Hotel Business Plan for starting your own hotel

Hotels are among some of the best businesses that you can start if you have the investment for it. As a matter of fact, if you want to invest a large sum of money in a business that has virtually zero risk, rental real estate business plan might just be the safest option.

We will give you a business plan for hotel that you can use to start your own hotel and make a lot of money while you are at it. This sample business plan for a hotel will follow the example of Hotel Intergalactic, a venture by John Abruzzi. Let us now see what business consultants have to say about this business.

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Hotel Business Plan Summary

2.1 The Business

Hotel Intergalactic will be a 3-star hotel situated in downtown Los Angeles. The hotel will be registered with the local government and will be insured. The details of this business will be described in this executive summary for hotel with focus being on the way you can make lucrative profits by owning a hotel.

2.2 Management of Hotel Business

The next thing this business plan template for hotel needs to address is the way this hotel will be managed. For this, we will hire a manager to look after the day-to-day matters of the hotel. Other than the manager, one accountant and three assistant managers will be hired.

As this is a business plan for small hotel, we will not be hiring a lot of managerial staff to run it. The assistant managers will be responsible for procurement, operations, and customer service. The assistant managers will report to the manager who will act as an agent of the owner, John Abruzzi and will make decisions on his behalf in his absence.

2.3 Customers of Hotel Business

The customers of this free sample hotel business plan will be the following:

  • People coming to visit Los Angeles.
  • People who are in Los Angeles for business meetings.
  • Los Angeles-based companies that need accommodation for their employees coming from other cities.

2.4 Business Target

The targets of Hotel Intergalactic are:

  • Becoming the best hotel in Los Angeles.
  • Starting to make a profit of $29,800 a month by the end of year 3.
  • Expanding its services to at least other cities by the end of year 5.
Hotel Business Plan - 3 Years Profit Forecast
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Company Summary

3.1 Company Owner

Hotel Intergalactic will be owned by John Abruzzi. John has a master’s degree in hospitality management and has been working in the hoteling industry for more than half his life. He knows the business and is passionate about it. He also has enough money to start the business. Combined, all these factors make him the perfect owner in this hotel business plan pdf.

3.2 Why the Hotel is being started?

John Abruzzi is one of the most prominent hotel managers in the area and that means if he starts a hotel people will know he means business. In this example of a hotel business plan, the main reason for starting this business is that this is a profitable business opportunity.

3.3 How the Hotel will be started?

Step1: Making a Feasibility Report

The next thing this new hotel business plan needs to discuss is the feasibility report. At this stage, a survey will be conducted to chalk out the demand and availability of hotels in downtown Los Angeles area. Any good hotel business plan sample doc needs to make sure of the thing that a proper feasibility report is made and the hotel is designed according to the demand in the area.

Step2: Developing a Brand

This hotel business plan, just like a resort business plans needs to cover another important thing. This is developing a brand. As the hotel is going to be in the heart of Los Angeles, it is cardinally important to have a brand.

Step3: Establishing the Hotel

As the hotel is to be constructed from scratch, the best-case scenario would’ve been an empty plot but that is not the case as the downtown Los Angeles area is fully covered by a concrete jungle. For this purpose, an apartment building will be bought and will be modified into a hotel.

Step4: Promotion and Marketing

Last, but not the least, the hotel needs to be promoted on all media channels to make sure people are aware of its existence and it attracts business.

Hotel Business Plan - Startup Cost
Start-up Expenses 
Research and Development$24,000
Expensed Equipment$55,000
Start-up Assets$345,000
Cash Required$360,000
Start-up Inventory$40,000
Other Current Assets$230,000
Long-term Assets$273,000
TOTAL ASSETS$1,248,000
Total Requirements$1,640,200
Start-up Expenses to Fund$392,200
Start-up Assets to Fund$1,248,000
Non-cash Assets from Start-up$1,633,000
Cash Requirements from Start-up$382,000
Additional Cash Raised$51,000
Cash Balance on Starting Date$37,000
TOTAL ASSETS$2,103,000
Liabilities and Capital 
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$46,000
Other Current Liabilities (interest-free)$0
Planned Investment$1,640,200
Investor 1$0
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$387,800
Total Funding$1,640,200
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    Services of Hotel Business

    A hotel business plan, unlike a home inventory business plan has a limited number of services. While a home inventory service business can offer a lot of services, a hotel business can only offer a few. Here’s an overview of the services Hotel Intergalactic will be offering:

    • Accommodation

    It goes without saying that the most important service offered by the hotel will be accommodation. The hotel will have 20 single-bed, 20 double-bed, and 10 twin-bed rooms for accommodating the guests.

    • Banquet Service

    The second most important service provided by Hotel Intergalactic will be that of a banquet. Three large halls will be made a part of the hotel and will be provided for everything from business meetings to birthday parties.

    • Restaurant

    The top floor of the hotel will have an open-air rotating restaurant which will be open for the guests in the hotel and any other person coming in just for a meal.

    • Bar and Lounge

    The hotel will also feature a bar and a coffee lounge. These services will also be available for both the guests of the hotel as well as other people.

    Marketing Analysis of a Hotel Business

    Marketing analysis is the study of the various variables of the market that can affect the successful operation of a business. Any business plan for a hotel operation needs to shed light on this in order for the hotel to be successful. Before we get into the details of this business plan sample hotel industry, we need to have a look at the industry as a whole. There are just above 90,000 hotels in the US and more than $194billion change hands in this industry annually.

    5.1 Market Trends


    If you want to learn how to write a business plan for a hotel, you will have to closely study the trends of the industry. Just like making “”sample property management business plans, it is important to have an insight into the market before establishing a hotel.

    The US hoteling market might have its seasonal ups and downs, but it has been noted in the past decade that the industry has seen a steady growth. The worth of this industry has increased from $133billion in 2009 to just under $200billion in the last decade. Industry experts and analysts are of the view that this industry will show a minimum of 5% growth by 2025.

    Let’s now see more details of this hotel business plan outline.

    5.2 Marketing Segmentation

    One of the most important things to consider when planning any business is the market segmentation. You need to have a clear idea of the market segments that you are going to target and only then you can properly plan everything.

    Apparently, the hoteling business is only for one market segment, the people who need a place to spend the night. However, there is more to the story that just that. Even a house painting business plan has multiple market segments. Any hotel can have customers and clients divided into a number of market segments. We will focus on four segments of the market via Hotel Intergalactic.

    Hotel Business Plan - Marketing Segmentation

    5.2.1 Individual Customers

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    Most of our customers will fall into this category. These will be the people who show up at the hotel and want a room. We will make every possible effort to make sure these customers go home happy and consider us the next time they need a hotel.

    5.2.2 Companies

    Companies need accommodation for their employees when they are on a meeting. This segment of the market will give us bulk business and we will offer them discounts to make them our loyal customers.

    5.2.3 Bar and Restaurant Customers

    As the hotel will have a bar and restaurant, the people coming to visit them will also be a segment of the market for us.

    5.2.4 Banquet Customers

    As the hotel is to have three banquet halls, this will also be an important market segment for us. We will rent out the halls for conferences, parties, weddings, birthdays and any other function people need them for.

    Market Analysis       
    Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
    Individual Customers33%36,00038,00040,00042,00044,00010.00%
    Bar and Restaurant Customers20%22,00023,00025,00027,00028,00010.00%
    Banquet Customers25%30,00032,00034,00036,00038,00011.00%

    5.3 Business Target

    Our business targets are:

    • To maintain the highest standards of client satisfaction.
    • To become a well-known name in the industry.
    • To expand the business to all the major cities of the US.

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    5.4 Product Pricing

    Hotel Intergalactic will offer the services at a price comparable to that of the competitors. We might keep the price a bit lower than that of the competition at the start to attract customers but once we earn name, we will increase the prices.

    Marketing Strategy of Hotel Business

    The next important thing for opening a hotel business plan is the marketing strategy of the hotel. No hotel management company business plan can be complete if it has no marketing strategy. To make a workable marketing strategy, we need to do the following.

    6.1 Competitive Analysis

    The competitive analysis for Hotel Intergalactic has revealed the following:

    1. The competition in this field is immense in the area we are working in. We need to provide something extra to get customers.
    2. We will provide complementary dinner to our customers. No hotel in the area does this and this will give us a competitive edge.
    3. We will subsidize the companies who want accommodation for their employees so that they choose us over the other options.

    6.2 Sales Strategy

    • We will advertise the hotel through all the media channels in the area.
    • We will partner up with travel agents and tour planners to get customers.
    • We will offer discounts to companies who want to get accommodation for a large number of their employees.

    6.3 Sales Monthly

    Hotel Business Plan - Sales Monthly

    6.4 Sales Yearly

    Hotel Business Plan - Sales Yearly

    6.5 Sales Forecast

    Hotel Business Plan - Unit Sales
    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    Banquet Service40,00042,40044,944
    Bar and Lounge38,00040,28042,697
    TOTAL UNIT SALES175,000185,500196,630
    Unit PricesYear 1Year 2Year 3
    Banquet Service$70.00$81.20$94.19
    Bar and Lounge$42.00$48.72$56.52
    Accommodation $2,214,000.00 $2,722,334.40 $3,347,382.38
    Banquet Service$2,800,000.00 $3,442,880.00 $4,233,365.25
    Restaurant $2,240,000.00 $2,754,304.00 $3,386,692.20
    Bar and Lounge $1,596,000.00 $1,962,441.60 $2,413,018.19
    TOTAL SALES$8,850,000.00 $10,881,960.00 $13,380,458.02
    Direct Unit CostsYear 1Year 2Year 3
    Banquet Service$68.00$78.00$90.00
    Bar and Lounge$40.00$45.00$52.00
    Direct Cost of Sales   
    Accommodation $2,132,000.00 $2,564,140.00 $3,132,596.80
    Banquet Service$2,720,000.00 $3,307,200.00 $4,044,960.00
    Restaurant $2,128,000.00 $2,552,480.00 $3,083,158.40
    Bar and Lounge $1,520,000.00 $1,812,600.00 $2,220,233.60
    Subtotal Direct Cost of Sales$8,500,000.00 $10,236,420.00 $12,480,948.80

    Personnel plan

    Another thing that needs to be made clear in this hotel resort business plan sample is the staff that we will need to operate the hotel. Unlike an RV park start up business plan, we will need a larger workforce to smoothly run the operations of the hotel.

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      7.1 Company Staff

      • John Abruzzi will be the owner and CEO of the hotel.
      • 1 General Manager.
      • 2 Assistant managers.
      • 1 Accountant.
      • 1 Receptionist.
      • 5 Waiters.
      • 3 Waitresses.
      • 2 Drivers.
      • 1 Guard.
      • 4 Cooks.
      • 2 Bartenders.

      7.2 Average Salary of Employees

      Personnel Plan   
       Year 1Year 2Year 3
      General Manager$13,000$14,300$15,730
      Assistant Managers$24,000$26,400$29,040
      Total Salaries$206,000 $226,600 $249,260

      Financial Plan

      The last thing to be discussed in this business plan is the budget for hotel business plan. As the hotel is being started from scratch, the following expenses are to be arranged:

      • The cost of establishing the hotel.
      • The cost of hiring the staff.
      • The salaries of the staff for the first 6 months.
      • The cost of buying cars for guest pick and drop.
      • The money needed to advertise the hotel.
      • The money needed to establish a web presence of the hotel.

      8.1 Important Assumptions

      General Assumptions   
       Year 1Year 2Year 3
      Plan Month123
      Current Interest Rate8.14%8.19%8.26%
      Long-term Interest Rate8.40%8.48%8.52%
      Tax Rate24.03%24.45%25.80%

      8.2 Break-even Analysis

      Hotel Business Plan - Break-even Analysis
      Break-Even Analysis 
      Monthly Units Break-even5342
      Monthly Revenue Break-even$132,420
      Average Per-Unit Revenue$234.00
      Average Per-Unit Variable Cost$0.66
      Estimated Monthly Fixed Cost$164,120

      8.3 Projected Profit and Loss

      Pro Forma Profit And Loss   
       Year 1Year 2Year 3
      Sales$8,850,000 $10,881,960 $13,380,458
      Direct Cost of Sales$8,500,000 $10,236,420 $12,480,949
      TOTAL COST OF SALES$8,500,000 $10,236,420 $12,480,949
      Gross Margin$350,000 $645,540 $899,509
      Gross Margin %3.95%5.93%6.72%
      Sales and Marketing and Other Expenses$140,000$148,000$156,000
      Leased Equipment$0$0$0
      Payroll Taxes$34,000$35,000$36,000
      Total Operating Expenses$390,400 $420,350 $452,340
      Profit Before Interest and Taxes($40,400)$225,190$447,169
      Interest Expense$0$0$0
      Taxes Incurred($8,080)$45,038$89,434
      Net Profit($32,320)$180,152$357,735
      Net Profit/Sales-0.37%1.66%2.67%

      8.3.1 Profit Monthly

      Hotel Business Plan - Profit Monthly

      8.3.2 Profit Yearly

      Hotel Business Plan - Profit Yearly

      8.3.3 Gross Margin Monthly

      Hotel Business Plan - Gross Margin Monthly

      8.3.4 Gross Margin Yearly

      Hotel Business Plan - Gross Margin Yearly

      8.4 Projected Cash Flow

      Hotel Business Plan - Project Cash Flow
      Pro Forma Cash Flow   
      Cash ReceivedYear 1Year 2Year 3
      Cash from Operations   
      Cash Sales$53,000$57,240$61,819
      Cash from Receivables$19,000$20,520$22,162
      SUBTOTAL CASH FROM OPERATIONS$72,000 $78,480 $84,758
      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$73,000 $79,000 $85,000
      ExpendituresYear 1Year 2Year 3
      Expenditures from Operations   
      Cash Spending$40,000$42,000$45,000
      Bill Payments$25,000$28,000$31,000
      SUBTOTAL SPENT ON OPERATIONS$65,000 $70,000 $76,000
      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
      SUBTOTAL CASH SPENT$66,000 $71,280 $76,982
      Net Cash Flow$18,000$20,000$22,000
      Cash Balance$28,000$31,000$33,000
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        8.5 Projected Balance Sheet

        Pro Forma Balance Sheet   
        AssetsYear 1Year 2Year 3
        Current Assets   
        Accounts Receivable$23,000$25,760$28,954
        Other Current Assets$1,000$1,000$1,000
        TOTAL CURRENT ASSETS$284,000 $318,080 $357,522
        Long-term Assets   
        Long-term Assets$10,000$10,000$10,000
        Accumulated Depreciation$19,100$21,392$24,066
        TOTAL LONG-TERM ASSETS$23,000 $25,760 $28,980
        TOTAL ASSETS$292,000 $327,040 $367,920
        Liabilities and CapitalYear 4Year 5Year 6
        Current Liabilities   
        Accounts Payable$18,500$20,720$23,289
        Current Borrowing$0$0$0
        Other Current Liabilities$0$0$0
        SUBTOTAL CURRENT LIABILITIES$18,000 $20,160 $22,660
        Long-term Liabilities$0$0$0
        TOTAL LIABILITIES$16,000 $17,920 $20,142
        Paid-in Capital$30,000$30,000$31,000
        Retained Earnings$54,500$59,405$65,346
        TOTAL CAPITAL$283,000 $308,470 $339,317
        TOTAL LIABILITIES AND CAPITAL$299,000 $327,040 $367,920
        Net Worth$296,000$322,640$354,904

        8.6 Business Ratios

        Ratio Analysis    
         Year 1Year 2Year 3INDUSTRY PROFILE
        Sales Growth7.25%8.03%8.90%3.00%
        Percent of Total Assets    
        Accounts Receivable9.21%10.20%11.31%9.80%
        Other Current Assets2.13%2.36%2.61%2.40%
        Total Current Assets150.02%152.00%152.00%158.00%
        Long-term Assets11.56%11.60%11.64%12.00%
        TOTAL ASSETS100.00%100.00%100.00%100.00%
        Current Liabilities4.92%4.96%5.00%4.34%
        Long-term Liabilities0.00%0.00%0.00%0.00%
        Total Liabilities7.63%7.69%7.76%7.38%
        NET WORTH101.30%102.11%103.05%110.00%
        Percent of Sales    
        Gross Margin95.30%97.87%100.61%99.00%
        Selling, General & Administrative Expenses94.10%96.64%99.35%97.80%
        Advertising Expenses1.55%1.59%1.64%1.40%
        Profit Before Interest and Taxes42.00%43.13%44.34%33.90%
        Main Ratios    
        Total Debt to Total Assets0.18%0.18%0.17%0.40%
        Pre-tax Return on Net Worth74.08%74.70%75.00%75.00%
        Pre-tax Return on Assets95.03%99.78%104.77%111.30%
        Additional RatiosYear 1Year 2Year 3 
        Net Profit Margin33.10%34.13%35.18%N.A.
        Return on Equity55.80%57.53%59.31%N.A.
        Activity Ratios    
        Accounts Receivable Turnover7.77.87.8N.A.
        Collection Days100100100N.A.
        Inventory Turnover3233.633N.A.
        Accounts Payable Turnover151616.3N.A.
        Payment Days272727N.A.
        Total Asset Turnover2.52.52.6N.A.
        Debt Ratios    
        Debt to Net Worth-0.04-0.03-0.04N.A.
        Current Liab. to Liab.111N.A.
        Liquidity Ratios    
        Net Working Capital$240,000$253,440$267,633N.A.
        Interest Coverage000N.A.
        Additional Ratios    
        Assets to Sales0.860.870.87N.A.
        Current Debt/Total Assets1%0%0%N.A.
        Acid Test29.129.1229.16N.A.
        Sales/Net Worth2.12.22.3N.A.
        Dividend Payout000N.A.

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