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 Hotel Business, - Need Advice

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TSmarcosee1099
post Nov 7 2014, 05:15 PM, updated 10y ago

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Dear Forumer,

I'm working in leisure & tourism business for few years, as well as consulting new hotels and resorts. Recently, friends ask me to start a small hotel together.

After some study and research, here is the investment details.

Initial Investment: RM800,000
Total Rooms: 20 standard room
Annual Rate of Return: 15-20%

Need you all advice on the insight and things that need to be concern of.

Thanks
bumbleb716
post Nov 7 2014, 05:45 PM

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wow congrats
is this exsisting hotel or brand new one? location?
Sacrifies
post Nov 7 2014, 07:56 PM

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QUOTE(marcosee1099 @ Nov 7 2014, 05:15 PM)
Dear Forumer,

I'm working in leisure & tourism business for few years, as well as consulting new hotels and resorts. Recently, friends ask me to start a small hotel together.

After some study and research, here is the investment details.

Initial Investment: RM800,000
Total Rooms: 20 standard room
Annual Rate of Return: 15-20%

Need you all advice on the insight and things that need to be concern of.

Thanks
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I dont think RM800,000.00 investment is sufficient for a hotel.

ah_suknat
post Nov 9 2014, 06:46 PM

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QUOTE(Sacrifies @ Nov 7 2014, 11:56 AM)
I dont think RM800,000.00 investment is sufficient for a hotel.
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Budget hotel may be.

TS what is your target market? What concept? Tourist? Business? budget concern?
Lave1980
post Nov 9 2014, 07:17 PM

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A lot of business only can sustain 2-3 months. You need to calculate how long the business can sustain before make a profit.
ehwee
post Nov 14 2014, 04:20 PM

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it's depend on the location of the hotel, do you guys think the market for budget hotel at places like kl, malacca and george town is packed?

these place still got market for new comers?
nanan75
post Nov 15 2014, 07:57 PM

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QUOTE(marcosee1099 @ Nov 7 2014, 05:15 PM)
Dear Forumer,

I'm working in leisure & tourism business for few years, as well as consulting new hotels and resorts. Recently, friends ask me to start a small hotel together.

After some study and research, here is the investment details.

Initial Investment: RM800,000
Total Rooms: 20 standard room
Annual Rate of Return: 15-20%

Need you all advice on the insight and things that need to be concern of.

Thanks
*
try Pengerang, Johor as there will be a huge Petronas project 4-5 yrs from now.
kochin
post Aug 28 2015, 09:32 AM

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QUOTE(marcosee1099 @ Nov 7 2014, 05:15 PM)
Dear Forumer,

I'm working in leisure & tourism business for few years, as well as consulting new hotels and resorts. Recently, friends ask me to start a small hotel together.

After some study and research, here is the investment details.

Initial Investment: RM800,000
Total Rooms: 20 standard room
Annual Rate of Return: 15-20%

Need you all advice on the insight and things that need to be concern of.

Thanks
*
any updates?

have been toying with the same idea too.
but my concerns are as follows:
1. permits and license. i understand it may be difficult to obtain the necessary licenses especially if its budget hotel
2. bomba compliances and fire insurance issues.
3. own vs lease. if lease, always at mercy of landlord and after dumping huge capex into the building.
4. insurances. might cause a bomb.

that's all. thanks.
pltan
post Aug 28 2015, 05:20 PM

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QUOTE(kochin @ Aug 28 2015, 09:32 AM)
any updates?

have been toying with the same idea too.
but my concerns are as follows:
1. permits and license. i understand it may be difficult to obtain the necessary licenses especially if its budget hotel
2. bomba compliances and fire insurance issues.
3. own vs lease. if lease, always at mercy of landlord and after dumping huge capex into the building.
4. insurances. might cause a bomb.

that's all. thanks.
*
No personal experience in the 20 room hotel category but

1. Converted downtown office space into a ~130 room budget hotel (~$100-120 ARR) , licensing wasn't too much of an issue.

3. Ownership is preferable in my opinion, but it's possible to lock in a long term rental with a landlord, with options to renew at fair market values.


We're bearish on occupancy and they are trending down already this year. But maybe with a smaller hotel you'll be less susceptible to international customers, and geared more to the local economy instead.


howszat
post Aug 28 2015, 11:21 PM

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QUOTE(marcosee1099 @ Nov 7 2014, 05:15 PM)
Need you all advice on the insight and things that need to be concern of.
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24-hours. A hotel business is 24 hours round the clock. You need to have someone to manage it round the clock.

If you don't have people to do that, forget it.
lch78
post Aug 28 2015, 11:44 PM

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I see many budget hotels cum boutique budget hotels mushrooming for the last few years. Must be good profit margin for it to grow so fast.

 

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