Hotel Business Plan

If there is one industry that has picked up huge momentum in the past decade, it is the travel and tourism industry. With more and more people travelling, not just within the country, but also internationally for tourism as well as business purpose, the one sector that has seen a massive surge in the travel and tourism industry is the hotel sector. Thanks to globalisation, people have become more aware of the comforts and luxuries they should expect from a good hotel.

Also, India is one of the leading countries whose travel and tourism sector contributes a major chunk to the nation’s GDP. As per the current trend, the demand for hotel accommodation is growing at 6% per annum. However, against that, the growth of supply is at 3% per annum. Thus, there is tremendous potential in the hotel industry for someone looking to start a new business.

Like with any other business, it is vital to first chalk out a detailed road map of your business plan to control and direct a steady growth as well as to obtain funds for from outside investors and lenders.

A step by step strategy for starting a hotel business is as follows:

Step 1: Prepare a strategy – the very first step in the process is to plan your business strategy which gives a snapshot of the hotel’s growth plan for the next 5 years. This should include the foreseeable goals, obstacles, SWAT analysis of the industry as well as in depth plans for meeting the set goals. In short, it should be a short, yet crisp summary that provides a clear cut outline of the entire business strategy.

When you present your business plans to obtain a business loan from lenders, the investors and lenders usually go through the first page and decide if they wish to read more, so it is also vital to lay out all the critical information up front like your market analysis that proves that a new hotel is needed and your unique skills and qualifications for meeting your objectives.

Step 2: Industry analysis – this can initially seem overwhelming, given the sheer number of hotels being opened all across the country these days. But, you will need to focus your attention only on the hotel sector that mirrors your hotel plan. Is it is small motel with just basic amenities? Is it an upscale boutique hotel? Or a luxury resort or 5 star property with modern amenities? You will first need to decide what niche you wish to target and then accordingly analyse the trends and projections that are likely to affect that market niche.

Step 3: Customer analysis – as it is popularly said, ‘Customer is the king of the market’, even in the hotel industry, it is imperative that you understand the requirements of your target customers. You need to get answers to questions like who is likely to choose your hotel? Are they travelling for business or pleasure? Are they travelling with kids? How often are they likely to visit the hotel? What would be their ideal budget? What will be their expectations? Latest amenities ? Luxurious interiors? Outdoor sports? And so on. It is vital for you to figure out the potential customer’s demographics and accordingly draw a plan to meet their expectations.

Step4: Competitor’s analysis – there are two types of competitors you need to analyse: Direct competitors that include hotels that target your market and indirect competitors, which include a broader sector like restaurants and other businesses that are just a part of your market. You will accordingly need to plan a strategy to ensure your hotel has something unique to offer.

Step 5: Planning the marketing – this will consist of four Ps – product, price, place and promotion. Product being your hotel and its services, price being the rates of your products and services, place being the physical location of your hotel as well as its website or other booking sites it is listed on and promotion is your way of attracting customers to not just stay with you once, but also keep coming back.

Step 6: Operations –your short term operations will include the day to day tasks of booking reservations, check-in and check-out clients, luggage handling, housekeeping, accounting and so on, whereas the long term operations will include the ways in which you plan to meet your goals like achieving a certain rate of occupancy, adding more restaurants and other such additional services to attract more visitors.

Step 7: Management – a strong management team is the backbone of your hotel business as it will not only convince financers to invest money in your venture, but also ensure smooth functioning of the operations.

Step 8: Financing – last but not the least will be to get a business loan for your hotel venture. Given the potential for growth in the hotel sector in India, various lenders like banks, NBFCs including digital NBFCs like Lendingkart are willing to invest in this growing market.

Benefits of obtaining a loan from Fintech companies like Lendingkart, which have seen a consistent surge of late, are:

  1. Tailored credit solutions
  2. Quick loan processing
  3. No collateral needed
  4. Zero hidden charges
  5. Flexible repayment options
  6. Provides good flow of liquidity
  7. Enhances credit score integrity
  8. Quick application process:
    1. Submission of application on the website by filling up personal, business and loan details.
    2. Upload the required documents that include address proof, business registration proof, GST filling, Trade licence, VAT registration, Aadhar card, bank statements, PAN card and TIN.
    3. Evaluation – after evaluating the application, if found to be in accordance, the loan in sanctioned.
    4. Disbursal – the loan amount is credited.

Hotel Business Plan FAQs:

1. What are the different types of hotel loans provided?

2. For what purpose can we avail a hotel business loan?

Building new hotel, renovation of existing hotel, capacity enhancement and related activities.

3. What is the interest rate for Hotel Loan

Interest rates start from 15% per annum.

4. What are the processing fees of lending kart?

We charge a processing fee of 2% upfront.

5. Does Lendingkart charge any pre closure fees?

No, we do not charge any pre closure fees, as long as you have paid your first EMI in full.

6. What is the loan tenure?

We offer business loans for up to three years period

7. What are the repayment instalments options

At Lendingkart, we have flexible repayment options of EMIs or fortnight instalments.

8. Why is it advisable to pay loan instalments bi weekly?

As a rule of thumb, the faster you repay your loans, the faster you can renew your loans, thus ensuring revolving credit. This is especially beneficial if you are using a loan for working capital optimisation.

9. Does Lendingkart charge any hidden fees?

As discussed above, at Lendingkart, we do charge any hidden fees. The only fees we do charge is the one time processing fee of 1% to 2% depending on the amount and type of your loan.

10. Is there any collateral required for business loans?

Since all business loans at Lendingkart are unsecured, we do not demand any collateral against our loans.

11. What are the key areas to consider before one thinks of opening a Hotel Business?

The Key points to take into consideration are: • The best location for opening a hotel • Capital requirements • Stupendous and lavish business plan • Exceptional hospitality and customer service techniques • Smart e-commerce strategy to be followed like website and social media marketing and focus• Smart pricing strategy to be followed like staffing, categories of rooms and suites, maintenance costs, competitors pricing, time and length of the considerable stay etc. • Flexibility • Quality Management • Investment in a strategic marketing plan • Understanding the competitors

12. What are the basic costs that one needs to incur before investing in a Hotel Business?

Before investing in a Hotel Business, one needs to understand the following expenses: • Building, Renovating Refurbishing or Buying Hotel Property and raising it • Working Capital for Staffing and other Fixed expenses • Marketing costs • Operational costs • Luxury Costs • Licenses and Legal considerations

13. What kind of housekeeping staff is required for a basic Hotel?

Some of the key positions of housekeeping considered and filled before starting a hotel should be: • Customer care executives • Cleaners, Sweepers and Housekeepers • Managers • Washers • Waiters

14. What are the kind of Licenses that are required by the Hotel Business owner?

He must apply for the following mandatory licenses before investing in a hotel business:• Food Safety License from FSSAI (Food Safety and Standard Authority Of India) • Health and Trade License from Local Civil Authority in your area. • Eating House License from Licensing Police Commissioner. • Liquor License from local Excise Commissioner • Fire Department License from fire department

15. How can one determine the Hotel area which can be built?

It depends on the kind and style of hotel, the vendor wants to open. If it is a luxurious 5-star hotel with 100 plus rooms, then the minimum space required would be around 100,000 square feet. For a mid-sized hotel with 60-80 rooms, the area could be between 10000-50000 square feet.