Hospitality Entrepreneurism: What Are the Possibilities?
By Robert O'Halloran
Entrepreneurism in hospitality and tourism has a history and is diverse and multi-faceted. Tourism as an industry is the umbrella of the sectors related to service and hospitality. It can include public sector organizations like convention and visitor bureaus, state and national parks and forests offering recreational destinations etc.
Tourism areas such as cultural, heritage, and medical speak to the products and services offered to the traveling public. Operationally, tour companies and tour guides are part of the service products within tourism. Specifically, the umbrella of tourism is inclusive of the hospitality infrastructure that is inclusive of lodging, food service, meetings and events, clubs, sports events and venues, airlines, transportation and businesses that are primarily private sector. Also, new areas of concentration have emerged, such as Airbnb and short-term rentals that are changing the lodging landscape.
Entrepreneurs can be identified in most sectors, noting that hospitality and tourism business giants often began with entrepreneurial ideas. Historically, names like Conrad Hilton, (Hilton Hotels ) J.W. Marriott (Marriott International) and Kemmons Wilson (Holiday Inns ) once were identified as entrepreneurs. Each has a story of how they began and how their ideas evolved into the companies that are now considered leaders in the hospitality corporate world. Similarly food and beverage names like McDonalds, Wendys, Hardees and Kentucky Fried Chicken all began as new and innovative ideas with pioneers such as the McDonald Brothers and Ray Kroc, Wilbur Hardee, Dave Thomas and Colonel Sanders. The question for people searching for the magic formula for success for a new business is what did these entrepreneurs have in terms of innovative ideas, opportunities, work ethic, risk-taking, planning, and decision-making that made them successful?
Personally, I have never been an entrepreneur. I have had what I can describe as entrepreneurial moments. For example, many years ago, on my backpack tour of the globe, I was in Hong Kong and was able to provide a very reasonable tour of many parts of the Hong Kong Island and Kowloon using public transportation and tourist service information materials. I did not make a lot of money but was able to pay for much of my own expenses seeing Hong Kong. The diversity of entrepreneurism and its business sectors poses a question, what is the meaning of entrepreneurism?
What is Entrepreneurism?
The hospitality industry particularly lends itself to entrepreneurship. Every property, whether it's a restaurant or a hotel, has its own specific market characteristics, which are determined by its location and by the products and services they offer. Understanding the local market is the key to success and requires an entrepreneurial mind set in order to succeed. As an entrepreneur, people often form their own startups or new companies, focusing on innovation in their field and bringing new ideas into reality.
Those who found their own businesses need to be 'jacks-of-all trades '. For instance, besides the basic hospitality skills like preparing and serving food and beverages and managing hotel accommodations, hoteliers need to understand something about architecture, construction, legal and regulatory aspects, IT, marketing, social media, human resources management, accounting, finance and risk management, statistics, revenue management, and the list goes on and on. However, and most of all, hospitality entrepreneurs need to possess determination and persistence. An entrepreneur must also be ready to accept failure as a learning experience.
A simple definition is that an entrepreneur is a person who has an idea for a product or service, creates a new business, bearing the risks and enjoying the rewards, and turning those ideas into a profitable business. We should note that the operating styles, skills and abilities, responsibilities and habits of entrepreneurs are important to benchmark. These can and in some cases should include attention to detail, flexibility, consistency, communication, marketing, customer service, financial management, language skills, cultural awareness, leadership skills, the ability to work on a team, flexibility and consistency. Some note the difference between a business owner and an entrepreneur as business owners are more focused on tested methods of success.
Entrepreneurism in Hospitality and Tourism
Entrepreneurism has provided many with opportunities never thought possible. The big hospitality names associated with entrepreneurship have historically been white males. This is not to critique their efforts but to note that many barriers have been eliminated or made more manageable. Thinking of owning a business is what some might describe as part of the American Dream. An article, The Future of Hotels Is Female and These 5 Hoteliers Are Changing the Game highlights what can be described as Entrepreneurship Benchmarks.
One entrepreneur noting her own experience, "A hotel is a living thing. We (female entrepreneurs) are just continuing a conversation the neighborhood has been having for hundreds of years. These buildings have seen so much, epidemics, wars and heartbreak, progress and joy, and we're just the latest custodians. We wanted the layers and patina to be palpable." Included below are entrepreneurial examples of some of these benchmarks.
• The Surfrider Hotel - Malibu, California
• The Joshua Tree House - Joshua Tree, California
• The Roundtree - Amagansett, New York
• The Carpenter Hotel - Austin, Texas
• Hotel Peter & Paul - New Orleans, Louisiana
Have a Plan
Entrepreneurial ideas need to be well thought out, researched, and operationalized through sound planning. For example, starting with concept, entrepreneurs or would be entrepreneurs need to flesh out the concept and learn about relevant aspects of the hospitality and tourism industry. What do businesses in those sectors look like and who are the leaders in those sectors? Benchmark the successes of the leading businesses and or organizations. For example, for a hotel, how many rooms will it have? Will it be an independent or will it be branded? Will there be meeting spaces? What level of services will be provided? What amenities will be included? What level of parking, outdoor and recreational facilities if any?
A great hotel idea needs to be supported by extensive research and analysis that will be inclusive of selection and creation of a competitive set of hotels. The selected hotels will create your market and then data collection to include at least occupancy rates, market mix of demand, average daily rates, revenues per available room,(REVPAR), and more. The market metrics for each of these indices form the basis of your market. Once demand for room nights has been identified the process of estimating future demand and the target date for opening the hotel need to be identified. Hotel entrepreneurs need to estimate growth rates and forecast a growth in demand for the market as a whole and a new hotel's location.
Moving forward the entrepreneur will need to estimate how well a new hotel will be able to penetrate a selected market and how many room nights can the new hotel reasonably expect to capture. Or if they are more aggressive, perhaps they are not being reasonable. This analysis will lead to the forecasting of occupancy percentages for both the market and a new hotel, from the present through three to five years of operating results.
Start up plans like these, can be applied to restaurants and other hospitality and service businesses. For example, a restaurant, would define a competitive set, but the metrics would be adjusted to analyze the number of seats, the number of turns (how many times does the dining room fill and then refill) a dining room would have per meal period. In this scenario one would also need to define average check, and more. Restaurants can tend to have many moving parts because of different meal periods and menus. A restaurant entrepreneur is an individual who starts their own restaurant business noting that to become an entrepreneur in the food industry, you'll find endless opportunities but the key to success will be doing your research and robust business planning.
Entrepreneurial Opportunities
Hospitality and tourism business ideas have been noted to include glamping, bed and breakfast owner, glamping host, tour guide, travel blogger, translator, photographer, local cooking expert, vehicle rental, souvenir shops, concierge services and more, as noted below. Hospitality business ideas could include starting a: hotel consulting business, walking tour business, travel agency, tour company, private snorkel tour business, private hostel business, event management company, day spa business, Airbnb hosting, creating a restaurant reservation platform, running a surf school, providing wine tours or fishing charters, operating a pet hotel, or helicopter charter business, an airport bus shuttle service, manage a hotel art supply company, operate canoe and kayak tours, operate student hostels, or a party bus, and or an extended stay hotels businesses. The options seem limitless.
Tourism Entrepreneurship: Meaning, Characteristics & Examples is an article where entrepreneurism is highlighted as part of a world of travel and exploration. There is a special breed of individuals who possess a unique blend of vision, innovation, and business acumen that create these businesses. They are the tourism entrepreneurs, creators, and managers of ventures that shape the experiences of travelers while driving economic growth within the tourism industry. Tourism entrepreneurship is an exciting realm where individuals with a passion for travel and a knack for business come together to create and manage ventures within the tourism industry. It involves identifying opportunities and developing innovative ideas to meet the needs and desires of travelers. Think of it as weaving together the threads of adventure, hospitality, and entrepreneurship to craft unique experiences. This resource also notes the characteristics of tourism entrepreneurship as innovation, market knowledge, risk taking, adaptability, sustainability, networking and having a passion and vision for their entrepreneurial business. Tied to the discussion is the concept of franchising.
Franchising
It should also be noted that there are multiple opportunities to purchase franchise hospitality businesses. I think of franchising as being entrepreneurial with a lot of proven methods and standards already in place. As previously noted maybe these folks would be classified as business owners and operators. A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.
Intrapraneurs
The hospitality industry is ripe for intrapreneurs, a new breed of employee who serves as a changemaker inside of their current organization. Intrapreneurship involves passionate individuals who use their entrepreneurial skills with the support and resources of their employers to drive innovation, strengthen their workplace, or improve products. A hospitality company leading the charge toward intrapreneurship is Hilton Hotels and Resorts, a global brand of full-service hotels and resorts. They unveiled a concept called LightStay , a direct result of intrapreneurship inside of their organization. The program, which calculates a hotel's environmental impact, was developed by employees to track the brand's sustainability footprint. There have been a number of industry leaders like Aramark that have had dedicated "Intrapreneur" themes and programs focusing on creating new ideas to challenge the current way of doing things. The focus is on the skills and abilities of an individual that are entrepreneurial and can also plan and implement change in existing environments.
Framing Entrepreneurial Education
How does one get an education to be an entrepreneur? Business training courses, community colleges, bachelor degree programs are more and more prevalent through the country. Chambers of Commerce, community colleges and four-year universities all have entrepreneurship programs. A review of some of these program courses notes that they are functional business areas, applied to marketing, accounting, finance, management and MIS. That is not a critique, but practical as it is hard to teach an innovators skill set. The focus needs to be on being creative and then being able to organize a creative idea. Also, not everyone wants to be an entrepreneur. For those of you running your own businesses, you are at work, almost all the time. A resource, The Office of Entrepreneurship Education's mission is to provide entrepreneurial information and education, resources and tools to help small businesses succeed.
Individual entrepreneurship programs exist in colleges of business and elsewhere across the country and are multidisciplinary and embrace a diverse skills set. The program at our university notes that many industries have created a demand for entrepreneurs who can provide dynamic leadership in creating new enterprises. Equally important is the need for individuals with an entrepreneurial spirit to infuse innovation into existing industries. Also noting that through a unique curriculum and co-curricular partnerships in industry, the Miller School of Entrepreneurship serves as a regional hub that empowers students with the skills and experience to help transform their communities.
Resources online can help identify the leading programs nationally in entrepreneurship. Hospitality business education programs, our included have been teaching students and interested entrepreneurs how to plan, research and open restaurants, small inns and other hospitality businesses for years. If a would-be entrepreneur is seeking help to identify how to start the entrepreneurism process, I recommend they check out their nearby educational institutions for resources. Faculty interest, projects and research can also be stepping-stones for entrepreneurism.
Teaching and learning objectives can be inclusive of students understanding and ability to clarify the differences between tourism and hospitality sectors and products. Students need to appreciate adaptation and flexibility in business decisions and plans. Students need to understand safety considerations and identify a variety of alternative business operations in developing areas. For project work students can be prompted by questions and topics related to the entrepreneurial product, location, or processes. These types of assignments, projects or class exercises help potential entrepreneurs develop their ideas and learn how to conduct research and identify resources. Courses also need to consider how technology can be integrated in the process and how will a new entrepreneur keep their entrepreneurial business sustainable?
Wrap up
No matter how you assess entrepreneurism and the work required to be successful requires a good work ethic. Kemmons Wilson, the founder of Holiday Inns, now a brand and part of InterContinental Hotel Group (IHG,) was an early lodging entrepreneur. In a time when franchising rules, regulations and laws were new, Wilson's efforts were part of the building of the modern hotel industry. He shared what he called his Twenty Tips for Success.
- Work only a half a day; it makes no difference which half - it can be either the first 12 hours or the last 12 hours.
- Work is the master key that opens the door to all opportunities.
- Mental attitude plays a far more important role in a person's success or failure than mental capacity.
- Remember that we all climb the ladder of success one step at a time.
- There are two ways to get to the top of an oak tree. One way is to sit on an acorn and wait; the other way is to climb it.
- Do not be afraid of taking a chance. Remember that a broken watch is exactly right at least twice every 24 hours.
- The secret of happiness is not in doing what one likes, but in liking what one does.
- Eliminate from your vocabulary the words, "I don't think I can" and substitute, "I know I can."
- In evaluating a career, put opportunity ahead of security.
- Remember that success requires half luck and half brains.
- A person has to take risks to achieve.
- People who take pains never to do more than they get paid for, never get paid for anything more than they do.
- No job is too hard as long as you are smart enough to find someone else to do it for you.
- Opportunity comes often. It knocks as often as you have an ear trained to hear it, and eye trained to see it, a hand trained to grasp it, and a head trained to use it.
- You cannot procrastinate - in two days, tomorrow will be yesterday.
- Sell your wristwatch and buy an alarm clock.
- A successful person realizes his personal responsibility for self-motivation. He starts because he possesses the key to his own ignition switch.
- Do not worry. You can't change the past, but you sure can ruin the present by worrying over the future. Remember that half the things we worry about never happen, and the other half are going to happen anyway. So, why worry?
- It is not how much you have but how much you enjoy that makes happiness.
- Believe in God and obey the Ten Commandments.
Review of his tips highlights work ethic, risk taking, opportunity, attitude, self-motivation and enjoyment. These themes connect to creative ideas and innovation and the willingness to seize opportunities. Within business cultures, business disciplines are integrated in an effort for innovative hospitality businesses to offer great service products that are inclusive of seeking and securing capital, managing and coordinating finances, sound leadership decision making, managing people, products and systems, and embracing and understanding people and service. The hospitality entrepreneur is adaptable, flexible, nimble, and willing to take a worthwhile risk.
No one can know everything and as previously noted, beyond lodging and food service or whatever the specific hospitality or tourism business is, there are always topics that the entrepreneur and business leader should have at least identified resources file on. A What Else? list for hospitality entrepreneurs, could include, technology, artificial intelligence, entertainment management, production, staging, franchising, healthcare, advertising, promotion: TV, radio, online, print media, construction management, design, retail, risk management, security and safety, sales, mentoring, sustainability for business, the environment and a community, real estate, planning and more.
If you have the itch to be an entrepreneur, document your ideas and do your research. Identify and assemble your resources and start to build your plan. Advice for aspiring entrepreneurs is to work for a successful company and learn from them, how they are organized and identify a mentor. Remember you are always a student of the industry even after graduation! Good Luck!
