The hotel business plan and why it’s important

If you intend to own and operate a hotel, the one thing you must have in place is a solid, actionable and realistic business plan. Not only will this be useful to you when you want to attract investors and partners or when you need to obtain funding, it can be the perfect roadmap to help you achieve your business goals and not get distracted along the way. With a solid hotel business plan, you will be able to make important decisions more easily, and you will know whether you are on the right track or if you need to make changes in how you are working. With all this in mind, here are some tips on how to get started on your business plan. Define your hotel business plan Studies indicate that having a well-crafted business plan can help your organisation grow up to 30% quicker and safeguard against potential risks, so it is certainly something you will need to be able to do if you are planning on running a hotel and getting into hotel management. Take your time over your hotel business plan and think things through, but keep in mind that this document is not set in stone and you can make changes if necessary. In fact, many in the hotel industry find that they need to continuously adapt their business plans to reflect the changing needs of clients and the economy. One element to include in your plan is an assessment of the risks and challenges of owning a hotel. If you can include these, it will show that you have researched the potential issues that you might come across during your career in hospitality and that you have safeguards in place. Identify your target market You will need to carry out thorough market research to determine exactly who your target market (your typical guest) is. This can be something you do yourself – for example by sending out surveys or using social media – or it could be a project you outsource to experts. Although this latter idea will cost more, it could be useful when you need precise information. A hospitality degree can help you understand what your target demographic wants from a hotel, and if you can provide it for them, and account for this in your hotel business plan, you will have much stronger evidence as to why your hotel business model is going to succeed. Once you know who is most likely to want to stay in your hotel, including their age, background, career, gender, and as much other information as you can find, you will be able to craft a marketing plan that speaks directly to these people, helping them make a decision that goes in your favour when they need somewhere to stay. Conduct a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis Carrying out a SWOT analysis is a crucial task that will help you understand a business in greater detail. Once you have the information gathered from this analysis, you will know which areas you need to work on and improve, and where you excel – and therefore stand out from the competition. Your Unique Selling Point (USP) could be developed from this. A SWOT analysis considers your strengths, weaknesses, opportunities and threats (hence the acronym). You must honestly appraise each of these elements as you work through them. Through this step, you will be able to see if your hotel development opportunities will work or whether you might need to change how you are approaching something. If you can include your SWOT analysis results in your hotel business plan, lenders and investors will be able to see that you have thought about every outcome of what you intend to do, and you will know precisely which route to take when it comes to moving forward. Set clear goals and objectives With clear objectives in place, you will have clear goals to work towards. This will help to keep you and your team motivated, and it will steer you in the right direction at all times. As for external lenders who might need information about where you see your hotel business going, these goals will show that you have a considered plan. Combined with your SWOT analysis, this should be a solid foundation on which to build a business. Now that you have a better understanding of what goes into a hotel business plan, you will be ready to start writing one by incorporating the following: The mission and vision statement Mission and vision statements might seem at first to be the same thing, but they are actually different. The mission statement outlines everything your business is doing right now to reach its objectives. This will be just two or three sentences that talk about what your hotel business does, how it does it, and perhaps why it does it, while the vision statement is usually just one sentence that outlines the ambitions and ultimate goal of the hotel. The two might be linked, but they are not the same. Outline your hotel business model When writing your hotel business plan, there will be a variety of sections to include, such as an executive summary; a business description and structure; the services offered; your market research and marketing strategies linked to that SWOT analysis; your personnel, including management; and financial plan and document. Common mistakes to avoid when creating a hotel business plan One of the biggest errors when it comes to your hotel business plan is not being realistic with your financial projections. Whether you hedge your bets or you are too optimistic, seasoned lenders and investors will be able to tell if something isn’t right, and they won’t want to work with a hotelier who doesn’t understand their figures. Another mistake is guessing rather than doing research. Your market analysis will give you important information that you can use to your advantage, and skipping this task because it is time-consuming or difficult will only harm your business in the end.