How to Start a Hotel | From Dreams to Reality

You may think that starting a hotel is an easy business. But in reality, it is not. You must know about the industry, competition and what you will offer to stand out from them. So, if you are looking for how to start a hotel, you must have strong hospitality skills.

 

If you have that, follow the step-by-step process below and witness your dream of starting a hotel come to reality. 

 

Step 1 - Research the Hotel Industry

 

The Indian hospitality industry is growing at a CAGR of 12.02% in FY 2022-2026 and is expected to reach US $10.08 Billion by 2026.

 

The factors that are mainly increasing the industry growth are: 

 

• International tourism
• Growing domestic travel 
• Increase in customers spending power on weekend getaways and vacations

 

Tips to Research the Hotel Industry 

 

1. Find out what your competitors are doing: What are their prices, amenities, and promotions? What are their strengths and weaknesses? What do customers think about them?
2. Determine what people want: Learn what type of amenities guests want in hotels today, as well as how much they're willing to spend for these services.
3. Look at trends: Keep an eye on the latest trends in the industry so that you can stay ahead of the curve and be prepared for changes that could affect your business.
4. Understand customer preferences: Figure out who your target audience is so that you can design your services accordingly and increase customer satisfaction.

 

Step 2 - Find a Good Location

 

Before you start looking for a location, it is important to have a clear idea of what you are looking for.

 

First, you need to decide on the type of hotel that you want to open. 

 

For example, if you want to open a resort-style hotel in an area with many tourists or vacationers, your best bet would be somewhere near a beach or other tourist attractions. 

 

If you want to open an upscale boutique hotel in an urban area, your best bet would be somewhere close to restaurants and nightlife.

 

The next step is deciding on what kind of location will suit your needs best. For example, the minimum space required to start a hotel is 4000 sq ft - 5000 sq ft.

 

If you are looking for something with lots of space, perhaps an industrial area would work well for you. 

 

But if space is not an issue and all that matters is convenience and accessibility, then perhaps living right in the center of town would be best.

 

Step 3 - Hire an Architect

 

The next step is hiring an architect. 

 

Many people start their hotels with a limited budget and think that hiring an architect is a luxury. 

 

But this is not the case, as architects are the ones who will design your hotel from scratch. 

 

They will also help you save money by designing your building in such a way that it can be extended in the future without having to demolish it and start again.

 

The architect's job is to bring your vision to life. 

 

They will work on every aspect of the hotel from the lobby to the outside facade, from guest rooms to restaurants, pools, gardens and more. And they will do so with creativity and expertise in mind at all times.

 

For this purpose, you can either look for the local architects in your city or you can find them on Spacerace.

 

Step 4 - Register your Hotel 

 

Registering your hotel will not only protect your ownership but will also help you get financing and find tenants.

 

A registered property is more attractive to potential investors, as they know that the property is a legitimate investment.

 

Thus, you can register your hotel as follows:

 

• Private Limited Company Registration 
• One Person Company
• Limited Liability Partnership
• Sole Proprietorship
• Partnership Firm.

 

The choice of structure will depend on various factors. To make the right choice, get in touch with our expert by filling out the form on your right.

 

Step 5 - Get Licenses

 

To start a hotel, you must have all the mandatory licenses specified by the government. 

 

It will ensure that your hotel operates legally and within regulations set by the government.

 

Here is a list of licenses to start a hotel in India:

 

• GST Registration (if required)
• Shop and Establishment Act Registration
• Building Permit
• Fire Safety License
• NOC from Local Police Station
• Bar License (if serving alcohol)

 

There may also be some other license that differs on the basis of the service you provide or on the basis of your local regulations.

 

For example, you need an FSSAI license if you are also preparing and serving food in your hotel. But that won't be required if you are collaborating with other food outlets.

 

Step 6 - Find out Financing Options

 

One of the most important things to do before starting any business is to make sure that you have enough money in your account to start it. 

 

It is one of the best ways to ensure that you will not run out of money during the first few months of your business. 

 

Also, it will help you avoid costly mistakes like overspending on unnecessary expenses or buying more inventory than you need.

 

Average Cost of Starting a Hotel in India

 

The cost of starting a hotel in India varies depending on the location, the size of the property and other factors. 

 

The average cost of starting a hotel in India is:

 

• Rs. 80 Lacs - Rs. 5 Crores (Small Hotel with 20 - 80 Rooms)
• Rs. 10 Crores - Rs. 50 Crores (Medium Hotel with 100 - 150 Rooms)
• Rs. 100 Crores - Rs. 200 Crores (Luxury Hotel with 200 - 500 Rooms)

 

Moreover, the amenities you want for your hotel will also affect the cost of starting a hotel in India.

 

Step 7 - Hire Contractor and Start Construction

 

The first thing that you need to do is to find out the best contractor you need for the project. 

 

For this purpose, you can do the following:

 

• Consulting local real estate agents 
• Ask your architect for a recommendation.
• Find out the contractors of the hotels in your area

 

After that, you can choose them on the basis of past projects, reviews, and experience in the field.

 

The next step would be to decide what type of contract you want with this contractor. 

 

There are two types: fixed or hourly rates. 

 

Fixed rates are when the contractor is paid a set amount for each day that they work on the project, whereas hourly rates are when the contractor is paid per hour worked on the project.

 

Once you have appointed a contractor, start with the construction and meanwhile follow the next step.

 

Step 8 - Hire an Interior Designer

 

The interior design of the hotel should be a reflection of the services and hospitality offered by it. 

 

It needs to be aesthetically pleasing, comfortable, and functional. 

 

A good interior designer can help you in achieving this goal.

 

For this purpose, first, you will have to select a theme for your hotel.

 

You can ask your designer and architect to suggest a few themes and look at their portfolios. Also, you can take theme suggestions from Pinterest.

 

Here are a few famous hotel themes in India:

 

• Heritage 
• Vintage
• Modern
• Luxury
• Cottages
• Wooden 

 

Going with a particular theme will help you with attracting more customers. As people now willingly spend more on hotels and comfort when they are planning a trip.

 

Moreover, it will also help you with coming up with more effective marketing strategies to approach your potential customers.

 

Step 9 - Collaborate with Kitchens and Chefs

 

The kitchen is the heart of any hotel. Kitchens are where all the food is cooked, and chefs are responsible for the quality and taste of the dishes.

 

The success of a hotel largely depends on its kitchens and chefs. 

 

The chef sets the tone for a restaurant, which in turn influences how guests perceive both the food and service, as well as how they feel about their overall experience at that location.

 

You can hire these chefs from:

 

• Cooking academies
• Job Boards like Naukri.com
• Recruitment agencies
• Reference from family, friends or social sites.

 

For this purpose, you can ask them to prepare two similar dishes and one of their own speciality. 

 

After that, judge them on the basis of taste, ingredients, cooking time and presentation. 

 

Step 10 - Hire Hotel Staff and Security

 

A hotel must have the right staff and security. 

 

Here are some tips on how to find the right people for these positions.

 

• Get experience: One of the best ways to hire qualified staff is to hire people who already have experience in the hospitality industry. This way they will know what it takes to be a good hotel staff member or security guard.
• Conduct interviews: The next step is conducting interviews with potential employees. You must ask questions that will help you figure out if they are a good fit for your hotel. You should also ask about their availability and salary expectations so you can offer them an appropriate salary package.
• Background check: Once you’ve found someone who seems like a good fit, it’s important to conduct background checks on them to make sure they don’t have any criminal records or other issues that could potentially harm your business.

 

Step 11 - Set a Price List

 

Setting a price list is an important task when starting a hotel. But, it is also one of the most difficult.

 

The prices of the room will depend on the factors such as:

 

• How many people can it accommodate?
• What are the facilities in the hotel and room (For example, WiFi, TV, Geyser, etc.)?
• What is the view from the room?
• Where is the hotel located?
• Hotel's overall cleanliness.

 

The prices should be competitive, but not too low.

 

On the basis of the above factors, divide the room into different categories.

 

For example, a standard room might cost Rs.1000 per night, while a suite might cost Rs.10,000 per night.

 

The next step is to decide what services will be offered at each price point and how much they will cost (e.g., in-room breakfast at additional Rs 100).

 

Step 12 - Advertise your Hotel

 

Depending on the type of hotel you are running, you will have different ways of advertising it.

 

For example, a five star hotel will have a different way of advertising than a budget hotel.

 

There are many ways in which you can advertise your hotel in India, but the most effective ones are:

 

• Creating a website for your business and marketing it on Google and other search engines.
• Getting listed on travel websites like Tripadvisor.
• Advertising through social media sites such as Facebook and Twitter.
• Creating an online presence with blogs about your business or industry.
• Publishing articles about your business or industry online.
• Create an email list for customers to subscribe to receive updates from the company.

 

Factors that Make a Hotel Successful

 

• Location

 

The location of the hotel plays a very vital role in its success. Thus, when you are looking for a location to start a hotel, consider the view, landscape, mobility, mobile networks and land cost. 

 

Along with it, find out if there are other hotels in the area. Reject the location if it is super crowded with competitors.

 

• Amenities

 

Hotels are not just a place to sleep, they are also a place for entertainment and relaxation. 

 

To attract more customers, hotels need to provide amenities that will keep the customer feeling relaxed and entertained.

 

Amenities can be anything from a pool or spa to a fitness center or game room. 

 

The type of amenities offered will depend on the type of clientele that the hotel is trying to attract.

 

• Cleanliness

 

A clean hotel creates a perception of quality and care. It also provides an environment that is conducive to relaxation and comfort. 

 

This in turn leads to higher customer satisfaction, lower turnover rates, and increased revenue.

 

A clean hotel is more likely to attract more customers and keep them coming back.

 

• Behavior

 

Hotels have to be mindful of how they are treating their guests.

 

The hotel staff is the face of the company, and their behavior reflects on the company's image. 

 

The way they talk to guests and their attitude towards them can make or break a guest's experience.

 

• Safety

 

A hotel’s guests will be more inclined to stay at a hotel that they feel safe in.

 

Hotels should make sure that they are maintaining their safety standards and providing security measures to ensure the safety of their guests. 

 

Also, they must have emergency plans in place and provide first aid kits and emergency exits.