Business Plans for Hotels, Motels, and Bed and Breakfasts
If you are writing a business plan to seek funding or simply submitting the plan to receive approval for your commercial lease, here are 5 items you want to include in your business plan.
1. Total Potential Occupancy - If you multiply the total number of rooms by 365 days, you have calculated the total potential occupancy for your location. Let's take a bed and breakfast. If you have 6 rooms, then your total potential occupancy (or total nights you have to sell) are 2,190 nights. It's important to start with this number because you cannot oversell your "inventory." You cannot sell the same room to two different people in the same night. Or if you do oversell your "inventory," then you'll issue refunds to the individual who you cannot accommodate. Understanding your total potential occupancy is important to your financial forecast. Lenders will complete this calculation to ensure your revenue forecasts are reasonable. Therefore, I suggest you start with this number.
2. Total Occupancy Rate - Although you have 2,190 "nights" to sell, you won't sell them all. It's pretty much impossible. You'll have an on season and an off season. Or you'll have a certain amount of vacancies each year. Most hotels run on a 60%-80% occupancy. I've heard of seasonal B&Bs running on a 40% occupancy (and still running profitably). It's important to create realistic assumptions with regards to your occupancy rate.
3. Market Opportunity - How many people could potentially spend the evening at your hotel? How did you calculate that number? Is your hotel near a major interstate? Tourist attraction? Vacation spot? Fortune 500 company that has lots of visitors? The U.S. Capitol? Be honest about the true market opportunity. As you're writing your plan, you want to ask yourself if you'll truly hit your occupancy goals.
4. Marketing Plan - Marketing describes how you "get and keep customers." When hotels consider marketing plans, it's not enough to depend on Booking.com. A comprehensive marketing plan including social media, Google keywords, positive reviews, and returning visitors must be developed and executed. The best marketing plans are always simple to execute; however, they're repetitive. It's about doing the same things day in and day out without fail for years and years.
- Average Spend per Customer/Room - Whether a family is vacationing (leisure travel) or a business executive is coming for a meeting (business travel), the average spend per customer or per room should be calculated. Does the guest just purchase the room or does he also buy something from the mini-bar? Does he order room service? Does he pay for a movie? All of those little items add up.
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