Too many people have an idealised conception of the accommodation business and aren’t fully aware of what it takes to make it in the industry. They often don’t take matters like economics, market conditions, or work load into account. But just like any sector, jumping in head first could have disastrous consequences and spell doom for your business. In this article, we’re going to give you three things you should consider before getting into the accommodation business in Australia.
The Market You’re Entering
Understand the type of area you’re trying to start an accommodation business in. Don’t try to start an accommodation business when there isn’t the demand for it. You could check online hotel rentals to see the going rates for a night in various neighbourhoods. If there are many budget hotel rooms in the local area, don’t try to build something new to compete with them because you won’t be able to compete with their economies of scale. A differentiating factor like catering to a particular underserved market may work, but you need to verify that there is enough demand in that niche to sustain a business.
The Cost of Going Upscale
If you want to try to offer a more upscale hotel experience by adding a bar and/or restaurant, the general advice is not to do this unless you have restaurant experience. And don’t assume that your restaurant will automatically have a steady stream of customers from the hotel. Food and beverage operations have massive overheads, and you may drain your main operation trying to sustain it.
Adding more services like a spa, meeting halls, lounges or banquets adds to the complexity of maintaining the facility. Furthermore, you have to pay the ongoing costs even if these amenities aren’t fully utilized. Also, adding amenities that aren’t of interest to your customer base is going to waste money.
That Piece of Real Estate May Need Work
A lovely home on the beach or large farm home is often picked up in the hope of turning it into a bed and breakfast. A large, unaltered home may be able to host one or two visitors in guest bedrooms, but if you’re going to handle more people or provide more upscale accommodation, renovations and expansion are probably in order. If you buy an older mass resort or budget accommodation, the buildings may still be in need of repairs or updates to bring it up to building code. In other cases, the property is in decent shape but you’d want to make a few changes so that it is different from other accommodation in the area.
In all of these cases, you’ll want to work with a good Sydney architect. The best architectural firms have experience in the hospitality industry, solid references and a good reputation. They’ll also be able to give you recommendations and give you advice on what would actually make more sense from a design and budget standpoint.
The decision to start an accommodation business should involve careful consideration of multiple factors. You need to do your research and understand what you’re getting into, especially if it means opening up your home to guests.
