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How to Start a Hotel Business
Starting a hotel can always be a profitable business, particularly in India, a preferred tourist
destination in the world. The growing economy of the country has also made it a favored destination
for the business community. All this has made hospitality industry a very profitable sector in the
country. Setting up a hotel guarantees you a great and successful future. However to start and run a
hotel one needs proper planning.
How to Write a Hotel Business Plan?
A hotel business plan will help you operate your business in a very smooth and efficient manner. It
serves as a roadway to your success. You business plan must include every aspect of the hotel
business. Things which must be part of you hotel business plan include:
Who will be your guests? Will you target business people or holidaymakers or a broad cross-section of guests?
Where will the location of the hotel be? To tap tourists you need to have a seaside location orhills.
For business people you must have your location close to major business centers or in the centre
of the city.
How big will the hotel be? Your plan must also include facilities you will offer to guests, thenumber of staff required, and provision for staff accommodation
What Services will you Offer if you want to Start a Hotel Business?
Will you have a bar? Will you offer restaurant meals and for this will you employ a chef? Will your restaurant and bar be open to non-residents? What will the bedroom facilities in hotel be? Will you have tea and coffee making facilities, TV,
AC, mini-bars, hairdryers, WiFi Hotspot access etc?
What all hotel facilities will you offer, such as sports room, child care facility, TV lounge,gymnasium etc
Will you have a conference room, a discotheque or a function room? Will you offer an online booking service What policy will you have to counter wastage, theft and other stock losses
Investment you Need to Start a Hotel Business
It is difficult to make a beginning without external investment.
This is particularly true if you start your investment from scratch. So you need to have a plan which
will convince potential investors.
The best place to go for finances is a bank. All banks will want to have a thorough look at your hotel
plan before they sanction money for it. So, always keep a realistic and feasible business plan ready.
For your financial assistance you can also look forward to avail grants and advice from a variety of
bodies. You can opt for equity, capital or debt finance.
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Common Mistakes you Should Avoid Before
you Start a Hotel BusinessYou need to avoid two common mistakes when you set out to start new hotel business:
Failing to Seek Professional HelpIt is only an experienced professional aware of local governments ins and outs can help you set
up a hotel properly. They will help you in devising plans and in procuring licenses and permits on
your behalf. Getting the Insurance Wrong
Insurance can buffer you from all types of unforeseen calamities which usually take toll on human
lives. You need to make sure you insure the hotel itself from fire and thefts. Apart from property
insurance, you will need workers compensation insurance and liability insurance for customer.
Search for the best available policy.
Purchasing a Hotel that is up for SaleStarting your hotel business with a hotel that is up for sale can ease matters for you. You can
refurnish it or just carry on with the business. However you need to take factors into accountbefore buying one. This includes
Enquire about the reasons for the sell off. Make a good estimate of how much you need to spend to make the hotel up to your
standards.
Your chosen property should have growth prospects. A dead property will be a wronginvestment
If you have the dream to make it big, the hotel industry is where you need to invest in.
Related Posts
EXECUTIVE SUMMARY COMPANY SUMMARY HOTEL & LOUNGE OVERVIEW MARKET ANALYSIS COMPETITIVE ENVIRONMENT STRATEGY & IMPLEMENTATION PROMOTION STRATEGY FINANCIAL PLAN RESUME
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EXECUTIVE SUMMARY
We seek funds for the acquisition and renovation of Seven Elms Resort, an adult-
marketed, 17-room "boutique style" hotel specializing in a couples' "getaway" to provide
relaxation and recreation in Benzie County, a popular tourism spot located next to the
state of Michigan's Lake Michigan. Moderately priced between the high-line hotel
properties and the older motel strips, Seven Elms Resort shall fill an affordability niche
not presently available in Benzie County.
Combined with an on-site lounge, grill, poolside beverage service, and morning
continental breakfast bar, we are seeking investment funds to renovate the hotel
building, build-out a piano bar/lounge area with dance floor, and construct an outdoor
pool adjacent to the indoor pool. With this refurbishment and other new amenities,
Seven Elms Resort will form the basis of a highly profitable hotel venture. We are
seeking funds to develop and expand the business in a phased approach, as highlighted
within this document.
Seven Elms Resort's owner, Steve M. Blackburn, has an extensive business background,
including over 14 years of experience developing a variety of businesses. Mr. Blackburn
received his B.A. in Business Economics, and currently is an M.B.A. candidate at the
University of Michigan. Desiring to return to his own business, he wishes to establish
Seven Elms Resort, Inc. in 1999.
The foundation for the plan is a combination of primary and secondary research, upon
which the marketing strategies are built. Discussions and interviews were held with a
variety of individuals involved with other similar businesses to develop the proforma
data, review the market potential, and competitive situation.
Renovation in the Prairie Style period, our hotel's design elements and furniture willreflect this "organic" approach and provide an overall comfortable experience. Seven
Elms Resort shall specialize in meeting an individual or couple's needs. As growth
warrants, the 10-acre site would allow for future expansion of the lodging portion of the
resort (Phase II).
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Business Plan Purpose
Introduction
In today's highly competitive environment, formal business planning is an essentialelement in achieving business success. A well-written business plan is primarily a
communication tool used to obtain financing. In certain instances, particularly with our
early stage company, this business plan also serves as a strategic plan.
Considering that lenders are inundated by numerous investment opportunities from
which they choose only a few, this business plan describes our story and how we intend
to grow. Seven Elms Resort, Inc. management team has made an in-depth analysis of its
opportunities and weaknesses and it has concluded that the company has an excellentchance to succeed.
Methodology for Business Planning
Sophisticated business planning helps management answer questions, such as: What
will be our record of achievement? How have we fared compared to our competitors?
Are we setting realistic and attainable goals and objectives?
Constructive and useful business planning requires a broad-based understanding of
changes taking place in the marketplace in which the company competes, or plans to
compete, and the ever-changing financial markets. In-depth technical skills in a variety
of disciplines such as financial analysis, sales and marketing, latest technology, and
managing growth are critical components in assessing a company's opportunities and
risks.
Developing the Business Plan
The management of Seven Elms Resort, Inc. has developed this disciplined planning
methodology to help the company anticipate its start-up costs and other critical
information to arrive at this realistic plan.
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Guidance from Outside Professionals
Mr. Blackburn has sought legal assistance and advisors to develop the Seven Elms
Resort concept. Steve will maintain an active management involvement in every aspect
of daily resort operations. This plan reflects his vision.
Five Objectives of Seven Elms Resort, Inc.
1. Attract $1.4 million mortgage/investment capital;2. Focus ideas and establish goals;3. Identify and quantify objectives;4. Track and direct growth;5. Create benchmarks for measuring success.
The business of Seven Elms Resort, Inc. is the creation of and funding of an adult
couples' 17-room hotel, specializing in a "getaway" atmosphere to provide relaxation and
recreation in the Greater Benzie County/Lake Michigan area. Management is soliciting
commercial finance partners who share its vision and desire to participate in this
exciting business opportunity in the resort community of Benzie County, Michigan. The
integration of these disciplines results in extensive and innovative services, set in a
unique Prairie Style surrounding for our prospective guests.
Ideal Property Location
The preferred location is a 10-acre parcel with 8 acres of woods. Of the 18 rooms, 3 are
executive suites, with Jacuzzi tubs, and one of them will be converted to an onsite
manager's apartment. Each room has individual climate control, direct-dial phones, and
televisions. The facility has a large main lobby area, indoor pool/Jacuzzi/sauna, lighted
tennis court, 2-car garage, storage shed, ample parking, and all equipment necessary foroperation of the motel. The separate onsite manager residence and meeting room
complex will serve as a future lounge/grill space. The grounds are beautifully
landscaped.
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The motel is located in the motel district of Benzie County and is situated on 9.43
beautifully landscaped, wooded acres. Approximately 7 of the 9.43 acres are wooded and
undeveloped, which creates an opportunity for significant expansion or potential for an
entirely new enterprise.
This facility consists of one building, built in two phases: a 22- and 15-year-old two- and
one- story wood frame 18-unit motel and manager's/owner's apartment, which when
combined, total approximately 14,787 square feet of living area. The 18-unit motel
includes a lobby with a fireplace, reception area, storage area, laundry room, bathroom,
meeting rooms, a balcony, 18 room units, a men's and women's bathroom, kitchen, a
whirlpool/sauna room, an indoor swimming pool, and mechanical room. The motel has
a partial basement and includes a laundry room with two washers and two dryers.
The manager's apartment (future piano bar and basement bar/meeting room area)
offers a living room, kitchen, dining area, family room, half bath, and gift shop on the
first floor with 3 bedrooms and 2 baths on the second floor. The home has a concrete
block basement that is partially finished with a recreation room and a 3/4 bathroom.
The exterior is cedar and the roof is pitch and pebble. The building is seated on a poured
concrete and a concrete block foundation. Interior walls are concrete block and drywall.
The flooring is carpet and ceramic tile. There are casement windows and wood storms
and screens. There is a basement area under the living quarters and a portion of the
motel.
Other improvements include a 2-car garage with 2 electric door openers. A detached
storage shed is located to the rear of the manager's apartment. Land improvements
include a blacktop driveway and parking lot with 23 parking spaces, concrete sidewalks,
a lighted tennis court, street signage, and beautiful landscaping with a mature variety of
trees and shrubs.
Mechanical systems include five gas hydropic, two gas forced air furnaces, electric
baseboard heat, individual heat, and central air for each unit; 120-gallon hot water
heater, 600-amp electrical service, intercom system, two central vacs, water softener,
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sump pump, 4-camera security system, cable television, smoke alarms, and telephone
system.
Mission Statement
Seven Elms Resort, Inc.'s mission is to provide quality hospitality services to our guests
in a comprehensive and cost competitive manner, providing the finest accommodations
in Benzie County, Michigan.
Company Business Plan Objective
This business plan serves to detail the direction, vision, and planning to achieve our goal
for providing superior and comprehensive hotel and lounge services. Our plan objectivesare:
Attract $200,000 bridge loan to secure $1.4 M property mortgage Focus ideas and establish goals Identify and quantify long-term expansion Track and direct growth Create benchmarks for measuring success
Seven Elms Resort shall fill a niche not presently available, namely a moderately priced
(under $130 per night, summer rate) resort. Combined with an on-site lounge, a grilled
food service, an indoor and outdoor pool bar, and a morning continental breakfast
offering, we shall differentiate ourselves by becoming a "boutique style" resort versus
simply another motel. With the construction of an outdoor pool adjacent to the present
indoor pool/whirlpool/sauna complex and our other refurbishment and new amenities,
Seven Elms Resort will form the basis of a highly profitable venture set in a Prairie Style
environment.
COMPANY SUMMARY
Company Ownership
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Mr. Steve Blackburn founded Seven Elms Resort, Inc. hotel and lounge in 1998 as a
Michigan Subchapter "S" Corporation. Since 1985, Steve has had extensive experience in
creating and managing organizations for environmental and economic development-
oriented companies involved in nationwide projects.
Steve consults with area businesses in development-related issues, including finance,
and is a United States SBA counselor at the Small Business Development Center at the
University of Michigan. Past SBA clients include service and manufacturing
organizations. He is a certified SBA Fast Track program instructor, a Michigan licensed
loan solicitor, with a specialty in commercial finance, and a guest lecturer at U-M for
Business Plan Writing Workshops. He has started previous business and corporate
subsidiaries and looks forward to managing Seven Elms Resort on a daily basis.
Currently, Steve is an M.B.A. candidate at U-M and holds a Bachelor of Arts degree in
Business Economics with a minor in chemistry from Notre Dame University.
Key Advisors to the Company
Seven Elms Resort, Inc. has additional key staff members and advisors to assist during
the development, planning, and initial planning phases. They include an architect
trained at the University of Notre Dame, CPAs, and former managers of bar and Bedand Breakfast style properties.
Management & Organizational Summary
Mr. Steve Blackburn will manage all aspects of the business and service development to
ensure effective customer responsiveness. Qualified resort associate professionals will
provide additional support services. Support staff will be added as guest and/or patron
load factors mandate. Blackburn has joined the American Hotel and Motel Association.
Corporate Development Plan
For purposes of this Business Plan document, Seven Elms Resort, Inc.Phase I and
Phase II for developmental growth are defined below:
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Phase I
This phase involves preparation and development of Seven Elms Resort. Until the ideal
property is acquired, Seven Elms Resort, Inc. offices will be housed at the home of Mr.
Steve Blackburn, its founder. The property will establish its own Prairie Style identity,
management directives, and capital. Incorporating a total quality management
approach and a guest appreciation program, Seven Elms Resort will develop key repeat
guests and lounge patrons. Through word of mouth and advertising, our reputation as
an affordable "boutique style" resort shall grow.
Property renovation will include the makeover of 18 to 17 rooms (with 3 suites) and the
conversion of the present onsite property manager's house to lounge gathering space.
New construction includes a bar room addition, extra parking lot build-out, and an
outdoor pool. [Phase I capital (start-up) funds are documented later on in this business
plan.] It is anticipated that the funding and transfer of this property will happen in
spring 1999. Operation "as is" of the facility would continue through the summer and
fall. The hotel will close for the winter months for its build-out and renovation.
Phase II
Continue implementation of sales, advertising, and marketing strategies developed inPhase I. Identify and pursue additional guest markets, i.e. Internet room guarantee
services. Seven Elms Resort shall evaluate its room occupancy position to determine if a
facility expansion is warranted. Seven Elms Resort anticipates additional support staff
would be needed at the proper time (Phase II). This Plan does not contain funding needs
for this Phase.
HOTEL & LOUNGE OVERVIEW
Establishing a hotel and lounge business clientele will take some time, as the research
revealed word-of-mouth /recommendations /referrals and value as the primary way in
which hotel and lounge services are selected by new guests. People who are completely
new to the area, or who have few established connections, may look to the Yellow Pages
or other advertising to establish available services, then call for information or pricing.
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A good portion of the past guests to the property will no longer return, as the present
ownership has operated the property as a Christian retreat-style motel.
Competitive Advantage
Strengths of Seven Elms Resort, Inc. include Steve Blackburn's broad base of experience
in managing different types of companies. He has extensive development experience
and a track record of hiring the right people and training them. Blackburn understands
the service sector business, has traveled extensively frequenting numerous lodging
establishments, and has gained invaluable experience in organizational management.
Currently, a mid-size "boutique" resort niche is vacant in the Lake Michigan market,
with present lodging on the high end, averaging $225 per night (and up) down to oldermotel properties of $79 per night. Several B&B establishments may fall into the middle,
however, Seven Elms, as a resort-style property, will serve its niche by itself.
Industry Keys to Success
1. A property designed for the guest and/or lounge patron2. Frequent Guest Award Program3.
Controlled overhead and operational costs
4. Regular and ongoing guest feedback5. Latest technology/software capacity6. Weekend lounge (piano bar, dance floor) entertainment7. Unique, timeless and comfortable environment8. Dedicated management and associate support staff
MARKET ANALYSIS
Seven Elms Resort, Inc. like all businesses, is affected by forces and trends in the market
environment. These include economic, geographical, competitive, legal/political, and
technical.
Economic Environment
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Positive forces include the generally prosperous economy that is currently in place, full
employment, rising wages, and low inflation, leading more people to be able and willing
to spend money and to get away for some time. The close locality of Lake Michigan
offers an affordable alternative to a flyaway destination.
Geographical/Competitive Environment
Located just two blocks from Lake Michigan and downtown Lakegrove, the area has
several golf courses, two ski hills, water recreation activities, numerous dining
establishments, various retail and specialty shops, art galleries, theatre entertainment
venues, and the beauty and serenity of Lake Michigan, which has made this county a
famous Midwest tourist destination. Traverse City began to prosper in the 1870s,
becoming a desirable resort area. Many homes and estates date back to this era and
several enormous "summer cottages" were built on the lakeshore and are still in
evidence today.
Seven Elms Resort shall fill a niche not presently available, namely a moderately priced
(under $130 per night), resort-type establishment. Combined with an on-site lounge, a
grilled food service, an indoor and outdoor pool bar, and a morning continental
breakfast offering, we shall differentiate ourselves by becoming a "boutique style" resort
versus simply another motel.
Our Prairie Style surroundings will attract and retain guests who appreciate such refined
environments.
Legal/Political Environment
Seven Elms Resort management will not move the project forward until it has obtained
an option to acquire one of the 19 Benzie County, Michigan, liquor licenses. As faced byall businesses, the proper insurance needs shall be met and all operations and policy
manuals shall be reviewed by appropriate legal experts. The facility will obtain all the
necessary building permits prior to construction. Present facility zoning allows for this
proposed use, including a bar, cabaret, grill, and dance floor space.
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Technology Environment
Computer programs greatly simplify the financial recordkeeping for today's businesses.
As a small business, Seven Elms Resort will need to watch its expenses closely. By
utilizing the existing software packages available in the hotel industry, including: room
and facility management database, controlled bar and inventory measuring systems,
and room key cards that allow patrons to charge directly to their room account, this
technology shall assist management in controlling costs, reducing cash management,
and maximizing revenue. Seven Elms Resort shall attract the resources necessary to
train and operate the system in order to generate the reports and manage the inventory.
COMPETITIVE ENVIRONMENT
A listing of the hotel and motel properties in Benzie County, Michigan (sourced through
Midwest and the Ameritech Directories) is as follows. (Note: Other properties on Lake
Michigan, but outside the city limits, are not included):
High Line ($139-$750 per night, depending upon season)
The Cove of Lake Michigan ($145-$225)
Grand Michigan Resort and Spa ($139-$750)
The Harbor's Edge ($139-$199)
The Michigan Inn ($215-$350)
The Strike Hotel ($200)
Motel ($59-$119 per night, depending upon season)
Breezy Chateau Inn
Budget Time Motel
Lake Michigan Motel
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Lakewood Motel
Misty Motel
Pine Tar Motel
Plaza Motel
Shady Drive Motel
The Stirrup Motel
Swiss Motel
Bed & Breakfast (B&B)
Dahlia House
The Mixer House
Precious Times Inn
Hotel and motel properties in adjacent communities are not listed, however, they doadvertise in the Yellow Pages.
Seven Elms Resort hotel and lounge is attempting to carve out a fourth segment in the
lodging market; that of a "boutique" style, high-line property at mid-line pricing geared
towards adult couples and not marketed to families.
A review of competitors' marketing strategies reveals no one targeting this market
segment. Hotel and lounge is a referral-driven businessnew business can be obtained
by encouraging and rewarding present guests to refer future guests. Networking within
business and civic groups is important; even if the business results are not immediately
felt, it is an excellent public relations opportunity. Live piano, or jazz style trio, on the
weekends will add excitement to the resort and draw community residents and guests
from other properties.
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Market Research
A hypothetical behavior sequence model for a new customer (future guest)
contemplating using a hotel and lounge service for the first time might look something
like the following (based on discussions and interviews with potential guests):
Individual or couple decided to getaway for a few days. This may happen as a result of a
need for a change of pace, vacation, or a celebration purpose. The need can arise
anytime year round. Even in the late fall and winter months people are thinking
"getaway" to break the weather doldrums.
Individual or couple investigates hotel services. In most cases, this means the they will
consider first any recommendations that they are knowledgeable of through priorassociation (relative, friend, or social group). If the individual or couple is new to the
area or otherwise has not made any close connections with people, he/she would look in
the Yellow Pages for a listing, or perhaps look in a newspaper for advertising.
Acting on the advice of friends (or own knowledge), the individual or couple will call the
recommended property to obtain information that will help him/her decide if this place
is the best for them. Criteria for selection include: (1) amenities (pool, on-site food
service, nonsmoking rooms, bar lounge area, etc.); (2) reputation (what kind of personsusually stay here?);(3) physical plant (how recent the renovation, upkeep, etc?); (4)
courtesy (professional and attentive staff?); and (5) pricing (is the place affordable?).
Based on the information received, the individual or couple makes a decision and either
schedules an appointment to view the property or makes a reservation.
The individual's satisfaction with his/her decision and with the service itself is largely a
function of their interaction with the staff during their stay. Everyone associated withSeven Elms Resort will do everything possible to ensure a satisfactory experience for the
guest, so that future business (and a future referral) is not at risk.
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Marketing strategies will build on this model, taking advantage of precipitating events,
fostering word-of-mouth recommendations, and creating satisfaction through
interacting with the future or present guests.
Summary of Opportunities and Threats in the Environment
Overall, the environment appears very positive for Seven Elms Resort, Inc. The forces
driving market demand, mainly economic and geographical, are strong, with more
people staying closer to home for shorter getaway trips and their comfort level of visiting
Lake Michigan, one of the Midwest's premiere travel destinations. On the negative side,
there is competition, and it will take a while for Seven Elms Resort to get "established"
in its market niche.
STRATEGY & IMPLEMENTATION
The business is driven by referrals and repeat business, so for the first few years Seven
Elms Resort will need to be aggressive in attracting new guests. The marketing strategy
is subject to change upon guest feedback and surveys.
Marketing Strategies
Target MarketsGeographical: The major cities within a three-hour drive of the
property.
Target Markets - Consumer:
New visitors traveling to the area Middle- and upper-income bracket Returning visitors to the area Businesses needing to hold small overnight planning and strategy sessions Area wedding parties Couples
Positioning and Product Strategy
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For its guests, Seven Elms Resort will be positioned as a new, beautifully landscaped,
nature-filled, unique atmosphere hotel with a bar lounge service that fits an adult
"getaway" market niche. A full range of referral services (i.e. restaurant
recommendations, shopping, taxis, area attractions) will be made available and tailored
to the needs of the particular guest.
Business services range from room phones that are Internet jack ready and telephone
answering message service for each room to on-site fax services and meeting room space
(lounge sitting area and cabaret room). Seven Elms Resort will aim to attract business
guests and their partners needing to hold planning or strategy sessions away from the
office in a new and comfortable surrounding, in order to even out revenues throughout
the week.
Distribution Strategy
Unlike products that are produced, then distributed, and sold, hotel and lounge services
are produced and consumed simultaneously in a real-time environment. Thus,
distribution issues center on making the services available in a convenient manner to
the greatest number of potential guests. Seven Elms Resort will maintain a front office
staff member throughout the night so guests are able to get answers to any question or
service when they need it. This flexibility is especially attractive to the business traveler.
Clients will be able to contact Seven Elms Resort by telephone, fax, and e-mail.
Pricing Strategy
Rooms per night fees have been developed. The fee schedule takes into account seasonal
rates that are common in the area. For businesses and other large group functions,
pricing can be discounted depending upon the number of rooms reserved.
Example lounge pricing and grill food offerings are also noted.
Example fees:
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Room Fees
Winter Rates (November through April):
Regular Rooms $109.00
Suites $149.00
Summer Rates (May through October):
Regular Rooms $129.00
Suites $179.00
(Includes Continental Breakfast, use of indoor and outdoor pools, and exercise equipment
room.)
Fax Service (per page, outgoing) $0.75
Telephone Rates (set at going company rate)
Hotel Safe Storage Fee (per day) $2.50
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Liquor and Drink Fees
(Sandwiches include fries, onion rings or chips.)
"Top Shelf" Brands $4.75 - $7.50
Specialty Drinks $4.50 - $5.75
Well Drinks $4.25
Import Beers & Wine $3.75
Domestic Beers $3.25
Draft Beer $2.75
Juices, Bottled Water, and Soft Drinks $2.50
Grill Menu
Rib-Eye Steak Sandwich $7.99
Chicken Breast Sandwich $5.99
Hamburger (1/4 pound) $5.99
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Liquor and Drink Fees
Fried Cod Fish Sandwich $5.99
Salads $4.99 - $8.99
Chicken Tenders $4.99 - $6.99
Cheese Sticks (with sauce) $4.99
Frozen Pizza $6.99 - $8.99
Service and Support Philosophy
By giving careful consideration to customer responsiveness, Seven Elms Resort's goal
will be to meet and exceed every service expectation of its hotel and lounge services. Our
guests can expect quality service and a total quality management (TQM) philosophy
throughout all levels of the staff.
PROMOTION STRATEGY
Promotion strategies will vary depending on the target market segments. Given theimportance of word-of-mouth referrals among all market segments when choosing a
"getaway" hotel or small business meeting location, our efforts are designed to create
awareness and build referrals. A cost-effective campaignfocused on direct marketing,
publicity, our frequent guest reward program, and advertisingis being proposed.
Marketing Plan
New Business Segment
A direct marketing (direct mail) package consisting of a tri-fold brochure, letter of
introduction, and reply card will be sent to a list of potential guests. This list can be
obtained from International Business Lists, Inc. (Chicago, IL) and is compiled from tax
records (by upper-income geographical areas, Secretary of State incorporation
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registrations, business license applications, and announcements from newspaper
clippings).
The brochure and letter introduces Seven Elms Resort, stresses the importance of
having a good time in comfortable surroundings, provides information on our resort
services, and describes what sets us apart from other area hotel and lounge properties.
The initial mailing may contain a promotional offer: the opportunity to receive a 10%
discount on the first night's room rate.
Approximately two months after the mailing, an additional letter shall be sent. The
potential guest would be asked to address any questions and the follow-up would
remind them to drop in for a property tour on their next trip to Lake Michigan.
Additionally, new businesses will be targeted and sent information.
The cycle would repeat itself with new target communities and select businesses and
would continue through the first year. After that, additional mailings would be
conducted, as needed, based upon occupancy goals.
Seven Elms Resort, Inc. will also consider developing a one-page newsletter to be mailed
quarterly to past guests and prospects in the database. The newsletter can be used to
update clients on hotel and lounge and area-related developments, but also serves as areminder of what sets Seven Elms Resort apart. The newsletter can be produced in-
house and for the cost of paper and a stamp creates a lot of goodwill among guests and
business prospects.
Publicity and Public Relations
A news release will be sent to area newspapers and magazines announcing the launch of
Seven Elms Resort, Inc. and lounge. Area talent searches will be conducted to secureweekend cabaret room entertainment.
Steve Blackburn will join the Benzie County Chamber of Commerce as a means of
networking in the community. He also may make himself available for speaking
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engagements at other community or civic organizations as a low-cost way of increasing
awareness and building goodwill in the community.
Guest Reward Programs
For present guests: "Stay 6 nights and get the seventh night for free" promotion and as a
means of building business by word-of-mouth, present customers should be encouraged
and rewarded for referring future guests. This can be accomplished by offering a small
"rebate" (5% or 10% rebate on first night stay) to current customers who successfully
refer a new guest.
Advertising
Advertising is utilized primarily to attract new guests and serves to build awareness and
name recognition of the resort in general, which is important for word-of-mouth
referrals ("Oh yes, I've seen that resort's ads before.")
Periodic advertising in target market area newspapers will afford Seven Elms Resort, Inc.name recognition benefits. From quarter page ads announcing its entertainment line-up
to business card-sized logo ads.
Yellow Pages
Ameritech PagesPlus, Greater Benzie County Telephone Directory.Research indicated that new visitors or people who don't have many personal
acquaintances to ask about hotel and lounge services will look to the Yellow Pages to
establish a list of potential hotel and lounge services to call. Even a small 2" 2" boxed
ad can create awareness and attract the desired target client, above and beyond the
ability of a simple listing. Ameritech Yellow Pages covers the relevant market area,
delivering over 30,000 copies to residents and business. Midwest Directories covers
Greater Benzie County but is considered a second-tier directory to Ameritech.
Telephone Book Cover. A business card-like ad on the plastic cover which is placed overany telephone book enables the business name/logo to be seen virtually 24 hours a day,
365 days a year. Covers are distributed bi-annually free of charge to residents and
businesses in Benzie County.
Restaurant PlacematsOpportunities exist for a business card-like ad to be placed onthe paper placemats used in area restaurants (shelf-life of the ad is about six months), or
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for special (holiday) events taking place at a restaurant (1-off opportunities). An example
would be getting on the area restaurant placemats (about 9,000 in six months), or
getting on the special Lions Club "St. Patrick's Day" dinner placemats at the Village
Restaurant (about 1,000 placemats for that event). Placemat advertising will reach area
residents as well as area visitors/tourists staying at other places.
Additional places to post flyers/business cards or for a business card ad include bulletinboards in public buildings (grocery stores, senior centers), and playbills for local theater
groups.
Example Promotion Budget - 1999 (Amounts Included in Start-Up Funds)
Resort brochure (2-color, 1,000 quantity, high quality paper)$750
Reply card (2-color, 500 quantity, card stock) $250
Lists (new businesses, home-based businesses) $750
Postage (mailing 450 pieces) $500
Restaurant placemats (5 restaurants/10 events) $500
Newspaper advertising $5,000
Yellow Pages $2,000
Advertising specialties (give-away) $250
Total for 1999 $10,000
Evaluation & Control Strategies
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Objectives have been established for Seven Elms Resort so that actual performance can
be measured. Thus, at the end of its first year, Seven Elms Resort should have:
$772,000 in total revenue Anticipate 57% occupancy rating
Each subsequent year new objectives will be set for these benchmarks and actual
performance will be measured against them. If actual performance falls short of
objectives, investigation will be made into the cause, and plans will be adjusted
accordingly.
In addition, it is recommended that Seven Elms Resort keep track of the source of all
new guests ("Where did you hear of us?") in order to measure the effectiveness of eachtype of promotion. Each subsequent year's budget should adjust spending toward the
types of promotion that reach the most new clients.
Customer satisfaction is most directly reflected in the year-to-year customer retention
percentage. All lost customers should be investigated to find out why they left. A
customer satisfaction survey may be considered after three to four years in the business.
FINANCIAL PLAN
Here is the Project Funding Summary for Seven Elms Resort:
Project Funding Summary
Building and Improvements Cost $881,000
Fixtures, Build-Out and Furniture$353,739
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Project Funding Summary
Developmental Start-Up Expense $116,000
Five Months Working Capital $49,261
Total $1,400,000
Phase 1 Funding Amounts Sought
Developmental costs for the start-up of this new hotel and lounge services company are
listed above. These schedules also listed in the Ten Year Proforma.
The following schedule highlights the anticipated developmental costs:
Classification: Cost
Liquor License $71,000
Architect Fees $7,500
Accounting $1,500
Marketing, PR & Advertising $10,000
Engineering & Permitting $5,000
Office Expense $2,000
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Classification: Cost
Founders Draw (Gen. Contractor)$16,000
Legal $3,000
Total $116,000
The development of Seven Elms Resort, Inc. will require the full-time talents of Steve
Blackburn. Phase II growth amounts will be developed and sought at a later date, based
upon needs to be determined at that time.
Financial Plan Assumptions
The following assumptions will be incorporated into Seven Elms Resort, Inc. proforma
statements.
All operating costs are based on Seven Elms Resort, Inc. management research of similaroperating companies.
Automated informational and bar control systems will reduce Seven Elms Resort, Inc.staff requirements.
Developmental start-up costs are amortized over a five-year period. Room Occupancy Rate at 57%, G & A overhead and operations costs are calculated on an
annual basis.
Property manager and founder's salary is based on a fixed salary expense basis. All fixed and variable labor costs should rise annually at 2.5% per year. All revenues are figured to rise annually at five percent. Fixed annual, administrative,
and office expenses rise at an annual rate of one half of one percent.
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