How to Start a Hotel in India with Limited Resources

The Indian hospitality industry is projected to grow at a CAGR of 7.3% during the period 2017-2025. 

 

The growth in the industry is mainly driven by the increasing number of international tourists, growing domestic travel and increased spending power of consumers.

 

In fact, the Indian hospitality industry has been ranked as the seventh most competitive in the Asia Pacific, after Taiwan, Hong Kong and Singapore.

 

In India, there are around 4500 hotels with an average occupancy rate of 60%. 

 

However, the hotel industry is highly fragmented, with small players accounting for more than 75% of the total number of hotels in India.

 

Steps to Start a Hotel in India

 

Step 1 - Find an Appropriate Location for your Hotel

Step 2 - Register your Hotel

Step 3 - Organize the Funds and Acquire Investment

Step 4 - Decide on the Design and Layout of your Hotel

Step 5 - Identify the Niche and Build Marketing Strategies

Step 6 - Hire Staff Members 

Step 7 - Tie up with the Kitchens

 

Step 1 - Find an Appropriate Location for your Hotel

 

The first step to starting a hotel in India is to find an appropriate location. 

 

It is the most important decision you will make. 

 

This is why you have to find out whether the location is accessible by public transport. 

 

If it isn't, then it's not worth investing in such a place because people will not be able to reach the property without their own vehicles. 

 

The next thing to consider is whether there are enough amenities and services around this location, like shopping malls, general stores, local markets and hospitals. 

 

If these are not present at all then tourists will find it hard to even live at your hotel premises while they're visiting India. 

 

The last thing that you have to do before finalizing any given location for your hotel is check out its proximity to other hotels or tourist attractions like theme parks or museums. 

 

It is best if these locations are nearby so that visitors can easily spend their time in these places.

 

Also, it is best to consider the following factors before finalizing a location:

 

• Size of the land and number of floors. 
• Cost of land
• Cost of construction 
• Cost of labor in that area
• Distance from the airport, railway station, and any other tourism attractions or amenities that may be needed to attract guests.

 

It can be challenging to find the perfect spot for a hotel in India, but there is always a hidden gem somewhere in the city or on the outskirts.

 

Step 2 - Register your Hotel

 

The process of registering the hotel with the government is not difficult, but it does take time.

 

The first step is to choose a business structure. For which you can go for:

 

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

 

The first three business structures on the list are best if you have any plans to expand and grow your hotel chain.  

 

However, if you are sufficient with just one property, go for a Sole Proprietorship or Partnership (in case you have a partner).

 

For this purpose, get in touch with an expert by filling out the form on your right. They will guide you through all the necessary paperwork and do the registration on your behalf as well.

 

Step 3 - Organize the Funds and Acquire Investment

 

The minimum investment required to start a hotel in India is 1 Crore. 

 

It includes the cost of land, construction, and other expenses. 

 

In addition to this, there are many costs that one needs to consider before starting a hotel in India such as:

 

• Land acquisition
• Construction
• Furniture
• Equipment
• Advertisement

 

It is not necessary to spend a lot of money to start a hotel. 

 

However, you need to have enough funds for the initial investment, which is around Rs. 20 lacs. 

 

The amount may vary depending on the location, size and facilities offered in the hotel.

 

For this purpose, you can consider the following sources:

 

• Business Loan
• Venture Capital
• Angel Investors
• Partnership Capital
• SMERGERS

 

Step 4 - Decide on the Design and Layout of your Hotel

 

This step is about deciding on the design and layout of your hotel. 

 

You must decide what type of hotel you want to build and the style that you want to use.

 

It will also determine how your guests feel when they walk in. 

 

Moreover, it can affect the price of your rooms, as some styles are more expensive than others.

 

Certain factors need to be considered while designing the layout of a hotel. These include:

 

• Location and size of the property
• Level of service provided by the property
• Target market for which the property is being designed
• Budget available for design and construction

 

You can go for a vintage design or a region-specific architecture. Or you can go for a modern or comfy-looking interior. 

 

The decision is completely yours, but make sure that you are one of a kind in the locality.

 

Once everything is sorted, start the construction and interior. 

 

Along with it, continue with the following steps while your hotel is under construction.

 

Step 5 - Identify the Niche and Build Marketing Strategies

 

Identifying the niche for your hotel will help you to determine what type of marketing strategies to employ. 

 

So, if you are a luxury hotel, you may want to focus on marketing through social media platforms like Instagram or Facebook. 

 

If you are a budget hotel, then online travel agents might be a better option for you.

 

You need to find out what they want and how you can provide it before coming up with a marketing strategy.

 

After that, use that info to make an effective strategy. 

 

As a result, it will also help you with targeting the right people through the right sources in the right places.

 

Next, create a marketing plan that will guide the execution of all the marketing strategies and pick your marketing channels. 

 

For example, if you're launching an email campaign, then you would need to decide on what email service provider you want to use and how often you want to send out emails.

 

Lastly, optimize for conversions. This means that once the strategy has been executed, it's time to evaluate if it was successful or not.

 

Step 6 - Hire Staff Members 

 

The next step is hiring. The number of people you require will depend on how big your hotel is and your occupancy rate.

 

For a small hotel with 10 - 15 rooms, you will require only 10 people including a manager, receptionist, housekeeping staff, waiter, cleaners and security.

 

Likewise, the number of people will increase in each department as per requirement.

 

Unless you are a five-star hotel, the minimum salaries would be:

 

• Housekeeping Staff - Rs. 12,000 to Rs. 15,000 per month
• Manager - Rs. 20,000 to Rs. 25,000 per month
• Receptionist - Rs. 13,000 to Rs. 18,000 per month
• Security Guard - Rs. 8,000 - Rs. 10,000 per month

 

Step 7 - Tie up with the Kitchens

 

This is the last step for starting a hotel in India, but it is equally crucial and has a great impact on retaining your customers.

 

Thus, choose the kitchens and cooks that can serve your customers with authentic and quality menu items and the most flexible times.