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Hotel Business Plan
OK, so you have decided to realize your dream and open your own hotel . 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 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.
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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)
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.
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!
Need help to Develop and Manage your Hotel Concept?
Our hotel consultants 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 as a boutique hotel , resort, B&B, aparthotel, hostel, or any other lodging concept for that matter, is guaranteed.
Hope this template has helped you get inspired to start your own hotel business .
Best of luck in your endeavours!
PS. Get in touch with us if you need help developing and managing your hotel concept.
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From idea to execution: 10 sections to include in your hotel business plan
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By Lana Cook
Do you love connecting with people from all over the world who share your passion for travel? Don’t want to work a typical 9-5 job and instead want to build a business where every day is different, and you own your schedule?
Opening a hotel business is a dream many entrepreneurs have, but it can be a daunting venture to start. A hotel business plan is a critical first step for business owners to turn their dreams into reality. A strategic plan allows one to study the hotel industry, identify their hotel’s unique point of view, and outline how exactly they will reach their goals.
Read on to learn more about the 10 sections to include in your hotel business plan, tips for creating an effective plan, and key things you need to start your new hotel business.
What is a hotel business plan?
A hotel business plan is a detailed document that identifies your business’s goals, objectives, and strategies for success. It includes market research and a roadmap for building and operating your business.
Why do you 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:
- Helps you identify whether you have a viable business idea
- Provides a detailed roadmap on what you need to accomplish and why
- Gives potential investors insight into your business idea and confidence that you can be successful
- Keeps you on track as you start to execute the different tactics outlined in your plan
- Identifies critical milestones for you and your team to reach
Your plan does not have to be static and should change over time as your business grows and evolves. Your first draft is a starting point to help guide your strategy and instill confidence in potential investors.
10 sections to include in your hotel business plan
Whether you’re starting a small boutique hotel, a cozy B&B, or a 5-star resort, you will need to address the following sections in your hotel business plan.
1. Executive summary
An executive summary is the most essential part of your business plan. It should concisely explain the purpose of your business and why it will be a success.
Include your mission statement explaining why your hotel exists and its overall goal. For example, Capella Hotels & Resorts ’ mission is to combine tradition, discovery, individuality, and twist of the unexpected to create the perfect stay for each guest.
You should also include your vision statement that clearly describes your hotel’s purpose for being in a single sentence. For Capella Hotels, its vision is to embody excellence in the craft of hospitality.
We recommend writing your executive summary as the final stage, as it should summarize the goals and objectives laid out in your plan.
2. Company analysis
Your company analysis is where you can dive into your hotel’s competitive advantage. Ask yourself what makes your hotel unique. Why would guests want to stay with you instead of your competitors?
In this section, identify your brand’s identity and the goals and objectives you want to accomplish. Outline how many rooms and room categories your property will have. For example, will you offer a hybrid hospitality model with dorms, single rooms, and suites? Explain what ancillary revenue sources you’ll offer, like in-room food and beverage options, welcome drinks, or airport shuttles.
Use storytelling to communicate your excitement and passion and make it clear what your hotel will bring to the hospitality industry that hasn’t been done before.
3. Industry analysis
As a business owner, you must be prepared for forces outside your control. You will need to conduct a market analysis that looks at the hospitality industry to identify micro and macro trends that may impact your business. Look at:
- Economic trends
- Environmental trends
- Political trends
- Global health trend
- Technology trends
For each trend, identify how it will impact your business and ways to mitigate risk or take advantage of opportunities.
For example, digital check-in technology has increased across the hotel industry with the rise of tech-savvy guests, new innovative software providers in the market, and labor challenges. Therefore, you should consider what guest engagement solutions you’ll include at your hotel.
In addition to trends, look at the history of the hospitality industry, its current size, and how it’s expected to grow in the short and long term. This research will impact the rest of your plan, especially your marketing and finances.
4. Customer analysis
What type of hotel guests do you want to attract? It’s impossible to please every kind of guest, which is why it’s important to identify your target market . Once you know who you want to stay at your property, you can develop amenities, services, and marketing materials to attract these guests and deliver exceptional experiences.
- What type of guests do I want? Business or leisure travelers?
- What demographics? Age, gender, marital status, etc.
- What are my target market’s interests? Water sports, hiking, relaxation, museums, animals, etc.
- What does my target market value? Sustainability, contactless technology, personalized service, localized experiences, etc.
This section will help you formulate the guest experience to ensure that expectations meet reality .
5. Competitive analysis
The competition you face will vary depending on where your hotel is located. This section is where you should conduct in-depth competitor research to understand how your hotel will compare. Identify who your five major competitors are — ideally, three direct competitors who you will be competing with upon opening and two aspirational competitors that you can emulate as you grow your business.
Conduct a SWOT analysis based on your competitors to look at:
- Strengths – where does your property excel in comparison to competitors? Why would travelers pick you? Price, amenities, location, technology, etc.
- Weaknesses – where does your property fall short in comparison to competitors? Price, amenities, location, technology, etc.
- Opportunities – what industry trends can you take advantage of? What local events or partnerships can you capitalize on?
- Threats – what are the biggest threats facing your property? War, travel restrictions, recession, etc.
A thorough analysis can help solidify your competitive advantage and develop a contingency plan for how you will deal with your weaknesses and threats.
6. Marketing plan
Without demand, there is no business. A hotel marketing plan outlines the channels you’ll use to reach your target audience to drive bookings. Your marketing strategy should include 3 key channels:
1) Paid media — paid advertising to promote your property and drive bookings. This includes online travel agencies (OTAs) , search engine marketing (SEM) , retargeting, and metasearch advertising .
2) Owned media — content you create, like your hotel website , social media channels , blog posts, and SEO .
3) Earned media — user-generated content created by third parties like media coverage or online reviews.
7. Operations plan
How do you plan to run your day-to-day operations? This section of your plan will outline all of the key tasks and responsibilities of your team and what exactly your hotel will offer. Consider:
- The number of staff and supervisors required
- Job descriptions and responsibilities
- Your service standards (check out our downloadable SOPs for some inspiration)
- How you’ll manage your inventory
- What hotel technology solution(s) will you need? PMS, channel manager, booking engine, payment terminal, revenue management tools, guest engagement software, etc.
- What services and amenities do you want to offer?
Detail your short and long-term operational plans and the stakeholders involved for each area.
8. Management team
Whether or not you’ve hired your team yet, this section is one of the most important sections that potential investors will look at. Make sure to outline the key personnel you will require and their roles.
In general, these are the following roles you’ll want to outline:
- Hotel management (general manager, front office manager, housekeeping manager, maintenance manager, revenue manager)
- Hotel sales team
- Housekeeping staff
- Front office staff
Depending on the size of your hotel, your team will vary. Identify what team members you will need to open and your hiring plans over the next five years.
9. Strategic plan
Hoteliers must be strategic in optimizing occupancy rates across seasons to maintain revenue. As part of your strategic plan, identify how you will manage:
- Pricing – what room types will you offer, and how will the pricing vary?
- How will you maintain consistent occupancy throughout the high and low seasons? Will you adapt your pricing and marketing strategies?
- How will you conduct revenue management ? What type of rules/alerts will you use to adjust rates? Will you use technology to help with revenue management ?
- What will your online reputation management strategy be? How will you collect and respond to online reviews?
- What will your distribution mix look like? How will you drive reservations across a variety of channels?
10. Financial plan
Your financial projections are the most challenging but arguably the most important part of your hotel business plan. In this section, you should include the following:
- Start-up costs – how much money will you need from lenders to operate your hotel? Consider business licenses, furniture, down payments, etc.
- Operating costs – how much money will you need to keep your business running? Consider staffing costs, guest acquisition costs , mortgage payments, utilities, SaaS payments, etc.
- Income statement – what will your revenue, expenses, and profit be over the first 3-5 years of business?
- Cash flow projections – how will cash flow in and out of your business? Show what capital investment you’ll need to start.
- Balance sheet – identify your assets, liabilities, and equity.
If you’re looking for a potential investor, your financial plan will be the section they care about most. Here you must prove how your business will provide a return on investment. Don’t forget to include an Appendix that shows more detailed reporting and financial figures.
8 tips for creating an effective plan
1. Start with the section that excites you the most! Covering all the topics outlined above can feel overwhelming, so don’t feel pressured to go in order.
2. Reach out to a business owner you admire. No matter what type of business you’re starting, it’s always helpful to get advice from another business owner. Reach out to a successful local business owner to see if they’d be willing to share some insights they learned along the way.
3. Be concise. While there’s a lot to cover, you must be concise in each section of your plan. Include any additional research or documentation in the appendix to keep your business plan clean.
4. Try to avoid industry jargon. Depending on what type of investor is reading your plan, they may find jargon irrelevant and distracting.
5. Ensure you have a clear competitive advantage. You should be able to state in one sentence what makes your property unique. This selling point will be prominent in all of your marketing materials.
6. Set SMART goals. Setting specific, measurable, achievable, relevant, and time-bound goals is important to stay organized and on track to reach milestones.
7. Don’t forget about your plan. You will have spent hours developing your plan, so make sure you use it! Reference your plan as you build and grow your business , and remember that it’s ok if things change.
8. Illustrate your passion. Communicate why you want to be a part of the hospitality industry. Passion is contagious and gives investors more confidence that you will work hard to achieve your dreams.
What do you need to start a hotel business?
Ok, so you’ve read through this article and are now wondering — what’s next? Ensure you have the following items on your radar to start your business.
- A vision. Know exactly what kind of business you want to build.
- A business plan. Stay on track with a well-developed business plan.
- A location. Decide if you want to build a new property or renovate an existing hotel.
- Capital. Do you need to raise an upfront capital investment? Remember that new businesses usually aren’t profitable for the first few years and will need cash flow to pay for expenses.
- Business licenses & permits. Depending on the type of property and its services, you’ll need an occupancy permit, alcohol license, food service license, sales tax license, etc.
- Technology. Choose a hospitality management platform that can help you scale your business.
- Furniture & equipment. You must furnish your property with the proper furniture, electronics, appliance, etc.
- Staff. Take time hiring staff you can trust and who understand your hotel’s brand and vision.
Your business plan provides the foundation for your new business and outlines the next steps in the journey. Ensure you fully understand the market and competitive landscape to enter the industry prepared for whatever is to come. Start slow and invest in the right people and technology to support the growth of your business.
About Lana Cook
Lana Cook is a Content Writer at Cloudbeds where she is able to combine her love of writing and passion for travel. She has spent the last few years writing about all things technology and the ways in which it can be used to help businesses thrive. When she’s not busy writing, you can find her checking out the latest movie or searching for a new TV show to binge.
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Hotel Business Plan Template
If you want to start a hotel business or expand your current one, you need a business plan.
Over the past 20+ years, we have helped over 5,000 entrepreneurs and business owners create business plans to start and grow their hotel businesses.
Below are links to each section of your hotel business plan template:
Next Section: Executive Summary >
Hotel Business Plan FAQs
What is the easiest way to complete my hotel business plan.
Growthink's Ultimate Hotel Business Plan Template allows you to quickly and easily complete your Hotel Business Plan.
Where Can I Download a Hotel Business Plan PDF?
You can download our hotel business plan PDF template here . This is a business plan template you can use in PDF format.
What Is a Hotel Business Plan?
A business plan provides a snapshot of your hotel as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why Do You Need a Business Plan?
If you’re looking to start a hotel or grow your existing hotel you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your hotel in order to improve your chances of success. Your hotel business plan is a living document that should be updated annually as your company grows and changes.
What Are the Sources of Funding for a Hotel Business?
Hotels are usually funded through business loans.
Often you'll have to use personal savings and/or angel investors to help with the down payment on the business loan.
In the financial model section of your plan, be sure to detail, among other things, how much it will cost to build your hotel and the key uses of funds (e.g., building the hotel, cost to furnish the hotel, staffing costs, working capital, etc.).
Note that if you already operate several hotels, private equity investors might be interested in helping to finance your expansion.
How Do You Start a Hotel Business?
Starting a hotel business is easy with these 14 steps:
- Choose the Name for Your Hotel Business
- Create Your Hotel Business Plan
- Choose the Legal Structure for Your Hotel Business
- Secure Startup Funding for Your Hotel Business (If Needed)
- Secure a Location for Your Business
- Register Your Hotel Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Hotel Business
- Buy or Lease the Right Hotel Business Equipment
- Develop Your Hotel Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Hotel Business
- Open for Business
Learn more about how to start a hotel .
HOTEL BUSINESS PLAN OUTLINE
- Hotel Business Plan Home
- 1. Executive Summary
- 2. Company Overview
- 3. Industry Analysis
- 4. Customer Analysis
- 5. Competitive Analysis
- 6. Marketing Plan
- 7. Operations Plan
- 8. Management Team
- 9. Financial Plan
- 10. Appendix
- Hotel Business Plan Summary
Start Your Hotel Plan Here