How Much Cost to Build a Boutique Hotel From the Ground Up

Sara Hospitality | Oct 19, 2023

Starting a boutique hotel or luxury business is like a dream for many people. They are attracted to the charm of hospitality and see it as a chance to start fresh. However, setting up a new boutique hotel is actually quite challenging and harder than it may seem at first. If you're new to the international hotel industry, you'll encounter obstacles that you never imagined. The hospitality industry is highly competitive, making it difficult to get a good position.

Boutique hotels are a hot commodity, and establishing your own is a great thought. But, starting a boutique hotel needed money, the right knowledge, and real-life experiences to make it work. Hence, this blog discusses the cost of building a new boutique hotel from scratch. 

What is a Boutique Hotel?

Boutique hotels are small and cozy places where guests can enjoy pleasant and personalized travel experiences. These hotels have unique themes and styles that create a special atmosphere for guests. Unlike regular hotels, boutique hotels usually have a smaller number of rooms, typically ranging from 6 to 15. This smaller size allows them to focus on providing a more personalized and tailored experience for their guests.

Cost of Building Boutique Hotels

The hotel owners can’t open hotels until they move beyond the construction stage. However, starting a hotel business involves expenses like installing astonishing tiles, using quality hospitality furniturebeautiful bathroom vanities, color, etc. So, the cost of creating a boutique hotel business are:

1. Calculate an Estimated Cost

The first step of a hospitality business is starting and running a boutique hotel. After that, you can pursue this dream of starting a hotel. The primary cost is the purchasing of property. So, the leading factors involved in the business are:

a. Location of Boutique Hotel

Selection of a location with minimum expected guests will cost less, but, on the other hand, if the place doesn’t have worth, it will not turn into a profitable venture. Also, the city or country selected will strongly impact the cost. 

b. Size of Boutique Hotel

A boutique hotel with more rooms, amenities, and decor is more expensive than a simple room. While minimalist is in trend, but sometimes goes an extra step, and offering an amazing destination experience will help you to stand apart from competitors. 

c. Owing the Real Estate

Unlike large-scale hotel businesses, which have a distinction between real estate ownership and hotel companies. The situation in boutique hotels is the exact opposite. You should own both real estate and hotel business yourself because:

  • You can build wealth by adding value to the property, as this property is not optimized in structure, design and efficiency. 
  • Ownership of place provides more freedom to perform innovations. 

2. Selecting the Right Location

The location is crucial, but even more, is the potential within that location. While finding the locations, do not look for top locations with a lot of hustle and bustle. Instead, shortlist the locations which have the potential to be turned into dream destinations for your guest. Instead, shortlist the places which has the potential to be turned into dream destinations for visitors. 

3. Search for a Suitable Concept

Sometimes we can’t emphasize enough the significance of finding an amazing concept which currently becomes a hot topic among visitors. We all have a spark of creativity within us, but we need to though from a guest's perspective what they like and don’t like. A secret recipe that is an ideal combination of location, attraction, lifestyle, financing, personal touch and a tidbit of personality in a hotel so it conveys what you are trying to achieve. Personal property size will make it a good and welcoming lodgement. No matter whether you have five rooms or 20, focus on what exactly what you claimed for. Another factor is guest amenities which shows the personality and message you want to deliver as a hotel owner. 

Furthermore, personalized service, local dining choices, and high-quality bathrooms will help create something that stands out as classy and elegant. 

4. Be Ready With Finances

There are three approaches you can use to finance your dream boutique business. The three ways are:

a. Conventional Banks

According to personal experience, banks need to be more open about offering loans to small entrepreneurs. But, if the business has strong goodwill and a bank statement, it is one of the safest and most reputable financing methods for a boutique hotel. Usually, the public bank taye is lower than private banks. 

b. Private Lenders

This kind of company offers quick loans via smooth application processes. However, if you don’t want to get into a thorough process with the bank, then agreeing on high interest is risky for young business owners. 

c. Cash in Hand

If you have cash or immediate money, it is one of the best and least dependent approaches to starting a boutique business. There are 0% interest charges on personal money and no need to agree with banks and other lending organizations' binding terms and conditions. 

5. Establish Strong Business Plan

Generally, a business plan is a presentation of an idea. Thus, it would be perfect to divide everything into steps and get a clear vision for establishing an effective plan.

 a. Overview of the Industry

Initiate by writing a description of the boutique hotel industry, and discuss the facts, like the role of boutique hotels in the economy. 

b. SWOT & Market Analysis

Focus on market trends and get new targets to gain a competitive advantage over boutique hotels. Furthermore, conducting a SWOT analysis to discover strengths, weaknesses, opportunities, and threats enables you to become successful in the business. 

c. Product and Services

The products and services depend on the visitor type you want to welcome. The standard facilities the boutique hotel offers include laundry, drinks, food, and other wellness like spas and gyms. 


If you're thinking about starting a boutique hotel business, it's important to know the basics before you begin. In case you need high-quality furniture for your hotel, you can rely on Sara Hospitality. As one of the top hotel furniture manufacturers in the USA, we guarantee success and provide excellent services. Consider this guide your go-to resource for all things boutique hotel business!