Embarking on a journey in the hospitality industry, whether managing a cozy bed and breakfast, a family-run inn, an urban hotel, or an expansive all-inclusive resort, demands a compass for success — a well-thought-out business plan.
Even if your hotel concept is a gem in the crown of hospitality, its brilliance won’t shine without a meticulously organized plan detailing how it will evolve and thrive.
Sadly, many hoteliers underestimate the power of a robust business plan. Some hastily assemble a mishmash of documents for stakeholders and investors, while others neglect the idea altogether, often due to the perceived intimidation surrounding business plans.
Yet, here’s the silver lining: crafting a hotel business plan is not as formidable as it might appear. At its core, it’s a comprehensive summary of the pivotal aspects of your hotel concept. It serves as a window for readers, offering detailed yet succinct insights into your vision.
Are you unsure where to begin? Fear not! Following the guidance outlined here will pave the way for you to effortlessly develop an impactful business plan, steering your hotel towards prosperity.
Hotel Business Plan Essentials
1. Executive Summary
Your business plan in a nutshell.
The placement of executive summaries is misleading. They normally come first in business plans, but really, they should be written last. This is because they cover all the key points that are mentioned in your business plan.
Remember… most people won’t read your entire business plan. They’ll only read the executive summary. Keep that in mind when you write it and make sure you don’t miss any key details that set your project apart. Having said that, your executive summary should be short and sweet, so don’t add extraneous details. Balance is key here.
Along with summarizing the basics, remember to include your broader mission statement and specific project objectives.
We’ve said it once and we’ll say it again, it’s much easier to write a great executive summary once you’ve finished the rest of your business plan!
2. Company Analysis
Think of this as an elevator pitch.
Provide an accurate yet exciting impression of your hotel project as it stands. Talk about background information like business stage, legal structure, investors and/or stakeholders and other major milestones. Most importantly, make sure you also highlight your hotel’s unique features and qualifications, sometimes referred to as USPs (Unique Selling Propositions).
USPs are key in the highly competitive hotel market and can really make your concept stand out from the crowd. Does your hotel have pool, jacuzzi or spa amenities? Is it completely wheelchair accessible? Does it offer amazing views of the city or surrounding countryside? These are all key features to highlight in your company analysis.
Some company analyses also use the SWOT analysis framework to assess their hotel concept’s strengths, weaknesses, opportunities and threats.
3. Industry Analysis
What context will you be operating in, exactly?
In a business plan, industry analysis refers to researching relevant market trends. Understanding short and long-term trends that affect the hotel industry is key in putting together an effective hotel business plan, and eventually running a successful hotel.
Think about trends and events in relation to broader themes like technology, health, environment, politics, culture and economy. Reflect on how they might affect your business, or better yet, how your business could use them to its advantage. In the
context of COVID-19, for example, it’s a great idea to be transparent about the sanitary measures and distancing policies your business has (or would be able to) put into effect.
Depending where your hotel is located, industry analysis may be daunting. A more manageable way to think about it is in relation to your relative market. That is, focus your research specifically on hotels that have a similar concept to yours.
Industry trends affect family-run bed and breakfasts very differently than they do all-inclusive resorts, so make sure to undertake analysis that’s relevant to your business.
4. Competitive Analysis
Now, it’s time to size up the competition.
One of the best ways to put together a successful hotel business strategy is to have an excellent idea of what the competition is doing. Emulate what they’re doing correctly and improve upon what they’re doing wrong. If you see that many customers are complaining about the weak WiFi or lack of breakfast at hotels in the area, see if your business can provide those amenities.
You can focus your research solely on local competitors, but you can also include global competitors with similar concepts to your own. How you choose to do this will depend on your hotel’s concept and where it’s located.
Similar to industry analysis, competitive analysis is intimidating to many. In order to simplify it, only undertake in-depth analysis of your most direct competitors. Some market experts also use the
SWOT analysis framework when analyzing the competition as well.
When it comes to more indirect competitors, try grouping them together and thinking about big picture comparisons.
5. Ideal Customer Profile
Next, you’ve got to figure out who exactly will be coming to your hotel.
It’s incredibly important to have a specific picture of your hotel’s ideal customer. Just like any other product or service, you’ll need to determine who you’ll be marketing to. Different kinds of hotel guests have different priorities and needs, so it’s important to
determine who you’ll be catering to.
Put simply, a businessman staying in central London for a work conference will have very different hotel needs compared to a family of four on a week-long summer vacation.
Ideal hotel guest profiles take geographic, demographic, socio-economic, psychographic, cultural and behavioral considerations into account. You’ll also want to consider whether your hotel concept will be broadly appealing to several hotel guest profiles or if you’ll be catering to a specific niche.
Need help putting together ideal customer profiles? Get inspired by checking out your direct competitors’ guest reviews online.
6. Marketing Plan
Last but not least, how will you attract guests?
A strong concept is only half the battle. Without an
effective marketing strategy, your hotel will remain empty. At its most basic, your marketing plan should describe how you’ll attract guests to your hotel and therefore make it a profitable business.
In doing so, marketing plans usually touch on the following categories:
- MarketingHow will you get the word out to guests?
In the modern age, this most often refers to online marketing strategies related to your hotel’s website, search engine results and social media presence. You can also cover direct marketing, offline marketing, networking, third-party promotion and partnerships here.
- Sales & DistributionHow will you secure bookings?
Think about what channels you’ll use to communicate availability and manage reservations, for example if your hotel is being listed in Airbnb, you’ll need an
Airbnb channel manager
to handle your reservations and avoid double bookings. Most hotels use a combination of
direct and indirect sales and distribution strategies. - Yield & Revenue ManagementHow will you make sure that your hotel is profitable? Consider pricing and yield strategies early on to maximize your business’s revenue growth.
Other Elements To Include
We’ve talked about hotel business plan essentials, but we’re not done yet. The points we covered above are the basics, but there are several additional elements that you might want to consider including.
Remember, your hotel business plan should most importantly present the specific context of your project. The elements you include should reflect that.
We’ve included some ideas of additional elements you might like to include below, but the possibilities are endless.
- OperationsDiscuss how your hotel will run on a day-to-day basis. This connects to management but focuses on the big picture. Make sure to include details like staff numbers, hotel processes, service standards, external suppliers and inventory management.
- ManagementHave you established who will be in charge of your hotel’s management? Or who will be working at your hotel? If you have, talk about their profiles and what qualifies them to do their jobs here.
- FinancesPut simply, discuss the money you have, the money you’ll require and how much you estimate that your project will cost in total. This is also a good opportunity to mention ROI projections.
- Reference MaterialsBe sure to include any supporting materials that support the information presented in your business plan. e.g. charts, graphics, resources, imagery and other media.
There you have it! Follow the steps above and you’ll have an effective business plan for your hotel in no time.
If you’re feeling overwhelmed by the process, remember to focus on the essentials first. Basic information like your project background, industry trends, competitor research and ideal clientele is your bread and butter. Once you’ve got those elements covered, start thinking about what additional elements you want to include based on your needs.
Before we go, we have one last piece of advice. The better you know the ins and outs of your hotel, the easier it’ll be to write your business plan. If you don’t know what to write, you may need to undertake additional research before you get started.
Tools like PMS (Property Management System) and CM (Channel Manager) only assist lodging establishments in operating more simply, saving time, and being more efficient compared to not using them. However, that is not the root of growth or the challenges faced in the accommodation business. If you want to effectively manage OTA channels and create stable growth, you should have a clear understanding of how OTA platforms operate, such as their nature, operational models, and how they display, calculate displayed prices, and collect prices (after deducting commissions). Of course, larger hotels that want to approach it systematically will do it synchronously from the beginning, but smaller lodging establishments wanting to reduce operational costs should overlook it and focus on optimizing display and providing outstanding customer care.
Synthesized by: OTA Lyst
