Budding hoteliers can set themselves up for success by building a solid business plan. The symbolic foundation of your hotel, your business plan keeps you on track and accountable to your objectives and goals and is necessary for securing investors. This is not to say that initial plans should not be adapted and revised, especially in an industry as capricious as hospitality. With a plan to guide you, you can maintain focus on your goals and make better decisions in an ever-changing market to ensure success through easy and challenging times.

When starting, resist comparing yourself and your business to large, billion-dollar chain hotels. Even these vast operations began with just an idea and a plan. Facing the blank page and writing something down is the beginning of turning ideas into reality. Here’s a checklist to get started:

10 Key Elements of a Hotel Business Plan

1. Executive Summary and Overview:
   This is a quick, concise view of your company’s vision, mission, and goals. When potential investors are leafing through piles of multi-page business plans, this section is your opportunity to create a captivating, memorable picture of your business.
   
   • Vision: A pithy slogan that accurately conveys your big-picture aspirations (e.g., Disney’s “Make People Happy”).
     
   • Mission: Describe the type of guests your hotel caters to and the service and stay experience you offer.
     
   • SMART Goals: Specific, Measurable, Achievable, Relevant, and Time-Bound criteria ensure your objectives will be met within an established time frame.
     
     
2. Market/Industry Analysis:
   Underscore (1) your specific, local market and travel patterns and (2) the broader hospitality industry and relevancy of global topics such as technology, the economy, politics, environmental concerns, and global health issues. This helps to identify the likelihood of your business’s success and potential future growth in the current market.
   
   • Conduct a SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. An effective business plan includes this tool to analyze objectives and identify the benefits and potential risks for your hotel in the local market.
     
     
3. Competitor/Company Analysis:
   Outline your competitors, focusing on direct local ones. Being savvy about your competitors’ strengths and weaknesses also leads you to the question: what is your unique selling point (USP)? Your answer tells potential investors why they should invest in your business rather than the one across the road by highlighting your operation’s desirability to guests.
   
   
4. Guest Segmentation:
   Your entire strategic plan and hotel brand are based on identifying your audience. Describe your target audience and emphasize, “Why my hotel.” Use research and data to show the relevancy and profitability of your target demographics.
   
   
5. Strategic Plan:
   This is your roadmap for connecting with customers, selling and managing rooms, and maximizing revenue.
   
   • Marketing: How are you going to get the right message to the right customers at the right time? There are many affordable, effective marketing channels and tools for hoteliers today. Your marketing strategy should include social media, a website, email marketing, direct sales, online reviews, and advertising partnerships/collaborations with individuals or organizations.
     
   • Revenue: An effective revenue management strategy takes into account demand forecasting, distribution, pricing strategies, and total revenue opportunities. Having a revenue management plan in place from the get go supports profitability, increases the likelihood of future growth, and is essential for hoteliers to navigate a constantly changing market.
     
   • Distribution: Market insights determine the best way to distribute inventory, and your strategy should consider your website, online travel agencies (OTAs), and traditional travel agents. However, focus on your direct booking strategy to cut commission costs and drive your bottom line.
     
     
6. Operations Plan:
   This is where you outline the operation’s practicalities. How will you run your hotel? Include:
   
   • Technology, such as a Property Management System (PMS).
     
   • Hiring processes and strategies and the roles you must fill.
     
   • Service standards.
     
   • Suppliers, inventory management, and any other relevant information.
     
     
7. Financial Plan:
   Include anything that impacts your operation’s finances, such as your business structure and model, start-up costs, fundraising opportunities, a return on investment (ROI) timeline for investors, reaching and maintaining profitability, and any critical suppliers and partnerships. Also, consider adding 30% of extra expenses and 30% more time to build your business so that nothing surprises you or sets you back.
   
   
8. The Team:
   Include bios for your management team highlighting the expertise and credentials with which they will execute your business plan. Investors need confidence in your team to bring the written words of your plan to life and achieve success.
   
   
9. Key Milestones:
   A timeline of relevant milestones, including:
   
   • Location selection, permitting and licensing, and build-out/construction.
     
   • Staffing, training, and grand opening.
     
   • Break-even point and eventual profitability.
     
     
10. Appendix:
    Include supporting documentation, additional information, or intricate details at the end of your business plan. This is the area you will reference throughout your plan to keep your main content concise and uncluttered.

Once you’ve written your business plan, regularly refer to it to ensure that new activities and investments align with your original vision and goals. Think of it as your roadmap for turning your dreams into a successful hotel!