Once you’ve decided to launch a new type of hospitality service, it’s time to write down your plans. It may be helpful to think through exactly what you want to include in your proposal before you begin drafting it.
Because of this, it becomes boring and uninspiring for investors. Many people may not be familiar with how to write the financial section of their business plans. This is also a problem when it comes to creating an investor pitch deck.
You need to know what to write and how to write it. However, you should give them enough details so that they’re excited about your project and don’t get bored.
Your hotel management software should be designed in such a way that it reflects your overall concept. It should be clear and crisp about the information and the calculation.
Also, make sure that the first page of your proposal is a reflection of your whole idea, so that the lender gets an overview of your entire concept at once.
Here are the 10 Steps to Write A Hotel Business Plan
1. Executive Summary
It consists of two parts: mission statement and objective.
Your mission is to provide an excellent customer experience by offering affordable accommodations for people traveling through your city.
Your objective tells you about your hopes for the hotel business. An average annual occupancy of 80–85% would be one good option.
2. Company Analysis
Describe your proposed hotels’ USPs. List them one by one.
3. Industry Analysis
Write down the current trends in the hospitality industry with relevant statistics. State the current state of the global economy with supporting statistics. You’ll be able to show that you’re well-versed in the industry you want to enter by using these facts.
4. Customer Analysis
You have to decide on the target market of your hospitality enterprise. Focus on the socioeconomic, demographic, geographic, political, and cultural characteristics of your potential guests. Explain how your establishment will meet their expectations in relation to accommodation, food & beverage, and other amenities. Clearly state why they should choose your place rather than others.
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5. Competitive Analysis
Conduct a thorough SWOT assessment of your competitors’ hotels. Then highlight where your own property stands out from its peers.
6. Strategic Planning
When it comes to hotel businesses, it’s important to know how they can best utilize social media platforms. For example, if you own a boutique hotel, you may choose to focus on Facebook, Instagram, Pinterest, Twitter, YouTube, Google+, and LinkedIn. Each one of these sites offers something different, so make sure you understand each site before deciding where to focus your efforts. You should also consider whether you want to create a separate account for each social media outlet.
For distribution, we need to talk about the third-party channel you’re going to be using for distribution, the steps involved, and the technologies you plan to utilize to ensure availability.
When doing business, be sure to include your pricing method, your realization method, and any terms pertaining to payments and cancellations. Also, provide detailed information regarding your cancellation policy.
7. Operational Planning
You need to describe the following for your hotel: the type of services offered, the size of the rooms, the location of the hotel, the amenities available, the types of facilities provided, the cost of staying at the hotel, the contact numbers, etc.
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8. Management Team
Give detailed information about your team members’ bios, including their qualifications. Also, provide information about your background and experience. Mention why you’re qualified to run a hotel business.
9. Financial Projections
This is the most critical aspect of developing a successful hotel business strategy. You must clearly define what your hotel is about, how much money you expect to make, and how much money you’ll spend every year. Include projections for five years into the future. Be realistic! Don’t overestimate your revenues and underestimate your costs.
If you’re raising money, tell people how much funding you need, when you expect to repay them, and why they would want to invest in you.
10. Appendix
Here’s where you’ll include any supporting information about your company. You can also mention your competitors’ strengths and weaknesses. Make sure that they’re included in this section too. Include any facts about your industry. For example, if you’re planning to open a restaurant, you might list the types of food you serve and how much money people spend eating out each year.
The 20-Point Checklist of your Hotel Business Plan
After completing your hotel management plan, you must read it again. Make sure that it includes the following elements:
- Company Overview
- Market Overview
- Relevant Market Size
- Target Customers
- Customers’ Needs
- Competitors- Direct & Indirect
- You’ve got an edge over your competitors.
- Products & Services
- Pricing
- Promotion & Distribution
- Operational Process
- Milestones you Hope to Achieve in Future
- Members of the Management Team
- Members of Board
- Revenue Model
- Financial Highlights
- Your projected income for the next five years
- Funding Requirements
- Repayment Schedule
- Supporting Documents
Make sure you’ve checked everything off in your business plan. If there’s anything missing, add it to your plan.
SWOT Analysis of Hotel Business
To succeed in your hospitality industry, you need to perform a SWOT (Strength, Weakness, Opportunity, and Threat) analysis of the entire hospitality sector.
It’s important for any new company to perform a SWOT analysis before they start their operations. They need to know what strengths and weaknesses they have and then turn those strengths into advantages.
Let’s now perform a SWOT analysis of the hotel industry.
- Strength
Hotels offer accommodation at various price points ranging from budget to luxury. They’re available for short stays or long stays, so whether you need a hotel for business or pleasure, there’s bound to be one within reach.
Hotels are an important part of any city’s economy because people who stay there visit various tourist destinations, eat in local restaurants, drink in local bars, and buy locally available products. These expenditures help strengthen the local economy.
- Weakness
The main weakness of hotel management is the cost. High-end hotels cater to only a certain demographic. They also charge higher tax rates. Other industries do not pay these kinds of fees.
- Opportunity
Hotels can improve their services by adding new amenities or attracting more visitors. They can offer different services depending on the preferences of the local community.
Hoteliers also have an opportunity to draw in visitors all throughout the entire calendar. During the off-season, they can attract locals who come back from their vacations.
- Threat
The main threat facing hotels today comes from the boutique type of arrangements that are now common in many locations. These establishments offer their guests a personalized experience at a considerably less price than larger chains. Often they give more individualized service and often even provide better quality.
One threat is any political turmoil in the region where the hotel is located. If there is political upheaval, people may not want to travel to an unstable part of the country. Because of this, the tourism industry, which includes hotels, could suffer significant financial losses.
As you study the different types of hotels, you’ll be able to quickly adjust to changes in the market by understanding the threats and possibilities, as well as your own strengths and weaknesses.
The Pricing Strategy in your Hotel Business Plan
Every hotel should know how much they spend per night. They should also know what their revenue is per room per day. Then they can figure out if they are losing money on each guest. You may not think about it, but hotels lose money on every single person who stays there. That means you need to make sure you price your rooms correctly. If you do, you won’t lose any money!
- Cost-Based Pricing
- Customer-Based Pricing
- Competitor-Based Pricing
This price plan is simple enough. To run a hotel successfully, you must consider all expenses involved. These include building taxes, insurance, labor, utilities, repairs, marketing, and more. Once these numbers are calculated, you can then increase room rates accordingly. In order to maximize profits, you may also wish to raise prices during peak seasons or holidays.
If your monthly fixed costs are $5000, and your variable costs for each guest are $50, then you must earn at least $5500 per guest per year to break even (covering your fixed costs).
You need to calculate the profits you want to achieve before calculating the cost of renting out your property. Once you’ve calculated these figures, then you can determine the rental prices.
This structure is logical and easy to follow. It is also flexible because if the costs change, you can adjust them accordingly. This also ensures that every time you earn profits.
However, there are some disadvantages to this approach too. For example, it doesn’t consider your competition’s prices and customer demands. It’s less competitive and isn’t based on perceived value.
This strategy is based on the perception of the customer. If you can provide them with the comforts and amenities they desire, they will be willing to pay for those things regardless of whether they are actually worth the price. They are more than anything else about their experience.
If you’re charging $200 per night, but the customer sees the value in staying at your hotel because he/she wants to enjoy the luxurious experience, then it doesn’t really matter what the actual costs are to you. What counts is whether there’s enough interest in your hotel to justify its price.
With this type of pricing, you can maximize both your profits and customer satisfaction. You can also increase prices depending on the demand. If you’re able to do a good market analysis, you can even anticipate what people will be willing to pay for.
The advantages of this approach are that it allows you to keep prices low. You do not have to worry about competition because you are not competing against them. Your costs remain constant. And you can improve profit margins by increasing your volume.
When setting prices, consider competitor-based price points. Determine which room type each competitor offers, the different services offered by each competitor, and the different terms applied to each service. Only then can you determine what to set your own rates at.
The advantage of this kind of pricing is that it works well for an extremely competitive market like the hospitality business. It lets you set up a distinctive position. You can attract more customers by setting prices accordingly.
One disadvantage of this price structure is that in the competitive market, you’re often forced to cut prices or quality standards. You also need to find new ways of drawing customers aside from the price.
Pricing isn’t always easy. You might be able to improve your results by combining different pricing strategies.
If you want to ensure you’re always covering your costs, you could start by using the cost-based method. However, if you want to be able to sell at a lower cost than others, then use a competitive pricing strategy.
Many people have great plans. To be an entrepreneur, you must take action to turn those plans into realities. If you’re convinced to start your own bed & breakfast, write down your thoughts and goals.
Make sure to include everything you think about running your B&B – from what type of rooms you’d offer to how much money you’ll make per night. You can also create a detailed budget so you know exactly where you stand financially before you begin.
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