How To Establish A Hotel Or Guest House Business In Nigeria – Detailed Guide

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A hotel is an establishment that provides paid lodging, meals and other services to people, usually travellers or tourists mainly  on a short-term basis. A moderate-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat screen television, and en-suite bathrooms are part of the facilities usually offered in a hotel.

Small, lower-priced hotels ( sometimes called guest houses )  may offer only the most basic guest services and facilities. However, larger and higher-priced hotels will provide additional guest facilities such as a bar, restaurant, swimming pool, office center, tennis or basketball courts, gymnasium, spa, conference and event facilities, and social function services.

Each guest deserves and usually expects hospitable treatment thus, providing hospitality to meet guests’ needs involves not only a positive attitude but an array of services that make the guests to enjoy their stay. When guests ‘expectations are met and even surpassed, it makes the business grow as referrals would be generated by the positive reviews from the guests. For this reasons, hospitality and customer service are very important considerations in hotel business operation.

How to start a hotel business

a. Carry-out a feasibility study

You need to carry out good research on the location and size intended for the business. This is very important as it will help in decision-making and form part of the business documentation. The criteria to look out for in selecting a location are accessibility and space to accommodate the business. Market research can be done, going by the area, competition, giving out surveys and making inquiries for analysis.
The ownership structure should be defined as hotel business is capital-intensive. It is important to determine the ownership structure under which the business is to be set up. The business can be run under sole proprietorship, partnership or by franchise. Franchising involves using the brand of a popular (established) hotel/bar business to run and grow the business.
Choice would be made of the brand to promote as the name of the hotel. The hotel name should be unique and appealing. A good brand name and services should be made to attract guests.
The feasibility research should put into account all funds needed for the setup, facilities, services and running the business. The current capital and the financial outlay in the short and long terms should be addressed in setting up the business. This study helps to decide if it is a beneficial business and how productive the business would be in short and long terms. It also will help to draft a strategic and fitting business plan to guide the investment decisions to be made in the business.

b. Secure the needed funding

From the feasibility study carried out, you should have an idea of the cost required to set up the hotel business. Now how to  get the needed funds should be decided taking into consideration the best option. You may approach banks or other financial institution for loans with necessary documents to start and manage the hotel or guest house. However, before approaching the banks, you should have put some structures in place and explores other sources of funds. See 12 effective ways you can raise start-up funds for business.

C. Register the business

You need to register the business with the corporate affairs commission of Nigeria as it is a requirement for obtaining the certificate of incorporation which will be needed to obtain the license of operating a Hotel along with the tax clearance.
Licenses, approval and permit to run the business must be obtained from the authorizing bodies like The Nigeria Hotel Association (NHA), Nigerian Tourism Development Corporation (NTDC), and the State Hotel Licensing Authority.

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d. Acquire land and other procurements

Getting the right land at the right location is very vital in hotel business. The location should be located in a serene environment and    with accessible roads. A thorough research on the area to locate thebusiness will be helpful in buying rightly as the costs of property fluctuate from place to place.
The building structure is dependent on the hotel size and what the owner would want to be in the business like bar, restaurant, swimming pool, office center, tennis or basketball courts, etc.
Procurement of facilities in the room, bar, kitchen, furniture, electronics, internet services, swimming pool, gym center, e.t.c. should be made. A standby generator is needed to complement the main source of power for a steady power supply to the hotel.

A hotel room

e. Recruit competent staff
There are different categories of workforce  needed to run the hotel or guest house business successfully. The size of the hotel and the amount of patronage it usually gets would determine the  staff strength. More staff can always be recruited as the business grows. Find below the basic categories of staff that you would need:

  • General Manager: This is usually the highest in rank in a hotel set up. He/She handles the managerial functions and is the superior with the responsibility of the whole operation of the hotel and bar and must have the experience and technical know-how to manage the business excellently. He/She reviews and monitors the performance of the employees and direct them to the goals and targets of the business.  All other employee reports to the General Manager while he/she report directly to the proprietor.
  • Operations Manager: His/her duty is to ensure the smooth running of all operations of the hotel and design efficient strategies for the profit and financial growth of the company. The operations manager works in tandem with the finance department, human resource department, accounts department, customers’ service and many other such departments within the company. A degree or certificate in hotel management and experience in hotel operations is required to be successful in this role.
  • Cashiers/Accountants: They handle the financial computations of the business. They sees into the movement of the cash submitted by the attendants, keeps the records of the cash transactions and process cash for the use in the hotel/bar by approved authority. The Chief Accountant will report to the General Manager and submit periodic financial statement and reports.
  • Supervisor: The supervisor is the line manager to the rest of the workforce in order to ensure the smooth operation of the business. He ensures that everyone and everything including the facilities are in order.  He sees to it that everyone is up to his task and report back to the operation managers. He performs other basic supervisory duties.
  • Customer services attendants: They interact directly with customers, providing them with various services. They act as liaisons, providing guests with particular services as requested and anticipate what customers  might need. They interact directly with customers helping with the booking, luggage, parking, taking orders, serving food and beverages, and take payments from patrons. They must have strong interpersonal and communication skills. They should be detail-oriented, because they need to remember customers’ orders, especially complicated drink orders. They include the Front desk officers, Waiters, Waitresses, Porter, Driver, Parking Lot Attendant, e.t.c.
  • Maintenance staff: They are responsible for maintaining energy and machine efficiencies and reducing operating costs.  They are also help to maintain a standard of cleanliness everywhere in the hotel and every equipment. They typically clean individual hotel rooms as well as the common areas. They are Housekeepers, housekeeping supervisor, maintenance supervisor, and maintenance workers. Overall, they protect the integrity of the hotel through maintenance of all facilities.
  • Security: The main concern of a security guards is the prevention of crime, risk and danger against people and property. Hiring  professional security guards from a reputable security agency will reinforce the hotel’s security and safety.

f. Kick start your operations

When everything above has been put in place, it is now time to begin your operations.
Carry out adequate publicity of your business. You can use various means to let people within and outside the city where the hotel is located to know about the business.
Radio, television and online means like social media platforms are good ways you can spread the word about the business.

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Hotel safety and security measures

Below are some basic safety measures that should be put in place and observed in the running of the hotel business to ensure success.

1. Security must be a top priority for everyone in the hotel and bar to create a safe and secure place for the guests. The security men should have regular meetings where safety measures are discussed and videos and handouts about how to spot suspicious activities and other safety issues are shared. An external security consultants can be contracted for periodic review and update of current security policies.

2. Regular security awareness with the staff should be done to reinforce hotel safety and security. This helps to layout all security procedures to follow against risk, crime and danger. This also keeps them up to date about how to respond and minimize risk and potential danger in the hotel.

3. An important everyday security measure is to control every access points (entrances and exits) as having multiple access points without proper control can put the hotel at great risk. Security guards should inspect every access points physically or through remote monitoring for any suspicious movement always.

4.The hotel must have an updated emergency response plan with clear procedure to safety and security as threats such as fire, crime or violence can happen unannounced. As failing to have and implement a clear emergency plan/procedure can put both guests and staffs in the hotel at risk.
Guests should be informed of every security upgrade in the hotel and there should be regular updates of access keys and locks to keep tracks of entry and exit of every access points in the hotel.

Tips to achieve success in hotel business

1. The location of the hotel must be accessible and also be a serene and conducive environment for the guests.

2. The hotel should have a business process manual where all job roles would properly be defined and the dependencies clearly stated for the employees to perform optimally.
It is however important to have an open and sincere communication with the employees as this will encourage them to think of ideas and criticism that will improve performances and benefit the company.

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3. The manager must have a goal and direction with which targets will be given to the employees. Targets are used to measure the business success. Target can be set for monthly or periodically, depending on how it is agreed upon in the performance contract.

4. Employees must have good communication and team work skills as building a very good team is important in the hospitality industry. Employees should be made to see each other as partners in progress and be willing to work with one another in order to achieve a better working environment and it is the duty of the managers to make sure this takes effect.

5. Proper maintenance of property and facilities (bar, restaurant, bed and mattress, electronics, bulbs and lights, Air condition, power generating set, washing machine, swimming pool, internet etc.) should be done regularly and must be given utmost priority by the management.

6. Professional customers’ relationship should be built with customers through good service and excellence reception. The workforce should be trained to engage customers of different attitude to deliver quality services. Incentives and benefits should also be given to the workforce when necessary.
Provision should be made for a complaint box or recommendation box for customers or an email to write directly to the managers. This will help to know the areas that need improvements and what customers think about the hotel/bar.

7. The hotel management must ensure credible accounting of income and expenses of every business entity to measure the business success. Stock and inventory in the bar, restaurant and other business units should be monitored too. Audit should be done at regular.

Conclusion

Hotel and bar business is a high yielding business as the return on capital is so high that profit are in millions of naira monthly, if properly managed. However, attention must be given to the overhead cost of running the business, the salaries of employees, cost of purchasing and maintenance, transporting and storage (insurance) of the bar products while planning and setting up the hotel and bar to ensure profit maximization. A good management should help with implementing and managing the business process of the hotel in order to achieve profitability and overall success.

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About The Writer : This was written by Ijalana Funsho,  content contributor at MyAfribusiness.com. He is a graduate of Agricultural Economics, an HR practitioner and a project manager.

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