Buying a hotel in South Africa can seem an attractive business opportunity, the realisation of a lifetime’s ambition – or sometimes both. But, as with any commercial property purchase, there are still some important business realities to consider if you want your purchase to become, or remain, a viable business acquisition.
So, with that in mind, here are some important need-to-knows to guide your search:
Decide your location
Generally speaking, most of your potential customers are likely to consider booking at your hotel because of its location. So being in the right place is the primary business requirement.
South Africa offers a host of leisure, hospitality and tourist options but they are all very different. If you want to tap into the business-travel market you will need to be close to big cities such as Johannesburg and Cape Town.
On the other hand, if you are after tourist clientèle you may want to consider a beachfront location, perhaps somewhere on the Western Cape, or look at cultural destinations such as the wine-growing regions.
Perhaps the most popular hotel location of all, you may wish to consider a hotel which services South Africa’s globally famous safari destinations such as the Kruger Park or the Madikwe Game Reserve, among many others.
Research your clientèle
Leading on from the above, you will need to have a clear picture of what your guests will want. Business customers, for example, are likely to need always-on connectivity, comfortable accommodation and may well appreciate locations which have access to nightlife.
By contrast, your tourists and holidaymakers will be looking for a special experience which will create happy memories. So, as a hotelier you will want to ensure that your food, sleeping accommodation and any other facilities more than match the regional attractions.
Research the market potential
If you find a promising hotel for sale, you will obviously check the booking pattern. This will reveal what type of guests are likely to make repeat bookings, and with what frequency. You should also expect that the establishment has data relating to seasonal booking trends and upcoming bookings in the near future.
Beyond this, you will want to establish how much spare capacity the hotel has at present and consider how you could optimise future bookings to increase your income. This will involve researching a range of local and regional features such as analysing your rivals offer (and any expansion plans they may have), possible link-ups with partner businesses, the importance of local trade if you allow access to bars, restaurants etc., and many other features which could impact on your business in some way.
Audit the facilities
If you are considering making an offer for a business, don’t forget to check the present state of the hotel accommodation and whether any upgrades, alterations and additions may be required.
While it could be argued these features will be reflected in the selling price, any planned refurbishment, for instance, will impact upon your ability to deliver services for a certain time period. That could mean a rather shabby hotel in a good location, though still a good buy at the right price, may also come with a much-delayed business launch.
Is this really for you?
Don’t make the mistake of underestimating how becoming a hotel owner may affect you and your family. You may be overcome by excitement about the prospect of a new lifestyle, but will you be happy with the changes?
Good staff can make a real difference to the job and be a vital source of knowledge and continuity when the chips are down. But as an owner you’re never ‘off duty’. If something affects the property or involves the comfort of your guests, that means (day or night) it will be your concern. So, you will often find yourself covering a whole range of tasks, perhaps for the first time ever.
Take care even if you have some experience of the hotel trade, because every business is different. It’s the endlessly nuanced variations which can still catch you out. As an owner-operator you will be steering the ship while simultaneously marketing to new customers, looking after quality control and keeping an eye on rival businesses in your region.
Though this is not a task for the faint-hearted, South Africa remains a desirable destination with lots of untapped potential available and there’s nothing to beat the sight and sound of happy guests. So why not check out the business for sale advice on how to find hotel opportunities for sale.
By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.