Hotel Business Plan

Owning and running your own hotel may well sound tempting, because we always associate the word „hotel“ with free time, relaxation, nice guests and a lot of things to do. And it’s exactly this “a lot of things to do” that start-up founders should consider when developing a business plan.

As a hotel owner you are the contact person and source of information for your guests and your staff. You call the shots no matter if it is about the kitchen, the laundry, the floor service, the reception, the catering areas or spa. This also applies to all electrical and construction aspects. You are responsible for the marketing, accounting, management, discussions with accountants, and contact with lawyers and services.

Before diving into in the extensive and time-consuming creation of your hotel’s business plan, you should think twice about whether you are up to the challenge and if you have the necessary technical expertise. And remember: Self-employed means self and employed. You must be in or at the hotel at all times, even during the most beautiful holidays.
Then comes the next issue: What kind of a hotel do you want to open? A boutique hotel, a budget hotel, a wellness hotel, a trade fair and conference hotel or maybe a small cozy family hotel in the countryside?

Once you have answered this question, it comes to creating a business plan for your hotel. Being able to confirm that you have the necessary background to make a business plan for your hotel by providing the relevant certificate is also a great advantage and can contribute to a positive outcome of your financing interview. Always think of the attachments when submitting your business loan application documents.

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Creating a Hotel Business Plan

Hotel Business Plan Tip 1: Insight Into The Hotel Industry

In 2014 there were around 30,000 1-5 star hotels. About 8,000 of these are certified by the German Hotel & Catering Association. There are about 19,000 hotels on Hotelier.de.

The total turnover was EUR 25.6 billion from 424 million overnight stays. The accommodations boom is expected to continue in the future. These positive market signs make opening a hotel a feasible and lucrative enterprise on one hand, but indicate very high competition on the other, not least from the digital revolution (AirBnB, Couchsurfing etc.).

 

Hotel Business Plan Tip 2: Your Target Group and Offer

What kind of clients am I looking for?

– Companies booking your hotel for conferences
– Businesspeople booking your hotel for meetings with other businesspeople and associates from work
– Guests seeking rest, relaxation, spa procedures
– Families looking for a casual and friendly place to stay
– Day, weekend and event tourists
– Guests passing through looking for the lowest price
– Gourmet guests looking for something special in the area of cuisine

Are representatives of the target group to be found in the area where you would like to open a hotel? This is an important question that must be analyzed and answered. Finally, the demand determines your services and must be reflected in your hotel’s business plan.

For example, businesspeople prefer a certain atmosphere with good services and are less price-sensitive. In terms of location, they would prefer a hotel with parking spaces in the city center or near to banks, administration centers and other administrative offices.
Guests looking for rest and relaxation would appreciate a sophisticated spa package offer. They would love a quiet hotel in the suburbs or near to parks or other green areas.

A child- and family-friendly hotel on the outskirts of town with easy access to the downtown area and a wide range of activities in the vicinity will become quite popular, as long as you also offer games in the hotel and childcare.
Every tourist coming to your city to go sightseeing or to visit an event places great emphasis on informative, personal service at relatively low prices. A central location is key for these tourists. Those just passing through would be happy with a simple room and a good breakfast at the lowest possible price.
Gourmet guests place emphasis on a star kitchen with great ambiance (luxurious, elegant or extravagant). This standard must prevail throughout the hotel so that these guests feel comfortable and will be happy to come again.

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Hotel Business Plan Tip 3: The Current Competition

Don’t forget to look at the competition through a magnifying glass. This includes a location analysis. The German Hotel & Catering Association provides the relevant stats and city plans. This way you can find out if there is already someone offering this service at your site of choice or you have a real chance of penetrating the market.

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Hotel Business Plan Tip 4: Legal Framework

The legal framework is not only an essential part of your business plan, but includes important provisions for running a hotel. The liquor license is important, for example, if you want to offer foreign guests drinks, especially alcoholic ones. Furthermore, you must comply with the regulations of the construction authorities. Architectural drawings and floor plans must be presented upon request. The labor inspectorate and the health department check whether the conditions in the kitchen, the patisserie, the food storage, the utility room, the laundry rooms and especially the guest rooms meet the sanitation requirements.
The most important rules should be considered when developing a hotel business plan. You must demonstrate background knowledge in this area to your financial consultant no later than during the finance interview. You should be familiar with the relevant legislation right from the start, starting with labor and youth protection through to personal rights, tax law and contract law.

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Hotel Business Plan Tip 5: Price Formation and Marketing in the Hotel Branch

Price Formation

Running a hotel is always associated with high fixed costs, especially electricity and staff costs. The latter are contingent on the standard you offer. If you’re going upmarket, the costs will be many times higher than if you open a B&B or budget hotel because the professionals you need always receive remuneration that is above the agreed rate. For a leased hotel the installments are to be included as agreed. The figures and the profit margin of the kitchen will also vary with the level.

Marketing

The marketing of the hotel should be considered very carefully when writing a business plan. Apart from the high costs that are generated in this sensitive branch, the marketing of a hotel is key in terms of market penetration. A meaningful and interesting website alone is not enough, not even if the hotel site has decent and professional links. Registering in portals such as hotelier.de with over 250,000 unique visitors means that anyone who is interested will find your hotel.
Advertisements in local and regional print media must be supplemented by ads in national magazines. It is very important that the hotel be featured at trade shows and tourism fairs. This is the perfect presentation platform, including the target group. The hotel must be featured in various travel brochures. You will need to make and build contacts with travel agents and tour operators.

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Hotel Business Plan Bonus Tip: Building A Solid Loyal Client Base

Man is a creature of habit, so he likes coming back to places where he feels comfortable. You will have to attain this status with a lot of hard work and high costs. You have to be on the spot at all times. Give high priority to the issue of loyal clients when writing a business plan for your hotel.

In this article we outlined the most essential information in terms of creating a hotel business plan. Should you need help writing a business plan, would like us to create a business plan for you or require other business plan services, please do not hesitate to contact us.