How to Start a Motel

There are over 132,000 hotel and motel businesses in the United States. While hotels focus on providing guests with amenities, motels provide inexpensive lodging and a place to sleep for travelers. Are you interested in providing hospitality to customers through learning how to start a motel? Keep reading to discover the steps to creating a motel business and the best motel and hotel insurance to boost income. 

How to Start a Motel Business

Do you want to know how to start a motel business? You must acquire the right skills and follow steps like registering your business and renovating your motel.

Get Funds

Here are some funding options for your motel business:

Start Small and Get The Hang Of the Business

You should learn how to start a small motel business to get the hang of things before starting. Consider getting a job in the industry to get used to how the business runs and acclimate yourself to the lifestyle change. Running a motel is different from your standard 8-hour work day. You must be on top of things 24/7 to ensure you can manage your motel smoothly. Sometimes, you must work without a break for a week just to keep up with daily operations. Starting a motel business is hard work, and you must be prepared beforehand.

Come Up With a Catchy Name

Another crucial step in how to start your motel business is to come up with a name for your business. Your business name should be carefully considered. Changing the name is difficult once you have chosen it and made your business official. Pick a name that communicates your brand and speaks to your target customer. If you want to emphasize your location, you could call your motel “Lazy Sands” if it is near a beach. A name like “Best Stays Inn” would communicate your commitment to the quality of the rooms you provide. A business name is required for some business structures.

Become an Expert In Your Area

Since you are starting a motel, you will need to become intimately familiar with the area you operate in so you can provide recommendations for customers. Your guests will want to know where the best places to eat are, what major attractions are available, and more. People will also appreciate any local flavor you can add to your motel. You could include pamphlets for local music shows or stock motel rooms with art from local artists.

Renovate Your Motel

If you are starting out as a motel owner, you will likely need to do some renovations to get your building up to industry standards. To attract guests, you should  renovate so your rooms include standard features like:

  • Windows that let sunlight in

  • Common appliances like microwaves, toasters, and refrigerators

  • A place to cook meals

  • Security doors

  • Phone line

  • A private bathroom

  • A place to wash dishes

Register Your Business

Eventually, you will need to register your business as a legal entity before you can start offering rooms to guests. You have several options for a business structure, which include:

  • Sole proprietorship: With a sole proprietorship, your business is cheap to form, and you maintain control of all business profits. The downside of this business structure is that you are liable for debts if the business fails.

  • Corporation: A Corporation is costly to form and has extra regulations to follow. The advantage of a corporation is that you can raise capital by issuing stocks. Owners of a corporation are called shareholders and receive income through dividends. Dividend payouts are taxed in addition to the corporation’s business income.

  • Limited Liability Company (LLC): An LLC comes with higher costs than a sole proprietorship but allows you to have the business liability protection of a corporation. LLCs can be run by you alone or with a combination of other owners called members. It is common practice to use a registered agent for your LLC, who will help you set up your LLC and provide a business address.

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How to Run a Motel Business

Let’s look at a few tips when discovering how to run a motel business. There are always ways that you can improve your business and make it a fixture in your local community.

Open a Business Bank Account

You can take your motel business to the next level with a business bank account. You can access business loans through this account and set up a separate way to receive customer payments. Consider opening a merchant services account, which allows you to process credit card transactions from guests. Your business must be registered to get a business account, and you typically need an employer identification number (EIN). You can apply for an EIN for free from the IRS.

Take Feedback From Your Guests

As a motel owner, you must be flexible to your customers’ needs. To this end, you should set up a Google Business Profile where customers can leave comments and reviews. Taking feedback is critical to adapting to issues your customers have and ensuring you remain an attractive option in your area. Guests will often give feedback on the aesthetics of your motel and request certain features. Another advantage of taking feedback from customers is that it establishes a direct line of communication with them. This gives your business a more personal touch. You could set up a digital line of communication through email or another service that allows them to communicate with you or your staff directly. 

Partner With Local Businesses

Since you aim to be an essential part of your local community, you should contact other businesses to help with cross-promotion. You will likely be seeing guests new to the area, so your recommendations of businesses go a long way. If you want to provide a way for guests to get food, you could contact a local food truck or another mobile food service to set up a shop near your motel during lunchtime. You could use the space in your business to host free meetings, classes, or workshops that interest people in your community. Your business could host a local game night to help promote relationships with local businesses and promote your business.

Find Other Revenue Streams

In addition to charging customers a fee for their rooms, you could offer other services to earn additional income. You could run a small convenience store out of your motel with essential toiletries and snack items to save guests a trip to the store. Another excellent option is to open a bar in your motel so guests can assemble when they don’t want to hang out in their room. Making your motel a popular local social place will help drive business. As you diversify your revenue streams, they can synergize together to create more growth opportunities for your income.

Having a social media account for your motel is an excellent way to reach new customers and stay relevant to the conversation. Make posts on a platform like Facebook, Instagram, or Twitter where you promote your motel’s look, feel, and atmosphere. This will make it more attractive to potential customers and open a direct line of communication with your target audience. Seven out of ten Americans regularly use social media to stay connected. Recently, more businesses are choosing to focus on using social media. Forbes reported that 77% of businesses use social media to reach their target customers. Over 92% of marketers in the US are required to use social media for marketing in large companies. In today’s modern world, social media is increasingly becoming a requirement for becoming a successful business. 

Keep up with Your Own Health

Running a motel can be exhausting work. To combat the potential long hours of keeping your motel running smoothly, you will want to work on maintaining your health to stay in top shape. You will want to establish a routine and avoid deviating when possible. The breaks in your work will often come when you least expect them, so you should focus on preparing nutritious meals and avoid the temptation to eat out. Also, a work-life balance is vital in the motel and hospitality industry. According to studies, chronic disease risk factors tend to be higher among hospitality workers because of factors like working late-night shifts, being on your feet constantly, and non-standard working hours.

Invest on Technology

Use payroll automation to process the salaries of your assistants without errors. One software we recommend for payroll automation is OnPay. OnPay helps you process payroll and tax filings easily. You only pay $40 per month for this handy tool. By clicking here, you can try it out for free for one month!

Use a CRM to streamline the operations of your business. Bloom allows you to track projects, sign legal papers, and do other important matters for business growth. This doesn’t cost much. The best part is that Bloom offers a 1-month free trial and by clicking here and signing up, you’re also able to start a free trial and then have 15% off your first 12 months!

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How Much Does It Cost To Start a Motel Business

Next, we will look at the costs of starting your motel business. The following costs are estimates and will vary depending on the area you live in. Generally, you can expect to spend between $40,000 or more when starting your motel business.

Building and Property Expenses

If you don’t already have a building to transform into a motel, you will likely need to spend a few hundred thousand dollars to purchase a property capable of housing your guests. This cost will vary based on how many guests you intend to allow to stay and the market you are buying in.

Insurance Coverage

The average cost for motel, hotel & resort business insurance is $83 per month or $996 per year. Your number of employees, industry risk, area, and coverage limits all determine the amount you pay on your insurance premium.

Permits and Registration Fees

As part of your business, you must pay a fee to register your business legally and purchase any necessary local zoning permits. You often need a vendor’s license to charge tax on your motel services. These fees can range from a few hundred to a thousand dollars or more.

Employee wages

The average wage paid to your motel workers will vary based on their duties. Typical employees you will need to employ include:

  • Housekeeper: You need housekeepers to keep your motel in top shape and to clean rooms to ensure new guests have a pleasant stay. Your motel housekeepers will make around  $14.56 per hour.

  • Front Desk Receptionist: Your front desk receptionist will greet customers who come in to book a room in person. They can also assist guests who are currently staying at the motel. A front desk receptionist makes an average hourly wage of $10.87.

  • Personal Assistant: A personal assistant helps you keep track of your business spending and can manage ordering supplies you need. A personal assistant in the motel industry makes an average hourly wage of $17.32.

  • Guest Service Agent: A guest service agent is responsible for booking guests and ensuring necessary arrangements are made before arrival. These employees typically make around $14.42 per hour.

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Why You Need a Business Owner’s Policy (BOP) as a Motel Owner

A business owner’s policy combines different types of insurance coverage into one package. Insurance is necessary to protect business assets like your motel building and equipment from damaging events like fires, thefts, and vandalism. It can also protect you from nasty lawsuits from customers or other members of the public that you did not plan for. Purchase this coverage from NEXT

What Does a Business Owner’s Policy (BOP) Cover?

A business owner’s policy can be customized to include coverage, endorsements, and add-ons. Standard coverage contained in a business owner’s policy may include:

  • General liability insurance: A general liability insurance policy will cover third-party claims levied against your business. This includes both your direct customers and members of the public. You will receive coverage for property damage, bodily injury, and personal injury claims and get help paying related legal costs.

  • Professional liability insurance: This policy is sometimes called professional indemnity insurance or errors and omissions insurance. As these names suggest, it protects you from costs related to business mistakes. Typically, you will use this to defend against claims of negligence, copyright infringement, slander, and libel. The policy will also protect you against accusations of failing to complete a contract with a third party.

  • Business interruption insurance: Business interruption insurance is usually included in a business owner’s policy. It relieves your business from losing income due to a physical event like property damage or a fire. Not only will this policy compensate you for lost income, but it will also pay relocation costs and help you pay rent or other loans.

  • Commercial property insurance: This coverage protects your business premises and other property from physically damaging events. Typically, this policy covers theft, water damage, wind damage, lightning, fire, vandalism, and explosions. If you live in an area beset by extreme weather, you will likely need flood or hurricane insurance to get fully covered separately.

Advantages Of Choosing a Business Owner’s Policy

A business owner’s policy typically costs more than one that only offers a single type of coverage. However, it also provides many advantages for this increased price. For one, a business owner’s policy will save you money if you need multiple types of insurance. This means a business owner’s policy has extra value and is an excellent choice when considering your business’s long-term protection. A business owner’s policy also saves the extra hassle when multiple events must be covered. You now only need to deal with one insurance company’s adjusters instead of contacting several insurers simultaneously.

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