So, you have decided to open a hotel and realize your dream. The first and foremost step is to write an effective business plan that promises to bring returning customers and lots of success to your business. Though you have an amazing concept of launching the hotel business, your business plan is crucial and serves like a road map to its growth. Many business owners don’t take the time to write a business plan, while others don’t know how to write a business plan. This is where most of the business owners get stuck. A thorough business plan is the first thing potential investors will look for. To get started, take this course to learn how to draft a business plan the right way.
A hotel business plan should include the summary of your idea and reflect on the essentials of the business. The real value of the hotel business plan is not about having everything worked out as a completely planned product but more so about genuine research, analysis and thinking about whether the business can be run in a well-organized manner. Let’s take a look at some of the critical points that should be included in your hotel business plan. This course on how to create a business plan will help you get more insights.
Synopsis of Hotel Business
Your executive summary or synopsis must include the vision, mission and organizational objectives of your business. You should explain to the prospective investors as to why you are in the hotel business and the vision you have for your business. These are very important requirements of a summary or synopsis. Strategic positioning is an overall approach which is the set of rules and regulations to meet the goals of your company. You should also include a brief overview of strategic positioning in the executive summary. Apart from this, you should include answers to questions like:
- What is the location of your hotel, room count, rating and overall feasibility?
- What is the mission of your business? This should include everything about the hotel.
- What hotel products and service offerings will be utilized?
- Who will be your guests and what are the key trends?
- If a loan is required, what is the amount needed and how will that amount be used?
Description of Your Company
You should provide all the basic information about the company and business domain along with the key highlights. If you want your business to grow, you need to understand the market well and know the entire gamut of services that you can offer to your customers. Detailed information about the main selling points of your hotel should be defined, such as:
- Explain the guiding principle of your business
- What are the specific milestones and objectives of your business?
- What are the competitive strengths of your hotel?
- What will be the expected financial results over the next 5 years?
- The expertise, skills and other strengths of your business etc.
USP of your Hotel
This section should include information about the hotel concepts and USP along with answers to some important questions, which will help the investors and other interested parties get a clear idea on your marketing strategies for the future:
- What are the products of your hotel? List the tangible offerings of the hotel.
- What kind of services will be provided to the guests?
- What makes your hotel brand unique and appealing to the guests?
- List of competitor hotels or hotel groups that can prepare you for opportunities or threats.
Before starting a hotel business, it is essential to have a good idea about the local as well as regional competitors. Don’t forget to include what sets you apart in the market. Investors always want to know how well you understand your competitors and what are the plans you have to make sure you stay ahead of others. You should exhibit to the investors that you have a good grasp of the market and competitors and that you can sustain well in the industry. You should also clearly show how you can exploit the weaknesses of your competitor and turn them to your advantage and strengths. While writing a plan, incorporate points by asking yourself these questions:
- Who are the local or regional competitors of your business?
- What are the competitors’ average prices, occupancy and target markets?
- What is your competitor’s analytical framework?
Industry and Market Condition
Your business plan must also include all the required information on the current trends of the industry and how it will impact your hotel business. This section helps you gain investor’s confidence as they begin to understand that you have a good grasp on the domain specifics. Also, remember that investors would always want to know about your future hotel guests. So, make sure to define the customer market properly so that the readers are able to understand clearly that you plan to serve your customer groups in a focused manner, which will also grab the attention of your competitors. You can demonstrate this by answering the following questions appropriately:
- How is the industry changing and how will it impact you? What are your short term and long term goals?
- What is the present environment and what are the influences of technology?
- Are there any tax advantages or benefits available?
- What barriers exist for entering into the business such as capital, experience, local councils etc.?
- What is the size of the tourism market around the location of the hotel?
- What is the current supply of hotel rooms? How much supply is currently there for different star rating levels?
Financial Plan or Analysis
The financial plan is one of the most essential things of a hotel business plan, as it acts as a foundation to your business. We all know that without proper finance and funds, it is difficult to sustain any business, small or big. The financial plan should include the detailed information about the start-up cost, on-going cost of doing business, the revenue levels and so on. To better understand various revenue models and financial projections needed in a business plan, check out this course. The revenue level depends on the number of rooms you have and the average price per room, expected occupancy rate and so on. Depending on the targeted customers, the below financial data should definitely appear in your hotel business plan:
- Your forecast for key metrics of the hotel, such as OCC, RevPar etc.
- How much amount do you need, when and why?
- What is the anticipated period of holding the asset or contract?
- When will investors get equity and profits?
The hotel business is run by an entire team and not a single owner or stakeholder. Hence, it should include a list of well qualified members, wherein each and every one should be responsible for the growth of your business. You should include the team details and how they will manage the hotel business and your management team must have the ability to impress the investors. Hence, the business plan should show how your management team will use their experience to operate the hotel efficiently and how you, as a business owner will be able to translate their collective experience into operating the hotel properly. You can also include the resume or bio-data of the star performers and managers. You also need to show a commitment to train your staff for better performance. You can do this by collaborating with a major hotel unit or hospitality management institute. Learn the best possible ways to train your staff in our course on hospitality supervision and leadership. Key details to be included in this section are:
- How you are going to find and hire a qualified person?
- How will the key people achieve their goals and come up with tangible results?
- What background and qualifications do the key players possess?
- Who is responsible for the overall achievements?
- Who are the shareholders and what are their percentages?
The hotel business plan should also include an ideal project plan for turnaround operation. It should include information on the milestones, opening event, PR results, site selection, marketing team, sales targets, and the break-even point timings of the hotel project and so on. Besides this, you can include a variety of information related to your organizational planning, strategic planning, and customer analysis and so on. You may have numerous great ideas but a good write-up will always help you implement your plans in a well organized manner. Make sure to get the required permits and licenses and plan for the related activities.
You can additionally provide other relevant information in the appendix section. Don’t clutter the main sections of the business plans with too many details. Before opening a hotel or pursuing the project of repositioning your existing hotel business, it is imperative to have this kind of critical thinking. You won’t regret spending time on creating a good business plan, as they help you know about your business in greater depth. Remember, no investor would be interested to become a stakeholder if you fail to present a clear business plan. So, go ahead and use this effective checklist to get your creative juices flowing and write a perfect hotel business plan! At any time, feel free to refer back to this awesome course to write an effective business plan.