There are two schools of thought when it comes to turnover. The first is to keep earnings below the VAT threshold, which is £73,000. If you fall beneath the threshold, you may be able to make a 40% profit on turnover.
The alternative is to go all out to earn as much as possible. To make it worthwhile you need to earn considerably more than the VAT threshold, which means taking £100,000 plus.
So what can you do to maximise your income? The main source will almost certainly be from accommodation. In trying to attract visitors year-round, location will be a major factor. Brighton is a popular getaway from London, so targeting couples looking for a weekend break, as well as the lucrative stag and hen market, has proved lucrative for several hotels, including the Granville.
If your location leans towards a particular market, you could improve your prospects by offering tailored facilities. For example, if you’re going to be based in a coastal spot which attracts plenty of divers and surfers, you could boost your profile by providing drying rooms for equipment.
Offering supplementary facilities and events can also help expand your earnings. Some hotels house a restaurant that is open for lunch and dinner, thereby enticing guests to use the hotel's facilities, rather than spend their money elsewhere. A number also host wedding receptions; many require the wedding party to take over the entire hotel from Saturday until Sunday lunch, thus ensuring that all its rooms will be paid for.
Given the overall seasonality of the hotel business, cash flow remains a major consideration, warns Smith. "If it is a couple looking to go into the business, we encourage one of them to keep up an outside income, at least in the early stages. That way you can earn some money through the winter to help supplement the summer income."
While fluctuating income and hard work can be a disincentive to setting up in the hotel business, the potential financial reward and opportunity to meet people may ensure this is a bed you are happy to lie in.