Compared to residential ventures, commercial real estate is a whole different level of complexity. There are, however, pros and cons to engaging in both sides of the playing field. With a hotel project, for example, there are ordinances to follow and permits to acquire for hotel guests’ safety. The building must be up to code and be able to comfortably sustain the maximum occupancy. Before you are ready to present your proposal to would-be investors, it’s important to also make sure with officials that you will be allowed to build the size hotel you are envisioning and that it doesn’t infringe upon any local laws, such as within the tourism industry. Because it is a very risky gamble, only certain types of investors will be willing to dive into this type of real estate.
Before seeking out investors for a hotel project, it’s crucial to do your due diligence on many topics, such as any similar-price range competition in the area. This now extends beyond other chain motels and hotels to include AirBnB and other privately rented properties. For this reason, in addition to the rise and fall of uncertainty in the economy, any hotelier knows that today’s hospitality race is a much different one than was fought in previous decades.
There will be lots of factors to consider when choosing an amount to fund a hotel, especially if you are starting from the ground up. Keeping a structured accounting of all income and expenses is key. Startup costs might have to overlap with some operational costs as soon as you start hiring employees, for example. Licenses will have to be obtained. Inventory will have to be purchased and maintained. If you are unfamiliar with the hotel financing process, it is wise to get a professional hospitality project manager to help you navigate the waters.
Just like in any retail situation, household names are more familiar to people. The same holds true for familiar hotel names. It might help you to obtain funding if you open a franchise of a familiar well-established hotel brand. The name recognition will save you a fortune in advertising costs.