BusinessHABBudget motel: A motel is a facility with rooms where guests can pay to spend a designated number of hours or nights. Normally, motels are for overnight use, but rooms can also be rented by the hour according to the motel’s policies. Motels are typically distinguished from hotels because the rooms can be accessed directly from a parking lot rather than a corridor.
We have put together this simple guide to starting your motel business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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1. Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns.
2. What are some insider tips for jump starting a motel business?
The best approach for opening a motel business is largely determined by the area in which it’s located. Owners should scout different locations and assess the competition around each one. Once owners do their research on comparable hotels or motels, they can use this information to distinguish their business.
Carving out the right brand starts with understanding what your potential customers need. Are people worried about their safety in a large city? Are they looking for a motel with more amenities? Do they believe the motels are overpriced in their area for what they receive? Is your location closer to the most popular locations in your town? As you narrow down your strengths, it should be easier to set the right branding strategy for your customers.
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3. What are the costs involved in opening a motel business?
Motel costs include the following:
- Rent/mortgage
- Utilities
- Furniture
- Staff salaries
- Maintenance
- Supplies (linens, cleaning products, etc.)
- Office equipment
- Commercial insurance
4. What are the ongoing expenses for a motel business?
Motel owners will need to account for the cost of salaries, equipment, maintenance, rent/mortgage, utilities, and commercial insurance.
5. Who is the target market?
The target market can be anyone looking for a place to stay at a reasonable price. The target demographic usually refers to tourists or passers by, but this is not always the case. Plenty of locals may want to take a staycation to see their town in a new light (without going overboard on costs).
6. How does a motel business make money?
Motels charge people a set amount to use their facilities. This charge should account for not only the direct costs of the room (including utilities), but also the common areas and the service staff.
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7. How much can you charge customers?
Motel owners can charge the going rates in their area. They may only be able to charge $15 a night for a weekday during the off-peak season. However, owners may be able to charge $100 or more per night during a three-day weekend if there’s a major event happening in their area.
8. How much profit can a motel business make?
Profits for motels can be substantial, especially if the demand is high. Room rates can conceivably triple during major events and peak tourist season. However, average profits have fallen in the last few years for motels from around 35% to 25%.
9. How can you make your business more profitable?
Motels can consider selling merchandise to their customers, including T-shirts, hats, and sweatshirts. Or they can set up a small gift shop where customers can purchase liquor, snacks, and beverages. These convenience goods and souvenirs can be sold at high-profit margins and can provide supplemental income beyond that of the standard room rates.
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10. Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
11. Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
12. Know how to promote & market a motel business
Most people will likely find you via online research. You’ll need to create a website that is search-engine friendly and easy to navigate or consider investing in paid online advertising. Owners may also want to look into partnerships with websites like Expedia or Priceline. Offer special rates or special amenities for first-time guests. Finally, consider partnering with travel agents or other local partners as a way to spread the word about your new business. Travel agents are always on the lookout for reasonable places for their clients to stay, especially in high-traffic cities or neighbourhoods.
13. Know how to keep customers coming back
Attracting customers starts with being visible enough for them to find you. Ensure your online and local presence gives you a competitive edge over other local options. When guests are with you, the staff should be welcoming, accommodating, and proactive to their needs. This will help generate the reviews you need and help guests remember your business if they ever swing through your area again. Consider offering an incentive for people to fill out a survey about their experience, such as a small gift. Their feedback can help you fine-tune your operation for future guests.
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14. Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
15. What happens during a typical day at a motel business?
Owners will likely spend their time coordinating staff and ensuring the facility meets quality standards. They’ll need to manage employees, ensure regular maintenance, and interface with guests. Owners will oversee all activity within the motel and make adjustments as needed. They’ll set financial expectations and design their marketing for their target demographic.
16. What are some skills and experiences that will help you build a successful motel business?
You should be organized, logical, and good with people. If you’re not committed to your staff and customers, you’re likely to overlook important details in your business. Most motel owners will hire a general manager to take care of many of the daily activities, but owners still need to stay involved enough to catch smaller issues before they turn into big problems.
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17. What is the growth potential for a motel business?
Quality motels are always in demand in practically all areas of the country. Even in places that are saturated with facilities, patrons are always looking for something extra. For example, if your motel offers more security than those around it, this can entice people to try your motel over more established businesses in the area.
18. Know how and when to build a team
Most motel owners will build a team immediately to ensure guests have access to staff members at all hours of the night. Look for people who are conscientious, friendly, and organized. Staff should have a strong background of the town, so they can answer questions and enhance a guest’s stay. Look for people who can stay calm during emergencies and direct guests to safety.
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Conclusion:
Motel owners can also consider offering unconventional options that other motels don’t. For example, towns that are frequented by truckers may be able to turn a profit by renting rooms by the hour. These working professionals may just want a place to shower, eat, and change before their next stop without having to pay for a full night. Or owners may want to outfit their motel with luxury amenities. Anything from free breakfast to turn-down service can give your motel a good reputation from the moment you open.
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