how to start a hotel business

7/30/2019 How to Start a Hotel Business

1/25

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.


2/25

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


3/25

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).


4/25

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.


5/25

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.


6/25

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,


7/25

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


8/25

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:


9/25

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.


10/25

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


11/25

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.


12/25

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


13/25

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.


14/25

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.


15/25

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


16/25

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:


17/25

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


18/25

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


19/25

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


20/25

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


21/25

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


22/25

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


23/25

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


24/25

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


25/25

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.

Read more:http://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oE
http://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oEhttp://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oEhttp://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oEhttp://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oEhttp://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oEhttp://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-07/Hotel-Resort.html#b#ixzz2TwJxB8oE

how to start a hotel business

Documents