Hotel is a form of real estate investment. As a real estate investment, it's in a sense a capital intensive business. A hotel owner needs to acquire or lease a piece of land, hire an achitect to draw a blue print and get a construction company to develop the project. All these processes take years. Lot of money have been invested but not even a penny has been earned.
Moreover, after the project has been completed, the owner needs to bring in manpowers. Hotel business is not just capital intensive but also labor based business. As an owner from the beginning till now, he has to pay, pay and pay :(
Labor Based Business means it's a high ongoing overhead cost. The longer the business runs, the higher the cost incurs.
As a result, a hotel owner needs to understand hotel business model lest he/she will suffer financial difficulties.
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