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Hotel Business (or the hospitality industry) is considered to be the epitome of the service industry. It is the business that represents the essence of the service industry in the best form. The general rule or notion that the customer is the king is the basis of all the businesses in general but is best explained or highlighted in the hotel industry.

The foremost requirement for an entrepreneur to start a hotel is the drive or desire to serve. This approach, serving customers, will favour the business not in the short run but also in the long run as it will be represented in the entire management as well as the staff of the hotel which is the basis for running any successful hotel business.

Another key requirement for the entrepreneur to start a hotel business is the business plan. It is like a strong skeleton for the business to be built on. A strong business plan provides the business with a well defined direction and detailed approach for running the business. A good business plan is also vital for procuring funds to start a hotel business as well as seek more funding if and when needed.

Features of a Good Business Plan

The key contents of a business plan should be able to make it efficient and sound as well as make the lenders believe in the potential of the business and its viability. Some of the key aspects of a good hotel business plan are discussed below.

Executive Summary

The executive summary is the description or an overview of the business. It highlights the need for the business, catering the area of business that can be new or upscaled.

It also highlights the objectives of the business and clearly defined goals

Company Analysis

The entrepreneur has to provide details of the business or a few highlights like the location of the business, employee details, key milestones or unique features of the business. This provides the lenders and the investors an insight of the business.

Industry Analysis

A detailed analysis of the industry of the hotel like the type of the hotel small or big, resort or a boutique hotel, etc. also helps the understanding of the target customers or the target segment of the business. It also helps the business build its niche in the target segment.

Competitive Analysis

A detailed analysis of the competition is one of not only the direct competition but also the indirect competition of the business. The indirect competition is those that may target a different market. Also, other hotels or restaurants that cater to a different need for your target customers can also be considered as an indirect competition. An in depth analysis of such completion apart from the direct competitors allows the business to iron out any potential fails or shortfalls that may hamper its progress.

Customer Analysis.

This is another important aspect of the business plan. Customer analysis of the target customers of the business will highlight the various ways in which the business can best cater to them. This analysis includes the socio-economic, demographic, geographic analysis and detailing the potential needs of the customers and the unique selling point of the business would be to provide them in the most unique and comfortable manner which in turn will make the customers choose the hotel over others. A detailed customer analysis will also help the business build customer loyalty which is another key to a successful business.

Strategic analysis

The strategic analysis of the business relates to the marketing and promotional aspect of the business as well as determining the correct pricing policy. A correct pricing policy involves setting the price keeping in mind the target customers as well as the segment of the hotel. If the hotel is underpriced or overpriced, it will affect the sustaining capacity of the entity. Furthermore, the promotional and marketing strategies applied by the business will create the much needed presence and the remembrance factor among the customers. This ensures that the hotel is viewed as a lucrative product and is sought after by the customers.

Management Team

The management team of the hotel is directly responsible for the success of the hotel. Hence, the business plan has to highlight the key qualities or educational background of the members of the management. This provides the potential investors as well as the lenders with the assurance that the hotel is a good investment as well as that the management is equipped with the capability to navigate the struggles, if it may face, and come out strong.

Financial Plan

The financial plan of the business is the skeleton of the business plan. The budget of the hotel has to be clearly outlined along with other key elements like the capital expenditure needed, key performance indicators, minimum occupancy to stay afloat, revenue to be generated on average to cover the basic expenses of staying open, working capital requirements, etc.

The financial plan will also indicate the need of funds as and when needed along with the potential sources of such funds.

Operational Plan

The operational plan is the day to day working plan of the hotel. It includes the details like the staff requirements (job description and responsibilities), the professional qualifications that would be needed for the efficiency of the staff, key suppliers and their credit policy, procedure to manage inventory and sources to replenish the same in a timely manner, customer bookings and partner booking channels, setting the standards of service and ensuring the adherence to them, etc.

A detailed operational plan will assure the investors and lenders of the smooth functioning of the hotel without any hindrances.


This section highlights the unique achievements of the hotel or the key highlights of the hotel that give it an edge over its competition. Such highlights can be anything from a favourable or attractive location, training process, permits, etc. The hotel can also set the target milestones in terms of operating income or occupancy or certain permits that boost its position in the market at the same time assures the investors or the lenders of their investment or finance in the entity.


All the supporting details or documents relevant to support the claims and the projections of the business plan belong in this last part. However, the focus point to remember is to not burden the readers with unnecessary or extra details. The information to be provided should be crisp and with latest documents or permits/licenses, quotations of machinery, equipment, furniture and fixtures or other assets that will be needed, etc.

Given above is a general idea of the details to be provided as part of the business plan for a hotel. Entrepreneurs can seek help from professionals as well in making a business plan for their hotel, if needed.

FAQs – Hotel Business Plan

1. Is a business plan necessary for attracting investments from potential investors?

Yes. Business plan is one of the essential documents to be provided for securing an investment for the business.

2. What is a better competition analysis for a hotel business?

A better competition analysis for a hotel business is to account for direct as well as indirect competition of the business. Direct competitors are the ones that are in the same line business, cater to the same customer needs or have a similar set up of the business like the entity in question. Indirect competition are those businesses that may not cater to the same needs of the customers but are still part of the hotel industry and have the potential to generate revenues from the customers of the entity/entrepreneur’s business.

3. Is location a key aspect of the hotel business?

Yes. Location of the business is one of the key features that is responsible for the success or failure of the business in the hotel industry. A good hotel if set up at an unfavourable hotel may not attract customers no matter the excellence in services offered or any other unique features of the business that it may boast of.

4. Is a business plan essential for getting a loan from the bank?

Yes. Business Plan is an essential requirement of most banks in providing loans for the business unless it is loans for small businesses or Shishu loans under PMMY where business plan is not mandatory.

5. What is the information that is generally required for a business plan?

Some of the information that is generally required to prepare a business plan for a hotel is listed below,

  • Location of the hotel
  • Balance sheet
  • Cash flow statement
  • Income statement
  • Vendor/supplier quotations
  • Capital investment required and the expenditure for the same
  • References or past record of the promoters
  • Financial projections

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