Motel business plan for starting your own business
One of the businesses that cannot go out of business in the foreseeable future is that of a motel. As long as people keep traveling, they’ll need to stay somewhere and that means they’ll need motels. Motel business plans are one of the first requirements for starting this business. We’ll tell you in detail how to write a business plan for a motel in this post. This strategic business plan will talk about what type of business is a motel and how you can run it in a profitable manner.
Let’s have a detailed look at this business plan for hotel.
Executive Summary
2.1 The Business
Wanderer’s Inn will be a registered motel on Interstate 91 100 kilometers east of Austin, Texas. It will provide housing and lodging services for the tourists coming to the area or traveling on the road. If you want to know how to buy a motel or start one of your own, we’ll tell you all the details about it.
2.2 Management of Motel
One of the most important parts of motel ownership is motel management. This part of the business plan will talk about that. As this motel is not a very big one, the management will not be a very complicated one. All we need to have is a manager to run the day to day affairs of the business and two receptionist to welcome the customers.
2.3 Customers of Motel
When writing a business plan for buying a franchise, it is important to have a clear idea of the customers of the business. The customers of motel business plan can be from a number of different categories and market segments, and it is of paramount important to have service and products to serve all of them in order to run the business successfully.
The customers we will be entertaining at Wanderer’s Inn will be the following:
- Travelers coming to dine in.
- Travelers who need a room to stay.
- Locals who want to dine.
- Truck drivers who need to stay.
2.4 Business Target
Just like a resort business plan, it is important to have a clear business target before we start the motel business plan. The goal of this business is to make money, of course. However, we cannot go around telling that to the customers, it ruins the image of the business.
The targets of Wanderer’s Inn will be to:
- Provide best-in-class dining and resting services to the customers.
- Expand the services to other locations.
- Achieve more than 95% customer satisfaction score.
- Outcompete any of the competition.
Company Summary
3.1 Company Owner
The owner of Wanderer’s Inn will be Whip Whittaker. Whip has worked as a hotel manager for more than half his life. He has a lot of experience in running such establishments. He also has a lot of connection in the industry and can come up with the best team to run the business. He knows how to run a motel.
3.2 Why the Motel is being started?
The reason Whip has acquired this restaurant motel business plan and is going to start this business is that he stumbled upon a duffle bag on the railway track and it happened to have a million dollars in it. The very next thing he did was to download a motel business plan sample pdf as his dream to start his own motel business in USA could finally be realized.
3.3 How the Motel Business will be started?
Step1: Making a Feasibility
The first thing you need to do to start any business is to make a feasibility report. Just to be clear, you can start a business skipping this step, by all means. However, that just exponentially increases your chances of losing the money you invest in the business, making that not the smartest choice. So Whip conducted a feasibility study and found out that there indeed is an opportunity to start a motel in the said location.
Step2: Developing a Brand
The next thing to do in order to establish a profitable motel is to make a brand around the name. It is important because people believe in brands the most and if we plan to expand the business to multiple locations in the future, having a brand is immensely helpful.
Step3: Establishing the Motel
Once the work on branding has started, a date for the opening of the winery will be given and the work on making the winery will start. The winery’s construction will be started and it will be built as soon as possible.
Step4: Advertisement
No business can be successful if it is not known to the people who are going to be the customers. In order to make the business successful, we will advertise the business using all advertisements available in the area. All measures will be taken to make sure that the people travelling in the area know Wanderer’s Inn and stop by to buy our services.
| Start-up Expenses | |
| Legal | $239,000 |
| Consultants | $0 |
| Insurance | $32,000 |
| Rent | $29,000 |
| Research and Development | $28,000 |
| Expensed Equipment | $50,000 |
| Signs | $3,500 |
| TOTAL START-UP EXPENSES | $381,500 |
| Start-up Assets | $351,000 |
| Cash Required | $362,000 |
| Start-up Inventory | $41,000 |
| Other Current Assets | $233,000 |
| Long-term Assets | $29,000 |
| TOTAL ASSETS | $1,016,000 |
| Total Requirements | $1,397,500 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $381,500 |
| Start-up Assets to Fund | $1,016,000 |
| TOTAL FUNDING REQUIRED | $1,397,500 |
| Assets | |
| Non-cash Assets from Start-up | $1,408,000 |
| Cash Requirements from Start-up | $375,600 |
| Additional Cash Raised | $49,000 |
| Cash Balance on Starting Date | $34,000 |
| TOTAL ASSETS | $1,866,600 |
| Liabilities and Capital | |
| Liabilities | $31,000 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $49,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $80,000 |
| Capital | |
| Planned Investment | $1,397,500 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,397,500 |
| Loss at Start-up (Start-up Expenses) | $389,100 |
| TOTAL CAPITAL | $1,786,600 |
| TOTAL CAPITAL AND LIABILITIES | $1,866,600 |
| Total Funding | $1,397,500 |
Services
If you need a complete business plan for buying a motel, it is important to have a clear view of the services the business will be providing. Wanderer’s Inn will provide all the services on and off the premises to make sure that no part of the business is untapped.
To give you an idea of what services a motel can provide, this free business plans for motels has some of the services the business can provide. This is just a starting point; you can further expand on it to include more services as well.
Here are some of the services we are making a part of this motel business plan pdf.
Hotel Rooms
The main service of the motel will be to provide hotel rooms for weary travelers who are travelling to unknown destinations.
Dining Services
Dining services will be provided to people who are staying in the hotel or just stopping by to dine in.
Off-Premises Catering
The people in the area who need catering and dining services for functions and parties off the premises can also hire our services.
Car Workshop
As most of the customers of the motel are travelling on a long trip, we will provide car workshop services for the ones who need.
Marketing Analysis of Motel
The next step needed to start a motel business plan successfully is to run a proper and complete marketing analysis of the business.
Business Plan for Investors
This business plan motel has a detailed marketing analysis of the business. This is because we think this is the most important part of motel hotel business plan. Even if you need a business plan for motel purchase, you need to run a marketing analysis so that the business can return you a profit according to your expectations.
5.1 Market Trends
Once your business hotel motel plan sample has made marketing trends of the business a part of the document so that you can have an idea of the business you are about to start. If we have a look at the trends of the motel business, it has expanded a lot in the past years. Bulk of the expand of this field can be attributed to the increase in interstate travel.
5.2 Marketing Segmentation
Now is the time that we discuss the marketing segmentation of the business. Customers of the business we are going to run will be divided into the following segments.
5.2.1 Travelers
People who are travelling in the area and want a room to stay will be the largest market segment for us.
5.2.2 Locals
We will also provide the services to the locals.
5.2.3 Workshop Customers
People who want car workshop services will also be one of the market segments for us.
5.2.4 Catering Customers
People who need off-premises catering services will be yet another market segment for the business.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Travelers | 38% | 41,000 | 43,000 | 45,000 | 48,000 | 50,000 | 10.00% |
| Locals | 24% | 25,000 | 26,000 | 28,000 | 29,000 | 31,000 | 10.00% |
| Workshop Customers | 20% | 20,000 | 22,000 | 25,000 | 27,000 | 30,000 | 10.00% |
| Catering Customers | 18% | 15,000 | 17,000 | 19,000 | 21,000 | 24,000 | 11.00% |
| Total | 100% | 101,000 | 108,000 | 117,000 | 125,000 | 135,000 | 10% |
5.3 Business Target
- To establish credible name in the motel industry in the area.
- To expand to at least 3 more places by 2 years.
- To make $174k in profits by the end of year 2.
- To become the best motel in the entire state.
5.4 Product Pricing
The services of Wanderer’s Inn will be priced at the market average of the other motels in the area. We will provide better services than the competition but at the same prices to grow our business at the start.
Marketing Strategy
If you need a business to be successful, having a marketing strategy is of paramount importance. This section of this boarding kennel business plan addresses this factor. You can use this motel marketing plan template for advertising your motel or come up with one of your own. If you want to know how much does it cost to own a motel, the answer is ‘a lot’. That will not be a part of this motel business plan pdf because the cost can vary from location to location.
What’s included in this motel business plan template is the competitive analysis and sales strategy for the business.
6.1 Competitive Analysis
- We have noted that there is no motel in 100 miles on both sides of the location we have selected for Wanderer’s Inn.
- The motels available in the area are of very low quality and standard and we can gain competitive edge by providing better services.
- There is a lot of demand of motel services in the area.
6.2 Sales Strategy
- We will use all local and national advertisement platforms to make sure that the motel is known to as many people as possible.
- We will offer top-class services at a discounted price to get as many customers as we can for the business.
- We will provide 100% customer satisfaction to make sure we get repeat customers and make a good name for the business.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Hotel Rooms | 53,000 | 56,180 | 59,551 |
| Dining Services | 49,000 | 51,940 | 55,056 |
| Off-Premises Catering | 40,000 | 42,400 | 44,944 |
| Car Workshop | 32,000 | 33,920 | 35,955 |
| TOTAL UNIT SALES | 174,000 | 184,440 | 195,506 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Hotel Rooms | $51.00 | $59.16 | $68.63 |
| Dining Services | $39.00 | $45.24 | $52.48 |
| Off-Premises Catering | $60.00 | $69.60 | $80.74 |
| Car Workshop | $45.00 | $52.20 | $60.55 |
| Sales | |||
| Hotel Rooms | $2,703,000.00 | $3,323,608.80 | $4,086,709.38 |
| Dining Services | $1,911,000.00 | $2,349,765.60 | $2,889,271.78 |
| Off-Premises Catering | $2,400,000.00 | $2,951,040.00 | $3,628,598.78 |
| Car Workshop | $1,440,000.00 | $1,770,624.00 | $2,177,159.27 |
| TOTAL SALES | $8,454,000.00 | $10,395,038.40 | $12,781,739.22 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Hotel Rooms | $49.00 | $56.00 | $64.00 |
| Dining Services | $37.00 | $42.00 | $48.00 |
| Off-Premises Catering | $58.00 | $66.00 | $76.00 |
| Car Workshop | $43.00 | $49.00 | $56.00 |
| Direct Cost of Sales | |||
| Hotel Rooms | $2,597,000.00 | $3,146,080.00 | $3,811,251.20 |
| Dining Services | $1,813,000.00 | $2,181,480.00 | $2,642,707.20 |
| Off-Premises Catering | $2,320,000.00 | $2,798,400.00 | $3,415,744.00 |
| Car Workshop | $1,376,000.00 | $1,662,080.00 | $2,013,491.20 |
| Subtotal Direct Cost of Sales | $8,106,000.00 | $9,788,040.00 | $11,883,193.60 |
Personnel plan
It is easy to come up with motel hotel business ideas but not all of them are translated into functional businesses. This is because this industry needs a lot of man power and having a personnel plan is a must for making the business possible and profitable. Just like a business plan for green house, you will need to have a lot of men to run the business. Let’s have a look at the details of the people you will need to make this business model for motel a reality.
7.1 Company Staff
The following people will be needed to run Wanderer’s Inn:
- Whip Whittaker will be the owner and CEO of the business.
- 1 manager for the hotel.
- 1 manager for the restaurant.
- 6 waiters.
- 3 cooks.
- 3 mechanics.
- 2 Office workers.
- 2 guards.
- 1 reception clerk.
- 1 Accountant.
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Hotel Manager | $13,000 | $14,300 | $15,730 |
| Restaurant Manager | $13,000 | $14,300 | $15,730 |
| Waiters | $58,000 | $63,800 | $70,180 |
| Cooks | $32,000 | $35,200 | $38,720 |
| Mechanics | $27,000 | $29,700 | $32,670 |
| Office workers | $18,000 | $19,800 | $21,780 |
| Guards | $20,000 | $22,000 | $24,200 |
| Reception clerk | $6,000 | $6,600 | $7,260 |
| Accountant | $9,000 | $9,900 | $10,890 |
| Total Salaries | $196,000 | $215,600 | $237,160 |
Financial Plan
The last thing we need to discuss to complete this business plan is the cost of motel business plan. If you want to know how much does it cost to build a motel, you better ask a civil engineer, preferably an experienced one. This financial plan, just like the one in the business plans for RV park, covers the prices involved in starting this business.
- Money needed to buy land to make the motel.
- The cost of building the motel.
- The cost of furniture needed for the motel.
- The salary of employees.
- The cost of establishing a workshop.
- Bonds, securities, insurance, and registration costs.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.90% | 8.14% | 8.22% |
| Long-term Interest Rate | 8.37% | 8.42% | 8.47% |
| Tax Rate | 24.04% | 24.30% | 25.20% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5334 |
| Monthly Revenue Break-even | $132,800 |
| Assumptions: | |
| Average Per-Unit Revenue | $233.00 |
| Average Per-Unit Variable Cost | $0.64 |
| Estimated Monthly Fixed Cost | $162,400 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $8,454,000 | $10,395,038 | $12,781,739 |
| Direct Cost of Sales | $8,106,000 | $9,788,040 | $11,883,194 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $8,106,000 | $9,788,040 | $11,883,194 |
| Gross Margin | $348,000 | $606,998 | $898,546 |
| Gross Margin % | 4.12% | 5.84% | 7.03% |
| Expenses | |||
| Payroll | $196,000 | $215,600 | $237,160 |
| Sales and Marketing and Other Expenses | $129,000 | $135,000 | $140,000 |
| Depreciation | $2,100 | $2,200 | $2,300 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,800 | $3,000 | $3,100 |
| Insurance | $2,100 | $2,100 | $2,100 |
| Rent | $2,700 | $2,800 | $2,900 |
| Payroll Taxes | $27,000 | $28,000 | $29,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $361,700 | $388,700 | $416,560 |
| Profit Before Interest and Taxes | ($13,700) | $218,298 | $481,986 |
| EBITDA | ($13,700) | $218,298 | $481,986 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | ($2,740) | $43,660 | $96,397 |
| Net Profit | ($10,960) | $174,639 | $385,588 |
| Net Profit/Sales | -0.13% | 1.68% | 3.02% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $54,000 | $58,320 | $62,986 |
| Cash from Receivables | $21,000 | $22,680 | $24,494 |
| SUBTOTAL CASH FROM OPERATIONS | $75,000 | $81,750 | $88,290 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $75,000 | $82,000 | $89,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $40,000 | $42,000 | $43,000 |
| Bill Payments | $25,000 | $26,000 | $28,000 |
| SUBTOTAL SPENT ON OPERATIONS | $65,000 | $68,000 | $71,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $65,000 | $70,200 | $75,816 |
| Net Cash Flow | $20,000 | $22,000 | $23,000 |
| Cash Balance | $26,000 | $27,000 | $28,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $275,000 | $308,000 | $338,800 |
| Accounts Receivable | $23,000 | $25,760 | $28,954 |
| Inventory | $3,700 | $4,144 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $280,000 | $313,600 | $352,486 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $21,000 | $23,520 | $26,460 |
| TOTAL LONG-TERM ASSETS | $26,000 | $29,120 | $32,760 |
| TOTAL ASSETS | $291,000 | $325,920 | $366,660 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $20,300 | $22,736 | $25,555 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $19,000 | $21,280 | $23,919 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $19,000 | $21,280 | $23,919 |
| Paid-in Capital | $30,000 | $30,000 | $31,000 |
| Retained Earnings | $53,400 | $58,206 | $64,027 |
| Earnings | $195,600 | $213,204 | $234,524 |
| TOTAL CAPITAL | $286,500 | $312,285 | $343,514 |
| TOTAL LIABILITIES AND CAPITAL | $305,500 | $325,920 | $366,660 |
| Net Worth | $317,000 | $345,530 | $380,083 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.32% | 8.11% | 8.99% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.28% | 10.28% | 11.39% | 9.80% |
| Inventory | 5.44% | 6.03% | 6.68% | 9.90% |
| Other Current Assets | 2.21% | 2.45% | 2.71% | 2.40% |
| Total Current Assets | 150.00% | 151.00% | 152.00% | 158.00% |
| Long-term Assets | 11.54% | 11.59% | 11.64% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.89% | 4.93% | 4.97% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.57% | 7.63% | 7.70% | 7.38% |
| NET WORTH | 100.40% | 101.20% | 102.13% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.50% | 97.05% | 99.77% | 99.00% |
| Selling, General & Administrative Expenses | 93.00% | 95.51% | 98.19% | 97.80% |
| Advertising Expenses | 1.39% | 1.43% | 1.47% | 1.40% |
| Profit Before Interest and Taxes | 41.44% | 42.56% | 43.75% | 33.90% |
| Main Ratios | ||||
| Current | 34 | 35 | 36 | 32 |
| Quick | 32.2 | 32.8 | 33.62 | 33 |
| Total Debt to Total Assets | 0.18% | 0.18% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 72.75% | 74.50% | 75.00% | 75.00% |
| Pre-tax Return on Assets | 94.90% | 99.65% | 104.63% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.45% | 34.49% | 35.56% | N.A. |
| Return on Equity | 56.00% | 57.74% | 59.53% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 33 | 34.65 | 35 | N.A. |
| Accounts Payable Turnover | 15 | 16 | 16.3 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.4 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $243,800 | $257,453 | $271,870 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.86 | 0.87 | 0.87 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 29 | 29.12 | 29.36 | N.A. |
| Sales/Net Worth | 2.1 | 2.2 | 2.3 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |