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:
- Tailored credit solutions
- Quick loan processing
- No collateral needed
- Zero hidden charges
- Flexible repayment options
- Provides good flow of liquidity
- Enhances credit score integrity
- Quick application process:
- Submission of application on the website by filling up personal, business and loan details.
- 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.
- Evaluation – after evaluating the application, if found to be in accordance, the loan in sanctioned.
- Disbursal – the loan amount is credited.