Introduction to Scouting for Hotel Ownership

The First Phase in the Life Cycle of Hotel Ownership

So you’ve decided to become a hotel owner? Global hotel industry revenue is predicted to reach $550 Billion US dollars in 2016, with revenue for the United States hotel industry reaching upwards of $176 Billion.

As the hospitality industry continues to heat up, hotel ownership is quickly becoming an exciting prospect. Industry breakthroughs and sophisticated technologies make successful hotel ownership and hospitality management easier than ever. However, the hotel business is also highly competitive and full of potential pitfalls, which can make achieving good financial results difficult.

Hotel Revenue

Position yourself for profitable ownership using the Hotel Owner’s Toolkit.

We provide you with beneficial insights and details of the 5 Phases of Hotel Ownership, encompassing the entire life cycle of hotel ownership. The first step towards realizing your dream of owning a hotel is to do some comprehensive Scouting.

The Scouting Motto: Be Prepared!

Building a solid foundation for successful hotel ownership begins with scouting. As every good Scout knows, the most important ingredient for scouting is that powerful old adage: be prepared! Aspiring hotel owners need to prepare for any potential twists, turns, trials, and triumphs on their journey to acquiring hotel real estate. We have a number of useful tips to further and inform your hotel scouting efforts.

Formulating an Ownership Strategy

Millions of people per year either leave or are forced out of the leisure and hospitality industry. According to the Bureau of Labor Statistics, the leisure and hospitality sector had 759,000 establishments that lost over 4.5 million employees between 2014-2015. Although only a small portion of these millions lost are business owners, suffice to say that failure is a very real outcome for some hotel owners.

Being prepared with an ownership strategy can be the difference between success and failure for your business. One of the biggest mistakes people make when looking for hotel real estate is not having a firm grasp on how ownership will affect their lives. Owning a hotel is a major lifestyle choice. Hotel keeping is an arduous profession that not only requires economic, technical, managerial, and marketing expertise, but it demands total commitment.  If you plan on being hands off, letting the business take care of itself, or otherwise adopt a laissez-faire approach to hotel ownership, then this may not be the best business for you.

When developing an ownership strategy, you’ll be making various underwriting assumptions about the business. For example, you might, and probably should, assume that your hotel will face competition from other local establishments, and you’ll try to come up with strategies to deal with the assumed competition. Every assumption you make when establishing an ownership strategy will propel your momentum forward, but making bad assumptions drives you away from profitability. Certainly, all owners want to form good assumptions in order to generate effective strategies. Coming up with a good, concrete strategy for hotel ownership essentially boils down to making sure that you do your homework and due diligence.

Doing Your Homework & Due Diligence

To help you mitigate the risks of ownership, outline and address any underlying assumptions of ownership through a comprehensive due diligence review. A good due diligence review includes, but is not limited to, researching and analyzing current demand drivers and anticipated trends of the market, gathering property plans documentation (such as hotel deeds and titles, construction records, inspections, engineering plans, environmental status, etc.), investigating potential competitors and considering how they might impact your business in the future, detailing and reviewing past and present operational procedures, compiling financial records (including taxes, revenue, and costs), evaluating all in-place service contracts (i.e. what products and business partners a hotel currently has), and devising preliminary budget, management, and operational schemes for the hotel.

Choosing the Right Location

Consider a hotel’s location from the customer’s point of view, and let the customer educate your decisions. Most hotel guests want access to nearby businesses, recreational activities, and leisure opportunities. The average hotel guest is more interested in the area around your hotel than they are by the hotel itself; unless it’s a wilderness retreat or some sort of an isolated vacation destination. Whether it’s taking advantage of a bustling city’s commerce, exploiting the natural beauty of an exotic paradise, or serving weary travelers on a long road, there’s a location somewhere out there that’s just right for your hotel and its customers.


Are you having trouble finding information on different locations? Many people use Google Maps to find geographic information, but there are a number of other great online resources that you might not know about:

The Passport Group Can Work For You!

The outstanding hotel brokers at The Passport Group are ready and waiting to help you realize your dream of becoming a hotel owner. Our hospitality experts have decades of hospitality know-how and industry expertise to satisfy any client’s needs; we’ll help you be prepared for every phase of hotel ownership, not just scouting. Please contact us anytime!

Next Article in the Hotel Owner's Tool Kit: Do Your Homework & Due Diligence

By |2017-06-05T16:17:49-07:00April 8th, 2016|Hotel Owner's Tool Kit, Hotel Scouting|Comments Off on Introduction to Scouting for Hotel Ownership

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