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 this is where most entrepreneurs get stuck.
Why? Many
do not have the time, 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.
They 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 is that after reading the first page most business I
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.
We have put together a guideline with 10 critical points you must include in your hotel business plan;
1. Executive SummaryThis exists of two parts:
- Mission Statement: Intro: 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 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 AnalysisInformation
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.
4. Customer Analysis
n-depth
information on your target market, including geographic, demographic,
socio-economic, psycho-graphic, behavioral segmentation details. Which
are the types of guests who will mostly stay at your hotel? Explain how
your hotel will meet the needs of these main segments in terms of
location, amenities and services. Basically, how will consumers answer
this question ‘Why my hotel?’
5. Competitive AnalysisA 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?
5. Competitive AnalysisA 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?
6. Strategic PlanThis 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 is the plan for your hotel website, SEO, SEM and SMM? Will you do offline promotion?
- 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?
7. Operations PlanHow
will you run the hotel? How much 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 TeamInclude the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success.
9. Financial PlanProvide the start-up costs of the hotel (capital investment), the ingoing business costs, operational expenses and revenue projections for the next five years. Include KPI like expected occupancy, ADR (average daily rate) and REVPAR (revenue per available room).
8. Management TeamInclude the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success.
9. Financial PlanProvide the start-up costs of the hotel (capital investment), the ingoing business costs, operational expenses and revenue projections for the next five years. Include KPI like 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 MilestonesThese are the most important achievement which once they have been completed, will make your hotel more likely to succeed. Think off:
10. Key MilestonesThese are the most important achievement 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
- Opening
- GOP Break-even
- NOI Break-even
- 10% Ebitda
Each time
one of the key milestones is achieved, the risk of lenders or investor
decreases. And once your last key milestone is reached, chance of
success is more or less guaranteed.
11. AppendixProvide 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.
11. AppendixProvide 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.
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 guideline 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!
If you have any questions or ideas, please post them below!
Cheers,
Patrick Landman @ Xotels
