As the world is becoming smaller, the need and prospects for a flourishing tourism industry has gone through the roof. Owning a hotel has become an alluring business opportunity for people who want to dive into the massive growth spurt of the tourism industry. The good news is that the hotel financing sector is growing at an equal rate.
UK’s weather may not be the friendliest on earth but it is still ranked as one of the most popular travel destinations in the world. A hotel here could mean a lifetime of revenue for an entrepreneurial Brit. But, the brilliant opportunity of a hotel business comes with a price tag not all of us can afford.
For most of the people, the real struggle starts after getting finance as owning a hotel demands a busy schedule, sometimes clocking 17-hours a day, seven days a week and the pressure of handling numerous clients continuously. Generally, a hotel becomes a profitable business when the turnover surpasses 100,000 pounds. Again, seasonal changes also come in as an important aspect for the UK where only July and August see a high growth in business.
Moreover, the dip in the pound’s value has been a concern for most of the hotel owners alike. The fluctuation in currencies is tricky for those hotels that rely mostly on foreign tourists. But, the majority of hotels in the UK thrive on business coming from within the country. As of now, regions like Yorkshire, London, Midlands, and South West have experienced the biggest rise in overnight trips.
Apart from such uncontrollable factors, an owner must also know about the ins and outs of running a hotel, like dealing with contractors and suppliers or making connections with other businesses. There are several more duties that the owner has to meet, which could include managing angry or dissatisfied customers. Basically, your management skills will be crucial while handling a hotel business.
Typically most hotel owners do not float on profits as a hefty chunk of their revenue is consumed in keeping the hotel running. With the average salary for a General Manager being as high as 85,000 British Pounds the room for net gains reduces. Then comes other high paying profiles to cater for like Executive Chef, Operations Manager, and Head Chef.
In this manner, the profit made by a hotel owner varies on its size, region of operation and perception among the general public. The only thing that can be guaranteed is that in the initial years you will require a continuous flow of working capital.
On a positive note back in 2015 UK registered 36 million visitors who spent 22 billion pounds during their stay. As per predictions by market experts, the tourism industry of the country will be worth 257 billion pounds by 2025. With all these lucrative numbers in mind, you should also seek out for a scope to bring in the initial capital.
The best option is to choose a bank that specializes in raising development companies, owner-operators of hotels and investment funds. These institutions must be ready to offer a minimum credit facility of 5 million pounds. More importantly, having hotel development tenure of up to five years will be considered as a big plus.