Hotel Business Plan
Hotel operations vary in size, function, and cost. Most hotels and major hospitality companies that operate hotels have set widely accepted industry standards to classify hotel types. Hotel management is a globally accepted career field and academic field of study. Degree programs such as hospitality management studies, a business degree, and / or certification programs formally prepare hotel managers for industry practice.
The demand for overnight accommodation is growing and hotels are enjoying increased popularity as a result. Hotels in cities and seaside resorts have benefited from the demand for modestly priced accommodation.
What constitutes a hotel, as opposed to a bed and breakfast (B&B) or guesthouse? Partly it is down to size, but it is also to do with the facilities offered. A B&B would only provide breakfast and it is usually someone's home, whereas a hotel generally offers all meals and is not a residential property. Guesthouses purely provide facilities for their own guests, while hotels can also offer extra services for non-guests.
The crux of the hotel business is, of course, the provision of accommodation. The size of the establishment can vary widely though, from just a few beds to a Las Vegas-style skyscraper. While beds are a prerequisite, hotel owners can also choose to incorporate a range of add-on services, such as a restaurant, conference facilities or health and spa amenities.
Having training and experience in the hospitality trade will be of great benefit in being able to provide the quality of service that guests have come to expect from hotels.
However, there are no professional qualifications or association memberships required to begin trading, so anyone can set up in the hotel business. While a track record in the hotel business may not be a requirement, the ability to work with people is a necessity.
An eye for quality is also a prerequisite. Guests are looking for quality all the time, such as in the food and the standards of the rooms. If they are dissatisfied, they won't come back. People travel more now and so expectations have increased. Guests will no longer be tolerant of rudeness or uncleanness and expect to get value for money. Quality does not mean having to be expensive, but it means having to be good at your price level.
You need to consider what type of hotel you want to run. Is it going to be a small, cosy affair catering for couples seeking a romantic weekend break, or a larger, metropolitan establishment servicing the corporate market? Some hotels pitch for both business and private clients. The types of clients you attract depend, in large part, on the hotel's location. A rustic setting will weigh against attracting corporate clients and will more likely appeal to people seeking quiet seclusion away from the city hubbub.
A hotel that combines proximity to a reasonably sized town with the quiet of the country can appeal to a wider segment of the market.
The size of the hotel, its location and the clientele you are aiming to attract will all determine the cost of the hotel and therefore how much capital you will need. It is possible to rent hotels from the owners, which may be either a private individual or a company, or you can lease a property from the local authority. Although renting or leasing does not require such a heavy upfront investment as purchasing, it means the profits will not all be yours, as they are when you own the entire business.
The first consideration is obtaining the necessary capital. Unless you have just won the jackpot on the lottery, borrowing is the most obvious source. If it is a leasehold, as most of the hotels are, the bank would treat it as an unsecured loan and would restrict borrowing to 50% of the value, unless other forms of security, such as a house, can be used.
So what can you do to maximise your income? The main source will almost certainly be from accommodation. In trying to attract visitors year-round, location will be a major factor.
You can also target a market that can provide a steadier source of guests. Offering supplementary facilities and events can also help expand your earnings.
Given the overall seasonality of the hotel business, cash flow remains a major consideration. If it is a couple looking to go into the business one of them should keep up an outside income, at least in the early stages. That way you can earn some money through the winter to help supplement the summer income.
While fluctuating income and hard work can be a disincentive to setting up in the hotel business, the potential financial reward and opportunity to meet people may ensure this is a bed you are happy to lie in.
Your hotel should offer at a minimum:
- Rooms with en-suite bathrooms.
- A fully cooked breakfast and a simple home cooked evening meal.
- Access to staff that is able to deal with customer enquiries and handle any problems that may arise.
You should plan to be more than a great hotel by creating an environment of pampered luxury that surpasses the standard fare for your location. Expanding your exposure via the internet and introducing the area to people that have not yet visited your location will allow you to maintain a higher than average occupancy rate and above average profits.
You should offer a high level of personal service and an extensive range of comprehensive business facilities available in luxurious settings.
Differentiating the type of business service offered, from that of the competition, will assist not only in building the hotel brand as a whole, but will attract frequent business travellers, who require a higher level of personal service and recognition than they can receive at other hotels in your location.
This will provide your hotel with an opportunity to leverage its core competencies as regards servicing the business traveller in a luxurious environment.
Hotel franchises can be the perfect way for you to get into the hotel business. Many people enjoy the hotel atmosphere, and desire the opportunity to own and operate a hotel. Unfortunately, hotels are very expensive to build, and inexperienced people will likely be unable to easily start a hotel. Instead of going to all the incredible lengths necessary for establishing your own original hotel, consider buying a hotel franchise instead.
Hotel Franchises are available across the world. There are many different types of hotel franchises, from much larger hotels, to smaller ones as well. If you have the financial capacity and credit to purchase a hotel franchise, you can easily become the proud owner of a thriving franchise.
It is important to enjoy what you do for a living. Unfortunately, many of us settle for jobs because they are lucrative or convenient. Instead of settling, why not pursue your dreams instead. If you have always wanted to own and operate a hotel franchise, now is the time. Hotel franchises are great investments. If you are in a good location and manage your staff well, you can own a thriving hotel.
Franchises are safer investments than beginning your own business from scratch. A franchise is an individual unit of a larger chain. However, instead of the operation being owned and operated exclusively, franchises are available to the public. The head of your franchise board will give you instructions and protocol specifications to ensure the successful operation of your business. If you follow their standards and guidelines, the potential for your success as a hotel franchise owner is very high.
Hotels have been the brunt of many jokes about bad service and poor standards. However, a recent survey found that more than two thirds of hotel owners favor the introduction of a statutory register, listing all establishments that meet basic requirements.
Your objectives in your Hotel Business Plan should be:
- Grand opening for your hotel - invite press.
- Exceed customer's expectations for luxury accommodation.
- Maintaining a 90% occupancy rate during the peak periods.
- Increase exposure and market using Internet technology and direct advertising to other regions of the United States.
- Increase use by divesting into other uses for property (cater parties, receptions, weddings, etc.).
- Assembling an experienced and effective staff.
Your mission for your hotel is to become the number one choice of visitors to your location.
In order to succeed, you will need to strive to achieve the following goals:
- Position your hotel as the best hotel in the location among the numerous tourists.
- Build strong market position among the local patrons.
- Maintain sound financial management of the venture.
Writing A Hotel Business Plan
Writing A Hotel Business Plan
Once you have decided to write your Hotel Business Plan, you will have to decide how much to say. Facing the fact that the bank will see you as small fry, you will be well advised to limit the main part of the plan to two typed A4 pages, or three at the very most. You can add appendices which could include a fuller account of any technical details you feel should be added, and of course the cash flow forecast.
In a two-page document, you must cover the points listed below:
- what your hotel is all about (often one sentence will do);
- how big your market is and what the competition is;
- if you have already started, what progress has been made;
- your own skill and experience;
- how your product or project compares with others;
- how you will get your act together;
- the longer-term view;
- how much turnover and profit you can expect;
- the money you need and why.
What exactly will your hotel do? Be as specific as possible about the type of hotel you are starting. Will it be a family hotel serving good-quality, local food at competitive prices in a family-friendly environment? Or will it be more upmarket, serving discerning customers in an intimate setting?
How will your products and services differ from those offered by your competitors? Why should customers want to come to you and how will you differentiate your Hotel to make it successful?
When describing your Hotel in the Hotel Business Plan, think of it in terms of writing a mission statement. This statement should give a clear summary of the purpose of your Hotel, and should be easily understood by you, your staff, your customers and your potential investors.
If you cannot describe your Hotel in these specific terms, you should rethink your business idea, focusing on your business' core purpose, target audience and mission.
Managing a Hotel requires more than just the desire to be your own boss. It demands dedication, persistence, the ability to make decisions and the ability to manage both employees and finances. Your management plan, along with your marketing and financial management plans, sets the foundation for and facilitates the success of your Hotel.
People are resources-they are the most valuable asset a Hotel has. You will soon discover that employees and staff will play an important role in the total operation of your Hotel. Consequently, it's imperative that you know what skills you possess and those you lack since you will have to hire personnel to supply the skills that you lack. Additionally, it is imperative that you know how to manage and treat your employees. Make them a part of the team. Keep them informed of, and get their feedback regarding, changes. Employees oftentimes have excellent ideas that can lead to new market areas, innovations to existing products or services or new product lines or services which can improve your overall competitiveness.
Your Hotel Management Plan should answer questions such as:
- How does your background / business experience help you in the Hotel?
- What are your weaknesses and how can you compensate for them?
- Who will be on the management team?
- What are their strengths / weaknesses?
- What are their duties?
- Are these duties clearly defined?
- If a franchise, what type of assistance can you expect from the franchisor?
- Will this assistance be ongoing?
- What are your current personnel needs?
- What are your plans for hiring and training personnel?
- What salaries, benefits, vacations, holidays will you offer? If a franchise, are these issues covered in the management package the franchisor will provide?
- What benefits, if any, can you afford at this point?
If a franchise, the operating procedures, manuals and materials devised by the franchisor should be included in this section of the Hotel Business Plan. Study these documents carefully when writing your Hotel Business Plan, and be sure to incorporate this material. The franchisor should assist you with managing your franchise. Take advantage of their expertise and develop a management plan that will ensure the success for your franchise and satisfy the needs and expectations of employees, as well as the franchisor.
Hotel Business Plan
Hotel Business Plan
Getting customers for your small Hotel
Small business resources are frequently far too scarce and valuable to waste. Yet, we see companies wasting money on a grand scale every single day when it comes to marketing. The waste is not necessarily in the marketing method chosen, although it frequently is, but in the execution.
There are simple cost effective ways to market your small Hotel.
Almost every area has a business networking group, if not a dedicated small business group. The idea here is to build up a rapport with other small business owners who, it is hoped, will recommend or use your services / product on the basis that it is preferable to deal with someone you know this has been proved to be so. Groups also provide added benefit this means that when you talk to a customer and that customer wants a product / service you do not provide, you will be able to get the deal based on your networking knowledge and connections. Your local Chamber of Commerce will be able to help you, and you may want to sign up with them.
If you provide services / products that serve a local community, you must have exposure in your local or free paper. The weekly cost is generally $25 a week: you can decide to insert weekly at $1,300 a year, fortnightly at $650 a year, or monthly at $300 a year. Having an advert in the classified section is less expensive than having an advert in the news pages, and block booking will reduce the cost by 10 - 25%.
Brochures, Leaflets and Flyers
Many small Hotel owners will tell you that brochures etc are a waste of money as they very rarely bring in business by themselves. They are useful for exhibitions an envelope stuffing with the monthly statement, but struggle to carry a message to potential customers as they have leaning towards presentation rather than the technical issues of your Hotel.
Leaflets/flyers can have a more specific message about special offers and current prices: the things that customers want to see. The presentation is not as important as on the flag waving brochure, and the customer generally has more belief in what you say due to the more basic presentation. Providing your customers with up to date information is essential, with the cost efficiency of leaflets / flyers and past and current customers can receive something regularly.
The Mail Shot
It is most important that your mailing list is as relative as possible to your target customer.
Cost is the key to successful mail shots. With an expected response of about 2 - 10% you have to mail a significant amount of prospective customers. To get 100 responses you need to post between 1,000 - 5,000 letters that's $600 for stamps alone, using an average of 3,000 mail shots. The other resources headed-paper, brochure, envelopes and time, easily brings the total to $1,000 for 300 responses - being a cost of between $3 - 10 for each lead. Almost every product has a customer user / buyer statistical breakdown if you know this, you can improve sales drastically. Its about good research, and knowing your product and customer.
The Internet has brought us a staggering phenomenon - partnerships and affiliates. Previously, most of us were unconcerned with competitors or aligned services, as such we were not inclined to promote an outside business/product/service that we had no stake in.
Now, if you do not have a working relationship with another company you are being inefficient and ineffective! This phenomenon is not the sole domain of the large company it works just as well at the small end.
Wherever you go you should always leave your mark be that Monday morning or Sunday afternoon. Always have a business card to hand, or a brochure if necessary. If you deal with email make sure your signature makes it very clear what you do and where you can be contacted don't worry about overkill. A letterhead is a must, and so is a compliment slip for attaching any number of items.
This is not for the faint hearted or highly strung! Learning to accept constant rejection is an ability far beyond most of us. So you should pay someone else to do it either in-house by a trained employee, or out sourced to a marketing agency. If you have a Hotel that can pay $20 - 30 a lead, resulting in ten leads for $200 - $300 you should make a good return on a product costing $800, and further sales will not incur this cost.
Newsletters did not derive from the Internet, they were always here. Similar to a mail shot, however, a newsletter is about informing and not selling. Few of us would welcome a newsletter that was designed to get sales, but knowledgeable news is received with interest. I am only too aware that the readers of this newsletter want interesting and relevant knowledge and not simply information.
Compiling a monthly one page newsletter that you post or email is fairly easy once you get used to the format and content. You would not sit down at the end of a month and think about what to write, you collect information over the entire month you may find you have too much information and that half of next months newsletter is in hand. Look about you for your initial list of mail outs: local papers, directories in library, names from friends, friends of friends, TV, Internet, endless names... A newsletter says that you are an expert, someone who has an opinion, that you are approachable, that you have answers, that you always strive to find a better way for yourself and your readers - this is why good newsletters reach far and wide, and hopefully repay your time and resource with sales.
Monthly Magazines and Trade Journals
They say that buyers have to see an advert 11 times in the paper media, with that reducing to 7 on the Internet, with specialist magazines / journals somewhere in between. This means that most small business owners immediately look at cost not surprisingly! At best, a reasonable advert in a monthly glossy would cost $400 , with an annual cost of about $4,000 after a discount. As readers want to buy services/products from brand names, the least they expect is to be familiar with your advert. If you are looking at testing in a glossy the minimum period must be three inserts, unless you have a business that sells brand named products and your advert offers great savings, performance etc.
It could be argued that the Internet does not belong in this list as it is time consuming and costly to have even a small degree of success. That said, the Internet can still be a generator of customers (and not a fancy brochure) if using Network Groups with the intent on pushing a number of businesses of mutual and relevant added benefit, and of course sharing the building and marketing costs.
The Internet has more opportunities for small Hotel than we currently see and those that have the drive and desire to create a business presence will succeed.
Great Hotels do not happen by accident.
They were planned that way.
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