How to Write a Hotel or Motel Business Plan

How to Write a Hotel or Motel Business Plan or Template

The hotel and motel industry has continuously grown over the last several years.  There are numerous reasons for the hotel and motel industry. 

First, the US has witnessed a steady increase in discretionary income. This consistent growth in discretionary income is often linked with families taking vacations. When people go on vacation, they typically stay in a hotel or motel. Interestingly, the rise in alternatives like Airbnb has sparked innovation within the hotel and motel sector. This innovation enables industry players to tap into current market trends. Due to these circumstances and more, crafting a detailed hotel and motel business plan becomes crucial, not just for potential funding but also for planning strategic decisions. Bearing this in mind, our business plan specialist offers some advice and suggestions for when you draft a hotel or motel business plan or its financial forecasts (10/23).


Executive Summary for a Hotel or Motel Business Plan Template.

The executive summary of a hotel or motel business plan or template should present clear and concise details from the main business plan, enabling readers to grasp the general idea of the enterprise and its identified target markets. For instance, specialists in hotel/motel planning suggest emphasizing unique features of the hotel/motel, such as its geographical placement, room count, anticipated room occupancy, target audience, and promotional techniques. When discussing these topics, it is crucial to maintain consistency with the primary business plan. A common approach by our planning specialist is to directly take details from the central business plan regarding the mentioned areas and insert them into the executive summary. This might require slight modifications. But, this direct approach for crafting the hotel/motel executive summary not only gives readers a quick insight into your business but also ensures the summary mirrors the comprehensive business plan (10/23).

Company Information and Location.

The company information segment of a hotel and motel business plan begins by stating the legal structure of the business and the address of the hotel/motel. Key details to highlight include services and conveniences offered by the establishment, its closeness to well-liked shopping destinations, and major attractions in the vicinity. Furthermore, it is vital to mention significant roads nearby and the ease with which they can be accessed from the hotel or motel. Such details are particularly significant for motels that mainly serve travelers on the move.

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Service Description and Competitive Advantages

In the service description section for a hotel and motel business plan, begin by outlining the variety of rooms available to guests. Some motels might offer one or two-room variations. In contrast, hotels typically showcase a diverse range of rooms, each with its features. Given these variances, it is essential to detail what sets each room type apart. Yet, when composing your business plan, it's wise to steer clear of listing specific room rates. As many know, hotel prices change frequently based on various factors throughout the year. To sidestep the need for constant updates to your plan, opt not to specify room rates. Instead, you can use general descriptors like low-priced, medium-priced, and high-priced.

Target Market for a Hotel or Motel Business Plan

A hotel or motel's target audience often hinges on its geographical location. For instance, a motel beside a significant highway might cater to passing travelers. Conversely, hotels might attract tourists visiting renowned destinations such as Disneyland, national reserves, or coastal areas. Upon pinpointing your establishment's target audience, give two or three reasons supporting this choice. For instance, if a hotel aims to serve beach enthusiasts, a valid reason could be its location directly on the shore or nearby.

Industry Research for a Hotel or Motel Business Plan

When discussing industry research for a hotel or motel business plan, initiate by delving into nationwide trends and data pertinent to the sector. Sources like IBIS World offer invaluable national statistics concerning the hotel and motel arena. As an illustration, IBIS World reported that the past year's revenues for the hotel and motel sector were roughly $107 billion. The annual growth rate over the preceding five years was around -10%. Yet, specialists in the field forecast a notable upswing in the forthcoming year, estimating about 15% annual growth. The profit margins for hotel and motel enterprises stand at around 3.5%. With nearly 80,000 hotels and motels dispersed across the US, these establishments employ over a million people. Such figures underscore the prevalence of small to medium-sized businesses in this domain. These are merely a handful of the trends and data about the hotel and motel industry that should be incorporated into a business plan's industry research segment.

Owner and Management Section

In the owner and management section of a hotel or motel business plan or template, the starting point should be detailing the reasons the business owner desires to launch or expand their hotel/motel. Once this base is established, the owner's experiences related to the industry should be highlighted. Such experiences could encompass frequent travels for business or pleasure, employment history in various hotel settings, or extensive research undertaken about the sector. It is also crucial to reinforce these experiences with pertinent educational achievements, like degrees in business, expertise in real estate, and so on. This approach allows prospective and existing hotel and motel business proprietors to substantiate their ownership aspirations.

Funding Request for a Hotel or Motel Business Plan

In the funding request segment for a hotel or motel, it's essential to commence by clearly stating the precise monetary requirement for initiating or broadening the hotel or motel venture. As an illustration, a company might require $1 million to inaugurate a coastal hotel. After this, it's necessary to pinpoint common expense categories for such an endeavor. Potential categories encompass construction costs, land acquisition, refurbishment expenses, training expenditures, promotional campaigns, etc. With these categories outlined, allocate specific monetary values to each. Concluding this list, present an aggregate total that should match the initially stated funding amount. Adopting this framework provides clarity on the funding amount required and offers flexibility since expenses are categorized rather than itemized.

Financials and Financial Projections for a Hotel or Motel Business Plan or Template

The section on financial projections for a hotel or motel business plan template should commence by identifying the average room rates and the typical number of daily guests. Building on this, one should specify the per-room expenses for upkeep, cleaning, sanitizing, and the like, which are considered variable costs. With these three metrics in hand—room rates, guest numbers, and variable costs—the financial projection expert can quickly compute expected daily gross profits. Subsequently, use estimated growth rates to extrapolate these figures and project monthly gross profits. To arrive at an essential earnings figure before factoring in interest and taxes, all fixed costs, including wages, must be subtracted from the gross profit. The concluding steps involve deducting expected interest payments and tax liabilities. With a net monthly profit calculated, apply growth rates and other fiscal tactics to project yearly profit and loss statements.

For determining growth rates in your projected financial model, consider researching either demographic growth or sector expansion. If your inquiry zeroes in on demographic growth, ascertain the typical demographic expansion in your vicinity and employ that figure as your revenue increment rate. Yet, a more accurate rate might be the broader industry growth rate for hotels and motels. This rate aligns more closely with a hotel's predictions than localized demographic growth. However, various aspects, like target audiences, influence the choice of growth rate. For expert guidance, kindly reach out to our specialized financial modeler.

Hopefully, these insightful tips and tricks for writing a business plan were helpful.  As always, if you need help with a business plan or financial projections, send us an email or give us a call. 

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Quality Business Plan and Quality Business Consultant.

Date: 10/07/2023