3 Major Challenges Hotel and Motel Owners Face in their First Year

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Hotel Reception

The hospitality business is a fiercely competitive one and hotels open and close every day. Not to mention Airbnb and the disruption it has caused in the industry. If you want to succeed in that sector, you will have to be prepared for what it truly means to run a hotel. The issue is that too many people have a romantic idea of what it means to be a hotel owner and aren’t ready for the challenges that plague so many in this field. Let’s take a look at some of the major challenges motel and hotel owners have to face in their first year.

Cash Flow Issues

This is one of the most common problems newcomers in the hospitality business have to face. Sometimes it is due to bad projections. In other cases, bad decisions. Spending too much at the beginning without knowing if it will translate into more clients is another issue.

While financing is an issue for many owners, it’s how this money is allocated that is often the problem. When financing a motel, for instance, a lot of owners will think of making aesthetic changes, when in reality, they should be spending on things they know will result in profits, like advertising. Not only that, but they are more likely to get their loan approved if it’s for something that will directly contribute to the bottom line.

HR Issues

Keeping and retaining employees in the hospitality industry is not easy. New hotels often have to deal with very tight margins and employees in this sector are not always the best paid.

We could tell you to start working on culture, but you should focus on making yourself more competitive instead. If you can’t afford to pay them much more than the competition, you have to give them additional perks. Flexible scheduling, more vacation days, health benefits, etc, should all be considered. Next, you can think about building a culture within your organization.

Daily Consumable Price Fluctuations

It can be tough to forecast for the next quarter when the costs of everyday items keep going up. The price of eatables and daily use products is rising by the day and is becoming a growing concern in the industry. One of the solutions here is to build a better relationship with suppliers and work harder on negotiation. Forming strategic partnerships with others in the industry and pooling purchases to increase purchasing power is another option.

But you should be spending every hour of the night and day trying to find ways to cut costs. You should see if you’re employing the most energy-efficient solutions for lighting and appliances. You should pay special attention to things like air conditioning for instance. Outdated units might be costing you thousands in additional costs every month, so this is something you’ll have to check.

These are some of the most common reasons why so many new hotels and motels fail. It’s up to you to prepare for these issues and have realistic expectations.

80 DAYS Benchmark
80 DAYS Benchmark