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Guidelines for hotel business
Guidelines for Bed and Breakfast

Guidelines for Hotel Business and Mortgages

Hotels and guest houses make up a significant group of the businesses in the UK, employing over 1.5 million people. There are four main types of hotels in the UK.

  • Town Hotels: These can be difficult to succeed in establishing. Niche markets that will guarantee a consistent clientele are hard to find. This type of hotel is not recommended for first time hotel buyers.


  • Country Hotels: These hotels determine their success on their restaurant and banquet facilities. However, keeping a good staff can be hard to do with little potential employees in the nearby area.
  • Resort Hotels: These hotels have a very seasonal and fluctuating income. It does usually balance out with the rest of the year, however. This is a good choice for first time hotel buyers because the initial investment is low due to the low price of property, and staffing is relatively low as well.


  • City Hotels: These are the biggest income generators. The purchase price is high but brings in steady income all year long.


Hotel Mortgages

            For a steady, well established hotel, lenders are prepared to lend up to 80% of the property’s value. For seasonal and resort hotels, lenders will only lend up to 50% of the value of the property. By providing a well made business plan with the market research included, a business owner could help the chances of getting a suitable mortgage for his hotel.

            The amount of money needed to open a hotel depends on many factors. This includes the number of rooms available to let out, the amenities available for guests, and the hotel’s location.

Running a Hotel

            Successfully running a hotel and bringing in sufficient income could depend on the market niche. By catering to a certain group of people, hotels can set themselves apart from the crowd. Examples of caterable niches are weddings, tourists, businessmen, golfers, etc. By making your hotel specialize in a certain type of excursion such as spa packages or weekend romance, a hotel could help bring in a steady clientele on the off season.

            Rules and regulations for hotels must be met and can be very extensive. Inspections are done annually and could result in the hotel being shut down should serious mistakes be found. With this in mind, regulations should be met consistently and diligently. They include but are not limited to:

  • Planning
  • Insurance
  • Health and Safety
  • Fire precautions
  • Employment
  • Liquor licensing



            Increased numbers of franchised hotels are expected to be open in the UK due to the significant rate of success in the US. Franchised hotels offer the customers a familiar name that makes them feel comfortable staying there. This is a good way for first time hotel buyers to make immediate profits. Franchises provide central reservation systems, marketing, and brand advertising. Internet shopping for hotels is very popular nowadays and having a big name hotel will increase the chances of being selected for the night’s stay.

            No matter how great franchise hotels appear, certain costs need to be considered before deciding on this route. Franchise contracts usually last 20 years and fees can be accrued for terminating the contract early. Other costs include an initial set up fee, central reservation annual fees, marketing fees, and guest loyalty program fees.


Potential Earnings

            The VAT threshold can determine a hotels profits. The current threshold is at £54,000 per year. Smaller hotels should try to keep below the threshold to keep their profits at around £20,000 per year. Larger hotels should try to be significantly higher than the threshold, around £100,000 per year to make a sufficient profit.

            Hotels should always consider their potential clientele when deciding on their niche. Changing niches to attract more guests on the off season, and in changes in demands, will ensure a consistent income for a successful business



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