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Is Owning A Hotel Profitable?

JodyP 24 January 2020
Is Owning A Hotel Profitable?

By Matthew Hernon, Account Manager at Dynamis

Operating your own hotel is something that many who frequent small establishments have thought about. Buying a hotel and making it into a dream spot for those looking for a boutique experience seems like something that is very doable. We often ask ourselves, “how hard could this be?” after staying at an idyllic hotel.

It’s important, though, that you are aware of the realities of buying and running a hotel. There are a lot of costs involved and you will need to be able to cover these before you start making a profit. Read on to find out what these costs are and how you can get a handle on them and get your hotel to be a thriving business.


Some of the main costs you have to worry about are the ones that remain the same no matter how many guests you have. This can be especially difficult to cover during the quieter months. These costs are things like the mortgage, the insurance and wages.

The other costs that you have will be dependent on the number of guests that you have staying. This will be things like the laundry costs, breakfast if you offer it and additional wages if you hire extra staff members during busy periods.

Your labour costs will probably be a large portion of your spending. It is, however, an important cost as your staff are what you need to keep your guests happy and your hotel in working order.

Be smart about how you utilise your employees though if you want to keep your costs down. Train your staff so that they are able to fill more than one function during their shift so that you can avoid hiring too many people. You should also have extra staff come in only at busy times like weekends and holidays so that you don’t have to pay them all year round.

Managing your costs

The key to keeping your hotel profitable is to keep a detailed record of your expenses. A meticulous recording of every cost will help you understand where you can reduce costs and what capacity you need to be at in order to cover them.

There are so many hotel management software systems available that will make doing this far easier. Using software systems instead of attempting to do this manually will ensure that you are able to make future predictions and have a more detailed understanding of where you are spending the most money.

These software management systems will also provide you with detailed reports that you can go through regularly in order to keep on top of your incomings and outgoings.

Filling your beds

While keeping your costs down is an important part of making a profit, another vital component is filling your beds. In order to do this, you will need to market your business. There are various ways that you can do this, and they have a varying price tag attached to them.

In the age that we live in, though, most of them are technology-based. There is no way to run a profitable hotel without getting familiar with ways that you can promote your business online.

Diversify the way that you market your hotel. Start with a really good website. Your guests need to be able to get a good idea of where they will be staying. Your website should be easy to navigate and updated regularly. Your customers should also be able to make a booking through your website.

You will also need to have a strong presence on social media. Make sure that you adapt your content and make it specific for the platform that you are using. All images and copy should be of high quality and they should reflect your brand.

It is a non-negotiable that your business is easily found on booking sites. On top of this, be sure to keep up with the reviews that are being left for you. Encourage happy customers to leave reviews and, if there are any negative ones, make sure you deal with them in courteous fashion so that others reading them can see that you care and have taken note.