Hotel Trends

How to Start a Hotel Business in 2023

14 Minutes

Kajal Makhija

How to Start a Hotel Business in 2023

Kajal Makhija
Published on

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The word "hotel" comes from the French hôtel, which means "townhouse" in English. The hotel business has been a part of human culture for thousands of years. In reality, it's an important part of the multibillion-dollar industry that serves modern tourists and provides them with ways to get around, places to stay, food, entertainment, and anything else they might need during their stay.

For centuries, people have been imagining the perfect hotel. Entrepreneurs from all over the world have jumped into the hotel industry ever since the days of stagecoaches, overland exploration, and rapid urbanization. They saw possibility, hotel profit margins, meaning, expansion, and esteem.

It's also gratifying to be able to provide a warm welcome to your loved ones in a hospitality setting. When you put in the effort and expense to create something truly unique, you naturally want to show it off to the people you care about. That's not easy to do with a lot of hotel investments, but a hotel was designed from the ground up to be shared. A high-visibility hotel investment like this requires more effort to enter and perform well.

A hotel is an operating business with a real estate component. It's worth a lot because it has been shown to make money and has the potential to make even more money. In fact, one of the main reasons to invest in hotels is because of how they work.

Types of Hotels

Its location, number of guest rooms, special services like concierge, travel assistance, and valet parking, and facilities like specialty restaurants, bars, places for business meetings, a swimming pool, and so on, could be some of the things that make it stand out. Its location, number of guest rooms, special services like concierge, travel assistance, and valet parking, and facilities like specialty restaurants, bars, places for business meetings, a swimming pool, and so on, could be some of the things that make it stand out.

Because each hotel has different services and amenities, it's hard to put them all into one group. If we use different criteria, some hotels will fit into more than one group.

Chain hotels

Chain hotels are the most common type of hotel. Most chain hotels are part of a group of hotels that are run by the same company or owner. There are tens of thousands of them all over the world.


Motels started to pop up to give travelers a place to stay the night that was cheap and easy to get to on long trips. Most of them are located along highways and other major roads and offer minimal amenities.


A resort is usually a place where travelers can get everything they need: accommodations, dining, drinks, and entertainment. Some resorts are all-inclusive, which means that travelers pay one price for unlimited services. These resorts are often popular vacation spots.

Backpacker hostels

Hostels are budget-friendly housing choices often associated with European backpacking. Most hostels offer dorm-style sleeping and attract students and younger travelers.

Conference/convention center hotels

Hotels that are part of a conference or convention center have both guest rooms and meeting space. These properties are made to hold big events and offer a wide range of event options to fit different setups, entertainment options, AV equipment, and break-out needs.

Extended-stay hotels

Some resorts specialize in long-term stays, while others cater to overnight guests. Extended-stay hotels are popular with business travelers and others who stay for several days, weeks, or longer.

Boutique hotels

Boutique hotels have 100 rooms or fewer and are usually in attractive places, such as a city center or shopping district. A boutique hotel may operate independently or as a member of a chain, but it caters to a particular demographic, has a distinctive style, and provides thoughtful services.


Bunkhouses are basic accommodations with bunk beds or barracks-like architecture. Originally, bunkhouses housed fieldhands, ranchers, cowboys, and other migrant workers. Many hotels now offer sophisticated bunkhouses for large parties.


Roadhouses are modest motels or hotels along highways. It was also used to designate British roadside taverns with accommodations. Some hotels and venues still use the word, but restaurants use it more.


Treehouses offer a bed in the trees and are ideal for young or adventurous travelers. These quirky properties can be open-air platforms or magnificent, sumptuous palaces.

Home stay

A stay at a residence by a traveler and especially by a visiting foreign student who is hosted by a local family.

There are several types of hotels. Some are low-, mid-, and high-end. Others offer luxury or distinctive amenities. A hotel's focus depends on its type, whether it's on comfort, an onsite attraction, or local culture.

How Big is The Hotel Industry? What is The Global Hotel Industry Market Size?

Are hotels profitable? What is the industry's growth rate? Did covid have an impact on the hotel industry?

In 2019, the global hotel and resort market reached a record high of $1.52 trillion USD. In 2020 and 2021, the global hotel industry market size fell below $1 trillion due to the coronavirus (COVID-19) pandemic. The global hotel industry market is expected to be worth $1.06 trillion by 2022.

When visitors spend money at local establishments like hotels, restaurants, and theaters, it pumps money into the local economy. It's a double win for the economy because those tourists are going to spend money on things like retail, pharmacy, and arts and crafts. Moreover, tourism can encourage the development of transit networks like roads and subways.

With so many people needing a place to stay for the night, hotels are a vital part of the service sector as a whole. It has strong ties to the tourism and hospitality sectors.

It's no secret that the epidemic had a significant impact on the hotel industry. The drop in business was so bad for several hotels that they had to shut down for good. Hotels' bottom lines have taken a hit due to guest cancellations and reduced bookings. The hospitality sector contributes roughly 10% to the global GDP annually. However, the hotel business contributed only 5.5% to the world's GDP in 2020, when the COVID-19 pandemic hit.

Hotel Technology Trends in Hotel Industry

There are more visitors to the state each year, so the World is constantly looking for new ways to make their stay enjoyable and memorable.

While visitors and travelers have kept the industry going strong throughout the years, technological advancements have made it possible for the sector to expand and adapt to the needs of consumers. Modern conveniences like air conditioning, electronic key cards, broadband internet, and Wi-Fi networks have taken hotels and resorts to a new level of sophistication. Online booking services have made it easier and cheaper for people to book flights and hotels, and they may have even sparked a newfound interest in travel.

These gadgets and tools have altered the image of travel, and future innovations promise to do the same. Professionals in this fast-paced field would do well to learn about the hospitality technology trends that are already popular and those that are expected to become popular in the near future. You can choose from hotel check-in software, hotel upsell software, hotel reputation management software, hotel business intelligence software, guest messaging software, and other new trends and technologies. Some of these are mentioned in detail here:

Cloud-based hotel software (PMS)

Property management systems are one of the primary hotel technologies. It's the foundation of the hotel sector. A property management system (PMS) combines modules and features to simplify hotel backend operations. A property management system (PMS) handles everything from reservations to housekeeping to billing. And that's not all. Cloud-based property management systems make hotels scalable, available, and safe.

Remote Check-In/Check-Out

Hotel owners can save money on staff and streamline their front desk operations by allowing guests to self-check in via smartphone with hotel check-in software. This technology also helps staff identify first-time and repeat guests by alerting staff about their arrival and enabling them to serve better at the reception and build meaningful relationships.

Mobile payments

Each hotelier must be aware of contactless payment and the latest hospitality technology. Customers complete transactions by placing their card or mobile device near the reader. In light of the economy, hotels have quickly adopted this approach. Because contactless payments are rapid and convenient, customers can transact on the go. Further, with contactless payments, hoteliers can reduce their revenue pilferage, which is otherwise very common in the hospitality industry. Credit cards, debit cards, UPI, and QR-code payments are examples.


The main goal of hotel reputation management is to understand and shape your hotel's online reputation. Reviews must be monitored, social media must be updated and interacted with, and the site must be search engine optimized, among many other tasks. Keeping an eye on your hotel's online reputation is important if you want it to do well in the market. You can't stress enough the significance of leaving each visitor with a positive impression of your resort.

Guest experience platform

Modern hotel guests want more freedom during their stay and a more individualized service. Today's hotel guests have higher expectations, and with the help of a guest experience platform, establishments may not only meet but surpass those expectations. A great thing about a complete guest experience platform is that it gives guests access to a wide range of services, such as voice-activated room controls, TV casting, in-room dining, and more.


Big data is a useful new hotel technology. Big data is a huge source of customer information. This data is utilized to analyze customer habits and influence strategic planning. Using this information, you can tailor your service to each guest's tastes and needs, giving them an amazing time. You can use guest messaging software for personal engagement and connection.

Investment Required To Start a Hotel Business:

You might be wondering how much it costs to build a hotel and how much hotel investment you need.

There is no particular figure a person would require to build a hotel. However, most of the time it's a function of location, the number of keys, and the category of property(1, 2, 3, 4, 5-star) you want to build. Despite the fact that it takes a lot of hard work and patience, the hotel industry is one of the most fascinating industries that may make someone wealthy enough to fulfill most of his or her aspirations.

Every part of the implementation, location sourcing, property blueprinting, development, marketing plan, staffing, etc needs to be well thought out and planned. With a well-thought-out hotel layout, you won't waste money or time on unnecessary amenities or features.

Understanding how much it costs to build a hotel and how much hotel investment you might be needing is a crucial first step. In addition, the amount of capital needed to open a hotel depends on a number of variables, including the hotel's size, kind, location, business ideas, government rules, licenses, permissions, etc., and the available capital used to establish the hotel's classification. In addition, loans are always an option for those who need financial aid. The majority, often 70%, will come from bank loans. Obviously, the cost of starting a hotel business depends on a number of things, such as:

Location: New York City, for example, is far more expensive than Austin, Texas.

Type: It goes without saying that a five-star hotel or resort is much more expensive than a backpacker hostel or a B&B.

Size: The number of rooms, restaurants, and so on all have a significant impact on pricing.

Step by Step Guide to Starting a Hotel Business

The key is to identify a gap in your market.

The first and most important step in learning how to run a hotel business is to learn about the global and local hotel industries. To get started, decide which hotel industry publications and websites you most enjoy reading, and then set aside time regularly to catch up. Now that you know a bit more about the hotel business, you are ready to do market research for your hotel.

Set long-term objectives for your hotel.

Once you have a firm grasp on what consumers want, you can begin developing a strategy to meet their demands. If you take a strategic approach, your one-of-a-kind offering of amenities, ideas, decor, marketing, location, and services will stand out from the competition and help you win market share.

Conduct a thorough analysis.

After setting goals and creating a plan, it's time to look at the numbers to make sure the hotel business will be profitable. Your analysis of the market should let you make educated guesses about important metrics including room rates, occupancy levels, RevPAR (revenue per available room), and operational expenses. If you know the basics of how a hotel makes money, it will be easier to choose a good revenue manager and sales team. The most important things you should do are create a hotel profit margin and look out for possible threats to the financial health of your hotel.

Evaluate available hotel finance options.

In order to get your firm off the ground, you need a sound financial plan, and after you've settled on one, you may begin raising capital. Your hotel can be funded in a variety of different ways.

Depending on your financial situation, hotels might make use of both common and alternative forms of financing. Specialty loans might make sense over time, but only if your hotel chain is large and well-known. This is because of how big the accounts receivable systems are in big hotels.

Complete the necessary documentation.

Before starting a hotel business, you must meet certain legal, regulatory, and insurance requirements. The same holds true for your hotel. Get in touch with your company's legal, insurance, accounting, and operational departments to find out what's needed in your area. At the very least, you should get hotel business insurance and register your company as a legal entity.

Recruit and train your hotel staff.

You can judge a company by the quality of its team. You may gain an edge in the industry and impress your customers by staffing every level with talented people.

Identify OTAs (online travel agencies).

OTAs have become increasingly important in the hotel industry because they allow customers to compare and book hotels online, at home, or on the go. Online travel agencies function as a marketing and distribution tool for hotels. OTAs are like "one-stop shops" that make it easy for people to find hotels, read reviews and compare prices. OTAs offer many of the same benefits as traditional travel agencies, but they are easier to use and let you do more of the work yourself. They'll also have an instant booking system.

Get the ball rolling on your hotel.

You've put in the time and effort, and now you're ready to create a hotel that will thrive in your area. You have the know-how and the people on board to make your dream a reality. Right on schedule, it's gone time.

To Sum Up

Consider why you want to invest in a hotel if you are a private investor or a large institution. You must learn how to run a hotel in an effective way. Multiple things are probably at play here. Understanding why you want to own a hotel is important because it will affect your business strategy, how you make decisions, how long you keep the hotel, how you rebrand it, and more.

Quoality is software that helps hotels earn more money and provide a better & consistent experience at scale. We always tell hoteliers that providing a better guest experience should be their top priority. We deliver a comprehensive set of tools that are simple to use to help you run your hotel business on the road. This lets you focus on giving your guests a better experience and making smart choices.

Frequently Asked Questions:

How do I start my own hotel business?

When first getting started in the hospitality industry, some entrepreneurs prefer to buy an already established hotel, while others prefer to construct brand-new hotels from the ground up. First, you need to come up with a business plan, then you can move forward with preliminary advertising, licensing, permitting, financing, building or remodeling, staffing, and opening your hotel.

How much does it cost to start a hotel business?

To open a hotel, you'll need a good level of an entrepreneurial mindset, but there's more to it than that: money. However, a tiny investment property doesn't require a million dollars to get started. One can open a little hotel for far less than it would cost to build a large one. The initial hotel investment could be made up of a lot of different things, like the price of land or a building that is already there, the cost of building, the price of furniture and decorations, license and permission fees, franchise or management fees, marketing costs, and employee salaries.

How much money do you make by owning a hotel?

Unfortunately, there is no appropriate reaction to this inquiry. Since the profitability of various hotel categories and types varies widely depending on the hotel's niche, its setting, and the services it provides, the average profit per room might range widely. Owners of hotels have a number of expenses they must cover before they can take their share, including salaries, franchise or management fees, mortgage payments, and taxes. Successful hotel management means more money in your pocket. Obviously, there are advantages to taking on more risk.

Is owning a hotel profitable?

You might be wondering: Are hotels profitable? The answer is YES; you need the right plan and strategy. In the hotel business, a hotel is profitable if the money it makes from selling rooms is enough to cover all of its operating costs and make a hotel profit margin. You should be able to see how your hotel will turn a profit in your revenue projections and in your financial plans.

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