If you’re considering buying a resort hotel, it may be one of the largest investments you’ll ever make. There are hundreds of variables to consider and plenty of money at stake. Still, it can be a profitable venture if you approach it in the right way.
The requirements of running a resort hotel gets more complicated if it’s part of a franchise. Unless you’re buying a franchise (if so, see this detailed guide on how to buy a hotel franchise), you must abide by the rules the franchisors set.
The purchase of an independent or franchised resort hotel will likely be among the largest investments you make. Are you ready for what’s ahead? Here’s what it takes to succeed in this competitive industry.
Solid Financing.
All investments require sound financing to carry the deal through, and a resort hotel is no different. Not only will you need a lender that sees your vision for the property to finance the purchase, but you’ll also need money to keep the business going once it’s yours.
Depending on your lender, you may be able to fit all the expenses under the umbrella of a single business loan. In many cases, however, the lender will want to separate the property and business loans. That way, if you default on payments, it’s easier to delineate where they can recoup their money.
Because of the size of the investment, stray away from hard money lenders and other high-interest loans. Do it right and go through the steps of conventional lending to meet the needs of a burgeoning business.
Most importantly, lay out the plan clearly to illustrate how you’ll profit from your investment. This not only proves to your lender that you’ll have a profitable hotel on your hands, but it also shows you the correct way to make it happen.
Certain Skills.
Running a hotel requires a unique skillset to succeed. That list of skills includes:
- Customer service
- Cultural awareness
- Communication
- Professionalism
- Teamwork
- Multitasking
- Attention-to-detail
- Organization
- Problem-solving
The need for these skills is heightened in a resort setting where you’ll serve individuals used to a higher standard of care. Every day, you’ll meet a new challenge, and a strong hospitality-based skillset will be required to meet and overcome them.
Adequate Experience.
Along with the required skills to get you through the day-to-day of running your resort, you’ll also need experience in the field. Since you’ll be the owner, you’ll want experience in both hotel work and operating a business.
Preferably, your hotel experience will have experience working with customers at some point. A front desk or management position will be extremely helpful in gauging the needs of your clients and meeting their demands. It would also be useful to have spent time cleaning or maintaining the property. These processes will provide invaluable insight into the standard of care and procedures you should expect from your staff.
Business experience is not as critical as hotel experience, but it will help. Your knowledge of the inner workings of a profitable business will help you keep things running smoothly on the back end.
Your experience does not mean that you should do everything to balance the bottom line — you can hire a bookkeeper and finance manager to handle the day-to-day business dealings as well as an experienced shift manager to keep your staff in line. But when you know what you’re doing, you’ll gain the respect of your employees and run a tight ship!
Commitment.
The purchase of a resort hotel indicates a long-term commitment that you must be willing to keep. After a year, if it’s not working or you’re not enjoying it, you can’t just walk away — with such a large investment of time and money, escaping with your dignity, reputation, and finances intact is often an insurmountable feat.
Know that you’re in this for the long-haul and be ready for all that entails. You’ll be putting in long nights and an extraordinary amount of your own money. You may go several years before you see a profit, which can be off-putting while you’re in the thick of it.
Try to keep a long-term view of the deal. Commit at the very beginning to stick with it — with a well-researched investment and the right skills and experience to keep it going, a successful venture is just around the corner.
