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How to Start a Hotel in Gold Coast Flipbook PDF
How to Start a Hotel in Gold Coast
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How to Start a Hotel in Gold Coast? Riley University of Gold Coast
Abstract Motel ownership might not be at the top everyone’s entrepreneurial bucket list, but maybe it should be. Collectively, the lodging business is worth more than$500 billion, and motels comprise a healthy portion of this by capturing the frugal traveler demographic. What this business venture lacks in glamour it makes up for in profitability—when done right, that is.
I.
Introduction
Buying a hotel can be a complicated process, even with previous experience owning and running an establishment. The business-for-sale marketplace is very dynamic — and each hotel is so unique — that both pros and novices alike must do extensive research and preparation before diving into a deal.
II.
What Does It Take To Start A Hotel in Gold Coast?
Unfortunately, way too many hotels are 'started' by people who are completely unmindful of the fact that they could need anything more than that. Even more unfortunately, the ending is frequently a disappointing, if not unhappy, one in such cases. You're sensible when it comes to business, you're not expecting to get rich quickly, you're in it for the long haul, and your expectations about life are generally realistic. You're a respectable, decent person who desires to be part of a respectable venture in which you can take pride; not someone who's in it for the fast buck, who just wants to launch it next year, hoping to sell it off the following year for a quickie profit, and/or who'd just be trying to milk the last five dollars out of a $3.98 investment for however long it took to find some sucker to buy it. Since you're asking, how does one 'start' . . . you're probably contemplating new construction, not acquiring an existing hotel. (I have a suggestion. Please consider it carefully. If it's your first time, and you have no construction or real estate development experience, consider the acquisition route, at least starting out. New construction requires somewhat more of an investment, it'll take awhile before you get a payout [where, with an existing property, you're getting at least some cash flow the first night after you take possession], and there is more risk involved [e.g., unforeseen cost overruns]. You can always do new hotels later as you gain experience and confidence - as well as revenue streams from your existing properties.) Accordingly, I'm going to assume that you're someone I should advise conservatively. Let's start with your location. Give it a rest for now about streets, thoroughfares, zoning, traffic counts, etc. First, we want to make sure you're in the right town. But before we do
even that, let's make sure you have the right kind of hotel in mind. Go to Hampton Inn's website, and while you're there, open the sites for Holiday Inn Express and Marriott. Start a reservation online for the city in which you'd like to build your hotel.
Once you've picked a town, let's look at something else while we're doing our research. Close and re-open your browser, and this time, open websites for Homewood Suites, Residence Inn by Marriott, TownePlace Suites by Marriott, Staybridge Suites, and Candlewood Suites. Do the same thing: check your rates for one night. Then - since we're dealing with all-suite, extended stay properties - do it again, only check the rates for a two-week stay. If the one night rate at such properties is much higher than the nightly rate at the more conventional hotels (Hampton, Courtyard, Holiday Inn, etc.); and there's not much of a drop in the rate between a one-night rate and a two-week rate, an all-suite property might be the way to go. (All-suite properties require a higher investment, but will enjoy lower variable costs. They run on lower margins, but enjoy higher occupancy and reduced staffing needs. It's the deviation from Class A mid-market I'd most likely go with, in a town where all-suite properties show up as lacking.) Now, as you've perhaps anticipated, I'm going to suggest something that personally, I generally lack enthusiasm for -- you'll lose count of the number of times I've observed that hotel franchising has no future. However, hotel franchising does have a present, and we want to keep your venture as conservative and low-risk as possible. And hotel franchising has a history that bankers who'll be supplying your mortgage loan tend to strongly favor. So, for you, we want to plan on going with a national franchise. For now, anyway. Any franchise agreement you negotiate (they usually run for a twenty-year term) should provide for termination with no penalty at fiveyear intervals. Here again, while I have my preferences, we want to see what's missing in your market, and be the bearers of gifts who provide the particular gift of what the folks in that area have
always wanted and never had before, so that your future customers will be happy to see us show up. If you're considering a hotel as a passive real estate investment - like an apartment building, or strip mall - be warned, it isn't. (Lots and lots of 'real estate' investors think of them that way: that's why you see hotels advertised for sale on LoopNet with a 12%-or-under 'cap rate' as though that capitalization rate is even an appropriate metric for determining the value a hotel, never mind an impressive one. It's neither.) You don't just collect the rent, and pay maybe a single on-site superintendent or a maintenance guy, and contract any needed repairs, and make the mortgage payment, and your costs are covered. A hotel is a business. It must be respected and managed as one. You may also own a Boeing 737, but owning it doesn't qualify you to fly it as pilot-in-command. Likewise, your wife's best friend who's into entertaining, or decorating, can't necessarily run a hotel, nor can your ne'erdo-well nephew or brother-in-law who needs a job. A hotel must be managed with skill and intentionality by people who know what they're doing. Which brings us to management ... And finally, we get to the part that many people forget. Or just don't pay enough attention to if they remember it at all. Or depend entirely upon the franchise organization for even though doing that assures your property a mediocre - at best - performance. Or cynically settle for that mediocrity when it turns out that their franchise organization doesn't have it handled after all (at least not as well as the owner was led to believe when they sold her the franchise), and doesn't hand it to them on a plate.
III.
Before You Buy a Hotel Business, Answer These 4 Questions
Buying a hotel is no small feat. It’s a competitive venture that offers little room for mediocrity, but it can pay out to anyone willing to do the work.
There are a number of reasons why it might make sense to buy a business, rather than building one from the ground up yourself, but either way, you’ll want to make sure you’re prepared for the investment of money, time, and resources needed to run a business that thrives.
Before undertaking what will likely be one of the most significant professional pursuits of your life, you might have a few questions. So, here are the answers to some of the most pressing ones. Is the property up to code? One of the most important initiatives prior to buying a hotel will be compliance. Nothing quashes an enterprising spirit quite like opening a business and then having to shut down due to negligent preparation. This is why the first question you should have answered is whether or not the property is compliant and up to code. Review local and federal rules and regulations to ensure your facility is in check. Do not take it on good faith that the previous owner kept things copacetic—don’t let another person’s complacency become your liability. Figure out if any licenses or permits need renewing and re-up inspections that might have fallen by the wayside. This could be for the property itself, but also any equipment or heavy machinery such as industrial-strength kitchen appliances, cleaning equipment, companyowned vehicles, and more. The key here is to make sure you understand the risks and liabilities that come with purchasing an existing property and business. What are the pros and cons of buying into a hotel franchise? One of the most significant decisions you will need to make is whether or not to open a franchise hotel. Prospective buyers should weigh the pros and cons of franchise options, because it’s not always a clear-cut choice. For example, consider these franchise pros and cons: Pros: Established marketing materials such as ad campaigns, website, and reputation Recognizable branding Established customer base Cons: Lack of autonomy Few opportunities for personalization Franchising fees That final point may be the most prohibitive factor for aspiring entrepreneurs. Franchise fees can quickly offset the initial benefits of owning a franchise, but before you discount this option, consider what these fees entitle you to. Although franchise fees are nonrefundable, the skills you will learn in marketing, management, upkeep, and so on within the context of a franchise are invaluable and can be transferred to new business opportunities down the line. If you choose to buy a franchise hotel from an existing owner, be sure to inquire about the existing agreement. The agreement may transfer to you without a hitch, or you might need to draft a new contract. Either way, acquiring ownership can come with hidden fees that must be anticipated. Is the property in the right location?
Travelers and tourists come to destinations for the location, not for the hotel per se. An exceptional stay will certainly resonate with clientele, but no one is packing their bags, leaving the comfort of their home, and hopping on a plane just to stay in a hotel. Your hotel is an extension of the location. It’s the crudités to the vacationer’s entree—not the main course. This is why great hotels always compliment a great location. This is when you consider whether or not you want to buy in a highly-traveled area. While areas such as Las Vegas, San Francisco, and New York bring in the most tourists a year, know that high-mileage areas are already saturated with hotels and come with a more expensive up-front cost. Finding a location is a sliding scale—the more alluring the location, the more you will have to pay for the property. The hospitality industry is a high-risk/high-reward venture, so now is the time to ask where you want to put down roots and how much you are willing to gamble. Whether you’re buying a recognizable franchise or quaint mom-and-pop, the location will certainly be a major success factor. Demographics: Who are your potential customers? Finally and most importantly, you need to consider your potential customers. Although it might seem reductive, getting to know your customer base is truly the best thing you can do to promote ongoing hotel success. Consumer demographics will inform who is staying at your property, why, and for how long. This information is important for determining your target clientele and driving business. When backed by historically-proven consumer data, you can better cater to your customers’ experiences, promote satisfaction, and encourage ongoing loyalty. There was a time when anticipating your target demo was more or less guesswork. You would have to gather anecdotal information and just hope your business adjustments resonated with your clientele. Luckily, today things are more sophisticated thanks to the Internet of Things (IoT) and artificial intelligence. Some hotel chains are leveraging IBM analytics technology to collect transactional and customer data into a central repository. This data can then be analyzed to make decisions about room arrangements, amenities, and customer experience services. The hotel industry is just now experimenting with big data, so expect this technology to continue to influence hospitality innovation. The good news? When you buy an existing hotel, there’s a good chance that the seller has a solid repository of data on their existing customer base. Take advantage of this—but be sure to also do your own market research, especially if you’re planning to rebrand or target a new demographic when you buy the business. Resources for preparing to buy a hotel business This is far from a comprehensive list of questions to ask before buying a hotel, but this is a good place to start. Above all else, be diligent and be discerning. When it comes to buying a hotel, doing your homework is the answer to a successful purchase. Write a business plan
Writing a Lean Business Plan and modeling different financial scenarios is a great way to make sure you’ve thought through every aspect of your hotel venture. You can download a free Lean Plan template to help you get started. You’ll want to use your Lean Plan as a framework for writing a full business plan if you’re planning to seek financing through a bank or investor. Lenders typically require a traditional business plan. You can see sample hotel business plans in the Bplans gallery if you’re not sure what to include. Learn more about the hospitality industry If you don’t have much experience in the hospitality industry, start with learning as much as you can about the industry and running a successful business.
IV.
Essential Things to Consider Before You Buy a Motel in Gold Coast
Buying a motel can prove to be a very profitable business and a great investment, especially if it is situated at a strategic location and enjoys a good reputation. However, not every motel will rake in profits. If the motel lacks goodwill, it will not attract visitors. Not only this, but it can also turn out to be a loss-making venture for you. Hence, you should evaluate its financial records to get a better understanding about the business. Apart from the financial aspect, you should also consider if the property is a part of any legal conflict, as you may end up losing your money because of this. Hence, it is important that you must give due consideration to certain important things before you make a buying decision. Here you will find the essential tips for buying motels for sale Gold Coast.
Conduct Research Conduct your own research, and find out why the owner is interested in motels for sale Gold Coast. In most cases, he will tell you that he wants to shift to another town or is interested in trying out some other business. Don't depend on what he tells you, and investigate on your own to find the real reason. Make sure that there are no conflicts or lawsuits involved with the current ownership of the motel or its land. Inquire about the duration for which the current owner has been in charge of the motel. Verifying all the information that the owner tells you is important or else you may end up becoming a part of a loss-making venture.
Corroborating the facts will help you take a calculated decision. Also, try to explore 2 to 3 motels, and weigh their pros and cons before zeroing in on the final one. Occupancy Rates You should check the room occupancy register in order to get a clear idea about the number of people staying in the motel every month. Also, take a look at all the expenditure. Ensure that the income is higher than the expenses incurred every month. This will tell you if the motel is getting visitors regularly, or whether it is running in losses. Also, try to compare the rates of this motel with those of its competitors to understand if the stay is priced appropriately. You may be surprised to find that it may either be overpriced or underpriced. You can then bring about the necessary change in charges, once you buy the motel. Financial Records It is important that you review the financial statements of the motel for at least 3 previous years to understand how it has been faring on the income front. It is better to hire a CPA to conduct the evaluation as he will be able to understand it better. Studying the financial records will also give you a fair idea whether or not to buy the motel. Do not forget to check the utility bills. If you find that the motel does not attract too many people and is running in losses, you can change your decision. Also, this can work in your favor during the price negotiations. Licenses and Documents Before buying the property, it is essential that you ensure that the motel has followed and fulfilled all the requirements of the state. It must have the necessary licenses and permits to operate the business. Make sure that the motel has paid all the necessary taxes and complied with the documentation regarding the same. Check if the property is insured and for how much. Calculate the amount of coverage and premiums. If you are not satisfied with the current insurance plan, you can switch to a better one. However, ensure that the insurance company is a reliable one. Find out if the motels for slae or its owner is not in any kind of legal or tax-related troubles. Financing Options If you have a good credit score, then any bank will give you money for buying a motel. You may be required to mortgage the motel building or your home against it, but you can always pay back the loan on time and have the property back. Also, if you can provide paperwork which indicates that the income from the motel is good enough to pay back the loan, there won't be any problem in availing one. As it is a business owner-occupied real estate venture, there are many banks who will offer SBA loans for the same. If you are a member of a credit union, you can also apply to it in order to get a loan for buying the business. Stay at the Motel It is advisable that you spend some time at the motel as a guest. Try to stay there before the owner comes to know that you are interested in buying the property. This will give you firsthand authentic information about the motel. The owner will only tell you about the 'positive aspects' of the motel and you must corroborate every fact. In most cases, the owner will ensure that the negative information does not reach you. Spending time at the motel will
help you understand the place from a guest's perspective. Things like rodent menace, water supply problems, electricity issues, leakages in bathrooms, dirty rooms, poor service, rude staff, etc., will only come forward when you stay at the place and experience it yourself. Negotiate the Amount Try to get a broker to mediate your negotiations. It is not advisable to conduct the negotiations on your own. Right from the beginning, be vocal about the maximum amount you are willing to spend in order to avoid any misunderstandings later. Make a proper offer with all the terms and conditions. You can negotiate on the price of the motel, final date of payment, and initial deposit amount. If you want the owner to conduct any refurbishment or repair work, ask him to do so before finalizing the deal. If you are going to take some time to get your loan sanctioned, make it clear to the owner right at the start. Competitors It is important for you to know about other players in the market. Find out about the rates and amenities they offer. If they are doing better than this business, try to understand why. Know about the reputation of the motels for sale Gold Coast you are about to buy. Consider factors like existing and future competition, market demand, business boom, rate changes, etc., when are looking for motels for sale Gold Coast.
V.
Tourism investment opportunities showcase in QLD
You can read about investment ready tourism projects below, then register your interest to be contacted by the Queensland Government about a project or investor support.
Barrier reef resorts Long Island Resort A perpetual leasehold opportunity exists to invest and revitalise Long Island Resort. With palm-fringed, white sandy beaches, Long Island is the closest island to the mainland and this investment opportunity includes mainland power and substantial infrastructure. Turtle Street Resort & Spa
Turtle Street is an exceptional waterfront site in a World Heritage listed area on the east coast of Curtis Island, surrounded by Curtis Island National Park and overlooking the Great Barrier Reef Marine Park. The proposed 2-stage precinct development is on 12ha and includes a 5star resort and spa. Ecotourism projects O'Reilly's Rainforest Retreat O'Reilly's Rainforest Retreat is a multi-faceted, 4-star eco-resort located in the Gold Coast Hinterland. It comprises 66 rooms and 48 x 2 and 3 bedroom 4.5-star luxury mountain villas that will be sold individually with the management rights retained by the project proponents. Two Pines Eco Development An opportunity to purchase an existing business and ecotourism development opportunity Two Pines Cafe on the Gold Coast Hinterland. Leisure and tourism facilities Adventure Waters Water Park, Cairns A unique opportunity exists to develop, as an equity partner, joint venture or loan facility provider, a world-class water park in the highly-popular tourist market of Cairns. Short-term accommodation Broadbeach Development Site This mixed-use, 4,856m² development site is strategically located on the Gold Coast. With the site being within walking distance of the beach, Jupiters Casino and Pacific Fair Shopping Complex, this site is a perfect opportunity. Broadbeach Lifestyle Precinct Opportunity to purchase over 1 hectare of vacant Gold Coast land with approval for mixeduse development. Development Opportunity, Surfers Paradise A new high-rise accommodation opportunity exists within the tourism heart of the Gold Coast. This site is currently classified as High-rise and Tourism Accommodation by the Development Approval could be amended through a Material Change of Use to enable a hotel development. Northpoint Banyan Tree Northpoint Banyan Tree is a 4,424m² development site with an opportunity for a mixed-use development including luxury hotels and serviced residences. The site is perfectly positioned on the Esplanade, Surfers Paradise, with panoramic views from all aspects. Resort Whitsundays An approved resort site on almost 4ha overlooking the exclusive Port of Airlie in the Whitsundays with an approved 5-lot subdivision. Surfers Paradise Development Site A mixed-use development site located in iconic Surfers Paradise on Queensland's Gold Coast. The 11,480m² freehold development is ideally situated north of Surfers Paradise CBD and approximately 100m to the beach. Motels for Sale Gold Coast
Licenced Restaurant- Bar- Cafe- Takeaway For Sale - Est 2002 - Loyal Customer Base - Premier Broadbeach Location - Freehold Available - Only $695,000 Visit here to buy: https://www.commercialproperty2sell.com.au/details/licenced-restaurant-barcafe-takeaway-for-sale-est--loyal-cus.php
Management rights plus residence! Live onsite by the magnificent Broadwater! Management Rights/Building include: - 101 apartments, over 30 floors - Desirable Residential High-rise - Gross revenue of $250,000 (and will increase next financial year) - Well located and maintained complex in very popular location - Sought after suburb on the Gold Coast - Resort style outdoor pool and heated inside pool, Heated spa and plunge pool along with 2 saunas, Gym, Full sized tennis court, Games room including a library, American sized pool table, Dart Board, Table Tennis, Secure bike rack, Communal boat jetty for residences capable of berthing a 40ft boat - Function room with chefs commercial kitchen and outdoor BBQ facilities Visit here for further details: https://www.commercialproperty2sell.com.au/details/managementrights-plus-residence-live-onsite-by-the-magnificent-.php
VI.
Tips for buying a hotel
How do buyers avoid getting burned and make sure they enter into an acquisition that offers them financial and emotional peace of mind? They have the greatest chance for success by being proactive and well-versed during every step of the purchase process. With the following three tips as starting points, buyers can be sure to find out what they need to know to get well on their way to owning the hotel of their dreams.
Understand your parameters One of the biggest mistakes people make when buying a business is not having a solid grasp on how it will affect their lives. It's not uncommon for hotel buyers to get so excited by the prospect of owning a new business that they rush into it without asking themselves some very important questions, such as: Will owning this business lead to a lifestyle that makes me happy?
It's no secret that owning a hotel can be a lot of work, but still, many buyers aren't aware of just how life-changing and time-consuming it can be. First-time buyers might have an unrealistic view of what a hotel owner needs to put into the business, believing the staff will be able to do most of what it takes to keep things running smoothly and profitably. Then, when they find themselves doing tasks they never thought they'd have to do, they might become disillusioned and overwhelmed, jeopardizing their health and the health of the business. Do the financials make sense? Even after doing proper research and believing that everything about owning the hotel they are looking to purchase would make them happy, there's one part of the equation that buyers can't focus on enough: financials. For one, buyers need to make sure they'll be able to secure a loan to buy the hotel, and that they are confident the cash flow from the purchase will be able to cover the loan payments. One essential consideration is whether or not the seller of the hotel is willing to finance part of the sale. If not, it can be extremely difficult to obtain a sufficient loan, and learning about this issue later rather than sooner will lead to unnecessary headaches. Get familiar with the market The first step a hotel buyer should take is to gather a list of all relevant businesses on the market. It's not uncommon for buyers to come across one motels for sale Gold Coast and try to proceed with a transaction without exploring other opportunities. No matter how great the business seems, that's never the right thing to do. With that approach, an even better opportunity could exist and the buyer would never know it. To cover all bases, buyers can use BizBuySell.com's Valuation Report to search for motels for sale Gold Coast in their area and price range, then narrow results down to the few that seem most appropriate for their desired lifestyle. This way they can ensure they've found the motels for sale Gold Coast that best meets their needs. Negotiate with patience Negotiation is an essential part of any business-for-sale transaction, but one that is too often underutilized by business buyers. During the negotiation process, though, sometimes deals fall through. It's bound to happen. For this reason, buyers should avoid becoming too attached to a single hotel. If they do, they'll likely be devastated when a transaction doesn't work out, and be left without a "plan B." Instead, they should keep a running list of "key properties" that they frequently revisit throughout the process and can turn to if their top choice deal fails to pan out.
VII.
Ways to run a successful motel
Owning and operating a motel is an art form in and of itself. Motels are up against many unique operational roadblocks that other lodging options don’t have to contend with. Chief among these challenges is providing customers with a hospitable stay on a shoestring budget. Motels are appealing due to their low price point, but that doesn’t mean visitors want a crummy experience. Owning a motel is a balancing act.
Don’t let your investment go to waste. Learn the ins and outs of owning a motel, and how to account for the specific challenges of this economic lodging service.
1. Do Your Homework Running a successful motel starts with buying the right business. No amount of TLC can turn a lemon into a cash cow, so make sure you are investing wisely from the get go. One way to investigate the financial viability of a motel is to check the room occupancy register. Lodging businesses—such as hotels and motels for sale Gold Coast—offer uniquely specific insight into their popularity among customers, thanks to in-depth occupancy records. A record of occupancy will clue you in to how often people stay at the motel, when and for how long. This information can be cross referenced with business expenditures to flesh out the potential profitability of a particular motel. 2. Location is Everything Here’s the hard truth: Unlike other lodging options, such as resorts or luxury hotels, people aren’t going to specifically seek out your motel. Motels are great economic options for people that need the bare necessities when traveling on a budget. For this reason, location is the single most important motel asset. 3. Keep Friends Close but Competitors Closer The best way to beat the competition is to think like the competition. Learning about motels in the area should become your new hobby. Being informed about the overall competitive landscape lets you successfully anticipate market trends and adapt accordingly. Get to know your competitors—review their prices, amenities reputation and more. Thoroughly compare your motel to the competition because you can bet prospective customers are doing the same thing. 4. The Day-To-Day Difference Ultimately, the success of your motel will depend on customer experience. On average, customers are twice as likely to complain about a bad customer experience than to praise a good one. Your motel simply can’t withstand an onslaught of poor online reviews or bad word-of-mouth, so do everything in your power to improve customer experience. Maybe spring for the higher thread count sheets? Maybe the carpets could stand to be vacuumed one more time each day. It’s the little things that make a difference.
VIII.
Conclusion:
The process of buying a hotel, even when buyers have done it before, will always be a learning experience, but when entering into it fully prepared there will be fewer bumps in the road. By starting with these three tips, buyers will be well on their way to a smooth transaction and a new, successful hotel.
IX.
References:
Quora Contributor. (2013) What Does It Take To Start A Hotel? | forbes. Retrieved from 14 June,2019 https://www.forbes.com/sites/quora/2013/02/28/what-does-it-take-to-start-a-hotel/ Bruce Hakutizwi. Before You Buy a Hotel Business, Answer These 4 Questions | bplans. Retrieved from 14 June,2019 https://articles.bplans.com/before-you-buy-a-hotel-business-answer-these-4-questions/
Madhushree Kelkar. (2018) Simple Yet Essential Things to Consider Before You Buy a Motel| businesszeal. Retrieved from 14 June,2019 https://businesszeal.com/essential-things-to-consider-before-you-buy-motel
Tourism investment opportunities showcase | Business.qld.gov.au. Retrieved from 14 June,2019 https://www.business.qld.gov.au/industries/invest/tourism-investment/opportunities
Hotels and Leisure for sale in Gold coast | Commercialproperty2sell. Retrieved from 14 June,2019 https://www.commercialproperty2sell.com.au/for-sale/qld/gold-coast/hotel-leisure/
Curtis Kroeker. (2013) Want to buy a hotel? 3 tips | bizjournals. Retrieved from 14 June,2019 https://www.bizjournals.com/bizjournals/how-to/buy-a-business/bizbuysell/2012/12/buying-ahotel-3-tips.html
Bruce Hakutizwi. (2018) 4 ways to run a successful motel | hotelmanagement. Retrieved from 14 June,2019 https://www.hotelmanagement.net/operate/4-ways-to-run-a-successful-motel-2018