| Owning your own hotel remains one of the most popular ways to start a new business. Every year thousands of people – ranging from the semi-retired couple to the lifelong hospitality professional – buy guest houses or hotels, with the businesses as varied as the buyers. It is hardly surprising, when you look at the statistics. Tourism is big business Tourism is rapidly becoming the world’s biggest industry, and the UK – whatever you personally might think of the weather – remains the fifth most popular destination in the world, after France, Spain, the US and Italy. In 2003, 24.7 million foreign visitors came to the UK, making the industry worth £74.2m to the British economy. For hotel owners, native business remains the primary source of income. British residents spent more than 43 million nights in hotels, motels and guest houses in 2003, with a further 11 million stays in B&Bs and Farmhouse B&Bs. Popular business option Given these statistics, it is unsurprising that buying a hotel is one of the most popular routes to owning a business. For some people, it is made irresistible by the vision of a people-orientated existence in some tranquil corner of Britain. Martin King, head of the commercial department at Waycotts in Torquay, says: "It is very much a job that people either love or hate. "A lot of people come down and buy a small guest house. Those who enjoy it will prosper, but some just can't cope with the lifestyle. The vast majority, however, do quite nicely. The main thing is not to come down with too big a borrowing." "It is a very good lifestyle," he adds. "With a seven to eight bedroom guest house you could turn over about £45k a year, based on an average of £5k to £6.5k per bedroom." This sort of scale will suit a semi-retired couple, he says, who can expect to convert about 50% of the turnover into profit. Turnover gap Above the VAT registration limit of £61k, however, the nature of the business changes profoundly. There is a 'gap' in which the business is unviable, as the extra proceeds end up in the taxman's pockets due to the 17.5% which has to be added to all bills. Hotels only become sensible propositions again once you pass the £100k turnover mark, which roughly corresponds to 16 bedrooms. Once you reach that size, King says, you can choose to employ additional staff, such as chefs and receptionists. King does have a warning, though. "People think they’ll work 12-hour days. But they won’t. This business demands 17-hour days, seven days a week. You have got to be a people person; you need to be able to deal with the general public continuously." Seasonality With the exception of year-round hotspots such as London or Edinburgh, seasonality remains one of the biggest issues for a hotelier. In Devon, for example, trade is brisk in July and August while November and February are much quieter. Buyers should be aware of how tourism as an industry has changed since the halcyon days of the British seaside resort. Many of the towns formerly dependent on that trade, such as Blackpool or Scarborough, are suffering as foreign travel has become so much more affordable, although areas such as the West Country are still popular, particularly with young families. Other, sometimes unlikely, destinations such as Manchester or Glasgow have become tourist hotspots thanks to massively successful urban regeneration projects – not to mention the fact that budget flights have popularised the idea of city breaks. Some resorts, notably Brighton, have managed to reinvent themselves, with kiss-me-quick hats and candyfloss thrown out in favour of a vibrant nightlife and a thriving gay community. Wales no longer means rain and caravans. Now it is promoted as a country where you can rock-climb and white-water raft before checking out a rock band at Cardiff’s Millennium Stadium – or visit world-recognised jazz and book festivals in towns such as Brecon or Hay-on-Wye. The 'grey pound' No prospective hotel owner can ignore the power of the ‘grey pound’. Britain’s over 60s are richer, healthier and more populous than ever – and they are determined to enjoy their retirement. Activity-based breaks, such as golf, cycling and walking long-distance paths such as the South West coast or the Pennine Way, are increasingly popular among those in this age group. The latter offers great opportunities for the potential entrepreneur. Of course, the key to running a successful hotel is to understand your potential clientele. Some even target a particular section of society – there are thriving hotels in Manchester and Brighton devoted entirely to the gay community, and very different establishments in the Lake District catering entirely to the needs of walkers (by, for example, offering packed lunches).
It is also worth remembering that awareness of and interest in food has increased dramatically in Britain over the past decade and a good meal is now seen as the highlight of a weekend rather than a drab necessity. Towns such as Ludlow now advertise themselves as 'gastronomic' destinations – towns that people visit purely to eat in restaurants or shop for food. Some hotels, and not just extravagant destinations such as Raymond Blanc’s Manoir aux Quat’ Saisons, sell their accommodation through the provision of high-quality food. Adding a restaurant, or improving the existing offering, is one way to revive a flagging business, and attract non-residents as well as your guests. With second-home ownership at an all-time high, this is one way to capitalise on holidaymakers who have their own accommodation, as well as locals. A people business Nothing can really compensate for the level of service and welcome you give your customers – which will often depend on whether you are a 'people person' and not Basil Fawlty. This is the surefire way to good reviews, repeat business and good reports to friends and family – the bedrock of any hotel success. In all seriousness, who could turn down the idea of a successful business dealing with satisfied people in idyllic surroundings?
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