How much does it cost to open/start/launch Stadium Hotel

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Introduction

The hospitality industry has grown steadily over the past few years, and the demand for stadium hotels is no different. With sports fans traveling from all over the world to attend major games and events, the need for hotels in and around stadiums has become increasingly popular.

According to a recent report by Statista, the global hotel industry was valued at 0 billion in 2020, and it is expected to reach 5 billion by 2026, growing at a CAGR of 3.5% from 2021 to 2026. The increase in tourism, travel, and global events have played a significant role in this growth, and stadium hotels are no exception.

In this blog post, we will discuss the start-up expenses associated with opening a stadium hotel. From land and construction costs to marketing and advertising expenses, there are several unique costs that need to be considered before launching a successful stadium hotel.

We will also discuss the different business models that are popular in the industry and how they can impact your hotel start-up costs. Plus, we’ll look at some of the ways you can reduce those costs and start your stadium hotel on the right track.

Whether you are an experienced hotelier or someone looking to break into the industry, this blog post will provide valuable insight into the costs and considerations associated with starting a stadium hotel.

Start-up costs

Before starting a stadium hotel, it is imperative to consider the start-up costs involved. These costs can vary depending on several factors that include location, size, and hotel amenities. In general, a stadium hotel start-up would involve the following expenses:

Start-up costs Average amount range (USD)
1. Land and building costs for building the hotel ,000 to ,000 per bedroom
2. Purchase of furniture, fixtures and equipment ,000 to ,000 per room
3. Marketing and advertising costs for the promotion of the hotel ,000 to ,000
4. Hiring and training of hotel staff ,000 to ,000 per employee
5. Technological infrastructure for the hotel ,000 to ,000
6. Legal and accounting fees for setting up the business ,000 to ,000
7. Payment of franchise fees (if operating under a franchise model) ,000 to 0,000
8. Operating costs for the hotel (eg utilities, maintenance, insurance) ,000 to ,000 per room per year
9. Fees payable at the stadium or arena for a partnership agreement 10-15% of stadium or arena revenue
Total ,000 to 2,000 per room (excluding franchise fees)

1. Land and building costs for building the hotel

The costs of opening a stadium hotel can vary greatly depending on location, hotel size and amenities. One of the biggest expenses of this business will be the cost of buying or leasing the land. According to recent statistics, the average cost of land in the United States is around ,020 per acre, although this may vary depending on the state and specific location.

In addition to the cost of land, building a hotel from scratch can be a significant expense. The cost per square foot for commercial construction can range from around to 0 or more, depending on the quality of materials and location. For a hotel with 100 rooms and an average size of 325 square feet per room, the construction cost could range from ,762,500 to ,750,000 or more.

  • Example: A recent stadium hotel in Los Angeles was built at a reported cost of 0 million, including land purchase. The hotel has 174 rooms and a rooftop bar with views of the surrounding sports arena.
  • Example: Another stadium hotel in Texas was built for around 0 million and has 222 rooms, a restaurant and meeting space.
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It is important to note that these costs are only estimates and can vary significantly depending on various factors. Additionally, renovations or upgrades to an existing building can also be a significant expense, depending on the scope of the project.

Overall, the land and construction costs for opening a stadium hotel can be quite high, but with the right location, amenities, and management agreement with the stadium or arena, it can be a lucrative long-term investment.

2. Purchase of furniture, fixtures and equipment

The purchase of furniture, fixtures and equipment (FF&E) is an important cost to consider when starting a stadium hotel. FF&E includes everything from beds and bedding to televisions and hall furniture. According to recent statistics, the average FF&E cost for a hotel in the United States ranges from ,000 to ,000 per room.

It is important to note that this cost may vary depending on the level of luxury and amenities offered by the hotel. A stadium hotel, in particular, must ensure that its guest rooms and common areas reflect the quality and feel of the stadium or arena with which it is associated. For example, a hotel associated with a high-end NFL stadium may require more expensive materials and finishes than a hotel associated with a minor league baseball stadium.

In addition to guest bedroom furniture, purchasing FF&E for common areas such as the lobby, restaurant, and fitness center should also be considered. These areas may require big-ticket items such as commercial kitchen equipment, high-end fixtures, and modern gym equipment. Statistically, FF&E costs for common areas of a hotel can range from .5 million to million.

Another significant cost to consider is ongoing FF&E maintenance and replacement. Rooms and common areas will require regular updates and repairs to keep the hotel fresh and modern. The cost for this may vary depending on the age and condition of the items. As a ballpark figure, it is recommended to budget at least 5% of total hotel revenue per year for capital expenditures, which includes FF&E maintenance and replacement.

  • Example: If a stadium hotel has 200 rooms, the estimated cost to FF&E would be between 0,000 and ,000,000. Additionally, the estimated cost to FF&E for common areas would be between .5 million and million. Finally, if the hotel’s annual revenue is million, the recommended annual budget for capital expenditures, including FF&E maintenance and replacement, would be 0,000.

3. Marketing and advertising costs for the promotion of the hotel

Marketing and advertising expenses for hotel promotion can vary widely depending on the location, size and target market of the business. The average cost for advertising a new hotel launch on traditional media such as TV, radio and print can start at around ,000 . However, with the rise of digital advertising, social media and influencer marketing, some hotel owners are opting for cheaper and more targeted advertising methods to reach their audience.

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Digital marketing costs for hotel promotion include website development, SEO optimization, social media advertising, and paid search advertising. The average cost of creating a hotel website can range from ,000 to ,000 , while SEO optimization can cost between 0 to ,000 per month. Social media advertising on platforms such as Facebook, Instagram, and Twitter can vary widely depending on target audience reach, ad type, and budget. For example, a Facebook ad campaign targeting sports fans attending a stadium event can cost anywhere from 0 to ,000 .

Another advertising expense a stadium hotel might incur is running promotional events and giveaways to attract new customers. The cost of promotional events varies depending on location, guest speakers, promotional materials and catering costs. Hosting a promotional event for a stadium hotel can range from ,000 to ,000 .

Finally, it is important to note that advertising costs may continue to accrue even after the hotel has launched. Indeed, hotels must regularly advertise their services and offers in order to maintain consumer relevance. The cost of ongoing ad spend for a stadium hotel can range from ,000 to ,000 per month.

  • In summary, marketing and advertising expenses for promoting a new stadium hotel can range from ,000 to ,000 depending on location, target audience and advertising preferences.
  • Digital advertising is another way hotel owners are choosing over traditional print advertising that can help save advertising costs while remaining effectively connected to the target market.
  • Hosting a promotional and giveaway event is a great way for new hotels to attract new guests while building hotel awareness.

4. Hiring and training of hotel staff

One of the significant costs associated with opening a stadium hotel is hiring and training staff. The cost of hiring and training staff depends on the size of the hotel and the number of employees required to operate the hotel.

The average salary for a hotel manager in the United States is around ,000 per year. The cost of hiring and training other staff such as receptionists, housekeepers and maintenance staff can add up to 0,000 per year.

To reduce the cost of hiring and training staff, hotel owners can partner with local schools or colleges to offer internships and training programs. Interns and interns can gain valuable work experience and skills, while hotel owners can benefit from the labor of interns or interns at a lower cost. They can also provide job opportunities for interns or interns after the training programs or internships.

Hotel owners can also offer competitive packages such as good salaries, health insurance, retirement benefits, and career progression opportunities to attract and retain employees. This can help reduce the cost of hiring and training new employees.

Another way to reduce the cost of hiring and training staff is to outsource some of the hotel services, such as laundry or cleaning services, to third-party service providers. This can help reduce the number of staff required to operate the hotel, and hotel owners can focus on providing better customer service and improving the quality of hotel services.

  • Offer internships and training programs
  • Competitive packages
  • Outsourcing hotel services to third-party providers

In conclusion, hiring and training staff is a significant cost associated with opening a stadium hotel. However, by partnering with local schools or colleges, offering competitive packages, and outsourcing some of the hotel services to third-party providers, hotel owners can reduce the cost and provide better customer service and improve hotel services. .

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5. Technological infrastructure for the hotel

Investing in the right technology infrastructure is essential for a successful stadium hospitality business. Aside from the usual hotel amenities, a stadium hotel should offer guests reliable high-speed internet connectivity, access to streaming services, and a user-friendly mobile app for hotel services and stadium events.

The estimated cost for creating a robust WiFi network for a stadium hotel starts from ,000 to ,000. This includes the routers, switches, and access points necessary for seamless connectivity. Providing customers with access to premium streaming services like Netflix and Amazon Prime can cost between 0 and 0 per month, excluding the cost of additional bandwidth required for streaming.

Developing a custom hotel mobile app for customers to access hotel services and stadium event schedules can cost between ,000 and ,000, depending on the features included. The app could offer features such as mobile check-in and payment, in-hall service requests, room service menu, and access to the stadium’s event schedule and ticket purchase.

Implementing Smart Room technology, which includes automated lights, temperature control, and voice-activated controls, could add another ,000 to ,000 per room. However, this feature can improve customer experience and satisfaction levels, which can lead to better reviews and increased revenue.

Implementing security measures such as CCTV monitoring, smart locks and access control systems are also essential for a stadium hotel. A basic monitoring system can cost around ,000 while smart locks and access control systems can range from 0 to 0 per door. Integrating these systems with the hotel’s technology infrastructure would require additional costs.

  • WiFi network: ,000 to ,000
  • Streaming services: 0 to 0 per month
  • Mobile app: ,000 to ,000
  • Smart room technology: ,000 to ,000 per room
  • Security measures: 00 to 0 per door

Investing in the right technological infrastructure for a stadium hotel is crucial to providing guests with a great experience. Keeping technology up to date and providing innovative services can help increase revenue while generating positive reviews and customer feedback.

6. Legal and accounting fees for setting up the business

The legal and accounting fees for setting up a stadium hotel business in the United States vary depending on several factors, such as location, size of the hotel, and the legal structure of the business entity. According to recent statistical data, the average cost of legal fees for setting up a small business in the United States is between 00 and 00. On the other hand, the average cost of accounting fees for starting a small business in the United States is between 00 and 00.

In addition to legal and accounting fees, there are several other fees and expenses that a stadium hospitality business must consider. These include license and permit permits, taxes, insurance and employee salaries. The cost of licenses and permits varies by state and state jurisdiction, but can range from to 00.

Another factor that can affect the legal and accounting costs for setting up a stadium hospitality business is the legal structure of the business entity. The most common legal structures used for small businesses in the United States are sole proprietorship, partnership, limited liability company (LLC), and corporation. Each legal structure has its own advantages and disadvantages, and the legal and accounting fees for setting up each type of business vary.

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For example, the legal and accounting fees for setting up a sole proprietorship business are relatively low, as it requires only a few legal documents and little paperwork. However, the downside of sole ownership is that the owner has unlimited liability for the debts and legal obligations of the business.

On the other hand, the legal and accounting fees for setting up a corporate business are higher than other legal structures, as it requires a more complex legal process and documents. However, the advantage of the corporation is that business owners have limited liability for the debts and legal obligations of the business, and the business can issue shares to increase capital.

  • To summarize, the legal and accounting fees to set up a stadium hotel business in the United States depend on various factors, such as the location, size, and legal structure of the business entity.
  • The average cost of legal fees for starting a small business in the United States is between ,000 and ,000, and the average cost of accounting fees is between ,000 and ,000.
  • Other fees and expenses that the hotel business should consider are licenses and permits, taxes, insurance, and employee salaries.
  • The legal structure of the business entity also affects legal and accounting fees, as each legal structure has its own advantages and disadvantages.

7. Payment of franchise fees (if operating under a franchise model)

If you decide to start a stadium hotel under a franchise model, you will have to pay a franchise fee. The amount of fees varies by franchise, but you should expect to pay a one-time upfront fee and ongoing royalties, which are usually calculated as a percentage of your revenue. Some franchises also require additional fees for marketing, training, or equipment.

According to recent data, the average initial franchise fee for a hotel is ,000. However, this can vary from ,000 to 0,000 depending on the deductible. Additionally, ongoing royalties typically range from 3% to 6% of your gross earnings. These fees may seem high, but they come with the benefit of receiving the support and resources of an established brand.

It is important to carefully consider the cost of franchise fees when deciding to start a stadium hotel under a franchise model. Determine if the benefits of the franchise justify the expense. Franchises can provide a proven business model, access to marketing resources, training for you and your staff, and ongoing support. However, you will also have to comply with franchise rules and regulations, which can limit your flexibility and creativity in operating the hotel.

Before signing a franchise agreement, carefully review all fees and costs associated with franchising. Make sure you understand what services and support you will receive in exchange for paying these fees. You should also research the reputation and success rate of the franchise, and speak to current franchisees to understand their experiences and any challenges they have faced.

If you decide not to operate under a franchise model, you will not need to pay franchise fees. However, you also won’t receive the benefits of a franchise, such as a proven business model and access to marketing resources. You will be responsible for creating and executing your own business plan, which can be more challenging but also more rewarding.

  • Example 1: Hotel A decides to operate under a franchise model with Franchise X. Hotel A pays an initial franchise fee of ,000 and ongoing royalties of 5% of gross revenue. In exchange, Hotel A gets access to Franchise X marketing resources, training programs and support.
  • Example 2: Hotel B decides not to operate under a franchise model and instead creates its own brand. Hotel B pays no franchise fees but is responsible for creating its own business plan and marketing strategy. Hotel B has more flexibility and creativity in operating the hotel, but may have limited access to resources and support compared to a franchise.

8. Operating costs for the hotel (eg utilities, maintenance, insurance)

Like any business, a stadium hotel will have various operational expenses that need to be considered. Here are some of the most common costs associated with running a hotel:

  • Utilities: The average monthly utility cost for a hotel is around ,000. This includes electricity, gas, water and internet services. Depending on the size of the hotel and the number of guests, this cost may vary.
  • Maintenance: Maintaining a hotel is a significant cost that includes everything from fixing broken equipment to routine cleaning. On average, the annual cost incurred by hotels for maintenance is around ,000 per room. This means that a hotel with 200 rooms would incur an annual maintenance cost of .4 million.
  • Insurance: The cost of insurance for a hotel can vary depending on the size of the hotel, its location and the types of services offered. On average, hotels pay about ,200 per room per year in insurance premiums. This means that a hotel with 200 rooms would pay around 0,000 per year for insurance.
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In addition to the costs above, other expenses associated with running a hotel can include payroll, marketing, supplies, and taxes. It is essential to estimate these costs accurately and include them in the hotel budget to avoid any financial difficulties in the future.

One way to manage operating costs is to implement sustainable practices such as energy-efficient lighting, HVAC systems, and water-saving appliances. This can help reduce utility costs and extend equipment life. Additionally, regular maintenance and servicing can prevent equipment failures and reduce overall maintenance costs.

Overall, operating costs will vary depending on the size of the hotel, its location and the services it offers. Proper budgeting and forecasting can help hotel owners estimate these costs accurately and plan accordingly to ensure business success.

9. Fees payable at the stadium or arena for the partnership agreement.

When it comes to associating with a stadium or arena for a hospitality business, hotel owners must pay a percentage of their revenue to the stadium/arena for the privilege of being the official hotel. This percentage varies from place to place and ranges from 5% to 15%.

On top of that, the hotel may have to pay additional fees for access to stadium advertising and promotions. These fees typically range from ,000 to ,000 per year and can be more for larger stadiums/arenas.

Some stadiums/arenas may offer discounted rates to their partner hotels, while others may require minimum room occupancy. These costs can range from 0 to 0 per room per night.

However, the above charges are not final and may vary depending on the agreement between the hotel owners and the stadium/arena. Revenue percentage, advertising/promotion fees and room occupancy fees are all subject to negotiation.

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Additionally, hotels may have to pay additional fees for other services provided by the stadium/arena, such as parking, catering and event coordination. These costs can be negotiated and should be discussed at the time of the partnership agreement. Hotel owners should carefully analyze all costs associated with the partnership agreement before signing.

  • Example 1: A hotel in partnership with Coors Field Stadium in Denver must pay 10% of its revenue to the stadium, with an additional ,000 for advertising and promotion.
  • Example 2: The Omni Hotel in partnership with Mercedes-Benz Stadium in Atlanta must pay a minimum of 0 per room per night and additional fees for parking, dining, and event coordination.

In conclusion, the fees payable at the stadium or arena for the partnership agreement vary depending on the venue and the services offered. Hotels should carefully assess costs before entering into a partnership agreement and negotiate fees where possible.

Conclusion

Opening a stadium hotel can be a lucrative business opportunity for those willing to invest time, effort, resources and money. The initial start-up costs of a stadium hotel can vary depending on a range of factors, such as location, size, business model and amenities. However, by doing your research and careful planning, you can minimize these costs and maximize your long-term profits.

  • Land and building costs for building the hotel may vary depending on the location and size of the property. On average, you can expect to spend million to million on building a stadium hotel from scratch.
  • Purchasing furniture, fixtures, and equipment can cost million to million , depending on the quality and quantity of items you need to purchase.
  • Marketing and advertising expenses for promoting your hotel can range from ,000 to 0,000 or more, depending on the media channels and strategies you use to reach your target audience.
  • Hiring and training hotel staff can cost 0,000 to million , depending on the size and complexity of hotel operations. This investment is crucial to ensure that you can provide top-notch hospitality services to your guests.
  • Technology infrastructure for the hotel, such as a reservation system, booking software, and security tools, can cost ,000 to 0,000 , depending on the vendor and the features you choose to implement.
  • The legal and accounting fees for setting up the business can vary depending on the complexity and requirements of your jurisdiction. On average, you can expect to spend ,000 to ,000 to comply with legal and financial regulations.
  • Operating costs for the hotel, such as utilities, maintenance, and insurance, can vary depending on the size and amenities of the property. On average, you can expect to spend 0,000 to million per year on these expenses.
  • Fees payable at the stadium or arena for a partnership agreement can range from 5% to 15% of your hotel’s revenue, depending on the negotiation and terms of the contract.

In conclusion, opening a stadium hotel can be a profitable business if you plan and execute it strategically. By considering start-up costs and ongoing expenses, as well as potential revenue streams and marketing opportunities, you can set yourself up for success in the competitive hospitality industry.