Expansion complete: the surprising difference between a 6 and 23 room hotel

Often, the first business most of us expats think of putting in our new country is a guesthouse.

It´s not a bad idea cause you really don´t need any formal education on the subject to do it. It wasn´t my plan either, I just kind of fell into it.

First in Guayaquil, partnering with a friend to start a small guesthouse, then here in Quito.

But most people start like I did in both Guayaquil then Quito: with five o six rooms.

My advice… don´t!

Unless, you really enjoy it of course.

Why?

Well, a few months back i finished an expansion from 6 to now 23 rooms.

And what´s the surprising difference between running the two, or between a small and a large guesthouse?

Nothing!

Really! The costs are ALMOST the same and either way it´s still a 24 hour business you just need to check the cell tower lease rates because it can vary in the same county or metropolitan area.

Even the email load is about the same.

Time invested… the same! It´s a 24 hour business either way! You need at least one person there ALL the time unless your cheap and want to handcuff yourself to the place.

Before, with six rooms, I had one person at night, one cleaner, and one part timer receptionist in the daytime with a part time cleaner that works when the full timer has off.

Thats two full timers and two part timers.

Now, with the 23 room place I´ve needed to add one more full time cleaner so i now have two cleaners daily, yet the same part time afternoon receptionist and the same night receptionist.

That´s it!

And cause I serve dinner I´ve had to hire a part-time chef cause with that many people one person can´t cook and attend the clients like they could before.

So what´s the difference between 6 and 23 rooms? One more full time cleaner and one part time chef.

But the difference in revenue is substantial.

It´s simple math, if you can charge $50 a room and fill the place, with just 5 or 6 rooms thats $250-300 a day revenue minus all your expenses equalling a bottom line of NOT MUCH.

But with over 20 rooms you can obviously generate over 4 times as much (with minimal increased expenses) if you can keep it full.

So if you are going to do it, do it big. Below is a pic of the new addition that was completed at my hotel near the Quito airport, total build time, roughly 3 months.

hotels-near-quito-international-airport

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