Running a small boutique hotel – What are the costs?

Running a luxury boutique hotel can be a dream, but it can be an expensive venture. Go in with eyes wide open and use these tricks to keep spending down.

I’ve always harboured a secret dream to run a small but luxurious boutique hotel. I blame reality shows like Alex Polizzi, Hotel Inspector. We watch the struggling proprietors with dismay and shout at the screen ‘I could do much better than that.’ Nodding enthusiastically along with the advice proffered by Ms. Polizzi.

By the time the credits roll we have convinced ourselves we could transform a rundown house by the seaside into an award-winning B&B. Offering themed rooms, little truffles on the pillow and a decadent terrace where discerning clients can sip their latte whilst browsing through Tatler.

Unfortunately, to realise your dream you many need deep pockets or a limitless credit card. There are numerous costs involved with opening and operating a small hotel.

Initial outlay

If you purchase a place you will no doubt need to spend some money to turn it into the hotel of your dreams. There will be a cost associated with any building work (inside and out) and you will need to decide on a budget for décor, fixtures and fittings. There will be lots to buy so it’s wise to seek out deals and lower prices by buying in bulk and investigating trade prices.

Wholesale towels will cost much less than buying a couple of smart towel bales from a high street store. You will also need to buy other essential items, from bedding and toilet rolls to plates and teabags (who said running a luxury hotel was a luxury?)

Fixed costs

Fixed costs remain the same regardless of sales, for example the mortgage and insurance aren’t affected by the number of clients staying the night. When it comes to technology there are some operating systems you can use to help your hotel to run efficiently (booking engines and front desk management systems can be subscribed to and paid for, so you know the exact cost involved).

Variable costs

These can change dependent on variations in demand. For instance, if you have a full hotel you will spend more on breakfast items and may need to bring in an extra member of staff to turn rooms around efficiently.

Reducing Costs

Labour is such an expensive resource that it can be tempting to try and run a small business all on your own (or enlist your nearest and dearest as free labour). If you do decide to hire employees work out when you are busy (you may get a lot more weekend trade so Sundays may be busy when guests check out).

Hiring a cleaner to come in on a Sunday and help service the rooms can ease the load and help you to get organised. But hiring a cleaner for the whole week may be a false economy if Monday and Tuesday are inherently quiet days. Roster your staff to accommodate the times when demand is high.

Following green principles can also save money (as well as help the environment). Switch off lights when not being used or switch to more economically sound LED lights (you could even invest in sensor lighting, that switches on and off dependent on usage of the area).

Conserve water and energy by filling the dishwasher after breakfast and do a big load in one go. Embrace the digital revolution, use an online diary for reservations and send confirmations by email rather than through the post. Maintaining equipment may seem like an add-on cost, but there will be higher costs still if you allow things to break down.

There are lots of items to purchase on setting up your hotel and items that will need to be replaced due to constant wear. Look for the most cost-effective way of purchasing items, this might include checking out auctions for fixtures and fittings and up-cycling existing items. Consider purchasing wholesale towels and bedding and look for deals on items that you will be using frequently (think cleaning products and the likes).

Laundry can be costly to keep on top of too, sending it out can be a simple, but expensive method. If you are sorting the laundry out yourself ensure you can turn it around in time and look for deals on detergent and other washing day staples!

Running a luxury boutique hotel can be a dream for many, but keeping guests happy, sticking to a budget and the endless day to day chores can take its toll. If it’s something you really want to do go into it with your eyes wide open.

Further reading on running a boutique hotel

Related Topics

Hospitality industry

Leave a comment

Your email address will not be published. Required fields are marked *