How to start a hotel business in 2026
Opening a hotel business in 2026 is a big deal. Before you commit financially, it’s a good idea to consider why you want to open a hotel. Are you tired of working for someone else and want a challenge? Are you scratching an itch? Even small hotels require hard work and commitment to be successful, so make sure you’re going into it with the motivation to make it work. Plus, there’s lots to think about before you even welcome your first booking.
This guide aims to provide essential steps for launching a successful hotel in the UK. From market research and planning to securing financing and opening your doors, this guide should help equip you with the knowledge and insights to enter the world of hospitality.
Before you open, don’t forget insurance cover. More info can be found on our hotel insurance page. From business insurance and energy savings to broadband and finance, Bionic helps you to compare, switch, and renew.
How much does it cost to open a hotel?
The cost of opening a hotel can vary a lot based on several factors, including location, size and the type of hotel, whether you want to open a small boutique hotel or larger accommodation.
On average, opening a mid-range hotel typically involves a lot of upfront investment, including acquiring a property, leasing, renovations, furnishings and initial operational costs. And if you’re going down the luxury hotel route, it's probably going to need a lot more investment for better materials, amenities, design as well as extra service offerings – such as room service and pillow chocolates. So, if you’re starting a hotel for the first time, it’s a good idea not to overstretch yourself and start with the basics covered well - before you expand your offering.
Costs can also be influenced by local regulations, staff costs and how tough the competition is in your area. It’s key for aspiring hotel owners to conduct thorough market research and financial planning for the best chance of success.
Here are some of the key expenses associated with starting a hotel business:
Premises and renovations
Your property is the core of your hotel business, and the biggest proportion of hotel start-up costs typically goes toward securing and preparing the building. Whether you purchase, lease or convert an existing property, renovation expenses can include structural work, redesign, and interior decor. The more extensive work carried out, the higher the upfront investment is likely to be.
Equipment
Hotels rely on a wide range of equipment, from beds and furnishings to commercial-grade kitchen appliances and security systems. These costs can add up quickly, especially if you aim to provide premium features or specialist facilities, like a spa, for example. Bulk purchasing and negotiating with suppliers could help reduce your overall costs.
Business rates
Business rates apply to commercial properties and should be built into your finances. They can vary a lot by location and property size, so check local authority guidance early.
Insurance costs
There are several types of business insurance that hotel businesses should consider. If you employ any staff, you are legally required to have employers’ liability insurance. This is to help protect against employee illness or injury as a result of their work. Some additional insurance types are essential for extra protection, like public liability and product liability insurance.
Understanding how much hotel insurance costs can help protect your business from risks like liability claims and guest injuries. If you are unsure what type of insurance your business needs, the team at Bionic can help. The level of protection you need will depend on your unique needs and will vary by insurer. Policy terms, conditions and exclusions will apply.
Energy costs
Hotels require a substantial amount of energy to power heating, cooling, lighting and guest facilities. Ensuring you have efficient energy usage is key to preventing waste. At Bionic, we compare quotes from a panel of selected, regulated insurers to help you compare energy suppliers and find options that may be suitable for your business.
Professional services
You might need the support of an accountant, solicitor, architect or consultant for planning, registering and launching a hotel business. These services ensure compliance with legal and financial obligations and could help prevent costly mistakes.
Marketing and branding
To help make sure your hotel attracts visitors and generates an income, you should invest properly in marketing and branding. Costs may include website development, professional photography, social media marketing and ongoing advertising. You can hire a professional to help you or do some of the work yourself.
Benefits of opening a hotel
Starting a hotel can be highly rewarding, both financially and personally. Once you get going, you might reap some of these benefits:
Revenue potential
Hotels can generate strong returns when run well, especially in areas with consistent tourism or business travel. With good marketing and a solid pricing strategy, as an owner, you could scale profits quickly as demand grows.
Business and lifestyle
Running a hotel can offer a fulfilling lifestyle, allowing owners to meet new people, provide memorable guest experiences and take pride in service. For many owners, the hotel becomes more than a business, it’s a personal passion.
Diverse revenue streams
Hotels can earn income from far more than room bookings, including dining, spa days, events, and partnerships. This variety can help protect hotel businesses from seasonal fluctuations.
Challenges and risks in hotel ownership
Like any business, starting a hotel comes with challenges that require good planning and management, and the willingness to get back up when things don’t plan out as expected.
Competitive market
The hospitality industry can be crowded, with traditional hotels, boutique stays and short-term rental platforms all looking for guests. Standing out requires clear positioning – what do you offer that competitors don’t? You also need a consistent record for great service and memorable marketing.
Recruitment
Finding and keeping skilled staff can be difficult, particularly in seasonal locations or tight labour markets. Creating a strong work culture and offering training can make a big difference when it comes to keeping staff.
Seasonal fluctuations
Demand in many destinations rises and falls throughout the year, creating financial ups and downs. Hotel owners should build budgets that withstand quiet months and take advantage of busier, peak periods.
Steps to starting a hotel business
The journey from business idea to opening night involves a good amount of planning and initial investment, so you can start on your feet.
Research the market and competitors
Start by analysing demand in your chosen area, looking at who currently visits, why they travel and where they stay. Reviewing competitor pricing, facilities and reviews will help you identify gaps in the market and shape a concept guests will genuinely want.
Choose a location and premises
Location is one of the biggest drivers of hotel success, so choosing a location that aligns with your target audience and travel patterns is essential. Whether you build from scratch or renovate an existing property, look at access to transport, footfall, local attractions and future growth plans.
Create a unique brand identity
Your brand should communicate what makes your hotel special, whether that's luxury, affordability, sustainability or a boutique experience. A strong identity can influence everything from interior design to website tone and helps your hotel stand out online, allowing potential guests to find you.
Hire staff
Every hotel relies on skilled, customer-focused staff to deliver great guest experiences. Hiring a team with the right balance of hospitality know-how, personality and flexibility can drive positive reviews and help create customer loyalty.
Licenses and permits
Before opening, make sure you have the correct licenses to operate legally in your region. This may include planning permission, fire risk assessments, food hygiene training, alcohol licenses, tv licenses and business insurance.
Key factors for a successful hotel business
Once the doors open, long-term success can depend on staying competitive, prioritising guest experience and continually refining your offer to keep up appeal as trends and customer wants change. Here's how you can keep occupancy steady and profits strong:
Identifying your unique selling point (USP)
A clear USP (unique selling point), helps potential guests instantly understand why they should book your hotel over others. This could be anything from unique, design-led rooms, wellness facilities, to unbeatable location or experience-led stays.
Marketing and branding
Effective marketing helps your ideal customers find you. A professional website, competitive listings on booking platforms and strong storytelling on social media play key roles in helping you to get those consistent bookings.
Reputation management
Online reviews are one of the most powerful decision-making tools for travellers, so managing your reputation is essential. Responding quickly to feedback or reviews, fixing recurring issues and encouraging happy guests to share their experiences can all play a role in helping to boost occupancy.
Is a hotel business profitable in 2026?
The profitability of your business will depend on various factors, including market demand, economic conditions, competition, operational efficiency and adaptability to changing customer preferences. But don’t let that put you off. If you put the work in, you could reap the rewards later on.
The global travel and tourism industry is in recovery post-pandemic, which is good news for hotels. However, challenges such as rising operational costs, finding the right staff, and the need for pricey technology may impact how much profit you could make, especially in the first year.
How do hotel businesses make money?
To put it simply, hotels generate revenue through various income streams, mostly centred around room bookings, which make up a lot of income. Hotels also make money on food and beverage services offered through on-site restaurants, bars, and even room service.
But there are other ways to make more money – like offering venues for corporate meetings, weddings and other events. Other services such as spa treatments, fitness facilities and kids' activities can also make up income. Loyalty programs and membership fees could also be an option to help provide additional income, while parking facilities, internet access, and premium television services can also be charged as an extra.
Get your hotel business on its feet with help from Bionic
Running a hotel can be as demanding as it is rewarding, and that’s why it’s important to protect it. The right insurance could help, whether you manage a boutique hotel, a countryside retreat or a city centre venue. Hotel insurance could help protect your business against risks like property damage, liability claims and even business interruption. Policies vary per insurer, and limits and exclusions apply. Always check your own policy schedule to see what cover is and isn’t included.
At Bionic, we know hospitality businesses are the backbone of the UK economy, and we wholeheartedly support them. We can help you compare insurance quotes from regulated providers to present suitable options that fit your hotel business.
We can also help sort other business essentials such as energy, broadband and more.
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