How to Determine a Good Location for a Hotel

Building a hotel represents a major investment, making it crucial to thoroughly evaluate the location before proceeding. The success of a hotel is significantly influenced by its location, and choosing the right one can greatly enhance its chances of success, while a poor choice can jeopardize the project from the start.

So, how can you assess if a location is suitable for a hotel? What factors can indicate whether a hotel will thrive in a particular area once it is up and running?

To determine the viability of a hotel location, you need to analyze its market potential. The hotel market is primarily divided into two segments: leisure and business. A location with strong appeal in the leisure market will attract tourists, whereas a location with strong business potential will draw guests involved in professional activities.

For leisure markets, proximity to popular tourist destinations is crucial. Hotels situated close to major attractions tend to perform better, though it’s important to remember that tourist demand can fluctuate with seasons and holidays.

In contrast, a hotel targeting business travelers benefits from being near commercial and government hubs. Such locations, typically in or near city centers, see higher occupancy during weekdays and less during weekends and holidays.

The ideal hotel location offers both leisure and business potential. A prime example is a hotel in central Paris, which benefits from being both a major business center and a top tourist destination.

Here are seven key questions to help assess the potential of a hotel location:

1. Are there tourists who would be interested in staying at a hotel in this location?
2. Is there a demand from business travelers in this area?
3. Does the location have sufficient transportation options (ground, sea, air)?
4. Is there a robust domestic market for the hotel?
5. Is there an accessible international market?
6. Is the surrounding area already developed or in the process of development?
7. Are there existing hotels in the area where the new hotel is planned?

If most of these questions receive a positive answer, the location is likely to have strong potential for a successful hotel.