The travel and tourism sector contributes a major lump to the nation’s GDP, the demand for good hotels is increasing at a great rate, people travel from one state to another, one country to another expects decent accommodation to stay.

The travel and tourism sector contributes significantly to the nation’s GDP. The demand for good hotels is increasing at a rapid rate as people travel from one state to another and from one country to another, expecting decent accommodation to stay.

More and more people travelling internationally for various purposes have created high expectations from hotels. They want luxurious and comfortable accommodations, which have become non-negotiable factors in the hospitality industry.

If you are considering the hospitality sector from a business point of view, it has immense potential for growth and countless profits. If you are someone who is looking to start a hotel or enter the hotel industry, then you have come to the right place.

In our series on different businesses, today we will be providing readers with an easy step-by-step guide on “How to Make an Effective Hotel Business Plan: How to Start a Hotel from Scratch,” so stay tuned.

Hotel Business Plan: Simple Steps to Follow

The hospitality industry has always been a business opportunity, and starting your own hotel individually is a bit of a difficult task to do; this business is generally composed of the monopoly of big industry players. In case you have made up your mind to launch your own hotel, then follow these steps.

Define your Goals and Prepare a Strategy

Similarly, like any other business, it is important for you to prepare a road map of your Hotel business plan. This planning includes doing various tasks like operations, deciding budgets, and planning further developments. Some of the primary tasks involved in outlining your business goals are

SWOT Analysis

Do the strength, weaknesses, opportunities and threat analysis of the industry. Do an in-depth competition analysis, determine your goals and ensure a clear-cut strategy of what to do and what not to do.

Prepare a strategy that can be presented to investors in case you are seeking funding. Conceptualise your business plan in such a way that you stand separate from other pitchers when presenting your business to investors.

Be clear with Financial projections.

This is one of the most challenging yet interesting parts of any business, as most people quit their idea of starting a hotel business because of the heavy costs involved. The following are the costs included when planning to start a hotel.

Starting costs

This is the cost of the initiation, the amount of money required from lenders to launch your hotel. It includes licences, down payments, furniture etc.

Operating costs

It is an estimate of the cost that is required to run the hotel, like staffing, rent, guest acquisition costs etc.

Expected Income

Before starting, find a rough figure of revenue, profits, and expenses during the initial years of the business.

Projections of cash flow

Estimate how much cash will flow in and out of the business along with what you initially need at the time of start.

Balance sheet

Prepare a balance sheet and identify your assets, liabilities and equity.

Get your Investment done.

If you are one who is planning to commence your own hotel and willing to make your own name in the hospitality sector, then make sure you have the required capital. One can go through these renowned sources to secure funding.

Invest your own secured fund.

Investing personal savings in the venture is one of the secure ways to start any business. If you have enough capital in your bank account, then kudos to your efforts because you have cleared the hardest barrier.

You can also try opening it in collaboration with someone because it will reduce the risk of investment.

Take Business loans

You can also fulfil your funding requirements by taking business loans using OneNDF.

OneNDF offers a variety of business loan opportunities for a Hotel Business plan, where you can explore the products and pick what suits best for your business needs.

Find an Investor

If you are a newbie in the Hospitality business then getting investors on board will be a difficult call for you because investors generally focus on selected factors like growth potential, scalability and quality. In case you have found your angel investor, then be prepared to share a portion of your business and revenue.

Grab the Prime location!

Location and Environment of the hotel surrounding play a crucial role. The location where you establish your hotel makes sure it is easily accessible to people and must be visible in the market for the people who pass by.

The too-crowded place is also not a good choice to open a hotel. The place must be decent enough that people can relax in peace and would be much preferred if close to nature.

The location must include things like

Parking space
Reserved waiting area
Nearness to market
Google map presence
Walking crowd

Get the License and Permits early

Starting a hotel requires various permits and licences from the government, it is feasible if you apply for the licences as early as possible, as some permits are priorly needed and renewed when the hotel is operational.

Licences and permits may vary according to the type, size, rating, amenities and location of the hotel. Licences are namely

Building permit
Fire safety permit
Police licence for hotel
Health / Trade licence
Business registration
ESI registration
PF registration
Bar licence
FSSAI food business licence
GST registration
Eating house licence
Lift clearance licence
Music Licence
Signage Licence
Certificate of environmental clearance

Get a best-in-class Hospitality Staff

When we say best in class, that means staff who have studied hospitality and must have some prior experience working in the hospitality industry and must understand the industry in and out.

Your staff highly represents your services and your outlook in people’s eyes, so don’t compromise on it and get the best possible manpower to make your hotel image eminent in the market.

In the hospitality sector, the management team is considered as the backbone of the hotel. Having a good management team will ensure you more funding and smooth functioning of operations.

In order to get the best hospitality staff, you can take the help of any employment agency that will provide you with the best staff and use platforms like LinkedIn, WorkIndia, and Apna jobs where you can post what requirements you have.

Staff needed in Hotel business

The importance of the right staff is of utmost importance and a non-negotiable factor. Let’s break down the staff into departments.

Front Office
Housekeeping department
Food and Beverage service
Kitchen staff
General and Admin Staff

Marketing and Branding

The Hospitality business segment is getting more competitive day by day. Therefore you need to have an exceptionally good marketing plan and a clear picture of your brand in people’s eyes. Adopt both online and offline ways, and choose a simple design and decent name for your hotel.

Online Sources of Marketing

Social media platforms

Social media presence in restaurant businesses must add awareness about your brand among potential people.

Blogs

A blog can become a strengthening factor in building your digital reputation and adds to your database for other digital activities.

Website

It is the most essential need of every business. In order to look professional in the market, having a website is a non-negotiable factor. Also, don’t forget to list your restaurant business.

Email marketing

It is an efficient way to gain customer loyalty; through this, you can receive direct replies from visitors and potential visitors.

Offline Sources of Marketing

Offline marketing works very well in the restaurant business in India, and there are a lot of ways to do it. Some of the proven ways are

Hosting food events
Engage with food bloggers and connoisseurs
Distribute pamphlets in the business locality
Billboard advertising
Newspaper and television ads
Radio ads

Customer Relationship Management (CRM)

The CRM system helps easy collection and storage of important customer data that can be helpful in analysing the changing preferences in habits of the customer. Hence using CRM gives the Hotel owner an improvised opportunity to serve its customers.

Why is CRM effective?

It gathers information about its customers to initiate the building of relationships in 4 facets.

Contact details
Frequency of visits (in a week or in a month)
Detailed profile on eating preferences
Average spending per visit.

Host a Soft Opening

Generally, in the hotel business, a soft launch is treated as the unofficial opening that happens months and weeks before the grand opening. Soft opening is generally done with less publicity and hype; also, very limited known people are invited to experience and give their feedback. One may not get the full-ended services and other amenities in this opening because the hotel is not officially open.

Official Grand opening

Unlike restaurants Hotels generally prefer grand and lavish openings when it starts entertaining people to come in. Generally, when a new lavish hotel is launched in the market, it hosts a Launch party, to which all the renowned and celebrated people of the city are invited, like Big businessmen, Lawyers, Journalists, Food Connoisseurs, and other Big hoteliers.

All this PR is done to create big hype about your brand, and that will generate curiosity among the general public to visit the hotel.

Do try to approach social media and other TV influencers nowadays. It creates a huge impact on people’s lives and is also helpful in framing your hotel’s image in people’s eyes.

(Advice: Focus on customer’s feedback and try to improvise services accordingly)

Conclusive statements

In the module above, we have deeply analysed all the points and factors associated with “Hotel Business Plan and How to Start a Hotel from Scratch”. Starting a hotel requires huge funding, and many permits and licences are required. In case of a lack of funding, it is better to start a hotel in collaboration with someone or you can also take easy Hotel business loans from OneNDF on the competitive rate of interest and easy repayment tenures.

It is better if you start applying for licences on an early basis because it’s time-consuming, and you may get your application rejected due to some unfulfilled formality.

Always keep the data of the visitors using the CRM model and try to re-bring them to your hotel using E-mail marketing and other POS tools which run on a database system.