Hotel business is profitable when you start it well. And it starts from knowing how to build a hotel that works. You need to understand what are more important if you must get it right. I have outlined some of the most important steps for you to take.
One thing you must avoid when you want to build a hotel is taking advise from your friends who are not experts in hotel building. A lot of young investors do this often. They listen to what their friends, old school classmates, neighbors and beer parlor friends has to say.
It’s not every advise that’s useful when you are investing millions into a project. Especially for business that may not be corrected when the mistake has been made.
Think of how to build a hotel as treating a patient who’s sick of a contagious aliment. You have to follow a particular prescription to get the right result. Also, only a trained physician should handle such sick person. The same way, when you want to build a hotel, use only qualified professionals.
For example, in building construction, their are construction engineers that specializes and understand how to build hotels. You should not use just any engineer to build a hotel.
Hotel Market In Nigeria
When building a hotel, the first consideration is to know how big is your hotel market. How many hotels are already operating there? Who are their target customers? How well are they serving the market? Could you find an untapped customer segment there?
No matter what type of hotel you want to build the approach is the same. If you don’t apply the right approach your result maybe skewed. And in this article, I have laid out in a simple way how you can build a hotel from scratch.
However, the concern of most people who want to venture into hotel business is that there are too many hotels already. How true is that? Let’s have a look at some of statistics of some of the states and topmost destinations hotels in the country. I have the top five below:
- Lagos has 25 five star hotels and 2,500 other hotels
- Abuja has about 10 five star hotels and 700 plus other hotels
- Port Harcourt has about 5 five star hotels and over 400 other hotels
- Ibadan has about 3 five star hotels and over 350 other hotels
- Calabar has about 3 five star hotels with over 250 other hotels
You can see that Lagos has the highest, with over 25 five star hotels, and about 2,500 other hotels in the state. If you pitch that to the over 20 million population in Lagos state, then, we still have huge gap for hotel business in the state.
The same goes for the other top four destinations for hotel business. And if we review all the other states in the country you will realize that there are actually less hotels in the country than most people think. There’s still huge investment potential in hotel business.
Tips To Build A Hotel That Works
If you intend to invest in hotel business, don’t listen to side talks. Build a hotel if you want to. The business is still very much viable, and it’s not saturated as many people think.
If you have doubt, make enquiry from the hotel licensing authority in your state to get the full picture of current number of hotels in your state. Hotels renew their licence every year. The licensing board would give you an idea of functional hotels. And most of these hotels are just chalets, not full fledge hotels.
There is really not so much hotels as some people think. That’s why I broke it down for you above. In fact, most states don’t have five star or four star hotels. Even if you think others are already saturated, what of four and five star hotels.
I have carefully compiled some tips to help you build a hotel of any size in Nigeria. Let’s take them one after the other.
Package A Hotel Business Plan
To build a hotel, its most advisable to have a hotel business plan. Don’t assume you know all the details you need in the hotel or what you want to build. It may be clear in your head but not to someone else.
A hotel business plan would help you understand the right kind of hotel to build in a target location. It will identify the market, customers, demand, service expectations and estimated cost of investment.
You should not build a hotel without first packaging a proper hotel business plan. And it has to be done by a hotel consultant. A proper understanding of hotel business is required in packaging a hotel business plan that covers all the important elements of building a hotel.
Another factor that’s important in packaging a hotel business plan is funding. Finding the right investors or accessing financial institutions with investment interest in hotel and hospitality business is part of what the business plan will help to sort out. So, your hotel business plan should also be helpful in finding the money to build a hotel.
Find The Right Size Of Land
The next step in building a hotel of any type is to find the right size of land. Hotel business is a location based business, therefore, you need a land where to build a hotel. Inasmuch as the location of the land is important, the right size of land for the type of hotel you want to build is equally more important.
If possible, work on the design first before acquiring the land size to accommodate the design plan. But the only reason it’s better to acquire the land before design plan is to enable the architect design the hotel based on the shape and topography of the land.
The right land size takes into account all the elemental features of the hotel. For example, if the hotel is going to have a swimming pool, what land size should the pool take? The size of land and it’s topography can affect the design.
Another important element of the land size decision is the car park. How many cars can park inside the hotel premises? This can take considerable amount of land space, based on the number of rooms and guests expected at the hotel at any given time.
How Feasible Is The Location?
After you have found the land, don’t just start to build a hotel without assessing the viability of that location. One thing you should know about business is that any business is profitable based on two important factors. One is demand and the other is accessibility.
Ones you identify demand in any business, make sure you make it easily accessible to the target customers. And that’s where location comes in. The viability of your location is determined by the demand and accessibility.
Although, business is not a good friend of assumption, you have to conduct a proper feasibility study to ensure proper analysis of the demand and accessibility for your target customers.
That’s why some hotels locate close to airports. The idea is to target those coming into the country or the city through the airports. If you noticed, customers who use the airports are often in need of a hotel for lodging. And to build a hotel close to the airport is to make it easily accessible.
The bottom line here is for you to priorities location assessment when you want to build a hotel. Don’t ignore it. Hire a hotel consultant to conduct the assessment for you. It can cost between N500,000 to N1,500,000 for a proper location viability assessment report.
Draw A Hotel Building Plan
You can’t build a hotel without a building plan. Hotel business is built based on classification. You have to know which class of hotel you want to build before you start building.
You can read all about the different hotel ratings and classifications here: How To Start Hotel Business In Nigeria For Beginners.
Once you have decided the classification of hotel to build, the design drawing should be next, to put that idea into a practical design. The architect should be experienced in hotel design.
Some architects specialize on homes and office buildings. Some are good with churches and mosque design. While some are just good with bridge and monumental buildings. A hotel design architect should understand the different classes of hotel buildings.
You build a hotel based on the class of the hotel. And for each class the cost of building, amenities to be provided and decoration is what determines the cost of building. So, pick wisely and design based on your hotel class.
However, depending on the class of hotel the cost of drawing a hotel plan also differs. You can get a hotel building plan drawn for the cost of N1,500,000 to N5,000,000 within Nigeria. If you want foreign architects to be involved it might cost over N20,000,000 fondue to exchange rate disparity.
Cost of Hotel Building Materials
Cost is a very important element when you want to build a hotel. Avoid this madness in using estimates. Don’t try to surprise yourself with wrong estimates. Also, if a contractor brings you a rough estimate, just know that you are going to lose millions that should have been saved.
The right way is to get the building plan costed by an experienced engineer. Costing looks into some many factors like, the numbers of blocks required, cement quantity needed, exact number of roofing sheets, flooring cost based on thickness and mass of gravel required.
I’m giving you an insight just for you to know that estimate and costing are not the same. Costing would give you like exact number of blocks required and cost of each block. While estimate would give you an approximate number of blocks required.
Both are not the same. You should go for proper costing to get the exact idea. Moreover, you don’t need additional cost to get the cost of building a hotel. It should come together with the design plan.
Any good design should come with cost of building together. A building plan without costing is just a drawing. And probably the architect doesn’t know his job. Or you paid for a drawing and not a building plan, which can be cheap too.
Hiring A Construction Company
To build a hotel you will need a building contractor. It’s usually advisable to use an established hotel building/construction company. This kind of companies should have everything you need to build a hotel.
It also saves you cost of building. If you use different people or contractors for different aspect of the hotel, each one of them will be looking for higher profit. But when one comoany is doing everything the cost is lower since the markup is determined by one factor.
One major problem with hiring a qualified hotel construction company is that very few has done hotel jobs before. Some experienced ones may have done some partial hotel building jobs or just knowledgeable about furnishing.
You will need a hotel consultant to help pick a good construction company to handle your hotel. Don’t use just any contractor to build a hotel. You won’t get the best. It’s in this same light that a Mercedes mechanic should not be used to fix a Toyota vehicle.
Furnishing The Hotel
Furthermore, hotel furnishing is just as important as the design. Furnishing a hotel also follows the classification for that hotel. There are basic requirements for a two-star hotel, different from that of a three-star.
Just as it would be wrong to furnish a two-star hotel as though it’s a three-start hotel. The way you furnish your hotel is important, even as it saves cost.
However, quality is another factor in consideration. Hotel is for public use, therefore wear and tear is expected. The cost of maintenance is huge and should be an important consideration from inception.
One way to combat this issue of maintenance is by using the best quality furnishing materials. It would cost more but pays up at long run. You don’t build a hotel furnitures like home furnitures. Hotels are built for luxury and luxury must have class and quality.
Hiring And Training Hotel Workers
No matter how good the hotel design is, the workers are what makes it a good hotel. You should hire and train workers properly. The kind of workers you employ would depend on the class of hotel.
That would also determine the salary scale. The truth about salary is that if you want the best customer service at your hotel, pay higher salaries to attract the right kind of workers for the job.
You cannot pay low salaries and expect professionals to be employed in your hotel. That’s why I recommend that you hire based on your class of hotel. For example, the kind of workers in a two-star hotel shouldn’t be the same in a three-star hotel.
And their salary scale shouldn’t be the same either. However, when you hire, train them to fit into your hotel service culture. Every hotel has its service culture. While you train your workers on hotel business from time to time, equally train them frequently on your hotel service culture.
Plan To Launch The Hotel
We are now at the launch plan. I’m not actually explaining how to preparing to launch a hotel. I’m only pointing out that planning a hotel launch is important in hotel business. You should make it the biggest and news worthy in your city.
The strategies you adopt should be one that inspires news stories. Remember, if your hotel appears on the news it’s free advertising that would reach more potential customers for you.
That’s a big way to launch a new hotel. Although, I’m not revealing any launch strategy here, but if you hire me for your hotel launch, we would work out a perfect news worthy launch idea for your hotel.
Test Running Your Hotel Operations
This part is another strategy of launching a hotel. It’s like test driving a car. The idea is not common among hotel entrepreneurs. However, it’s my unique way to build up word of mouth publicity for a hotel launch.
It’s not cheap to do this either, but it’s a great way to attract your target customers, host them with bunch of huge discounts and freebies for a whole week or a period of time. That way you may get to fill up your hotel, test your services and get valuable feedback from actual customers.
Also, I’m not going to reveal the strategy here. It’s something that each hotel should implement with the right strategy that would work for them. I’m available to help out with the planning if you need my services.
Hotel Opening Day
The last of the tips on how to build a hotel that works is about the hotel opening day. From the day you began to build a hotel, there is a picture of the opening day on your mind. This is actually the real launch.
But I don’t recommend opening day with a test run. You should test run for a week or more depending on your launch plan. Some launch plan can last over a month period or even three months.
Whatever you do, make the opening day unique and invite journalists, hotel bloggers, food bloggers, and anyone that can help promote your hotel. Also use hotel marketplaces like hotels.ng, booking.com and others.
If you want to build a hotel, you may be wondering what class of hotel that doesn’t have much competition. One class of hotel that stands out in the country as having less competition is five-star and Seven-star hotels. There are very few of them in the country. In fact, Nigeria has only one seven-star hotel built around 2018 in Abuja, the countries capital.
However, whether it’s a five-star or three-star or even one-star, if you follow my guidelines here you will build a hotel that works. Even if you already have an existing hotel, you can still relaunch or re-market your hotel.
One thing hoteliers should constantly do is explore the advantage of fresh ideas to compete in the hotel space. Frequently using the services of a consultant would help turn the fortunes of your hotel around. One simple idea can make all the difference in your hotel revenue.