Hotel Business Plan

A hotel business plan is going to serve as a guide for your successful launch and operation of your hotel business, but, most importantly, as evidence to investors and lenders that you are worthy of their investment. No investor is likely to put thousands or millions of dollars into your hotel business unless unless you’ve paid attention to the following in your plan.

1) Industry & Competitive Analysis

Investors will want to see that you have a good overall understanding of what it means to be in the hotel industry (sometimes called the hospitality or lodging industry). You must show that you have a grasp of industry trends, how those trends will or won’t impact your business, and why. Then investors want to know that you’ve analyzed your competition and understand the local conditions you will operate within. Show how you can exploit competitors’ weaknesses and why their strengths won’t put you out of business.

2) Customer Analysis

Investors want to know that you are clear on who your guests will be. When they read vague statements such as “we will be the best hotel in the city for families, business travelers, and tourists” they will worry that you are defining your customer market too broadly. The readers of your business plan should see that you will serve one customer group so well that you will be able to steal customers from the entrenched competitors in the market. Show this by demonstrating your understanding of who these customers are, what they want out of a hotel, and how your service will fit those needs.

3) Financial Plan

The financial plan you prepare must be based on detailed research into the start-up costs of the hotel, the ongoing costs of doing business, and the revenue levels you can project. These revenue projections are based on the number of rooms you will have, an average nightly price per room and the expected occupancy rate (the US industry average is around 60%). These numbers will give you the RevPAR (Revenue per available room), a key metric that will show investors that you are savvy about the hotel industry.

4) Management Experience

Investors have to not only see that the plan is well thought out and that the financial assumptions are reasonable, but that the management team you have chosen is well positioned to deliver. You may not have in-depth experience as a hotel professional, but don’t let that stop you from showing how whatever management experience you have will translate into your ability to operate the hotel. If you are choose someone else to be the manager, the same applies. Show a bio and resume of key managers or a plan for how you will find and hire them. Finally, the investor must see that you are adequately compensating this manager so that they know he or she will stick around through the launch. Ideally, this should include company stock or profit sharing that will tie their compensation to the hotel’s success.

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