hotel business plan format

• Revenue Management
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• Asset Management
• Pre-Opening
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• Turnaround Management
• About Xotels

Hotel Business Plan

OK, so you have decided to realize your dream and become a hotel entrepreneur, so now you need to start writing your hotel business plan . You have thought out an amazing concept delivering unparalleled guest service. The next step would be to write a hotel business plan. It’s like a road map to the opening. However, as a seasoned hotel revenue management consulting and hotel management company , we have seen that this is where most entrepreneurs get stuck.

Why? Many do not have the time and don’t know what to write or how to do the financials. But until you finish your business plan, you will not be able to get the financing either. So you end up with ideas sitting in your head not realizing your dream.

Really it is not that difficult to make a good hotel business plan. It is merely a structured summary of your idea. Most people try to include everything about their hotel concept in the plan. This leads to an indigestible super novel-like bookwork, aka a mess.

The key is, knowing what to include, and what not to include in your hotel business plan. Create a clear road map for success. Excite investors rather than bore them to death like most business plans full of redundant information do. And you need to lead readers down the exact path you want.

One of the main challenges for example is that after reading the first page most businesses often don’t fully understand what the hotel is all about. For investors and lenders, it is crucial they can quickly comprehend your plan, without reading the whole document.

Hotels 101: The Basics of Business Planning

We have put together a hotel business plan template to help you on your way. Check out our approach based on 10 critical points, being:

• Executive Summary
• Company Analysis
• Industry Analysis
• Customer Analysis
• Competitive Analysis
• Strategic Plan
• Operations Plan
• Management Team
• Financial Plan
• Key Milestones

Steps of your Hotel Business Plan

Let’s dive into the step-by-step checklist of what your hotel business plan should look like.

Infographic by Xotels

1. Executive Summary

This first part should consist of two main parts, being:

• Mission Statement (Introduction): a 1 line company description only the essence of your hotel (not 2 lines or a paragraph). It explains why you are in business or which huge need you are solving, that currently is not being met. For example in the case of Qbic Hotels “Moving modular hotels into under-utilized real-estate to reduce build-out cost and time.” 
• Objectives : What do you hope to accomplish (i.e. “Reach an annual occupancy of 90%”).

 2. Company Analysis

More detailed information on the USPs (unique selling points) of your hotel concept.

3. Industry Analysis

Information on the current industry trends and the current state of the market and how this will impact your hotel. This is needed as investors want to be sure you really understand the hotel industry. This acts as the foundation on which decisions such as trends and developments to follow will be based.  

Streamline Your Hotel Operations

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4. Customer Analysis

In-depth information on your target market, including geographic, demographic, socioeconomic, psychographic, and behavioural segmentation details. It can also help you to keep up to date with the latest hotel marketing trends to understand which are the types of guests who will be staying at your hotel. Explain which features will be meeting the needs and wants of these main segments when thinking of:

Basically, how will consumers answer this question ‘Why my hotel?’

Aim to break it up to the point value can be easily communicated (do not make it too overcomplicated). Think of the following examples:

• Psychographics: interests, lifestyles, personality, values, opinions, and attitudes
• Behavioural segmentation: purchasing behaviour, level of engagement, customer loyalty
• Demographics: gender, age, marital status and education
• Geographics: location (country, state, region, city)
• Socio-economics

Any of the above examples of hotel segmentation can, if described well, be of great value to your business plan. An example of this could be a hotel located in a beach town, where you should be able to describe how demographics and psychographics differ from summer to winter time. Especially, since this example is typically known for lower demand in winter which you could be compensating for with the right hotel marketing strategies on hand.

5. Competitive Analysis

A study of your local competition or global concept competitors, with each of their strengths, weaknesses, occupancy rates and market share ( SWOT analysis ). And don’t forget the most important part; what differentiates you from them. What makes you stand out?

Ask yourself: “can I add value to a specific area”, especially when it comes to hotel-dense areas like city centres or major destinations.

6. Strategic Plan

This exists of 3 parts:

• Marketing : How exactly will you attract customers/guests? How will you position yourself? What will your message be to the different segments of your business mix? How will your direct marketing work? What will be the plan for your hotel website, SEO, SEM and SMM? Will you do offline promotion? In short, your hotel marketing strategy should cover everything there is to know about how to market your hotel.
• Distribution : Which 3rd party channels will you use and how will you manage availability? What technology will you need?
• Revenue management : What pricing and yield techniques will you use? What will your payment and cancellation policies be? Which room types will you be selling, and how will they be individually marketed? How many revenue scenarios will I create? Where can I compensate income/demand streams when necessary?

Make sure you have the capabilities to plan out a strong marketing, distribution and revenue management strategy. 

Things get complicated rather fast, and choosing to outsource hotel and revenue management is likely to give you a strategic advantage, during the planning phase, and the execution of your business plans.

7. Operations Plan

How will you run your hotel? Think of the following elements:

• How many staff and supervisors will you need? 
• What are their job descriptions/responsibilities? 
• What background and experience should they have? 
• When should they start? 
• What are your service standards?
• Will you develop manuals?
• Which supplier will you use?
• How will you manage inventory?

8. Management Team

Include the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success. Having a great team is the key to success , and stakeholders will be impressed with a thorough explanation of the added value everyone brings to the table.

9. Financial Plan

Provide the start-up costs of the hotel (capital investment), the ongoing business costs, operational expenses and revenue projections for the next five years. These figures should be always based on your Hotel Feasibility Study . The KPIs to look at include expected occupancy, ADR (Average Daily Rate) and RevPAR (Revenue per Available Room).

If you are raising money , outline how much funding will be needed and when. Explain how you will generate a return on investment for investors, or when lenders will be paid back.

10. Key Milestones

These are the most important achievements which once they have been completed, will make your hotel more likely to succeed. Think off:

• Location selection
• Permits & Licenses
• Build-out / Construction of the Hotel
• Staffing and Training
• GOP Break-even
• NOI Break-even

Each time one of the key milestones is achieved, the risk of lenders or investors decreases . And once your last key milestone is reached, the chance of success is more or less guaranteed.

11. Appendix

Provide any other relevant information here. Don’t clutter the main sections of your hotel business plan with too many details. Rather support them with attachments in this part.

Putting Your Plan into Action

Many people have great business ideas. But that really doesn’t matter. The difference between dreamers and entrepreneurs is the action mindset. Are you ready to ship your idea to the market? 

The first step is to put your ideas on paper. I hope this free sample will help you write a persuasive hotel business plan. Because no investor or lender will be interested if you cannot present a clear plan.

Follow your dreams and go for it!

Maximize Your Hotel Revenue

Uncover the hidden revenue potential of your hotel or resort.

Need help to Develop and Manage your Hotel Concept?

Our revenue management consulting experts at XOTELS have helped hundreds of hotels to develop and optimize their businesses.

With cost-effective implementations and best practices developed over years of experience, successful business for your boutique hotel, resort, B&B, aparthotel, hostel, or any other lodging concept for that matter.

Hope this template has helped you get inspired to start your own hotel business .

Best of luck in your endeavours!

Patrick Landman

PS. Get in touch with us if you need help developing and managing your hotel concept, and help bring your hotel to the next level with our hotel consulting services.

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Hotel Business Plan Template

Written by Dave Lavinsky

Hotel Business Plan

You’ve come to the right place to create your hotel business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their hotel companies.

Sample Hotel Business Plan Template

Below is a template to help you create each of the key elements of your own hotel business plan:

Executive Summary

Business overview.

Pegasus Hotel is a startup full-service independent luxury hotel in Austin, Texas. Owned by two local businessmen, Frank Girard and Miles Butler, it will serve the new up and coming district of the outskirts of Austin and cater to the locals and travelers who crave a luxurious and relaxing atmosphere. Pegasus Hotel will be a 10-story, 360-room hotel with a five-star restaurant and bar, relaxing pool and spa, 20,00 square feet of meeting and event space, a spacious and fully-equipped fitness center, and a view of scenic Austin. Pegasus Hotel will hold weddings and events, meetings, retreats, and those looking to unwind and be pampered while staying at the hotel. The service and amenities will be first class and the concierge will treat guests with extreme care and ensure guest satisfaction is held at an exceptional standard..

Service Offering

The following are the services and amenities that Pegasus Hotel will provide:

• 354 luxury rooms, two presidential suites, and four parlor suites
• Olympic size pool with adjacent hot tubs and surrounding cabanas
• First-class full-service spa
• First-class restaurant and bar
• Spacious fitness center
• Over 20,000 square feet of attractive meeting space for events
• Concierge and butler service
• Complimentary wifi
• Valet service
• Laundry service
• Business center

Customer Focus

Pegasus Hotel will target the population of Austin, Texas, its surrounding communities, and travelers visiting Austin for work or play. Guests will be mid to high level income, enjoy traveling, enjoy visiting spas and high-end restaurants, and work in the corporate or government sector.

Management Team

Pegasus Hotel will be owned by Frank Girard and Miles Butler. They will act in an Owner capacity, and will not be involved in the day to day operations of the hotel. Frank and Miles will hire the appropriate staff to ensure Pegasus Hotel is a profitable and successful business.

Lorenzo Falucci, General Manager, has over twenty years of experience in the hotel industry. He has most recently managed another independent boutique hotel in New York and was excited to be recruited by Frank and Miles to operate the Pegasus Hotel.

Lorenzo will hire Lisa Montgomery as the Director of Sales and David Jimenez as the Assistant General Manager. Lorenzo, Lisa, and David will be the senior management team of Pegasus Hotel. They will oversee all other department managers – Maintenance, Housekeeping, Front Desk/Guest Relations, and Food and Beverage. Each department manager will oversee various employees in their respective department and role. The Pegasus Hotel will have a large and sophisticated operation as each department is integral in the success of the hotel.

Success Factors

Pegasus Hotel will be able to achieve success by offering the following competitive advantages:

• Friendly, attentive, and highly responsive staff that caters to each guest and will be able to provide the best guest experience possible.
• Luxurious amenities throughout the hotel that will make each guest feel pampered.
• Modern and contemporary designed hotel tucked against a beautiful Texas landscape perfectly suited to host any event.
• Competitive rates and frequent guest discounts.

Financial Highlights

Pegasus Hotel is seeking $10,000,000 in debt financing to begin constructing the hotel and commence operations of the business. The funding will be dedicated towards securing the land lease and the hotel build-out and design. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, furniture, fixtures, and equipment, initial inventory, and working capital. The breakout of the funding is below:

• Secure the land lot, architecture, build-out, and design: $6,000,000
• Hotel furniture, fixtures, and equipment: $2,000,000
• Initial inventory: $750,000
• Three months of overhead expenses (payroll, rent, utilities): $1,000,000
• Marketing & advertising: $150,000
• Working capital: $100,000

The following graph below outlines the pro forma financial projections for Pegasus Hotel.

Company Overview

Who is pegasus hotel.

Pegasus Hotel is a startup full-service independent luxury hotel in Austin, Texas. Owned by two local businessmen, Frank Girard and Miles Butler, it will serve the new up and coming district of the outskirts of Austin and cater to the locals and travelers who crave a luxurious and relaxing atmosphere. Pegasus Hotel will be a 10-story, 360-room hotel with a five-star restaurant and bar, relaxing pool and spa, 20,00 square feet of meeting and event space, and a view of scenic Austin. Pegasus Hotel will hold weddings and events, meetings, retreats, and those looking to unwind and be pampered while staying at the hotel. The mission statement of the hotel is to provide first class service and amenities.

The guests rooms will include luxury beds and bedding with best-in-class furniture and bathroom fixtures. Pegasus Hotel will also have a full-service spa that will be able to provide massages, facials, makeup and/or hair service, steam rooms, and a sauna. The Olympic-sized pool will have adjacent hot tubs with a swim-up bar and surrounding cabanas. Pegasus Hotel will be equipped with state-of-the-art fitness equipment in its spacious gym. The restaurant will be a high-end steakhouse that will feature entrees from a world-renowned chef and a wine list cultivated by the area’s most respected sommelier. There will also be over 20,000 square feet of meeting space that will hold weddings, bat mitzvahs, reunions, galas, and any special event.

Pegasus Hotel will be independently owned and operated and will feature its own reservation system and operational software. Each employee will be expertly trained and vetted to pass luxury industry guest service standards. Pegasus Hotel is committed to providing the best guest experience possible while maintaining a profitable hotel. Pegasus Hotel aims to be a step above the rest and be an unforgettable experience for all who step foot into the hotel.

Pegasus Hotel History

Pegasus Hotel is owned by two local businessmen, Frank Girard and Miles Butler. Frank and Miles have been friends and business associates for over thirty years. They became friends in college while attending The University of Texas at Austin. Frank is a real estate developer specializing in commercial real estate and multi-use land projects. Miles is a software engineer who has built multitudes of software programs for various companies. They have both been extremely successful in their careers and want to divest their investments in a large-scale full-service hotel in Austin, Texas.

Since incorporation, Pegasus Hotel has achieved the following milestones:

• Acquired a 40-acre lot on the outskirts of Austin, Texas.
• Registered Pegasus Hotel, LLC to do business in the State of Texas.
• Hired a consultant to conduct a feasibility study for a full-service hotel in Austin.
• Began developing reservation and operational management software for use at the hotel.
• Began the branding image, logo, website, and social media accounts for the staffing agency.
• Applied for a liquor and mixed beverage permit with the Texas Alcoholic Beverage Commission.
• Hired an architect to begin the design phase of the hotel.

Pegasus Hotel Services

The following will be the services and amenities Pegasus Hotel will provide:

Industry Analysis

The hotel industry is expected to increase to a $133 billion in the next five years. The hospitality industry will benefit from increases in travel spending, corporate profit and general consumer spending.

As consumers earn higher incomes and businesses replenish their budgets, travel spending is projected to increase over the next five years. Inbound trips by non-US residents are anticipated to rise 22% over next the five years, while domestic travel is expected to grow 9% during the same period.

The industry will see particularly strong future growth in extended-stay hotels, boutique hotels, spa and health retreats and resorts segments. As demand for these auxiliary services picks up, industry employment is anticipated to recover and increase over the next five years. Industry players are also expected to continue expanding abroad into emerging economies, such as Asia, Eastern Europe and South America. These foreign markets are expected to somewhat detract from domestic capital investment, as they offer higher growth prospects for industry operators.

Customer Analysis

Demographic profile of target market.

The precise demographics for Austin, Texas are:

Customer Segmentation

Pegasus Hotel will primarily target the following customer profiles:

• Individuals and families who have disposable income (mid to high level)
• Frequent travelers
• Individuals who dine out and visit spas frequently
• White collar workers (corporate or government office)

Competitive Analysis

Direct and indirect competitors.

Pegasus Hotel will face competition from other companies with similar business profiles. A description of our direct competitors is below.

Hotel Ella is a historic boutique hotel located in Austin, Texas. Located in downtown Austin and walking distance to the University of Texas campus, Hotel Ella is a stylish boutique hotel housed in the historic Goodall Wooten House, one of Austin’s original landmark estates. Constructed in 1900, the Greek revival-style mansion underwent an extensive renovation in 2013, and now offers the perfect balance between modernity and a rich history rooted in the fabric of the neighborhood and the university. Hotel Ella has 47 guest rooms, a cabana-lined pool, and a wrap-around veranda overlooking the front lawn. Hotel Ella features beautifully designed outdoor and indoor spaces perfectly suited for a vacation, wedding, or corporate event. The hotel also features a diverse collection of Texas Modernist works around the hotel grounds.

All guests of Hotel Ella are treated to warm southern hospitality and superior personalized service during their stay. The historic property is appointed with a variety of elegant 21st century amenities. Hotel Ella also offers the following amenities and guest services:

• Complimentary 24-hour guest services
• Complimentary high-speed wi-fi access
• Complimentary electric car charging station
• Complimentary morning newspapers available in the historic mansion
• Complimentary coffee stations from 5am – 11am
• Twice-daily housekeeping service
• Cabana-lined outdoor pool
• Fitness center
• Same-day valet laundry services
• In-room dining by Goodall’s
• Business services: photocopying, printing, postal services, and supplies

Hotel Ella also welcomes dogs of all sizes at no additional fee.

Kimber Modern

Kimber Modern is located in the hip SoCo district of Austin and is intended to draw in the independent urban traveler seeking a unique escape. It is architecturally designed with clean lines and abundant light filtered through canopies of oaks in an artfully landscaped Courtyard. The hotel also encompasses absolute comfort and attention to detail while providing technologically sophisticated rooms in their boutique guest rooms. Guests booking at Kimber Modern will receive complimentary beverages, parking, and WiFi.

Kimber Modern offers the following hotel amenities to its guests:

• Off street covered parking
• Electric car charging station
• Keyless entry
• Complimentary WiFi throughout the hotel
• Multi-level courtyard with a 25-foot glass water feature with multiple areas to lounge
• Jura self-serve coffee system featuring a variety of coffee drinks 24/7
• Beverage bar 24/7
• Gourmet teas
• Virtual concierge – computer, printer, and copier
• Meeting space available for groups
• 3pm check-in and noon check-out

Guests are also available to book the entire hotel for their group.

The Cat Noir Hotel

The Cat Noir Hotel is an award-winning 14-room boutique hotel located in the heart of Austin’s east side. The European-styled boutique hotel includes a restaurant and bar partner, Uncle Nicky’s Italian Specialties. Uncle Nicky’s offers a relaxed all-day dining experience that is themed after cafes in northern Italy. The Cat Noir Hotel opened in 2016 and has been ranked #2 by Travel + Leisure’s World’s Best Awards and Top 20 Best Hotels in Texas by Conde Nast Traveler.

The Cat Noir Hotel’s contemporary design maintains a sense of warmth and a unique aesthetic that is felt through the lobby, outdoor spaces, and each of the unique guest rooms. In addition to the design elements, The Cat Noir Hotel boasts the following features:

• Private roof deck for guests to enjoy the stunning views of downtown, the Texas Capitol, and the University of Texas
• Outdoor patio and courtyard areas on all levels
• Artwork from local artists

Each of the guest rooms include Juliet balconies with neighborhood views, fine linens, and Simmons luxury plush mattresses.

Competitive Advantage

Pegasus Hotel will be able to offer the following advantages over their local competition:

Marketing Plan

Brand & value proposition.

Pegasus Hotel will offer the unique value proposition to its target local market:

• Professional and attentive staff dedicated to ensure complete guest satisfaction.
• Various amenities throughout the hotel for any guest to enjoy.
• Modern and contemporary design with beautiful Texas views throughout the entire hotel.
• Competitive rates.

Promotions Strategy

The promotions strategy for Pegasus Hotel is as follows:

Social Media

Pegasus Hotel will invest in advertising the hotel on social media platforms Facebook, Instagram, LinkedIn, and Twitter. By using targeted social media marketing, Pegasus Hotel will be able to reach those who frequent nice restaurants and spas and travel frequently.

Website/SEO Marketing

Pegasus Hotel will invest in a strong SEO presence so that when someone enters “Austin boutique hotel” or “first class hotel near me” in their Google or Bing search bar, Pegasus Hotel is at the top of the list. Their website will feature photos of the guest rooms, meeting areas, pool, spa, fitness center, and restaurant/bar. Future guests will be able to make a reservation to book their future stay on the website and access contact information for either a Director of Sales or General Manager of the property.

Pegasus Hotel will request all requests for news stories regarding the development of the hotel, owner/developer information, opening dates, etc. By accommodating the press’ requests for stories, it will also be free advertising for the public to learn about the new up and coming luxury hotel.

Frank and Miles will invest in a billboard in downtown Austin where the mid to upper class of residents frequent. The hotel will be minimalistic but eye-catching. It will feature an attractive rendering of the hotel along with the website. Curious passersby will be directed to visit the hotel’s website for detailed information.

Third Party Booking Websites

Once the hotel is nearing 60 days towards opening, all of the third-party websites will feature Pegasus Hotel so that travelers visiting Austin will be able to see it listed as an option for Austin hotels.

Bridal Shows and Wedding Industry Events

Pegasus Hotel will have a table at all of Austin’s bridal shows and wedding industry events. It will attract those couples searching for a venue to accommodate their special day.

The pricing of Pegasus Hotel will be moderate and on par with competitors so customers feel they receive value when purchasing its guest rooms and services.

Operations Plan

The following will be the operations plan for Pegasus Hotel.

Operation Functions:

• Frank and Miles will be the owners of the hotel and hire the appropriate staff to manage the hotel. Frank will act as CFO of the hotel and Miles will be in charge of the reservation system and hotel operations software. Miles developed the software and will focus on making sure it’s always functional and efficient.
• General Manager will be hired to oversee the entire staff and hotel operations to include guest satisfaction, oversee vendor contracts, events, and making sure that each department is running effectively and efficiently.
• Assistant General Manager to assist the General Manager with overseeing the staff, with particular attention to guest satisfaction and front desk operations.
• Director of Sales will be hired to sell events, corporate accounts, and group bookings for the hotel.
• Maintenance Engineer will be hired to attend to all mechanical and plumbing issues that may arise.
• Executive Housekeeper will be hired to lead the team of housekeepers to make sure all areas of the hotel are being cleaned to Pegasus Hotel standards and that each guest is receiving all accommodations to their requested schedule.

Milestones:

Pegasus Hotel will have the following milestones completed in the next six months.

8/1/202X – Purchase land lot and break ground on new hotel business.

8/15/202X – Finalize architectural renderings and hire a General Contractor to build the hotel.

9/1/202X – Finalize contract with advertising company for them to design the branding image of the hotel, logo, website, billboard, and social media accounts.

9/15/202X – Begin social media and website advertising campaign. Billboard with a teaser of ‘Coming Soon’ will go up in downtown Austin.

10/5/202X – Hire General Manager and Director of Sales.

10/15/202X – Attend annual Wedding Industry Event with a table to begin advertising Pegasus Hotel.

11/1/202X – Pegasus Hotel will go live on third party booking websites.

11/15/202X – Remainder of staff will be hired to begin training program.

11/30/202X – Final walk-thru of newly constructed Pegasus Hotel.

12/15/202X – Begin furnishing and interior design of the hotel.

1/1/202X – Grand Opening of Pegasus Hotel.

Lorenzo will hire Lisa Montgomery as the Director of Sales and David Jimenez as the Assistant General Manager. After an exhaustive search, Lorenzo believes has found the next two senior management positions to ensure the success of the hotel. Each comes with an impressive resume of prior hotel sales and operational experience.

Lorenzo, Lisa, and David will be the senior management team of Pegasus Hotel. They will oversee all other department managers – Maintenance, Housekeeping, Front Desk/Guest Relations, and Food and Beverage. Each department manager will oversee various employees in their respective department and role. The Pegasus Hotel will have a large and sophisticated operation as each department is integral in the success of the hotel.

Lorenzo, Lisa, and David will meet with Frank and Miles monthly to update them on progress and overall operations and sales efforts of the Pegasus Hotel.

Financial Plan

Key revenue & costs.

The revenue drivers for Pegasus Hotel are the revenues it will collect when guests book a reservation at the hotel. The hotel will also collect revenues from its restaurant and bar, spa, and events it will host.

The cost drivers will be the payroll and overhead costs to staff the hotel. Other costs will involve the land lease, utilities, marketing costs, and technology fees. There will also be costs associated with the maintenance of the hotel, food and beverage inventory, spa inventory, and hotel guest room supplies.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Initial Number of Room Nights Sold per Month: 8,000
• Number of Events per Month: 30
• Land Lease per Year: $1,500,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Hotel Business Plan FAQs

What is a hotel business plan.

A hotel business plan is a plan to start and/or grow your hotel business. Among other things, it outlines your business concept, identifies your target customers, presents your hotel marketing plan and details your financial projections.

You can  easily complete your hotel business plan using our Hotel Business Plan Template here .

What Are the Main Types of Hotel Companies?

There are many types of hotel companies. Most hotels are affiliated with a hotel franchise company. Other hotel companies distinguish themselves by star level-  4 to 5-star hotels are on the higher end of rate and amenity offerings, whereas 2 to 3-star hotels cater more towards the everyday business travelers and families.

What Are the Main Sources of Revenue and Expenses for a Hotel Business?

The primary source of revenue for a hotel business are the room fees it charges each guest to stay at the hotel. Revenues are also collected for different amenity offerings, such as room service,  restaurant and bar revenue, spa revenues, and guest shop revenue.

The key expenses for a hotel business are the costs for inventory, maintenance, supplies, furniture, fixtures, and equipment, technology, and payroll of the staff. Other expenses will be the rent, utilities, and overhead costs, if applicable.

How Do You Secure Funding For Your Hotel?

Hotel businesses are most likely to receive funding from banks. Typically you will find a local bank and present your business plan to them. Angel investors and other types of capital-raising such as crowdfunding  are other common funding sources. This is true for a business plan for a hotel, a resort or a boutique hotel.

What are the Steps To Start a Hotel Business?

Starting a hotel business can be an exciting endeavor. Having a detailed roadmap of the steps to start a business will help you stay focused on your business goals and get started faster.

• Develop A Hotel Business Plan - The first step in starting a business is to create a comprehensive business plan that outlines all aspects of the venture. This includes market research to identify the potential market size and target audience , the hotel’s services, pricing strategies and a detailed financial forecast.  
• Choose Your Legal Structure - It's important to select an appropriate legal entity for your hotel business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your hotel business is in compliance with local laws.
• Register Your Hotel Business - Once you have chosen a legal structure, the next step is to register your hotel business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 
• Identify Financing Options - It’s likely that you’ll need some capital to start your hotel business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 
• Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 
• Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 
• Acquire Necessary Hotel Equipment & Supplies - In order to start your hotel business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 
• Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your own hotel business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective digital marketing strategy including SEO and paid advertising . You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a new hotel business:

• How to Start a Hotel Business

Where Can I Get an Example Hotel Business Plan PDF?

You can download our example hotel business plan PDF template here . This is a business plan template you can use in PDF format.

Other Helpful Business Plan Templates

Franchise Business Plan Template Resort Business Plan Template Bed and Breakfast Business Plan Template

• Sample Business Plans

Hotel Business Plan

Have you ever thought of owning a hotel? Great call!

Starting your own hotel business can be an exciting and rewarding venture, as the hospitality industry is booming nowadays, fueled by leisure trips and work vacations.

Whethe­r you’re planning to start a cozy bed & breakfast amenity or a luxury resort, the first thing you’ll need is a solid business plan to make it thrive.

Need help writing your plan in order?

Worry not; we’ve got you covered. This hotel business plan template will help you get started and guide you on what to write in the sections of your plan.

Sounds good? Let’s dive right in!

What Is a Hotel Business Plan?

A hotel business plan is a professional document that outlines your business idea, goals, and strategies to achieve them. Whether you’re a startup or expect to grow an existing one, you’ll need a solid business plan.

It provides a clear understanding of your hotel business, starting from its goals, target market, and service offerings to marketing strategies, financial projections, and long-term growth plans. So, it serves as a strategic blueprint for your entrepreneurial journey.

Now that you know what a hotel business plan is, let’s understand why you need one and how it can help you.

Why You Need a Business Plan for Your Hotel?

As a hotelier, having a good business plan is essential for opening and running your hotel business.

It helps you get your hotel business off the ground and make it successful, navigating all the intricacies of hotel management effectively.

Consider these several reasons why you need a business plan for your hotel:

Define your goals

While writing a business plan, you’ll need to clearly define your specific goals & objectives and the strategies you’ll use to achieve them. So, it’s like keeping a detailed map for your business.

Manage finances better

A well-prepared business plan helps you show how much money you’ll require to start and run your hotel, and how much revenue or profit you’ll earn from it. It also includes detailed budgets, expense estimates, and ongoing operational costs.

Get funding from investors or banks

A comprehensive plan is important if you need money to start and grow your business. It helps you demonstrate to the potential investors or banks that you have a solid plan for success and the potential for return on investment.

Know your competitors & customers

With thorough market research and competitive analysis, your business plan helps you identify and understand your competitors and customers. Also, you can assess the customer needs and distinguish your hotel from the competition.

Identify potential risks

An actionable plan will allow you to anticipate the potential risks and the strategies to mitigate them. This way, you can avoid critical pitfalls before they happen and save meaningful resources.

In simple terms, a business plan is not just a written document, but it’s a valuable tool for planning, managing, and growing your hotel venture.

Now without further ado; let’s explore the key components of a hotel business plan.

Key Components of a Hotel Business Plan

While writing a comprehensive business plan, you should include the following 10 key components in your hotel business plan:

1. Executive Summary

An executive summary is the first and foremost section of a hotel business plan, providing a high-level overview of your entire business strategy.

Generally, it would be written at the end once all the other sections are finalized. This is so because it highlights the most important points you mentioned in the rest of your plan.

In your executive summary, consider including the following details:

• Your business idea & goals
• Vision-mission statements
• Market opportunities
• Target audience
• Marketing efforts and USPs
• Financial outlook

In short, this section is your chance to present a persuasive and compelling snapshot of your business that impresses potential investors or readers. And ensure you keep it short and simple (2 or 3 pages).

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2. Company Overview

The company overview section provides a detailed description of your business, from its basic information (name, size, and location) to objectives.

So, it clearly explains your hotel business concept in detail and outlines the future goals that every potential investor or lender needs to know.

For instance, you may ask yourself these questions to plan this section:

• What is the size and legal structure of your hotel? (e.g., LLC, corporation, sole proprietorship, partnership)
• Who are the hotel owners or shareholders?
• What is your business’s background and founding story?
• What milestones have you achieved till now?
• What are the short-term goals and long-term objectives?

Overall, your company overview section is an in-depth understanding of your business, so make it engaging and to the point.

3. Market Analysis

The market analysis section of a business plan provides a thorough explanation of the hospitality industry based on the scale of your hotel.

So, you’ll need to conduct comprehensive market research and industry analysis to identify the market size & growth potential, target market, customer behavior, market demand, and regulatory environment.

In addition to that, you may include data on market trends that might impact your business, such as technology, politics, environmental concerns, or global health issues.

This way, you can position your business strategically and justify your hotel’s future growth in the current market.

4. Competitive Analysis

Competitive analysis is a meticulous study of your key competitors depending on where your hotel is located.

Here, you should consider including details of your direct and indirect competitors in the local market, along with their strengths & weaknesses.

This section is an important aspect of market research that helps you evaluate the competitive environment and determine what sets you apart from others. You can even explain your competitive advantages and identify your USPs.

5. Service Offerings

In this section, you should mention details of the primary services and amenities you plan to offer.

You may include different types of rooms and amenities available, any special services such as event hosting, spas, restaurants, and any unique products offered.

This will help investors understand what exactly your business offers, how much it charges, and what value it brings to the market.

6. Sales and Marketing Strategies

The sales and marketing plan outlines promotional strategies and tactics you’ll use to reach your target audiences and maximize revenue.

It involves careful consideration of several key aspects, like who you’re trying to reach, what message you want to tell them, and how you plan to attract and retain them.

A well-crafted sales and marketing plan is essential for brand awareness, revenue growth, profitability, and long-term success, as it ensures your hotel stands out and thrives in the hospitality industry.

As a hotel business owner, your strategies may include online and offline marketing or external promotional campaigns that must align with your hotel’s goals and objectives. For example:

• Unique Selling Propositions(USPs)
• Social media marketing
• Strong web presence
• Word-of-mouth promotions
• Networking with other businesses

Well, this section assists potential investors to better understand how you’ll promote your business and generate bookings.

7. Management Team

The management team section is an integral part of a hotel business plan as it introduces the hotel owners, key executives, and managers.

So, you may consider highlighting their roles and responsibilities, qualifications, industry experience, and expertise that help grow your hotel business. For easy understanding, refer to the below hotel owner profile:

Apart from that, clearly explain your compensation plan and organizational structure that will help you make better strategic decisions. You can even give brief bios of your external advisors, consultants, or board members(if any).

8. Operations Plan

The operations plan describes the day-to-day business operations and activities that keep your hotel running smoothly.

For instance, you may consider including insights into the operational structure of your hotel and details about facilities management, staffing & training, customer service policies, and administrative processes.

Additionally, you can mention any technology or systems that will be used to support hotel operations.

9. Financial Plan

Preparing a strong financial plan with realistic financial projections is very crucial in business planning. Typically, it covers the financial projections for the first few years.

Your hotel financial plan offers a detailed roadmap for the hotel’s financial future, summarizing sales & revenue projections, cash flow estimates, balance sheets, and profit & loss statements.

Besides these financial statements, you may consider adding your financial requirements, startup costs, and risk analysis & mitigation plan.

Simply put, a well-written financial plan provides a clear understanding of the ROI potential and ensures the hotel’s success and long-term sustainability.

10. Appendix

In the appendix, you can attach any supporting documents that don’t fit into specific sections but support your plan. It includes

• Market research data and surveys
• Licenses & permits
• Leases or contracts
• Resumes of key executives
• Architectural blueprint of the facility

You may also include any additional documents or attachments that your readers might use for reference.

Download Free Hotel Business Plan Template

Need extra help or any sample business plan to start writing your hotel business plan? Well, here you go; download our free hotel business plan pdf now and get started.

This advanced business plan template has been specifically designed for your hotel business. With step-by-step instructions and examples, it assists you in developing your own plan.

Simply import data into your editor and use it as a reference!

The Quickest Way to turn a Business Idea into a Business Plan

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Frequently asked questions, do i need to include financial projections in my hotel business plan.

Of course, you have to include projections in your hotel business plan. These projections help you present a complete overview of your financial strategy and the financial viability of your hotel. Also, you can show your business’s profitability to attract potential investors or financial institutions and secure funding or loans.

What marketing strategies are effective for a new hotel?

For a new hotel, these marketing strategies are the most effective ones:

• Developing and optimizing a professional website for your hotel
• Leveraging social media channels and email marketing
• Utilizing Online Travel Agencies (OTAs) for bookings
• Advertising through events or travel trade shows
• Offering loyalty or referral programs

Where can I find resources and templates for writing a hotel business plan?

Using business planning software like Upmetrics can be a good choice. It provides hundreds of business resources and a sample hotel business plan template to write your hotel business plan. Simply export the template in the editor and finish your plan in a few hours.

What tips can help secure funding for a hotel business?

If you want to secure funding for your hotel, consider following these tips:

• Writing a comprehensive business plan
• Showcasing the potential profitability of your hotel
• Reaching out to family and friends for investments
• Creating a polished & compelling pitch
• Visiting hotel industry conferences and events

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Write a Successful Hotel Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for hotel businesses who want to improve their strategy and/or raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every hotel business owner should include in their business plan.

Download the Ultimate Hotel Business Plan Template

What is a Hotel Business Plan?

A hotel business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Hotel Business Plan?

A hotel business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Hotel Business Plan

The following are the key components of a successful hotel business plan:

Executive Summary

The executive summary of a hotel business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your hotel company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your hotel business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your hotel firm, mention this.

You will also include information about your chosen hotel business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a hotel business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the hotel industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a hotel business’ customers may include:

• Business travelers
• Leisure travelers
• Groups and conventions
• Wedding parties
• Local residents

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or hotel services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Below are sample competitive advantages your hotel business may have:

• Location : if your hotel is located in an ideal spot for leisure or business travelers, this could be a key competitive advantage
• Amenities : if your hotel offers unique amenities that are appealing to your target market segments, this could give you a leg up on the competition
• Customer service : if you focus on delivering exceptional customer service, this could be a key selling point

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, launch a direct mail campaign. Or you may promote your hotel business via public relations (PR), speaking engagements, or other thought-leadership activities.

Operations Plan

This part of your hotel business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a hotel business include reaching $X in sales. Other examples include adding new locations, launching a new product/service, or hiring new employees.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific hotel industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue: how much revenue you generate.
• Cost of Goods Sold: These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss): Once expenses and revenue are totaled and deducted from each other, this is the net income or loss

Sample Income Statement for a Startup Hotel Business

Balance Sheet

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Hotel Business

Cash Flow Statement

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:

• Cash Flow From Operations
• Cash Flow From Investments
• Cash Flow From Financing

Below is a sample of a projected cash flow statement for a startup hotel business.

Sample Cash Flow Statement for a Startup Hotel Business

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your hotel company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

As you can see, there is a lot that goes into creating a successful hotel business plan. But with careful planning and execution, you can set your hotel business up for success.  

Finish Your Hotel Business Plan in 1 Day!

Hotel Business Plan Template [Updated 2024]

Hotel Business Plan

If you want to start a new hotel business or expand your existing hotel, you need an effective business plan.

The following hotel business plan template gives you the key elements to include in a solid business plan. In addition to this template, a solid plan will also include market research to help you better understand the hospitality industry trends, and how you plan to attract customers. It will also help you craft your mission statement, marketing plan and strong financial projections.

You can download our Hotel Business Plan Template (including a full, customizable financial model) to your computer here.

Sample Business Plan For a Boutique Hotel

Below are links to each of the key sections of a comprehensive business plan for a hotel:

• Executive Summary – The executive summary provides an overview of your business opportunity and summarizes the business plan.
• Company Overview – The company analysis includes information about your hotel concept, the hotel’s services and business structure.
• Industry Analysis – The industry analysis includes market research that supports your business and provides insights into market trends and the hotel industry.
• Customer Analysis – The customer analysis provides an overview of your target market.
• Competitive Analysis – The competitive analysis should identify your local competition (other hotel businesses, Airbnbs, etc.) and highlight your unique selling point.
• Marketing Plan – The marketing plan includes your hotel marketing strategy, pricing strategy and search engine optimization plan.
• Operations Plan – The operations plan includes information on your hotel operations and processes along with your business goals for long-term growth.
• Management Team – The management team section includes a profile of the hotel owner and hotel management team, their experience and job descriptions.
• Financial Plan – The financial plan includes financial projections, a cash flow statement, profit and loss statement and balance sheet.

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Hotel Business Plan Outline

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Hotel Business Plan

Turn your dreams into reality with a comprehensive hotel business plan. 

Why do I need a hotel business plan?

Studies show that entrepreneurs who finished their business plan were twice as likely to succeed in growing their business than those with no plan. A hotel business plan provides a detailed roadmap of what needs to be accomplished and why and gives potential investors insight into your business idea.  

Included in this business plan are templates for: 

• Company analysis
• Industry analysis 
• Competitive analysis 
• Operations plan 
• Financial plan

From idea to execution: 10 sections to include in your hotel business plan

What is hotel revenue management the beginner’s guide.

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Here is a free business plan sample for a hotel.

Have you ever envisioned opening the doors to your very own hotel, creating a home away from home for travelers, but find yourself unsure of where to start?

In the content that follows, we will guide you through a comprehensive business plan tailored specifically for the hotel industry.

As any seasoned hotelier will tell you, a meticulously formulated business plan is crucial to thriving in the hospitality world. It serves as a roadmap, outlining your vision, objectives, and the strategies you will employ to turn your hotel into a successful venture.

To streamline your planning process and set a solid foundation for your hotel business, feel free to utilize our hotel business plan template. Additionally, our team of experts is on standby to review and refine your plan at no extra cost.

How to draft a great business plan for your hotel?

A good business plan for a hotel must reflect the unique aspects of the hospitality industry.

To start, it is crucial to provide a comprehensive overview of the hotel market. This includes current statistics and identifying emerging trends within the industry, as illustrated in our hotel business plan template .

Then, you should articulate your project with clarity. This encompasses your vision, pinpointing your target market (such as leisure travelers, business clients, event planners), and the distinctive positioning of your hotel (luxury, boutique, budget-friendly, eco-conscious, etc.).

The subsequent section should delve into market analysis. This requires a thorough understanding of the competitive landscape, market dynamics, and guest preferences.

For a hotel, particular emphasis should be placed on the services and amenities you plan to provide. Detail your offerings - rooms, suites, conference facilities, spa services, dining options - and explain how they cater to the needs and expectations of your intended guests.

The operational plan is equally vital. It should outline the location of your hotel, the layout of guest rooms and public spaces, vendor relationships for supplies and services, and the operational workflow.

For a hotel, it is important to highlight the quality of customer service, room standards, and adherence to hospitality regulations.

Next, address your marketing and sales strategy. How will you attract and retain guests? Consider promotional tactics, guest loyalty programs, and ancillary services (such as tours, transportation, or special events).

Adopting digital strategies, like a robust website, online booking capabilities, and a social media presence, are also crucial in the modern marketplace.

The financial framework is another critical component. This includes the initial investment, revenue projections, operating expenses, and the break-even analysis.

In a hotel, managing cash flow is complex due to the high fixed costs and seasonal fluctuations, so precise planning and a solid understanding of your financials are imperative. For assistance, refer to our financial forecast for a hotel .

Compared to other business plans, a hotel's plan must pay special attention to factors such as location desirability, guest experience, staff training and retention, and the impact of online reviews and ratings.

A well-crafted business plan will not only help the hotelier to define their vision and strategies but also to attract investors or secure loans.

Lenders and investors seek robust market analysis, realistic financial projections, and a comprehensive grasp of the hotel's day-to-day operations.

By presenting a thorough and substantiated plan, you showcase your credibility and dedication to the success of your hotel venture.

To achieve these goals while saving time, you can simply fill out our hotel business plan template .

A free example of business plan for a hotel

Here, we will provide a concise and illustrative example of a business plan for a specific project.

This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.

To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.

All these elements have been thoroughly included by our experts in the business plan template they have designed for a hotel .

Here, we will follow the same structure as in our business plan template.

Market Opportunity

Market data and figures.

The hotel industry is a significant component of the global tourism sector with substantial economic impact.

Recent estimates place the global hotel market value at approximately 570 billion dollars, with projections indicating growth as travel demand increases post-pandemic.

In the United States alone, there are over 54,000 hotel properties, contributing to an annual revenue of nearly 200 billion dollars for the hotel industry.

These statistics underscore the hotel industry's vital role in not only accommodating travelers but also in driving economic growth and employment.

The hotel industry is witnessing several evolving trends that are shaping the future of hospitality.

Personalization and experience-driven stays are at the forefront, with guests seeking unique and memorable experiences tailored to their preferences.

Sustainability is becoming increasingly important, with eco-friendly practices and green hotels gaining traction among environmentally conscious travelers.

Technology integration, such as contactless check-in, smart rooms, and AI-driven customer service, is enhancing operational efficiency and guest satisfaction.

The rise of alternative lodging options like boutique hotels and vacation rentals is also influencing the market, offering travelers more diverse choices.

Health and wellness have become a priority, leading to the integration of wellness amenities such as spas, fitness centers, and healthy dining options within hotels.

These trends highlight the hotel industry's adaptability and its commitment to meeting the evolving needs of modern travelers.

Success Factors

Several key factors contribute to the success of a hotel.

Location remains a critical aspect, with hotels in prime destinations or convenient locales more likely to attract guests.

Quality of service is paramount, as exceptional guest experiences can lead to repeat business and positive word-of-mouth referrals.

Modern amenities and comfort are essential for meeting guest expectations and staying competitive in the market.

Brand reputation and online presence, including positive reviews and ratings on travel sites, significantly influence booking decisions.

Adaptability to market trends, such as offering sustainable options or incorporating cutting-edge technology, can set a hotel apart from its competitors.

Lastly, effective cost management and strategic marketing are crucial for maintaining profitability and ensuring the long-term success of a hotel.

The Project

Project presentation.

Our hotel project is designed to cater to the needs of travelers seeking a comfortable and accommodating stay without compromising on their health and lifestyle preferences. Situated in a prime location with easy access to tourist attractions and business centers, our hotel will offer a range of amenities tailored to guests who prioritize wellness and sustainability. The hotel will feature hypoallergenic rooms, organic bedding, a fitness center, a spa offering natural treatments, and a dining area serving nutritious, locally-sourced food with options for various dietary requirements, including gluten-free, vegan, and vegetarian meals.

The emphasis will be on providing a restorative and rejuvenating experience, allowing guests to maintain their healthy routines while away from home.

Our hotel aspires to be a leader in the wellness hospitality sector, setting a new standard for health-conscious travel and accommodation.

Value Proposition

The value proposition of our hotel project is centered around offering a holistic and health-focused lodging experience. We understand the importance of maintaining a balanced lifestyle, and our hotel is committed to providing an environment that supports the well-being of our guests.

From our fitness and spa facilities to our dining options and eco-friendly practices, we aim to ensure that every aspect of our guests' stay contributes to their health, comfort, and satisfaction.

We are dedicated to creating a space where travelers can feel rejuvenated and aligned with their wellness goals, making our hotel the preferred choice for health-conscious individuals and those seeking a restful retreat.

Our commitment to excellence in service and our focus on well-being will establish our hotel as a cornerstone in the community for sustainable and healthy travel.

Project Owner

The project owner is a seasoned hospitality professional with a passion for wellness and sustainable living. With a background in hotel management and a personal commitment to health and the environment, they are driven to create a hotel that exemplifies these values.

Armed with industry experience and a forward-thinking approach, the project owner is dedicated to innovating the hospitality experience by integrating wellness into every aspect of the hotel's operations.

With a vision of promoting sustainable travel and a healthy lifestyle, they are determined to offer a unique lodging experience that not only meets the expectations of guests but also inspires them to prioritize their well-being even when on the road.

Their dedication to creating a nurturing and eco-friendly environment is the driving force behind this project, aiming to set a new benchmark for wellness-oriented hotels.

The Market Study

Market segments.

The market segments for this boutique hotel are divided into several categories.

First, there are business travelers who require comfortable and convenient accommodations with amenities that support their work-related needs.

Next, there are leisure travelers, including couples, families, and solo adventurers, looking for unique experiences and personalized service.

The market also includes event planners and organizations seeking venues for meetings, conferences, or special events.

Finally, local residents may seek the hotel for staycations, dining experiences, or as a venue for personal events such as weddings or parties.

SWOT Analysis

A SWOT analysis of this boutique hotel project reveals several aspects.

Strengths include a prime location, personalized customer service, unique thematic rooms, and high-quality amenities.

Weaknesses could include the high operational costs associated with maintaining a luxury experience and the challenge of building brand recognition in a competitive market.

Opportunities lie in capitalizing on the growing trend of experiential travel, forming partnerships with local businesses, and leveraging online marketing to reach a global audience.

Finally, threats could include economic downturns affecting travel spending, the rise of alternative accommodation options like Airbnb, and the need to constantly innovate to stay ahead of competitors.

Competitor Analysis

Competitor analysis in the boutique hotel sector reveals a diverse range of players.

Among direct competitors are other boutique hotels, luxury chains, and alternative accommodations offering unique experiences.

These competitors vie for discerning travelers who seek more than just a place to stay but a memorable experience.

Potential competitive advantages include exceptional service, exclusive amenities, a strong brand story, and a commitment to sustainability and local culture.

Understanding competitors' strengths and weaknesses is crucial for carving out a niche in the market and for customer acquisition and loyalty.

Competitive Advantages

Our boutique hotel's competitive advantages lie in our dedication to creating an immersive experience for our guests.

We offer uniquely designed rooms, each telling a different story, and personalized services that cater to the individual needs of our guests.

Our strategic partnerships with local artisans and businesses allow us to provide authentic local experiences, setting us apart from generic accommodations.

We are committed to sustainability, ensuring that our operations have a minimal environmental impact, which resonates with eco-conscious travelers.

You can also read our articles about: - how to establish a hotel: a complete guide - the customer segments of a hotel - the competition study for a hotel

The Strategy

Development plan.

Our three-year development plan for the boutique hotel is designed to establish a strong foothold in the hospitality market.

In the first year, our goal is to build a solid reputation for exceptional service and unique guest experiences, focusing on local and regional markets.

The second year will be geared towards expanding our marketing efforts to attract international travelers and implementing sustainability practices to enhance our eco-friendly brand image.

In the third year, we plan to explore additional services such as event hosting and wellness retreats, further differentiating our hotel in the competitive landscape.

Throughout this period, we will continuously seek to innovate and improve our offerings, ensuring that we remain a preferred choice for discerning travelers.

Business Model Canvas

The Business Model Canvas for our boutique hotel targets travelers seeking personalized experiences, luxury accommodations, and health-conscious amenities.

Our value proposition revolves around providing a unique and memorable stay, with a focus on wellness, local culture, and personalized service.

We offer our services through direct bookings via our website and partnerships with travel agencies, utilizing our key resources such as our well-trained staff, luxurious facilities, and prime location.

Key activities include guest services, facility maintenance, and creating tailored experiences for our guests.

Our revenue streams are generated from room bookings, on-site dining, and additional services, while our costs are associated with operations, staffing, and marketing efforts.

Find a complete and editable real Business Model Canvas in our business plan template .

Marketing Strategy

Our marketing strategy is centered on creating a strong brand presence and showcasing our unique selling points.

We aim to attract guests by highlighting our hotel's bespoke experiences, wellness focus, and commitment to sustainability. Our approach includes targeted online campaigns, partnerships with luxury travel influencers, and engagement with travel communities.

We will also collaborate with local businesses and cultural institutions to offer exclusive packages and promote local tourism.

Utilizing social media, we plan to share guest stories and testimonials to build trust and encourage word-of-mouth referrals.

Risk Policy

The risk policy for our boutique hotel focuses on mitigating risks associated with the hospitality industry, such as fluctuating occupancy rates and guest satisfaction.

We will implement dynamic pricing strategies to optimize revenue and maintain a high standard of service to ensure repeat business.

Regular training for staff will be conducted to uphold service quality, and we will invest in robust health and safety protocols to ensure the well-being of our guests and employees.

Additionally, we will secure comprehensive insurance coverage to protect against unforeseen events and liabilities.

Why Our Project is Viable

We are confident in the viability of our boutique hotel project, given the growing demand for unique travel experiences and personalized service.

With our focus on wellness, local culture, and sustainability, we believe we can attract a niche market of travelers and establish a loyal customer base.

We are committed to adapting to market trends and guest feedback to ensure the success of our hotel.

We are enthusiastic about the opportunity to create a destination that not only provides a luxurious escape but also enriches the lives of our guests and the local community.

You can also read our articles about: - the Business Model Canvas of a hotel - the marketing strategy for a hotel

The Financial Plan

Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.

All these elements are available in our business plan template for a hotel and our financial plan for a hotel .

Initial expenses for our hotel include acquiring or constructing the hotel property, outfitting guest rooms with furniture and amenities suitable for a comfortable stay, designing common areas to meet hospitality standards, investing in a reservation and management system, staff training for exceptional customer service, as well as costs related to brand creation and launching targeted marketing campaigns to attract guests.

Our revenue assumptions are based on a thorough market analysis of the local hospitality industry, considering factors such as tourism trends, business travel patterns, and the competitive landscape.

We anticipate a gradual increase in occupancy rates, starting conservatively and growing as the reputation of our hotel strengthens.

The projected income statement indicates expected revenues from room bookings, ancillary services (such as food and beverage, event hosting, etc.), operational costs (housekeeping, maintenance, utilities), and operating expenses (rent, marketing, salaries, etc.).

This results in a forecasted net profit essential for assessing the long-term viability of our hotel.

The projected balance sheet reflects assets specific to our hotel, such as property, building improvements, furniture, and equipment, and liabilities including mortgages and other anticipated expenses.

It shows the overall financial health of our hotel at the end of each fiscal period.

Our projected cash flow budget details the expected inflows from guest payments and outflows for operational expenses, allowing us to anticipate our cash needs throughout the year. This will enable us to manage our finances effectively and maintain liquidity.

The projected financing plan lists the specific financing sources we plan to use to cover our startup and operational expenses.

The working capital requirement for our hotel will be closely monitored to ensure we have the necessary funds to finance our daily operations, including purchasing supplies, inventory management, and salary payments.

The break-even point specific to our hotel is the level of occupancy and average daily rate needed to cover all our costs, including startup expenses, and begin generating a profit.

It will indicate when our business will become financially sustainable.

Performance indicators we will track include the average occupancy rate, average daily rate (ADR), revenue per available room (RevPAR), the guest satisfaction index to assess service quality, and the return on investment to measure the efficiency of our capital invested in the hotel.

These indicators will help us evaluate the financial performance and overall success of our hotel.

If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for a hotel .

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Hotels are one of the most lucrative businesses one can get into. They are especially profitable if the hotel business plan in question is located in a busy city or near a popular tourist destination. Being part of the hospitality industry, you will never run out of customers as long as your hotel is managed properly. To run your hotel plan profitability, you must have a proper business plan that will help you dance your worries away. We have various hotel business plan templates applicable for various related businesses and accommodations such as a startup mini hotel, guest house motel, 5 star resort lodge, 3 star spa, and boutique, etc. Keep scrolling!

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General FAQs

1. what is a hotel business plan, 2. what is the purpose of using a hotel business plan, 3. what should a hotel business plan include.

• Executive summary
• A detailed sample analysis of your company and the work you do
• Industry and market analysis
• Client and customer evaluation
• Your competitors and other sources
• Marketing and operation plan, etc.

4. What Is a Successful Business Plan?

5. how do you write a hotel business plan.

• Operations : explain how your organization will operate daily
• Management : mention your management team
• Financial details : this is where you mention all key finances
• Project planning : define all the targets you want to hit
• Appendix and other details.

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Hotel Business Plans

Motel - hunting lodge business plan.

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Resort Hotel Ski Lodge Business Plan

Silver Bear Lodge is a winter ski and summer vacation resort lodge.

Writing your business plan doesn’t have to be a chore. Just check out these sample business plans for hotels and motels to get some ideas and inspiration.

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Hotel Business Plan Guide + Sample Plan

July 6, 2023

Adam Hoeksema

The hospitality industry offers immense potential, while some might believe that operating a hotel is straightforward, involving only accommodations and foot traffic, careful planning and meticulous execution are essential for achieving success, hence a well-structured business plan is indispensable.

Our primary expertise lies in hotel financial projection models but we understand that some of our clients require comprehensive business plans. That's why we've taken the initiative to delve into this topic and cover the following:

• Why Write a Business Plan For a Hotel?
• What to Include in a Hotel Business Plan?

Hotel Business Plan Outline

How to select a location for a hotel, how to analyze the competition for a hotel, how to create financial projections for a hotel, example hotel business plan, hotel business plan faqs, why write a business plan for a hotel.

For Hoteliers seeking financial support from investors, banks, or financial institutions, a well-structured business plan is a fundamental prerequisite. Demonstrating a thorough evaluation of the market, a clear and strategic approach, and a thoughtful assessment of potential risks and rewards is paramount to attracting the necessary funding for your venture.'

What to include in a hotel business plan?

A hotel business plan should provide investors and lenders with compelling reasons why guests will choose your hotel, demonstrate why you or your team are the ideal operators for the hotel, and present a financial projection that ensures their investment is secure. Below is a comprehensive outline of our complimentary hotel business plan template .

We suggest the following sections for your Hotel business plan

Executive Summary

Company Description

Market Analysis

Product and Service Offerings

Marketing Plan & Customer Acquisition

Operating Plan

Financial Plan

Choosing the right location for your hotel is a critical step in ensuring its success and captivating your target audience. To help you make the best decision, we present three essential points to consider when selecting a location for your hotel  Local Demand and Visitor Profile: Assess the local demand for hotel accommodations in the area. Analyze the type of visitors who frequently visit the locality, such as tourists, business travelers, or event attendees. Understanding the local visitor profile will help you tailor your hotel's offerings to meet their needs and preferences.

Proximity to Key Points of Interest: Look for a location that is in close proximity to key points of interest within the local area. This could include popular tourist attractions, convention centers, business districts, or entertainment venues. Being near such attractions increases the chances of attracting more guests and ensures a steady flow of potential customers.

Accessibility and Transportation Links : Ensure that the location is easily accessible by various modes of transportation. Consider the distance from major transportation hubs like airports, train stations, and bus terminals. Also, evaluate the availability of public transportation options nearby, as this will make it convenient for guests to travel to and from your hotel.

By focusing on these three points, you can identify a suitable local location for your hotel that caters to the specific needs of the local market and maximizes its potential for success.

There are a couple of tools that I like to use when analyzing the competition in the hotel industry. 

Ahrefs – Ahrefs will allow you to look up a competitor hotel's website, and you can see how much organic traffic they are getting and exactly what keywords are sending that traffic. For example, we can see that the Bottleworks Hotel in Indianapolis is receiving roughly 3,500 monthly visits from organic Google Search.  

We can also see what keywords are sending the most traffic to that page below:

By understanding the SEO strategies and keywords that competitor hotels are targeting, you can develop your content and marketing strategies to compete in the same spaces or identify underserved areas to capitalize on. This can assist in improving your hotel's online presence and attracting more guests through search engines.

TripAdvisor – Although mainly known as a review site, TripAdvisor can be a free and powerful tool for analyzing competition within the hotel industry. You can see guest ratings, read reviews, and understand what customers appreciate or dislike about different hotels in your area. This qualitative information can help you identify where your competitors are succeeding or failing and where you might have an opportunity to differentiate your services.

Just like in any industry, the hotel business has its own unique factors that impact financial projections, such as occupancy rates, room pricing, seasonal demand, and guest service expenditures. Utilizing a hotel financial projection template can simplify the process and increase your confidence. Creating accurate financial projections goes beyond showcasing your hotel venture's ability to generate revenue; it's about illustrating the financial roadmap to profitability and the realization of your hospitality goals.

To develop precise projections, consider the following key steps:

Estimate startup costs for your hotel business, including property acquisition or leasing, renovation or construction, furnishing and decoration, staff training, and initial marketing and branding expenses.

Forecast revenue based on projected occupancy rates, average room prices, ancillary service income (such as restaurants, spas, conference facilities), and potential growth in the customer base.

Project costs related to ongoing operations like housekeeping, food and beverage services, guest amenities, and maintenance.

Estimate operating expenses such as staff salaries, utility costs, property insurance, marketing expenses, guest support, and administrative costs.

Calculate the capital needed to launch and sustain your hotel business, covering initial expenses and providing working capital for continued growth, including funds for unforeseen challenges such as seasonal fluctuations.

While financial projections are a critical component of your hotel business plan, seek guidance from experienced professionals in the hotel industry. Adapt your projections based on real-world insights, leverage industry resources, and stay informed about hospitality trends and evolving consumer behavior to ensure your financial plan aligns with your goals and positions your hotel venture for long-term success.

Explore our Hotel Business Plan, presented below. If you prefer, you can access a downloadable Google Doc version of this hotel business plan template , allowing you to personalize and tailor it to your specific needs. Additionally, a helpful video walkthrough is available, guiding you through the process of customizing the business plan to perfectly align with your unique hotel concept.

Table of Contents

1. executive summary.

1.1 Organization Overview

1.2. Objectives

1.3. Mission Statement

2. Organization Description

2.1. Organization History

2.2. Legal Structure

2.3. Unique Value Proposition

2.4. Target Beneficiaries

3. Market Analysis

3.1. industry overview.

3.2. Collaborator and Competitor Identification

3.3. Target Beneficiaries

Key Point  1

4. Marketing and Fundraising

4.1. Strategic Plan

4.2. Program or Service Offerings:

4.4. Distribution Channels

4.5. Promotions and Fundraising

Key Point  2

5. Organizational Structure and Management

5.1. Organization’s Facility & Location

5.2. Staffing Plan and Volunteer Management

5.3. Governance, Financial Management, and Accountability

Key Point  3

6. financial plan.

6.1. Startup Costs

6.3. Expense Projections

6.4. profit and loss statement, 6.5. cash flow projections, 6.6. break-even analysis, 7. appendix.

7.1. Supporting Documents

7.2. Glossary of Term

7.3. References and Resources

Key Point  5

 1.1. company overview.

Briefly introduce the hotel's background, products or services, and target market.

      -  Example: Seaside Crest is a tropical-themed hotel located in Key West, Florida, offering a unique and luxurious experience for guests seeking a beachfront getaway.

   1.2. Objectives

Outlines the hotel's short-term and long-term goals.

        - Example:  Establish Seaside Crest as the premier destination for tropical hospitality in Key West, providing exceptional service and unforgettable experiences for our guests.

        - Example: Long-term: Expand our presence in other tropical destinations while maintaining our commitment to quality and guest satisfaction.

  1.3. Mission Statement

 Describes the hotel's purpose and core values.

        - Example:  At Seaside Crest, our mission is to create a haven of relaxation and tropical paradise for our guests. We are dedicated to delivering exceptional hospitality, breathtaking surroundings, and personalized service, ensuring that every guest's stay is a memorable one.

  1.4. Keys to Success

Highlights the factors that will contribute to the hotel's growth and success.

        - Example:  The success of Seaside Crest lies in our commitment to creating a tropical ambiance, offering top-notch amenities, providing outstanding customer service, and delivering a seamless guest experience. 

2. Company Description

   2.1. company history.

Provides context on the hotel's background and founding story.

        - Example: Seaside Crest is the brainchild of founder and hotelier, Emily Roberts, who envisioned creating a tropical paradise in Key West, Florida. With a passion for hospitality and a deep love for the coastal beauty of the region, Emily embarked on the journey of bringing Seaside Crest to life.

   2.2. Legal Structure

 Describes the hotel's legal structure (e.g., sole proprietorship, partnership, LLC, corporation).

        - Example: Seaside Crest operates as a limited liability corporation (LLC)

 2.3. Unique Selling Proposition

  Emphasizes the hotel's competitive advantage or unique offerings.

        - Example: Seaside Crest distinguishes itself by offering a one-of-a-kind tropical-themed experience, combining luxurious accommodations, breathtaking beachfront views, vibrant island-inspired decor, and personalized service. 

  2.4. Target Market

Defines the hotel's ideal customer base.

        - Example: Seaside Crest caters to discerning travelers and vacationers who seek an extraordinary beachside retreat in Key West, Florida. 

  Presents a general overview of the industry, its trends, and growth potential.

        - Example: The tropical hotel industry in Key West, Florida, is a thriving sector driven by the city's popularity as a tourist destination, the allure of its tropical climate, and the abundance of natural beauty that surrounds it.

3.2. Competitor Analysis

 Evaluates the hotel's direct and indirect competitors, as well as their strengths and weaknesses.

        - Example: Other hotels and resorts in Key West offering tropical-themed accommodations.

        - Example: Vacation rentals, bed and breakfast establishments, and boutique hotels in the area.

3.3. Target Market Analysis

Explores the hotel's target customers, their demographics, preferences, and pain points.

        - Example: Seaside Crest targets vacationers and travelers seeking a tropical getaway in Key West. Our primary market includes couples, honeymooners, and families looking for luxurious accommodations with a distinct tropical ambiance and proximity to the beach.

3.4. Market Opportunities

Identifies potential opportunities for the hotel to grow within the market.

        - Example: Seaside Crest can capitalize on market opportunities by offering unique amenities and experiences such as beachfront dining, spa services inspired by tropical traditions, and curated excursions to explore the natural wonders of Key West. Collaborations with local businesses for island-inspired dining and entertainment can further enhance the guest experience.

• Example 1: Conduct a survey among tourists in the area to determine their preferences for tropical-themed accommodations and their interest in a hotel with a beachfront location. (e.g., 80% of surveyed tourists express a strong preference for hotels with a tropical theme and direct beach access)
• Example 2: Analyze the occupancy rates and average daily rates of existing hotels in Key West to assess the demand and pricing trends in the market. (e.g., The average occupancy rate in Key West hotels during peak season is 85%, indicating a high demand for accommodations)

4. Marketing and Sales Strategy

4.1. product or service offerings: .

Describes the hotel's products or services in detail.

        - Example: Seaside Crest offers a range of tropical-themed accommodations and amenities, including luxury guest rooms, beachfront dining, spa services, and curated excursions.

4.2. Pricing Strategy

 Outlines the hotel's approach to pricing its products or services.

        - Example: Seaside Crest adopts a competitive pricing strategy, providing value for money while maintaining the exclusivity and high-quality experience associated with a tropical-themed hotel.

4.3. Sales Strategy

  Explains how the hotel plans to generate sales and build customer relationships.

        - Seaside Crest will implement a comprehensive sales strategy that includes online booking platforms, direct marketing to travel agencies, and partnerships with local tour operators to attract and engage potential guests.

 Describes the methods through which the hotel will deliver its products or services to customers.

   - Example: Seaside Crest will primarily distribute its services through online travel agencies, direct bookings through its website, and collaborations with travel agencies specializing in tropical getaways.

4.5. Promotions and Advertising

 Details the hotel's promotional efforts and advertising strategies.

        - Example: Seaside Crest will employ targeted marketing initiatives, utilizing social media and search engine platforms, to enhance brand visibility and attract new guests seeking a tropical-themed hotel experience in Key West..

• Example 1: Collaborate with local travel agencies to offer exclusive vacation packages that include a stay at Seaside Crest, showcasing the unique tropical experience and attracting potential guests. (e.g., 50 vacation packages sold within the first month of collaboration)
• Example 2: Organize a pre-launch event at a popular local venue, inviting travel influencers and bloggers to experience a preview of the hotel's amenities and share their impressions on social media. (e.g., 10 influencers with a combined reach of 500,000 followers attend the event and generate significant online buzz)
• Example 3: Offer a giveaway on social media to build a following

5. Facility Maintenance and Operations Plan:

   5.1. facility location and layout.

 Specify the hotel's physical business location and refer to the internal arrangement and organization of the space.

        - Example:Seaside Crest will secure a prime location in Key West, strategically positioned in close proximity to the beach and popular tourist attractions. The hotel's layout will be designed for optimal guest comfort and convenience, with thoughtfully arranged spaces and amenities.

5.2. Safety and Security:

Cover the hotel's comprehensive approach to safety and security, including surveillance systems, access control measures, etc.

        - Example: Seaside Crest will prioritize the safety and security of our guests and staff. We will implement robust security measures, including surveillance systems, access control, and trained personnel to monitor and respond to any potential threats or emergencies.

5.3. Cleaning and Housekeeping:

  Involves the hotel's procedures to ensure high standards of cleanliness, hygiene, etc.

        - Example: Our dedicated housekeeping staff will maintain the highest standards of cleanliness throughout the hotel, including guest rooms, common areas, and amenities. We will follow strict protocols to ensure a hygienic and pleasant environment for our guests.

• Example: The founding team of Seaside Crest includes Sarah Johnson, a seasoned hotelier with over 10 years of experience in managing luxury beachfront resorts, ensuring a deep understanding of the hotel industry's dynamics and customer expectations.
• Bennet  Leifer a renowned interior designer specializing in tropical-themed hospitality spaces, brings his expertise to Seaside Crest, ensuring the hotel's aesthetics align with the target market's preferences and create a memorable guest experience.

5.4. Energy Efficiency:

Involves energy-efficient practices and technologies to minimize energy consumption, reduce utility costs, and promote sustainability 

        - Example: As a responsible and sustainable hotel, Seaside Crest will strive to minimize energy consumption and reduce our environmental impact. We will implement energy-efficient practices, such as using energy-saving appliances, LED lighting, and smart systems for temperature control.

5.4.  Inventory Management:

includes tracking and controlling supplies, equipment, and amenities to optimize operations.

        - Example: Seaside Crest will employ an efficient inventory management system to track and manage hotel resources, including linens, toiletries, and other supplies. This system will ensure optimal inventory levels, minimize waste, and support smooth day-to-day operations.

All of the unique Hotel projections you see here were generated using ProjectionHub’s Hotel Financial Projection Template. Use PH20BP to enjoy a 20% discount on the template. 

   6.1. Startup Costs

  Provide a detailed breakdown of the total startup costs requirements, and where you plan for those funds to come from. You will also want to break down how the startup costs will be used including working capital to cover losses before the business breaks even.

        - Example: The total startup costs for Seaside Crest are estimated at $7,335,552. The owner plans to secure a business loan of $15,000, with  $7,500,000 contributed through personal funds.

6.2. Revenue Projections

Provide an estimate of the hotel's future revenue based on market research and assumptions.

        - Example:  Seaside Crest projects increasing revenue over the next five years, with $3,282,587 in the first year and reaching $5,938,052 by the fifth year.

Watch how to create financial projections for your Hotel

 Estimates the hotel's future expenses, including fixed and variable costs.

        - Example:  Seaside Crest's expenses include cost of goods sold, operating expenses, and direct labor and supply costs for the hotel, restaurant, spa, and events.

Summarizes the hotel's revenue, expenses, and net income over a specific period.

        - Example: Seaside Crest expects to achieve net income of $375,657 in the first year, growing to $1,845,652 by the fifth year, demonstrating a consistent increase in profitability.

 Outlines the hotel's projected cash inflows and outflows.

        - Example: Cash flow projections for Seaside Crest consider the seasonality of the hotel industry, ensuring effective financial management throughout the year.

  Determines the point at which the hotel's revenue equals its expenses.

        - Example: Seaside Crest anticipates reaching its break-even point within the first year of operation, indicating a strong potential for early profitability in the hotel industry.

Key Point  4

• Example 1: Benchmark financial projections against industry averages, such as the average revenue per available room (RevPAR) and average daily rate (ADR) for hotels in Key West, to ensure realistic revenue forecasts. (e.g., Seaside Crest's projected ADR is $250, in line with the average ADR of comparable beachfront hotels)
• Example 2: Analyze historical data from similar hotels in the area to estimate seasonality and demand fluctuations, accounting for factors like peak tourism seasons and local events. (e.g., Seaside Crest projects a 90% occupancy rate during the winter season based on the historical occupancy rates of nearby beachfront hotels)

   7.1. Supporting Documents

 Includes any relevant documentation that supports the information presented in the business plan, such as resumes, financial projections, market research data, and permits or licenses.

   7.2. Glossary of Term

 Provides definitions for industry-specific terms used throughout the business plan to ensure reader comprehension.

   7.3. References and Resources

Lists any sources or resources referenced during the preparation of the business plan, including industry reports, market research data, and relevant publications.

• Example 1: the owners of Seaside Crest invest a significant portion of their personal savings into the hotel's development and operations, demonstrating their commitment and confidence in the success of the venture. Additionally, they secure a personal guarantee for the hotel's financing, further aligning their interests with lenders and showcasing their willingness to share the risk.

How do I start a hotel business from scratch?

Starting a hotel business from scratch involves several key steps. Begin by conducting market research to identify a suitable location and target market. Develop a detailed business plan that outlines your hotel's concept, services, and financial projections. Secure funding through personal savings, loans, or investors. Obtain necessary permits and licenses and hire staff with hospitality experience.

What type of hotel should I open, and how do I choose a niche?

The type of hotel you open depends on your target market and location. Consider factors such as the level of service, amenities, and price range. Choose a niche that aligns with your interests and the demand in the local market. Options include boutique hotels, budget accommodations, luxury resorts, or themed hotels.

What marketing strategies can I use to promote my hotel?

Use a mix of digital marketing, social media, content marketing, and search engine optimization (SEO) to reach potential guests online. Collaborate with local tourism boards, travel agencies, and event planners to promote your hotel. Encourage positive reviews and testimonials to build credibility.

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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Hotel business plan template + PDF

This guide introduces the advanced AI Business Plan Generator template, meticulously crafted for entrepreneurs eager to initiate or develop their hotel business ventures. It's important to note that the names and financial forecasts mentioned in this example are for illustrative purposes only, serving as educational resources to help guide your business planning process. These examples are carefully selected to demonstrate how you can customize your own AI-generated Hotel Business Plan, helping you overcome challenges and capitalize on opportunities in the hotel sector.

For those seeking a customized solution, we offer a downloadable 'Hotel Business Plan PDF' . This document is crucial for entrepreneurs determined to create a compelling and effective strategy for launching or expanding their hotel services. The 'AI Business Plan Generator' serves as a detailed guide, offering deep insights into the hotel industry. It provides you with the necessary tools to skillfully manage and grow your hotel business, utilizing the power of AI for unmatched strategic planning.

Hotel business plan

How this hotel business plan sample was created.

Easily craft your personalized hotel business plan with our AI Business Plan Generator. Simply click 'Get your hotel business plan' and answer a series of targeted questions about your hotel venture. Our advanced AI technology will analyze your inputs to create a business plan that aligns seamlessly with the objectives and needs of your hotel operation. This effective and straightforward method takes only 5-10 minutes, yielding a comprehensive and structured plan. Our platform provides the flexibility to modify and perfect your plan, ensuring it precisely captures your unique vision for your hotel business. Upon completion, your plan is ready for download, serving as a clear and detailed roadmap for initiating and growing your hotel business. Take advantage of the power of our AI business plan generator, specially tailored for hotel businesses, to enhance your strategic planning process.

Hotel business plan sample

Executive summary, business description, market research and analysis, swot analysis.

• Organizational Structure and Management Team

Products or Services

Marketing and sales strategy, operations plan, financial projections, risk analysis.

47 Lounge Hotel emerges as a boutique luxury destination strategically nestled in the vibrant heart of San Francisco, California. Designed to cater to the sophisticated demands of young professionals, culture-savvy tourists, and discerning event planners, our hotel promises an unmatched blend of elegance, comfort, and personalized service. As we prepare to open our doors, the essence of our business model centers on delivering an exceptional accommodation experience, punctuated by curated amenities that set us apart in a competitive market.

This business plan outlines our strategic approach to establish 47 Lounge Hotel as a premier choice for luxury accommodation and events in San Francisco. Boasting a comprehensive array of services, including luxury accommodations, a fine dining restaurant, versatile event spaces, a wellness center, and bespoke concierge services, we are poised to meet the evolving demands of our target markets. These offerings are meticulously crafted to ensure comfort, engagement, and memorable experiences for our guests, illustrating our commitment to excellence in every aspect of our operations.

The foundation of 47 Lounge Hotel's strategic vision is our exceptional management team, which brings together a wealth of experience and expertise in hotel management, operations, finance, marketing, and human resources. Led by Olivia Smith, a veteran with over 15 years in the boutique hotel industry, our team is uniquely equipped to steer the hotel towards profitability and sustained growth. Supported by Ethan Taylor in Operations, Sophia Johnson overseeing our financial strategy, Michael Williams directing our marketing efforts, and Isabella Brown managing our human resource needs, the team's collaborative skills and industry insights are pivotal to our success.

Our market research indicates a lucrative opportunity within San Francisco's boutique hotel sector, driven by increasing demand for unique lodging experiences. With a strategic marketing and sales strategy focused on digital outreach, personalized service offerings, and dynamic pricing, 47 Lounge Hotel aims to secure a significant market share. Leveraging San Francisco's allure as a tourist and business hub, we anticipate steady growth in occupancy rates and revenue over the next five years. Our projections forecast a revenue increase to $1,200,000, with net profit margins expanding to 20% by year five, reflecting our focus on operational efficiency and guest satisfaction.

Acknowledging the inherent risks in the hospitality industry, from market fluctuations to operational challenges, we have developed comprehensive mitigation and contingency plans. These include diversifying our service offerings, adopting a conservative financial approach, ensuring regulatory compliance, and embracing technological advances to enhance guest experiences and operational efficiencies. Furthermore, our commitment to sustainability and community engagement stands as a testament to our ethos, aiming to make a positive impact while achieving our business objectives.

Financially, 47 Lounge Hotel is on a solid footing, with an initial investment of $1 million underlining our commitment to creating exceptional value for guests and stakeholders alike. With detailed financial projections highlighting our paths to revenue growth, profitability, and cash flow stability, we are confident in our capacity to deliver on our promises. Our balance sheet projections underscore a healthy financial structure, positioning us favorably for future expansion and investment opportunities.

In conclusion, 47 Lounge Hotel stands at the threshold of becoming a beacon of luxury hospitality in San Francisco. With a strategic location, a strong management team, a distinctive array of services, and a robust financial strategy, we are dedicated to realizing our vision of providing unparalleled guest experiences. As we embark on this exciting journey, our focus remains steadfast on achieving operational excellence, financial sustainability, and market leadership in the boutique hotel industry.

Hotel business planning

47 Lounge Hotel, nestled in the vibrant heart of San Francisco, California, is an LLC poised to redefine the hospitality experience for young professionals, tourists, and event planners. As a new entrant in the competitive hotel industry, our establishment is designed to offer a unique blend of luxury, comfort, and personalized services at an affordable price. Our prime location not only provides easy access to the city’s main attractions but also offers a stylish retreat for those seeking relaxation and indulgence in one of the world’s most dynamic cities.

The hotel industry, characterized by its offering of temporary lodging, food, and other services, is a vast and ever-evolving sector. Within this broad industry, 47 Lounge Hotel identifies itself with the boutique hotel segment, focusing on delivering a high-quality, intimate, and unique experience for guests. This approach capitalizes on the growing desire for accommodations that offer more than just a place to stay but serve as part of the travel experience itself.

47 Lounge Hotel was founded with a dual purpose: to fill a gap in the San Francisco hotel market for affordable luxury accommodation and to create a space that could cater to the diverse needs of modern travelers and small to medium-sized events. Recognizing the changing dynamics of the travel industry, where travelers increasingly seek experiences that are both authentic and unique, the founders envisioned a hotel that would not only provide a place to stay but also embed guests in the culture and vibrancy of San Francisco. From this vision, 47 Lounge Hotel emerged as a concept designed to offer luxury accommodation, fine dining, versatile event spaces, a wellness center, and personalized concierge services, all under one roof.

The mission of 47 Lounge Hotel is to offer guests an unparalleled experience by combining the comfort and amenities of a luxury hotel with the personalized service and charm of a boutique establishment. Our commitment to excellence, along with our dedication to providing a memorable stay, drives every decision and action within the hotel. We aim not only to meet the expectations of our guests but to exceed them, ensuring that every visit is unforgettable and every event is a resounding success.

As an LLC, 47 Lounge Hotel combines the flexibility of a partnership with the liability protection of a corporation, allowing our management team to focus on innovation and service excellence without the encumbrances often associated with more rigid legal structures. This flexibility is critical in the highly competitive and fast-paced hotel industry, enabling us to adapt quickly to market trends and guest needs while ensuring the business is well-protected and primed for growth.

The long-term potential of 47 Lounge Hotel in the bustling city of San Francisco is substantial. With its focus on young professionals, tourists, and event planners seeking unique and affordable luxury experiences, coupled with the management team's extensive experience and innovative approach to hotel management, 47 Lounge Hotel is positioned for success. Our financial projections over the next 3-5 years reflect a steady growth in revenue and net profit margin, signaling strong confidence in the hotel’s potential to capture and retain a significant share of the market. Furthermore, our strategic location and comprehensive range of services enable us to cater to a broad demographic, ensuring long-term relevance and profitability in the ever-evolving hospitality landscape of San Francisco and beyond.

The hotel industry is a significant component of the global travel and tourism sector, characterized by its dynamic nature and susceptibility to economic, lifestyle, and technological trends. As of the last reported year, the global hotel industry generated approximately $570 billion in revenue, with an expected annual growth rate of 3.5% over the next five years. This growth trajectory is underpinned by increasing global travel and a rising preference for boutique and unique lodging experiences among travelers, particularly in urban centers like San Francisco.

San Francisco’s hotel market is a vibrant segment of the local economy, catering to a mix of international tourists, domestic travelers, and business professionals. The city welcomed over 25 million visitors last year, contributing to a total lodging revenue of over $10 billion. Within this thriving marketplace, the boutique hotel sector, which 47 Lounge Hotel aims to enter, is particularly lucrative, with a growth rate outpacing the broader hotel industry at 5%. This segment’s popularity is driven by the desire for differentiated and personalized accommodation experiences, especially among younger travelers and professionals.

Based on current trends and market dynamics, our target market includes approximately 5 million young professionals and tourists, suggesting a revenue potential exceeding $1 billion for the boutique hotel segment in San Francisco alone. Given these figures, 47 Lounge Hotel aims to capture a 0.5% market share within our first five years of operation. This ambitious yet achievable target is supported by our strategic focus on unique value propositions such as luxury accommodation, specialized event spaces, and wellness centers tailored to our identified customer base.

Customer demographics within our target market primarily consist of individuals aged 25 to 44, with a roughly equal gender distribution. These customers typically boast higher-than-average disposable incomes, with annual figures ranging from $75,000 to $150,000, and display a preference for experiences over possessions, as indicated by their spending patterns. This demographic is highly educated, with over 60% holding at least a bachelor’s degree, and they are concentrated in urban areas with robust employment opportunities in sectors like technology, finance, and creative industries.

In the boutique hotel sector of San Francisco, average daily rates (ADR) range from $200 to $400, with seasonal variations. 47 Lounge Hotel plans to adopt a competitive pricing strategy, setting our initial ADR at $250, positioning us attractively against key competitors such as The Metropolitan Grand, City View Oasis, and Royal Haven Inn. These competitors currently capture approximately 10%, 5%, and 3% of the boutique hotel market share, respectively, with annual revenues averaging around $20 million for the leading player.

Consumer behavior trends indicate a growing demand for sustainable and authentic travel experiences. Increasingly, guests prefer accommodations that offer personalized services, eco-friendly practices, and technology-enhanced conveniences. This shift is paralleled by a significant adoption rate of mobile booking platforms, with over 70% of last-minute bookings made via smartphones.

Economic indicators pertinent to our market include a steady increase in disposable income levels across our target demographics and a stable unemployment rate, fostering consumer confidence and discretionary spending in the travel sector. However, regulatory costs and compliance expenses are considerable, with initial licensing and regulatory adherence costs estimated at around $100,000, alongside ongoing operational restrictions that may influence service delivery and cost structures.

Barriers to entry in the boutique hotel market are high due to the substantial initial investment required, which for 47 Lounge Hotel amounts to $1 million. This investment covers property acquisition, renovations to meet our unique value proposition, initial marketing to establish our brand, and operational expenses. Despite these barriers, the long-term growth potential in the boutique hotel sector, combined with our distinctive positioning and committed management team, underlines a promising outlook for 47 Lounge Hotel.

Hotel amenities business plan

Organizational Structure and Management

The organizational structure of 47 Lounge Hotel LLC is designed to ensure efficiency, foster innovation, and provide exceptional service to our guests. Our structure is hierarchical, yet flexible, facilitating clear communication channels and decision-making processes across different levels of the organization. At the top of the hierarchy is the General Manager, followed by heads of departments, and then team members within those departments.

The management team is composed of seasoned professionals with extensive experience in the hospitality industry. Olivia Smith, our General Manager, brings over 15 years of hotel management experience, with a proven track record of increasing guest satisfaction and operational efficiency. Ethan Taylor, the Head of Operations, is responsible for the day-to-day running of the hotel, leveraging his 10 years of experience to ensure a seamless experience for our guests. Sophia Johnson, our Chief Financial Officer, oversees the financial strategy of the hotel, drawing on a decade of hospitality sector experience to manage budgets, forecasts, and investment opportunities. Michael Williams, the Marketing Director, is tasked with brand development and customer acquisition, employing his expertise in digital marketing to enhance our market presence. Lastly, Isabella Brown, the HR Manager, oversees talent management, ensuring we attract, train, and retain the best professionals in the industry.

Our staffing needs are projected to grow as the hotel expands. Currently, we require a team of approximately 50 full-time employees across various departments including reception, housekeeping, food and beverage, maintenance, and wellness. As we establish our presence in the market and increase occupancy, we anticipate the need to expand our team, particularly within the food and beverage department and event planning services, to meet the growing demands of our guests.

Human resources policies and practices at 47 Lounge Hotel are centered around fairness, diversity, and professional development. We are committed to creating a workplace that respects and values diversity, offering equal employment opportunities to all. Our recruitment process is rigorous, ensuring we hire individuals not only for their skills and experience but also for their fit with our company culture. We offer competitive compensation, comprehensive training programs, and career advancement opportunities to incentivize and retain top talent. Regular performance evaluations help identify areas for improvement and potential for growth, ensuring our team remains motivated and productive. We also have policies in place for addressing grievances, encouraging an open and transparent communication culture.

To complement our internal expertise, we engage with external advisors and consultants in areas requiring specialized knowledge. This includes legal counsel for regulatory compliance, an environmental consultant to guide our sustainability practices, and a technology advisor to keep our operations at the cutting edge. These external partners are selected based on their track record and alignment with our values and operational goals.

In conclusion, our organizational structure and management practices are crafted to support our mission of providing luxury, comfort, and personalized service to our guests. The experienced team at 47 Lounge Hotel, supported by clear operational protocols and external expertise, positions us well to achieve our strategic objectives and establish ourselves as a leading boutique hotel in San Francisco.

Market analysis for hotel business plan

47 Lounge Hotel offers a carefully curated selection of products and services designed to cater to the varying needs of our young professional and tourist clientele, as well as small to medium-sized event planners. Our offerings encompass luxury accommodation, a fine dining restaurant, versatile event spaces, a wellness center, and concierge services, each crafted to enhance the guest experience and ensure a memorable stay.

Luxury Accommodation: Our accommodations range from elegantly designed standard rooms to luxurious suites, each equipped with modern amenities such as high-speed internet, smart room automation, eco-friendly toiletries, and premium bedding. Unique selling points include personalized room settings for lighting, temperature, and entertainment based on guest preferences, and rooms designed to reflect San Francisco's rich cultural heritage with artwork and decor sourced from local artists.

Fine Dining Restaurant: The on-site restaurant offers a gastronomic journey through local and international cuisine, prepared by our acclaimed chef using the freshest ingredients sourced from local suppliers. The unique selling point here is our farm-to-table approach, ensuring sustainability and support for the local community. The restaurant features a seasonal menu, including a selection of signature dishes exclusive to 47 Lounge Hotel.

Event Spaces: We provide configurable event spaces equipped with state-of-the-art audiovisual technology, making them ideal for hosting meetings, conferences, weddings, and celebrations. Our competitive advantage lies in our dedicated event planning team, capable of customizing events to meet the specific needs and preferences of our clients, coupled with unique catering options from our fine dining restaurant.

Wellness Center: The wellness center includes a spa offering a range of treatments, a fully equipped fitness center, and a pool area. Our focus on holistic wellness differentiates us from competitors, providing guests with programs tailored to stress relief, fitness, and overall well-being, integrating technology like VR meditation sessions and personalized fitness apps.

Concierge Services: Tailored experiences and recommendations allow guests to explore San Francisco's attractions in a personalized way. From booking exclusive tours to securing reservations at in-demand restaurants and shows, our concierge service ensures each guest can experience the best of the city according to their tastes and interests.

In terms of development stage, all primary offerings (accommodation, dining, event spaces, and wellness center) are fully operational. Future plans include the introduction of themed suites and the expansion of our event spaces to accommodate larger events. Additionally, we are continually enhancing our wellness programs to include emerging health and fitness trends.

Intellectual property status involves trademarks for the "47 Lounge Hotel" brand name and logo, ensuring brand protection and recognition in the marketplace. We also hold copyrights on unique designs and custom artwork displayed within the hotel, contributing to our distinctive ambiance and aesthetic appeal.

The production process, particularly for our dining services, involves a close partnership with local farmers and suppliers, emphasizing quality and sustainability. Our kitchen operates under strict quality control measures to maintain high standards for food safety and guest satisfaction. Supplier relationships are managed through a procurement strategy that prioritizes reliability, ethical practices, and environmental sustainability, ensuring a consistent and premium experience for our guests.

Overall, 47 Lounge Hotel stands out in the San Francisco hotel industry through its blend of luxury, uniqueness, and commitment to sustainability. Our dedicated approach to offering differentiated and high-quality services ensures we meet the sophisticated needs of our target market while fostering a positive impact on the local community and environment.

47 Lounge Hotel's marketing and sales strategy is designed to establish the hotel as a preferred destination for young professionals, tourists, and event planners seeking a unique accommodation and event experience in San Francisco. The strategy leverages digital marketing, personalized guest experiences, competitive pricing, strategic partnerships, and comprehensive customer service policies to attract and retain guests.

Marketing Strategy: Our marketing efforts focus on highlighting the uniqueness and luxury of our services. We intend to leverage digital platforms extensively, including search engine optimization (SEO), social media marketing, and email marketing campaigns to reach our target demographic. Our content strategy will emphasize the distinctive aspects of the 47 Lounge Hotel experience, such as our luxury accommodations, fine dining, wellness offerings, and customizable event spaces. We also plan to engage in storytelling by showcasing guest experiences and testimonials, local culture, and sustainability initiatives to connect emotionally with potential guests.

Additionally, we aim to form strategic partnerships with local businesses, tourism boards, and corporate organizations to tap into a broader customer base. Influencer collaborations and press releases highlighting unique offerings and events at our hotel will further enhance brand visibility and attract media attention.

Sales Strategy: The sales team at 47 Lounge Hotel will be trained to adopt a consultative selling approach, focusing on understanding the needs and preferences of potential guests and clients to tailor offerings that best match their requirements. This team will actively pursue leads for corporate events, weddings, and other functions through direct outreach, participation in industry expos, and networking events. Our sales activities will also include offering incentivized packages for early bookings and off-peak times to optimize occupancy rates.

Our direct sales efforts will be complemented by an easy-to-navigate online booking system, enabling guests to customize their stay by selecting room types, dining preferences, and wellness services at the point of reservation. This seamless integration of sales and technology will enhance the guest booking experience and drive direct sales.

Pricing Strategy: The pricing at 47 Lounge Hotel will adopt a value-based approach, ensuring that guests perceive they are receiving exceptional value for the premium services offered. Our pricing will be competitive with other luxury boutique hotels in San Francisco, with dynamic pricing adjustments based on seasonality, market demand, and local events. Special packages and promotions will be offered to target off-peak seasons and last-minute bookings to ensure steady revenue flow throughout the year.

Distribution Channels: Our primary distribution channel will be our branded website, supported by an integrated booking system for accommodations, dining, and events. We will also partner with online travel agencies (OTAs) and luxury travel platforms to expand our reach while maintaining rate parity across all channels. For corporate clients and event planners, direct sales initiatives will serve as a key distribution channel.

Promotion and Advertising Plans: Promotion and advertising efforts will include targeted online ads, social media campaigns, and email marketing designed to reach specific segments of our target market. Seasonal promotions and thematic packages (e.g., wellness retreats, culinary weekends) will be advertised through these channels, along with special rates for early bookings and extended stays. Participation in local and industry-specific events will further promote our offerings to a broader audience.

Customer Service Policies: To ensure customer satisfaction and loyalty, 47 Lounge Hotel will implement comprehensive customer service policies focused on personalized guest experiences. These policies will include flexible cancellation policies, a loyalty program rewarding frequent guests, and a guest feedback system to continuously improve our service offerings. Our staff will undergo regular training in customer service excellence to ensure every guest interaction enhances their overall stay.

Through these integrated marketing and sales strategies, 47 Lounge Hotel aims to build a strong brand presence, drive bookings, and ensure high guest satisfaction, positioning us as a leading choice for luxury accommodation and events in San Francisco.

Business plan for hospitality industry

The Operations Plan for 47 Lounge Hotel outlines the daily operations, service delivery processes, quality control measures, inventory management, supply chain management, and facilities and equipment needs. This plan ensures the efficient and effective execution of our hotel's offerings, maintaining the high standards expected by our guests.

Operational Workflow: Daily operations at 47 Lounge Hotel are designed to ensure that all aspects of the guest experience are seamlessly managed for the utmost satisfaction. The day begins with a morning briefing where department heads meet to discuss occupancy levels, guest arrivals/departures, special requests, and any events scheduled for the day. The housekeeping team follows a rigorous cleaning schedule, ensuring all rooms and public areas are maintained to the highest standards of cleanliness and preparedness before guest arrival and throughout their stay.

The reception team manages check-ins and check-outs, providing personalized greetings to guests, handling reservations, and addressing any guest inquiries or issues. The concierge service operates throughout the day to assist guests with recommendations, bookings, and any other requirements they might have. The dining and kitchen staff manage meal preparation and service, adhering to the scheduled dining hours while also accommodating room service orders.

Production or Service Delivery Processes: Our service delivery is focused on providing luxury accommodation, fine dining, wellness services, and event hosting. Each of these services has its own set of processes designed to ensure excellence. For example, room preparation involves a detailed checklist, including amenities replenishment, cleanliness, and personalization based on guest preferences noted at the time of booking or from previous stays. The kitchen operates based on a farm-to-table concept, requiring daily deliveries from local suppliers and preparation schedules aligned with meal service times to ensure freshness and quality.

Quality Control Measures: Quality control is paramount across all services. This includes regular training for staff on service standards, mystery guest programs to assess the guest experience, and strict adherence to health and safety standards in the kitchen and dining areas. Feedback mechanisms through guest surveys and online reviews are closely monitored, with the management team implementing continuous improvement measures based on this feedback.

Inventory Management: Inventory management is a critical component of our operations, particularly for the hotel’s restaurant and housekeeping services. We use a just-in-time inventory system for our kitchen, minimizing waste while ensuring ingredient freshness. Housekeeping inventory is monitored through a digital management system, tracking the usage and replenishment of linens, toiletries, and other room amenities.

Supply Chain Management: Our supply chain management strategy prioritizes partnerships with local suppliers to support our farm-to-table dining concept and sustainability goals. We maintain relationships with multiple suppliers for key items to ensure continuity of supply and negotiate contracts that allow for flexibility and cost-efficiency. Regular reviews of supplier performance are conducted to maintain our high standards.

Facilities and Equipment Needs: The hotel’s facilities and equipment are essential to our daily operations. This includes well-maintained guest rooms, event spaces with modern AV equipment, a fully equipped kitchen, a fitness center, and a spa. We implement a regular maintenance schedule for all physical assets, with a special focus on preventative maintenance to minimize downtime and ensure the longevity of our equipment. Investments in energy-efficient equipment and technologies reflect our commitment to sustainability and operational efficiency.

In conclusion, our Operations Plan is designed to ensure that the 47 Lounge Hotel operates smoothly and efficiently, delivering a high-quality, consistent experience to our guests while maintaining flexibility to adapt to their evolving needs and expectations.

The financial projections for 47 Lounge Hotel over the next five years have been meticulously prepared, showcasing our anticipated financial performance across key areas: sales, profitability, cash flow, and overall financial health. These projections are based on a combination of industry trends, our strategic business planning, and the initial feedback from the market.

Starting with sales, we anticipate a steady increase across our product and service lines, reflecting our growing brand recognition and the strategic expansion of our offerings. This growth is underpinned by a rising demand for boutique hotel experiences among our target demographic of young professionals and tourists. Our diversified revenue streams, including luxury accommodation, fine dining, event spaces, wellness center, and concierge services, are expected to contribute significantly to this upward trajectory.

Our Profit and Loss Projection indicates improving profitability, driven by increasing revenue and effective cost management strategies. We expect our gross profit margins to enhance as we scale operations and optimize our supplier relationships and operational efficiencies. Strict control over operating expenses will further ensure our net profit margins improve year over year.

From a cash flow perspective, the projections demonstrate robust cash inflows resulting from our operational activities, enabling us to maintain a healthy liquidity position. This will facilitate reinvestment into the business for growth initiatives and ensure we can comfortably meet our financial obligations at all times.

The Balance Sheet forecast reflects a solid financial standing, with total assets expected to grow due to reinvestments and enhanced operational efficiencies. Liabilities are managed with a prudent approach to financing, aiming to sustain a comfortable debt-to-equity ratio. Shareholder's equity is projected to increase as retained earnings grow, reflecting the overall financial health and viability of the business.

Financial assumptions underlying these projections include a stable economic environment, consistent market demand for boutique hotel experiences, and our ability to execute the strategic initiatives outlined in this plan. Key considerations include the potential impact of fluctuating occupancy rates due to seasonal variations and external economic factors, as well as the ongoing need for investments in marketing and property enhancements to sustain competitive advantage.

Therefore, while these financial projections are grounded in careful analysis and realistic assumptions, we remain cognizant of the ever-changing business landscape and are prepared to adapt our strategies as necessary to mitigate risks and capitalize on emerging opportunities.

Hotel management business plan

Sales forecast.

Profit and Loss Forecast

Cash flow Forecast

Balance Sheet

In the dynamic environment of the hospitality industry, 47 Lounge Hotel faces several potential risks that could impact its operational, financial, and market performance. Identifying these risks and implementing effective mitigation and contingency strategies is crucial for the hotel's sustained success and growth.

Market Risks: Market risks include fluctuating demand due to seasonal variation, changing consumer preferences, and economic downturns. To mitigate these risks, 47 Lounge Hotel plans to diversify its target market by catering not only to tourists and young professionals but also to local residents and businesses through event hosting and wellness programs. Marketing strategies will be adapted continuously based on market research and customer feedback to remain relevant. Additionally, developing a loyalty program will help encourage repeat business and reduce dependency on seasonal peaks.

Operational Risks: Operational risks at 47 Lounge Hotel comprise potential service interruptions due to equipment failures, supply chain disruptions, or staff shortages. Mitigation strategies include regular maintenance and updates of equipment and facilities, establishing strong relationships with multiple suppliers, and implementing a robust staffing plan that includes cross-training employees to ensure service continuity. An emergency response plan will be developed for critical situations to minimize downtime.

Financial Risks: Financial risks involve fluctuations in revenue due to market conditions, unexpected increases in operating costs, and potential cash flow shortages. To manage these risks, 47 Lounge Hotel will maintain a conservative financial strategy with a focus on cost control and efficiency. Regular financial reviews and budget adjustments will be made in response to financial performance and forecasts. A reserve fund will be established to manage cash flow shortages or unexpected expenses, ensuring financial stability.

Competition Risks: The risk posed by existing and new competitors entering the market can affect the hotel's market share and pricing strategies. To counteract this, 47 Lounge Hotel will focus on differentiating its offerings through high-quality service, unique guest experiences, and continuous innovation in its product and service offerings. Strategic partnerships and alliances will also be explored to expand market reach and enhance competitiveness.

Legal and Compliance Risks: Legal and compliance risks include the possibility of failing to adhere to industry regulations, leading to fines, legal action, or reputational damage. 47 Lounge Hotel will address these risks by ensuring compliance with all local, state, and federal regulations through regular legal reviews and audits. Adequate insurance coverage will be secured to protect against potential liabilities and losses.

Technological Risks: With the increasing reliance on technology in hotel operations and guest services, risks related to cybersecurity breaches, data privacy issues, and technology failures are of concern. Mitigation strategies include investing in robust cybersecurity measures, regular IT system reviews and updates, and providing staff with ongoing training on data protection and privacy laws.

Environmental Risks: Environmental risks, such as natural disasters or pandemics, could significantly disrupt hotel operations. The hotel will develop comprehensive emergency preparedness and disaster recovery plans, including business interruption insurance, to manage these risks.

Contingency Plans: Contingency plans are in place for critical risk areas, including alternative suppliers, backup systems for essential technology services, and arrangements for relocating guests in case of facility damage. The hotel will conduct regular risk assessment exercises to update these plans as necessary.

Overall, by identifying potential risks and implementing proactive strategies and contingency plans, 47 Lounge Hotel aims to minimize the impact of these risks on its operations and financial performance, ensuring long-term success and resilience in the competitive hospitality market.

Hotel business plan template

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Hotel Business Plan

You’ve probably decided to follow your dreams and open your very own hotel. But before you begin spending your financial resources and designing your hotel blueprint, you need to have a hotel business plan . It will guide you every step of the way and serve as your road map to the opening.

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What is a Hotel Business Plan?

A hotel business plan contains the goals of the owners, the methods, and the timeframe for accomplishing them. It also describes the hotel as a business, its recorded history, as well as its financial projections and information. They serve as a road map for the owners on how to run the hotel.

How to Create a Hotel Business Plan

Statista reports that as of March 2020, the average daily rate of hotels in the United States to be $110.66 million. The current state of the world shows how a hotel business can go down without specific content in the plan. It has to be adaptable with unexpected events occurring all over the world by finding new ways of providing service and gaining profit. If you have never made a hotel business plan before, check out these tips for some ideas on your design.

1. Add Executive Summary

Place the executive summary in your business plan’s introduction. Your mission statement serves as an introduction to your design. It’s typically a one-line statement that describes the essence of your company. This explains why you are in business or the market’s need for your services. Your plan’s objectives or business goals will then specify what you hope to accomplish with this corporate venture.

2. Write Down Company Analysis

The concept you have for your hotel should contain a unique selling point to succeed in a competitive market. This general analysis comprises the distinctive qualities that differentiate your hotel business from others. Provide detailed information for this section to make it easier for investors and other stakeholders to grasp your ideas.

3. Present Market Analysis

Market research and customer analysis is a vital aspect of your document. After all, you can’t serve a market you know nothing about. In-depth information about your target customers will help you determine the primary needs of this market segment in terms of location, amenities, and service.

4. Discuss Operations Plan

This constitutes the management responsible for running key aspects of the business. You need to identify the type of staff members and administrative body your hotel business requires, such as the number of employees and their responsibilities.

FAQ’s

Do i pay for my hotel stay before or after i check-in.

Generally, most hotels charge you for your stay when you are checking out, right after your stay in the hotel. However, you can also pay beforehand for your stay if you wish to book a room in advance.

Is a hotel a good investment?

Hotels are generally a good investment and make for an excellent source of income as long as you have a large market and an effective way to draw in customers. The economy can significantly impact the success or failure of your hotel.

Who creates the hotel business plan?

It is usually the owner of the hotel who comes up with the business plan. However, one must be business savvy and have an education in hotel management when it comes to this. If the owner is not very knowledgeable, they can have a team prepare it for them instead.

Hotels vary depending on the characteristics they possess, including the services that they provide, the location, the prices, and whether the establishment is an independent firm or part of a chain operation. Whether you own a startup bed and breakfast or a 5-star luxury hotel, the only way it will thrive is to have a solid hotel business plan to guide your endeavors in the hospitality industry.

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How to write a restaurant business plan + free template (2024)

By Homebase Team

Whether you’re living the dream of opening your own restaurant or reworking your existing concept, a restaurant business plan template takes a ton of stress out of writing a business plan.

With prompts for every section you’ll need, we’ve created our free restaurant business plan template to be your operational foundation (you’re welcome!). Something you can download, customize, and come back to whenever you make business decisions for your restaurant.

But first, let’s go through all the ways a written business plan helps shape your restaurant, and why it boosts your business’s chance of success.

What is a restaurant business plan?

A restaurant business plan is a written document that lays out an overview of a restaurant, its objectives, and its plans for achieving its goals.

It’s needed across all kinds and sizes of restaurants, and can be a handful of pages long or much more detailed. A well-written restaurant business plan not only helps you organize your ideas, it’s also a key part of getting investor funding .

Starting a restaurant? Here’s why you need a business plan. 

Creatively, opening a new restaurant can be incredibly exciting. But it’s also super complicated. From licenses, to equipment, to building a team, each phase needs a lot of attention to detail.

Before you jump in, it’s important to shape your plan of attack, organizing your business ideas into a clear, concise narrative that an outsider could easily understand. A business plan is an essential part of this—and here’s why.

Your business plan helps you:

Set short and long-term goals.

A restaurant business plan not only shows how your business will operate in its early stages, it also shows what steps it’ll need to follow as time goes by. Setting both your short and long-term goals at the outset makes you more likely to achieve them.

Understand your resource needs.

Going through the exercise of writing a restaurant business plan is as important as having the finished document in front of you. As you organize your thoughts, your resource needs—from the amount of capital you need to raise all the way down to the equipment you need to find—will take shape. 

Reduce potential risks.

Sadly, some 60% of restaurants fail within the first year of opening. One of the main reasons? A failure to plan. Your business plan will help you plan for most challenges at your restaurant before they come up, keeping you on the right side of that number.

Develop a marketing strategy.

As you do your market analysis and figure out who your customers are likely to be, the ways you’ll promote your business will get clearer. The more specific you are with your market research, the easier and more effective your marketing efforts will be.

Build your team.

Your business plan helps you see who you’ll need on your team and which roles you’ll need to fill first . For investors, it’s a document showcasing everyone’s collective experience, personalizing your restaurant in their eyes and packing a professional punch.

Share your vision.

Whether you’re using your business plan to secure startup funding or need additional capital after you’ve already opened, your restaurant business plan shows an investor or lender exactly why they should get behind you. 

The 9 elements of a strong restaurant business plan.

Your restaurant business plan will be unique to your vision. But all good business plans hit standard points, and whoever reads yours will expect them. As you develop and finalize your ideas, here are nine key elements you should include. 

1. Executive summary

A strong restaurant business plan begins with a strong executive summary. This is a sharp, concise overview of your restaurant and your opportunity to grab people’s attention.

Here’s where you communicate, in a nutshell, what kind of restaurant you want to run. Which demographic will you be targeting? Why is your business something the community wants or needs? Especially if you’re asking for financing, include a snapshot of your financial information and growth plan as well. 

Your executive summary should briefly lay out:

• Your mission statement. Why are you starting this restaurant now, in this location? 
• Your idea. What’s the concept of this restaurant?
• Your plan of execution. What are your key steps to making this concept work?
• Your potential costs. What are your expected expenses?
• Your anticipated ROI. How much do you expect your restaurant to make?

Many investors will make a split-second decision off of the executive summary alone—it might be all they’re going to read, so make every word count.

2. Company description

Now it’s time to let your creativity out and give your restaurant concept life. Give a more detailed description of your concept that lets your passion for what you’re creating come through. 

Flesh out all the other details of your proposed restaurant, including your restaurant’s:

• Style of cuisine and any unique selling points or differentiators that will make customers choose you
• Service style
• Restaurant name (or at least ideas)
• Size, seating style, and capacity
• Location ideas or the location you’ve scouted or secured
• Ambiance ideas including décor, lighting, and music
• Operating hours
• Other service offerings like whether you’ll offer delivery or takeout, delivery guarantees, catering, and any retail products you plan to sell
• Legal structure (e.g. sole proprietorship, LLC) 
• Existing management and their roles, including yours
• Experts or advisors you’ve brought on board

3. Market analysis

Present the research you’ve done on your target market. Make a couple of buyer personas to represent your future customers, explaining:

• Where your target customers live
• Their income levels
• Their dining-out and/or ordering-in pain points (e.g. lack of late opening hours, lack of family friendliness)
• How often they dine out or order in

Go through which other restaurants already have a customer base in your area, then explain why people will choose your restaurant over others. 

4. Sample menu

Even at the business plan stage, menu engineering is crucial. The specific menu items you’re likely to serve—the biggest thing that will set you apart—should shine through with descriptions that are short, clear, and evocative. If you have an executive chef already, this is a great area for them to add input.

Use language that will get people excited about trying your offerings. Hire a designer or use an online program to create your own mockup using the same colors, fonts, and design elements as the rest of your branding. 

5. Business structure

Dive deeper into your business structure (sole proprietorship, partnership, LLC, etc.) and organizational management. Show what your different employee positions will be (co-founders, managers, servers) to give a sense of your team’s makeup. An organizational chart can be helpful here.

Investors won’t expect you to have your entire team on board at this stage, but you should have at least a couple of people firmed up. For the roles that are already filled, including your own, summarize your collective experience and achievements. Bullet points work well, or some people choose to go into more detail with full resumes for the executive team or critical team members.

6. Restaurant design and location

Long before you sign a lease, make sure that your new offering will outshine existing ones nearby. In this section of your business plan, explain why your chosen location, or the ones you’re narrowing down, are going to be an effective space for your target market.

Consider things like:

• Neighborhood demographics
• Foot traffic
• Labor costs
• Accessibility

Hand in hand with location, your restaurant’s interior design—both in its floor plan and its ambiance—is also crucial to your business’s viability. Come up with a captivating restaurant design that communicates your theme and matches your cuisine, creating a memorable customer experience. Decide how many tables you’ll be serving, and plan out any outdoor seating.

Touch on things like:

• Team uniforms
• Flatware and glassware

7. Marketing strategy

How do you plan to market your restaurant? Your plan for grabbing customers’ attention is vital to getting diners through the door, especially at the beginning before word-of-mouth advertising has taken off.

What kind of offers will you provide? Will you have promotional events, direct mail, or a social media strategy ? Go through your planned marketing campaigns and explain how each of them will help secure your target market. 

8. Takeout and delivery options

If you’ve decided to have takeout and delivery at your restaurant—pretty important for most target markets—decide whether you’ll use your own drivers or a professional fleet like Uber Eats or DoorDash.

Show how you’ll provide the smooth digital experience your customers will expect. Decide if and how your website will come into play, bearing in mind that in 2023, 40% of consumers preferred to order directly from the restaurant website .

9. Financial projections

Your restaurant’s projected budget need to be solid, especially if you’re using your business plan to get startup funds. Without this, investors have no way of knowing if your business is a good investment or when it will become profitable.

Hire an experienced accountant with expertise in running restaurants and write down your market research, your planned costs , and your projected income. Show how investor funds will be used and whether you’ll be putting up collateral to get a loan. Give a sales forecast, usually for the first five years, and make sure to give a break-even analysis.

Get started with our free restaurant business plan template.  

As the team behind Homebase , we know how much there is to consider when you’re starting a new restaurant. We’re proud to be an all-in-one partner for thousands of restaurants large and small—helping make everything from staffing, to scheduling, to team communication easier for business owners.

And we know that your restaurant business plan is a high-stakes document. That’s why we created our free restaurant business plan template to make sure nothing gets overlooked.

Check out our free, downloadable template to get your ideas into shape, get started on your restaurant journey—and get investors excited to jump on board with you. 

Download your restaurant business plan template for free: Restaurant business plan + free template (2024)

Stop chasing down phone numbers with our built-in team communication tool. Message teammates, share updates, and swap shifts — all from the Homebase app.

Restaurant business plan template FAQs

What is the basic planning document for a successful restaurant.

The basic planning document for successful restaurants is a restaurant business plan. A restaurant business plan lays out a restaurant’s long and short-term goals and its plans for achieving those goals. Restaurant planners use it both to finetune their ideas and to secure investor funding.

How to write a restaurant business plan.

When writing a restaurant business plan, include an executive summary, a detailed restaurant description, market analysis research, a sample menu, a breakdown of your business structure, the design and location of your restaurant, your planned takeout and delivery options, your marketing strategy, and your financial projections.

What makes a business plan template for restaurants different from a standard business plan?

A restaurant business plan template differs from a standard business plan by including things like menu engineering, interior design, kitchen operations, front-of-house management, takeout and delivery offerings, and location analysis, which are unique to the food service industry.

Remember:  This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

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MoSCoW Method: How to Make the Best of Prioritization

Prioritization played a significant role in the success of most feature-rich apps, such as Slack and GitLab . Initially, they offered a limited set of functionalities that were essential for their users. With time, this set was supplemented with other features. Railsware is going to share its own style of prioritizing and show you how we use the MoSCoW method to get long lists of tasks done.

Why do you need prioritization?

As a rule, the daily routine includes a bunch of tasks. Ideally, you’ll have enough time and energy to cover all of them – but it just might happen that the number of tasks is immense and the resources available are not in abundance. That’s where prioritization comes in.

This term denotes a process to filter what you have to do in order of importance or relevance. For example, if you’re building a house, you are not likely to begin with the roof or walls until your foundation is done. Of course, things are much more complicated in the web development industry, and this example cannot reveal the full-scope value of setting priorities.

Complex projects and numerous startups make use of advanced prioritization techniques. These usually consist of frameworks known for specific requirements or rules that improve decision-making. Success in prioritization often determines the success of the company itself. Getting caught up in pending and undone tasks is a straight road to failure. That’s why businesses pay particular attention to which prioritization methods to use. There are quite a few of them, but they all have some common characteristics, such as orientation towards input (internal or external) and quantitative or qualitative tools.

By the way, we are hiring. Check out our job openings.

External orientation means that you need to involve stakeholders outside the development team to set priorities, while the internally-oriented methods can be executed purely in-house. Quantitative methods entail a deeper focus on numeric metrics in prioritization, and the qualitative one rests on expert opinions, votings, classifications to a greater extent. In view of this, they are traditionally divided into the following categories:

You can read about different Agile prioritization techniques in detail here . If you need, we’ve also gone more in depth on what Agile product development is in a separate article.

Railsware prefers a technique developed by Dai Clegg way back in 1994. Initially, it was named MSCW, but two o’s were added to improve pronounceability. This also made it sound like the capital city of Russia. Let’s see how it works.

What is MoSCoW?

To understand the gist of the MoSCoW method, we need to look at its origin – the dynamic systems development method (DSDM). It is a framework for Agile project management tailored by practitioners with the aim of improving quality in rapid app development (RAD) processes. A hallmark of DSDM projects is strictly determined quality, costs, and time at an early stage. In view of this, all the project tasks have to be allocated by importance. The need for managing priorities triggered the invention of a specialized prioritization mechanism.

This mechanism was implemented via MoSCoW – a simple yet powerful solution to set priorities both with and without timeboxes. However, it shows better efficiency if you have a certain deadline for a task, feature, subfeature, functionality, etc. The framework is applicable to all levels of project prioritization from top to bottom, as well as to all functions and focus areas.

The MoSCoW abbreviation (except for the o’s) is carved with first letters of the priority categories it works with. These are Must-haves, Should-haves, Could-haves and Won’t-haves. And that’s how you can define which task falls into which category.

Prioritization rules

These rules or requirements estimate the importance of any task/process/feature/etc. Each company or work team uses its own approach to setting requirements, but, in general, they do not differentiate much and look as follows.

These are top-priority requirements, which shape the foundation of the major pipeline. Avoiding them means blocking the entire project or further activities. As a rule, product ideation depends entirely on defining must-haves using such pointers as ‘required for launch’, ‘required for safety’, ‘required for validation’, ‘required to deliver a viable solution’, etc.

• Can we move forward with the project if this task is undone? – if NO , it’s MUST .

Should-haves

This type of requirement is of secondary priority. Should-haves do not affect the launch and, traditionally, are considered important but not crucial. They differ from must-haves by the availability of a workaround. Therefore, the failure of a should-have task is unlikely to cause the failure of the entire project. If you’re building a product, it will still be usable even if these requirements aren’t met.

• Will we move forward with the project if this task is done a bit later? – if YES , it SHOULD .

Could-haves

The next requirement is less important than the two previous ones but still wanted. If we compare could-haves with should-haves, the former is defined by a lower degree of adverse effect if omitted. Traditionally, the third-level priority requirements in the Agile framework MoSCoW are realized if a project is not highly constrained in time. Within the product development, we can call them low-cost tweaks.

• Can we sacrifice this task till the deadline? – if YES , it’s COULD .

Won’t-haves

You can also encounter this type of requirement under the name of would-have or wish-to-have, but these variants are not recognized by the Wiki . However, regardless of the chosen name, these requirements define the lowest priority for tasks that are unviable to implement with a particular budget and deadline. Won’t-have does not mean a complete rejection of something. It envisions reintroduction under favorable conditions in the future.

• Can we get back to it when things are going better? – if YES , it’s WON’T .

In search of the perfect tools and techniques, our team often modifies some well-known approaches and tailors them to our needs. This constant search and improvement led us to brand new product ideation and decision-making framework: BRIDGeS . BRIDGeS is a flexible approach for multi-context analysis suitable for building effective product strategies, solving operational and strategic problems, making day-to-day decisions , and more. Find out how to use BRIDGeS and what advantages BRIDGeS can bring to your team .  

MoSCoW is another tool that we modified to make it even more flexible and versatile. Below, we share our findings to help your team nail prioritization in a more efficient way.

How the Railsware team modified MoSCoW

The main difference between the classical MoSCoW and our version of this technique is that we added another level of prioritization within such groups as Must, Should, and Could. Each of these groups of requirements got another 4 complexity categories :

• 3 – most heavy and unclear requirements
• 2 – heavy complexity
• 1 – normal complexity
• 0 – easiest and the most urgent tasks within the group

This way, when a requirement gets, let’s say, the priority Must, we can also add a numeric matter to the letter M. For instance, our sprint can include several M2 tasks, one M1 task, and three S1 tasks.

When the task is marked with the priority “3” (M3/S3/C3), it most likely means that its scope is too large and complex to be fulfilled fast. You need to decompose it into smaller, manageable chunks and prioritize them as well. This way, from one M3 requirement, you can get a bunch of M2, S1, and C1 tasks, for example.

Sometimes, M, S, C, and W letters are not enough and we may also need an Urgent Must (UM) mark. UMs are the most critical things, such as hotfixes, bug fixes, and patches, which block the work of the whole team. From our experience, we recommend you to fix these tasks ASAP, as they hinder the team’s productive work. So if you set any task as UM, you should ignore all other tasks until the UM task is fixed. In normal situations, your bug tracking system shouldn’t have UMs.

Why do Urgent Must tasks appear? Often, UMs are the Must-haves that your team ignored before the deployment phase or missed during the QA phase. Pay attention to these tricky cases, and try to solve them before they become an obstacle.

Advantages of the modified MoSCoW approach

When we got an additional level of priorities within the MoSCoW system, we felt the following improvements:

• No need to run several rounds of task prioritization . When you have six Must-have requirements, you can’t understand which of them are the most critical or complex and run another round of prioritization. Our approach allows us to set priorities and clearly understand the importance and complexity of each task from the first round.
• Saved time . The ability to set all priorities at once saves time for all the team members who take part in the prioritization process.
• More balanced sprints. A sprint that consists only of Must-have tasks has little chance of being fulfilled. Must-haves are usually more complex requirements that guarantee the viability of a product, meaning their implementation takes more time and concentration from a developer. To dilute high-importance work with some low-hanging tasks, you can add some S0, C0, or S1 tasks to the sprint so that users get a bit more full-featured functionality of the main Must-have flows.
• More pleasant products for end users . While M3 and M2 tasks are usually crucial things necessary for the product viability, Could- and Should-haves may represent more pleasant things (changing a theme, additional filters, notifications, etc.) 

How to use MoSCoW

Everything looks simple in theory, but is it in practice? Let’s check out how a traditional MoSCoW analysis of functionality prioritizing works through the example of a regular web application. As a sample, we’re going to use basic functions taken from one of the Railsware products .

List all tasks

Prioritize cards.

Based on particular requirements for budget and time, we can single out the most fundamental features to be implemented in the minimum viable product . After the priority analysis, we’ve got the following:

• A user MUST sign up.
• A user MUST log in.
• A user MUST reset password.
• A user MUST open a time-tracking page.

The top-priority tasks are followed by important, though not vital,functionalities for the app. These are:

• A user SHOULD choose the billing system.
• A user SHOULD delete an account.
• A user SHOULD choose time-tracking options.

The evolution of the app does foresee its availability on mobile devices. However, this task is only nice-to-have at this point.

• A user COULD install a mobile app version.

And now the least-priority feature. It aims at enhancing the user experience once the app is on track. Theme selectability is definitely not what we’re going to make now, so this feature is saved for later.

• A user WON’T choose the app’s visual theme THIS TIME.

Restructure cards according to their priority

This step allows you to see the quantitative ratio of high and low priority tasks.

The most difficult thing about prioritization is to be icily intelligent and focus on the essential tasks to be done. Otherwise, you can get into the EVERYTHING-IS-MUST trap , according to which any feature like the billing system option or mobile app availability turns into the must-have.

And that’s why the MoSCoW Agile method is cool. It allows you to define a basic feature set, which has top priority and emphasizes that you do not need to abandon anything. The healthy balance of must-haves + should-haves is 50% of the entire scope. All (or almost all) of the tasks will be implemented later but in the order of their importance to your goal. The goal of this example is to build an MVP , and the categorization above shows the expected progress of the app’s functionality.

How to use modified MoSCoW

We took the same example with all the tasks listed above to showcase how we apply our version of this prioritization technique.

Set priorities using the extended MoSCoW model

The main priority (Must, Should, Could, and Won’t) are still the same, however, we dived deeper to make a more precise priority estimation of each task. Here’s what we came up with:

• “A user can sign up” got an M2 mark. It is a complex task, but it’s not critically urgent.
• “A user can log in” got an M1 mark. The task is important but not that complex.
• “A user can reset password” got an M1 mark. 
• “A user can choose the billing system” got an S3 mark. It’s an important feature, but its scope is large and should be split.
• “A user can delete the account” got an S2 mark. 
• “A user can open a time-tracking page” got an M2 mark. 
• “A user can choose time-tracking options” got an S1 mark. This is a low-hanging feature that can be taken to a sprint to balance the workload.  
• “A user can install a mobile app version” got a C3 mark. This epic is too large to be implemented in one sprint. Its scope should be split into smaller tasks and prioritized as well.
• “A user can choose the app’s visual theme” got the same priority mark – Won’t, which we do not decompose.

Our modified approach provides a better understanding of the task’s priority and complexity and shows the parts that need to be reconsidered. This way, it’s easier to plan a balanced sprint, taking only tasks that can be implemented (all cards with the priority “3” should be split into smaller tasks) and some small tasks that allow your team to reduce the workload. 

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MoSCoW pros and cons

The framework is quite popular among Agile projects with fixed timeboxes since it allows for managing the requirements for a specific release of a product. This prioritization method has proved its efficiency and reliability within our company as well, and we do recommend it to our clients. However, it is not perfect of course, and an unbiased look can reveal some flaws associated with MoSCoW technique. Let’s take a look at its strengths and weaknesses.

MoSCoW prioritization at Railsware

Let’s take a look at how we set priorities within the company.

Product development: we rest upon a roadmap where the product features and the order of their implementation are specified. As a rule, we leverage MoSCoW to define which feature goes first, which comes second, and so on, taking into account their importance and the interdependence of features. Must-haves and Should-haves are meant for the product release. Could-haves and Won’t-haves are postponed for the future.

HR and recruitment: prioritization rests upon such requirements as the demand for particular expertise, budget availability, timebox (how urgently we need this expertise), and so on. We leverage the similar patterns of setting priorities in other focus areas including on-boarding, branding, marketing, etc.

The biggest challenge of the methodology is that all stakeholders must be familiar with enough context to estimate features correctly. Besides, stakeholders that represent different functions like sales, development, marketing have their own vision of setting priorities, which not always works towards correct prioritization. Investors usually treat all features as Must-haves from their broad-based perspective and need them done without any respect of their implementation order.

Railsware has a Holacratic organizational structure . We take advantage of collective leadership based on the RASCI model and make decisions on different things including prioritization through voting. Team members can choose from several options like really want, want and don’t want. Each option implies a particular point. The option with the biggest point total has the highest priority. For small contexts, a responsible role (team leader, project manager, etc.) can be in charge of setting priorities on his/her own.

MoSCoW alternatives you may find useful for your project

Railsware uses Agile framework MoSCoW heavily and is pleased with it. However, it does not mean that we are closed to other solutions. Besides, a good product manager must consider the key product metrics and build the prioritization according to them. So here are some other worthwhile techniques that you may benefit from.

With this framework, you can define how happy the users are with product features. The Kano Model rests on a questionnaire, which is used to learn users’ attitude to a particular feature (like, expect, dislike, neutral, etc.). Visually, the model can be expressed via a two-dimensional diagram where the vertical axis is responsible for the level of user satisfaction (from totally frustrated to incredibly happy) and the horizontal one shows either how much was invested in the feature (Investment), how well was it implemented (Implementation), or how much users benefit from it (Functionality).

Categorization of requirements includes four types that are prioritized in the following order: must-be, performance, attractive, and indifferent. Must-bes are some basic things that users generally expect. Performance (also known as One-Dimensional) requirements are the golden mean and allow you to increase the satisfaction level. Attractive requirements are those that improve user experience. These are nice-to-haves or could-haves according to MoSCoW. Indifferent ones are less prioritized and sometimes even entirely omitted.

Value vs. Complexity

This prioritization technique is one of the simplest. You can encounter it under the names of Value vs. Cost or Value vs. Effort as well. The method feels intuitive and is aimed at maximizing value delivery. Estimation of features’ importance rests upon how much effort is invested to implement them and how much value they will bring. Here is how it looks visually:

Wrapping up

The art of setting priorities shows the efficiency of your workflow. Railsware’s choice is the MoSCoW project management framework, which has made a good showing in versatile functionalities and products. However, it might be less useful for immense projects with multiple teams involved in the pipeline. We advise you to find an effective prioritization solution that fits your unique needs, and to always avoid getting caught up in countless pending tasks.

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