4 ways to run a successful motel in 2018

Motels may not be glamorous, but they can be profitable enterprises. Photo credit: Getty Images/ImageegamI

Motel ownership might not be at the top everyone’s entrepreneurial bucket list, but maybe it should be. Collectively, the lodging business is worth more than$500 billion, and motels comprise a healthy portion of this by capturing the frugal traveler demographic. What this business venture lacks in glamour it makes up for in profitability—when done right, that is.

Owning and operating a motel is an art form in and of itself. Motels are up against many unique operational roadblocks that other lodging options don’t have to contend with. Chief among these challenges is providing customers with a hospitable stay on a shoestring budget. Motels are appealing due to their low price point, but that doesn’t mean visitors want a crummy experience. Owning a motel is a balancing act.

Don’t let your investment go to waste. Learn the ins and outs of owning a motel, and how to account for the specific challenges of this economic lodging service.

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1. Do Your Homework

Running a successful motel starts with buying the right business. No amount of TLC can turn a lemon into a cash cow, so make sure you are investing wisely from the get go.

One way to investigate the financial viability of a motel is to check the room occupancy register. Lodging businesses—such as hotels and motels—offer uniquely specific insight into their popularity among customers, thanks to in-depth occupancy records. A record of occupancy will clue you in to how often people stay at the motel, when and for how long. This information can be cross referenced with business expenditures to flesh out the potential profitability of a particular motel.

To get even more granular, you should investigate financial records to better understand the past, present and future success of the motel. Think about enlisting professional help for this step. A thorough audit of financial records can be conducted by a certified public accountant. In-depth background research on a motel prospect will not only help inform your purchasing decision, it also can be used to leverage business negotiations.

2. Location is Everything

Here’s the hard truth: Unlike other lodging options, such as resorts or luxury hotels, people aren’t going to specifically seek out your motel. Motels are great economic options for people that need the bare necessities when traveling on a budget. For this reason, location is the single most important motel asset.

While most prime motel locations—residing in major metropolitan areas and near highways—are likely occupied by now, that doesn’t mean the market is dried up. There are plenty of avenues through which you can buy a motel from a current owner and benefit from established branding, reputation and client base.

Location matters most to motel guests. Photo credit: Getty Images/DragonImages

3. Keep Friends Close but Competitors Closer

The best way to beat the competition is to think like the competition. Learning about motels in the area should become your new hobby. Being informed about the overall competitive landscape lets you successfully anticipate market trends and adapt accordingly.

Get to know your competitors—review their prices, amenities reputation and more. Thoroughly compare your motel to the competition because you can bet prospective customers are doing the same thing.

Savvy motel owners won’t only consider current competition but will look ahead to the future, too. Keep your finger on the pulse of your motel market and be aware of demand, shifting area demographics and other professional factors that could affect business.

4. The Day-To-Day Difference

Ultimately, the success of your motel will depend on customer experience. On average, customers are twice as likely to complain about a bad customer experience than to praise a good one. Your motel simply can’t withstand an onslaught of poor online reviews or bad word-of-mouth, so do everything in your power to improve customer experience. Maybe spring for the higher thread count sheets? Maybe the carpets could stand to be vacuumed one more time each day. It’s the little things that make a difference.

You can’t afford subpar service because if you don’t offer a pleasant lodging experience, your competition will. For all of the value of long-term planning and industry research, nothing beats good, old-fashioned interpersonal skills and a little hospitality.

Bruce Hakutizwi is international business manager for BusinessesForSale, an organization designed to help market, buy and sell businesses.

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