Not too long ago, David Kyrgitt Kalya foundes the Flipsyde Hustle forum where Kenyans share business ideas and plans. The aim of this platform is usually to explore how individuals can see beyond their ego in order to tap into money-making opportunities at the lowest costs.
Recently, a Kenyan woman wrote in to Kalya requesting for a plan on how to start hotel business at a residential area with upcoming flats. Here is her question on how to start hotel business:
“My name is Esther. Nataka kufungua business. I have a 1yr baby. Am living in a residential where there are upcoming flats and some are complete, I have a 1yr daughter…. I am thinking of opening a hotel can you please share pros and cons first before I proceed. The rent is 5k and thinking of hiring someone… will be paying her 9k.in this area hata ukitaka maharangwe or githeri huwezi pata unless you cook for yourself…kuna mtu moja huuza mandazi kwa kibanda… but coz I have a baby mimi siwezani na kibanda… juu ya baridi so I need a house.”
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Here’s Kalya’s take and proposal on how to start hotel business:
Pros of opening your small hotel in a residential area with upcoming flats:
1. The location is strategic, as there is an expected increase in population due to upcoming flats.
2. The business can serve the local community and provide job opportunities.
3. The low rent allows for reduced overhead costs, which can translate into more affordable prices for customers.
4. The business can potentially tap into the growing demand for affordable and quality food.
Cons of opening a small hotel in a residential area with upcoming flats:
1. Competition from existing establishments.
2. The area may not have sufficient foot traffic or potential customers.
3. difficulty in finding qualified and reliable staff.
4. The proprietor’s personal situation of having a child can affect your ability to manage the business effectively.
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Systems to manage the business effectively:
1. Implementing accurate financial management with clear records of revenue and expenses.
2. Utilizing a digital booking system and an online presence to increase visibility.
3. Establishing clear job descriptions and roles for employees to ensure accountability and efficiency.
4. Offering discounts and promotions to attract customers.
Challenges of the business:
1. Difficulty in attracting customers due to the competition present.
2. Staffing issues, such as finding and retaining qualified and reliable employees.
3. Maintaining quality standards while keeping prices affordable to meet customer demands.
4. Balancing personal obligations with the demands of the business.
Benefits of the business:
1. The potential to tap into a growing market.
2. The ability to serve the local community and provide job opportunities.
3. Low rent and overhead costs may lead to increased profit margins.
4. Possibility for business expansion due to potential increase in demand.
Here is a business plan should you require to start:
Business Plan:
Executive Summary:
The objective of this business plan is to provide a detailed overview of a low-cost hotel that will open in low cost residential area, catering to workers in residential construction projects and small families.
The emphasis is on affordability, simplicity, and quality. The target market is workers and families looking for affordable and quality meals.
Business Description:
The low-cost hotel will be located in a strategic location that is easily accessible to workers and families. The rent cost per month will be 5,000 shillings. The hotel will hire one cook who will have a monthly salary of 9,000 shillings.
Startup Capital:
The startup capital required for the business is approximately 40,000 shillings. A large part of this capital will be dedicated to the purchase of kitchen equipment. The cost of purchasing kitchen equipment will be:
- Plates: 2,500 shillings
- Glasses: 1,000 shillings
- Cups & Spoons: 2,500 shillings
- Large Pots & Small Pots: 10,000 shillings
- Gas Cooker & Microwave: 15,000 shillings
- Misc. Kitchen equipment: 4,500 shillings
The remaining capital will be used to cover other startup expenses, overhead costs, and utilities.
Products and Services:Â
The hotel will provide simple, affordable, and quality meals such as chapati and beans or rice and ndengu. Our menu will be simple, consisting of a few items that are readily available and cost-effective.
Our prices will be kept low by reducing overhead costs, maintaining efficient operations, and buying ingredients in bulk.
Marketing and Sales:
Our marketing strategy will target workers in residential construction projects and small families looking for affordable and quality meals.
It will involve distributing flyers, social media marketing and working with local construction companies to promote our services. We will also offer discounts for bulk orders.
Revenue Projections:
The hotel will sell food at an average of 100 shillings per serving. With a projection of 30 servings a day, the business will make 3,000 shillings in daily revenue. This translates to a monthly revenue of approximately 90,000 shillings.
Break-even Analysis:
The breakeven point will be reached once the business sells at least 400 plates of food in the first month of operation. This is achievable considering the projected sales of 30 servings a day.
Conclusion:
Opening a low-cost hotel in Kenya catering to workers in residential construction projects and small families is a feasible and profitable business venture.
With a startup capital of 40,000 shillings, the business can break-even in the first month of operation, generating a monthly revenue of approximately 90,000 shillings.
By offering affordable and quality meals, and reducing overhead and operational costs, the business can appeal to our target market and generate consistent revenue.