If you are thinking about running a hotel business, it is important to understand the different business models that hotels use to make money. Depending on your own goals and objectives, one model may be more effective for you than another. In this article, we will discuss the most common hotel business models and help you determine which one is right for your business.
Franchise Hotels
One hotel business model is franchising. In this model, hoteliers partner with a larger hotel chain and agree to operate their hotel according to the guidelines and standards set by the franchisor. This can be a good option for hoteliers who want to be part of a well-known hotel brand and do not want the hassle of starting their own hotel from scratch.
However, it is important to note that franchisors typically take a percentage of the hotel’s profits, so hoteliers need to be prepared to give up some control and autonomy. Though the business model is already tried and true, you won’t have as much creative freedom when it comes to things like hotel design and amenities.
Owner-Operated Hotels
Another hotel business model is owner-operated hotels. As the name suggests, in this model, the hotel owner is responsible for all aspects of the hotel, from day-to-day operations to marketing and sales. This model gives hoteliers complete control over their property and allows them to be more hands-on in the business.
However, it is important to note that this model can be more risky and challenging than others, as hoteliers are completely on their own when it comes to making the hotel a success. There is also more pressure to generate revenue and profits, as all of the responsibility falls on the hotelier’s shoulders.
Leased Hotels
Another common hotel business model is leasing. In this model, hoteliers lease their property from a larger hotel chain or management company. The lessee is then responsible for all aspects of the hotel, from operations to marketing.
This can be a good option for hoteliers who want to be part of a larger hotel brand but don’t want the hassle or risk of owning their own property. However, it is important to note that hoteliers will have less control over their hotel than if they were to owner-operate it.
Managed Hotels
Another hotel business model is management. In this model, hoteliers contract with a hotel management company to run their property. The management company is responsible for all aspects of the hotel, from day-to-day operations to marketing and sales.
This can be a good option for hoteliers who want to be hands-off in the business. However, it is important to note that hoteliers will have less control over their hotel than if they were to owner-operate it. Additionally, management fees can be costly and eat into profits.
Brand-Owned Hotels
The final hotel business model is brand ownership. In this model, hoteliers partner with a hotel chain to open a new hotel under the chain’s brand. The hotel chain is then responsible for all aspects of the hotel, from operations to marketing.
This can be a good option for hoteliers who want to be part of a well-known hotel brand and do not want the hassle or risk of starting their own hotel from scratch. However, it is important to note that hoteliers will have less control over their hotel than if they were to owner-operate it.
Which Models Are Most Effective?
There is no one-size-fits-all answer to this question, as the most effective hotel business model for your hotel will depend on your specific needs and goals. Here are a few scenarios to keep in mind:
- If your goal is to keep as much profit as possible, then an owner-operated hotel is likely the best model for you.
- If your goal is to be part of a well-known hotel brand, then a franchised hotel or brand-owned hotel may be the best option.
- If your goal is to minimize risk and hassle, then a leased hotel or managed hotel may be the best option.
- If you want full creative control over your hotel, then an owner-operated hotel is likely the best model for you.
- If you want your hotel to be popular and well-known, then a franchised hotel or brand-owned hotel may be the best option.
Final Thoughts
There is no single hotel business model that is right for every hotel. The most effective hotel business model for your hotel will depend on your specific needs and goals. Consider all of your options before making a decision, and be sure to consult with experts if you need help choosing the best hotel business model for your hotel.