Thinking of starting your own hosting business?
In LobbyPMS, the software to manage and market your lodging successfullywe give you a quick guide to each of the essential activities you will need to perform to open a hotel in different parts of Latin America. This can be a hostel, tourist apartment, inn or any other type of lodging business. In general, for all these types of lodging you must fulfill certain steps that we will tell you about below.
1. Define your business plan for opening a hotel
Any entrepreneur should have a work plan before starting activities to develop his idea. This is important for any project, however if we are talking about a lodging business, a business idea becomes an essential step.
This “idea” and “step-by-step” is what is commonly referred to as a business plan, business plan or simply the definition of a business model.
To achieve a successful business plan, we recommend using the CANVAS methodology, with which you can quickly define the 9 key aspects required to establish a business model:
- Customer segment
- Value proposition
- Distribution and communication channels
- Customer relations
- Revenue stream
- Key resources
- Key activities
- Allies Network
- Cost structure.
Select a strategic location for your customer segment.
When analyzing the ideal location for an accommodation business, one tends to think quickly of the most touristic places where the vast majority of hotels and hostels in the city have traditionally been located. However, this should not always be the case, since the ideal location for your business will depend on the customer segment you wish to target. This is especially true if you want to differentiate your business from the competition.
We recommend you to make a list of the preferences that your customer segment would have regarding the location of the place and their needs. For example, if your idea is an accommodation for health and wellness tourism, then you should look for quiet places, close to major clinics or medical centers and with easy access possibilities.
3. Investigate land use (permits for a hotel).
In most countries in Latin America it is necessary to have a land use license to start a commercial establishment open to the public.
Who issues the land use license? This varies from country to country, but normally the Municipal, Departmental or State Planning Offices (or depending on the name given to these offices in the country where the lodging is to be established) in each city are in charge of issuing this concept to whoever requests it.
Normally to apply for a land license or permit for your hotel you do not need to have an incorporated company. You can apply as a natural person with your identity card and the other documents required by the planning office. Sometimes, by law, you must present the business plan you have for the project to support the permits you are requesting.
4. Find the property management software that best suits the hotel’s needs.
Many properties start their operation without thinking about a very important point: the daily operation and administration. This may seem simple, but if it is not well thought out from the beginning, it is very easy to fall into oversales, lack of inventory control, lack of coordination in the shifts of hotel employees, poor management of suppliers, sales that do not materialize, wrong distribution of room availability through the different sales channels, among others.
Look for a software like LobbyPMS for the operation and management of your lodging.
To solve this problem, our recommendation is to to look for an allied software from the beginning. This software should allow you to have a simple control of all the operation, administration and sale of the rooms of the lodging. With LobbyPMSfor example, you will be able to distribute your availability on your web page and through different OTAs such as Booking.com, Expedia, etc. You will also be able to have a reservation calendar, a customized booking engine, manage rates in real time, control costs, hotel inventories, employee shifts, income, expenses, among many other aspects of the establishment.
Now, what are the most specific steps to follow if I want to open my hotel?
It is clear that all countries have different laws and regulations, but what is certain is that generally all countries function very similarly (especially in Latin America). In each city, country, department, state, etc., there are entities with different names, but the logic and function of each of them is similar throughout the region. Our recommendation is that you first understand the concept of each of the entities and processes mentioned above, and with this in mind, apply the same logic to know the place to go to in your city or country.
How to open a hotel in Colombia
Register the establishment with the Chamber of Commerce and DIAN.
The first step is to register the establishment with the Chamber of Commerce and DIAN (legal requirement). About the legal framework of a hotel in Colombia this will allow your lodging business to be legally registered in Colombia. There are two ways to register the business: As a natural person or as a corporation.
In this Creation of companies you can find the differences between each one and the guide to register in the Chamber of Commerce of Bogota (CCB). Do not worry because it is the CCB, because this registration is done in a similar way in all cities of the country.
Apply for the National Tourism Registration and register in the Colombian Migration System.
When you have your business legally registered and your property ready to receive people, then you will need to comply with these two additional legal requirements: Apply for the National Tourism Registration (RNT) and register your hotel in the Colombian Migration System (Legal Requirement).
You can apply for them at the same time you start your commercial activities, but you will have a deadline to obtain them. Otherwise, you could face penalties that could seriously affect your business.
The RNT is a legal requirement that all companies offering tourism services in Colombia must comply with. Click on this link to know the details of the registration process.
Access to the Alien Registration Information System
Migración Colombia is the Colombian customs agency responsible for monitoring and carrying out immigration control in the Colombian State.
One of the obligations within the Colombian legal framework that you will have as an entrepreneur in the hotel sector is to send to Migración Colombia the list of foreigners who entered and left the hotel each day. For this you must access the SIRE – Foreigners Registration Information System, with the access codes that you will be given at the entity when you request the registration. You will need to have completed step 4 to obtain access.
Manage your building permit for new properties or renovations
Construction licenses for new properties or remodeling (Legal requirement). If you are going to build your property from scratch, you are going to make major renovations on an existing business premises or you need to adapt an old family home for your lodging business, then you will need a construction license to be able to carry out this activity. We recommend this(Construction Licenses) which details the types of licenses, requirements and procedures to obtain them.
How to open a hotel in Mexico
Opening a hotel in Mexico means having to comply with certain general and specific hotel requirements. In addition, these requirements may be at the Municipal, State and Federal levels.
Register with the Federal Taxpayers Registry
The Federal Taxpayers Registry, better known as RFC, is a composite alphanumeric code that the government uses to identify individuals and companies that legally practice any economic activity in Mexico.
Performs the State Registry of Taxpayers
This is a State procedure that ensures that everyone makes their tax payments to the State correctly and without fail.
Licencia de Funcionamiento o Declaración de Apertura (Municipal Procedure).
Like the Land Use License, the Operating License or Opening Statement is issued at the municipal level by the municipality for the place where the business establishment is located and authorizes the commencement of the activity in such establishment.
Registration of the Business Registry with the IMSS
Thisprocedure must be carried out up to five days after the start of the activities. Failure to do so may result in penalties for the hotel establishment.
Opening procedure before the Ministry of Health.
Closely linked to this point, do not forget to get the sanitary license for the operation of the hotel and the food and beverage area. Also the firemen’s permit, applications for the electrical and gas installation, and the installation of advertisements at the Secretary of Industry and Commerce.
Approval of Secretary of the Environment and the Neighborhood Council
Finally, the approval of the Secretary of the Environment and the Neighborhood Council will be required .
The procedures are quite long, cumbersome and in some states, they are also expensive. Fortunately, since 2007 there has been a special governmental plan to be able to carry out all these procedures and comply with the requirements to open a hotel in less time. This is the Sistema de Apertura Rápida de Empresas Turísticas (SARE Turístico).
With this system, it is possible to open a low-risk business in the tourist area within 48 to 72 hours. All you have to do is present your voter’s credential, proof of compatible land use and proof of possession of the premises.
In addition to all these steps, it is important to define an adequate budget according to the needs of the project. This is where the question arises as to how much money to invest in the project.
How much money does it take to open a hotel in Mexico?
It is important to know that every project or business requires defining a budget as accurately as possible and that opening a hotel has considerable associated costs. To give an exact or average value of how much money is needed to open a hotel in Mexico is difficult; however, it is important to take into account:
- Land (purchase, lease, improvements)
- Equipment, furniture and licenses
- Maintenance
- Required personnel, salaries, staffing
- Insurance
- Marketing
- Utilities (water, electricity, telephone)
- Periodic changes or improvements to the hotel
These are just some of the many points to consider when investing in a hotel. As the range of investment in this industry is so wide, the invitation is to be as close to reality as possible in the estimated budget to invest.
How to open a hotel in Dominican Republic
The steps are simpler than they seem:
- First you must obtain the operating license. This is requested before the Ministry of Tourism of the Dominican Republic with all the details such as the name of the company that will operate the establishment, the activity to which it will be dedicated, name of the hotel, location, among others. Keep in mind that this operating license is granted for 1 year, so it must be updated annually.
- You must formally register the commercial name of the establishment before the National Office of Industrial Property (ONAPI).
- Register the establishment with the Chamber of Commerce.
- You will have to pay taxes before the Dirección General de Impuestos Internos (General Directorate of Internal Taxes) .
Remember that at the moment you want to carry out all the procedures before the Ministry of Tourism, you will have to present certain data (already made in your business plan). An example of this is the price rates per room, which will be given according to the category of the rooms.
How to open a hotel in Peru
In the case of Peru, the requirements are established by the Ministry of Foreign Trade and Tourism (MINCETUR) in the Regulations for Lodging Establishments. These regulations establish the provisions for the classification, categorization, operation and supervision of lodging establishments, as well as the functions of the competent bodies in this area.
To complement the steps established in the Lodging Establishments Regulations, do not forget:
- Register in the Single Taxpayers Registry
- Complete the documents: Operating License, Single Processing Form (FUT) and the ESSNA Affidavit.
- Establish the classification and/or categorization of the lodging. To this effect, you must comply with the infrastructure, equipment, service and personnel requirements set forth in the regulations. This classification is:
- For the authorization and operation of lodging establishments, the owners of these businesses must be registered in the Single Taxpayers Registry (RUC) in order to obtain the Administrative Registrations and Sectorial Authorizations. They must also have the respective Operating License.
- Last but not least, do not forget to follow the guidelines for health surveillance of workers at risk of exposure to COVID-19 approved by the Ministry of Health (Minsa).
6. Fight for your dreams to open the hotel you always wanted to open
Tourism in Latin America continues to consolidate as one of the fastest growing economic sectors, so starting a lodging business can represent a successful investment for you.
Still, like any new business, it requires passion, perseverance and discipline to succeed.
Whether you are starting your first business or you are a seasoned entrepreneur, don’t forget the importance of staying ahead of the curve by researching all of your customer segment’s behaviors, industry developments and competitors’ strategies.
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