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written by | October 11, 2021

Learn About Starting a Hotel Business in India

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Opening a hotel goes far beyond just having multiple rooms in a building and charging customers to check-in. The hotel establishment demands a lot of planning, research and investment. If you manage to give a heavenly feel to the tired travellers who visit your hotel, you'll soon notice great profits. You need to ensure that the guests should feel comfortable and face no trouble in the middle of their relaxation. If you feel that you can offer great hospitality, it's your time to understand how to start a hotel business in India and begin the necessary process. 

This guide will give you a solid idea about the ins/outs, vital documentation, investment and everything you should know before you step into the hotel business.

Did You Know?

In India, there were 2.5 million hotel rooms in around 100,000 hotels in 2018. Generally, the domestic guests market is around 3 times larger than the international ones. So, as a hotel owner, you don't need to rely just on the international guests. You can earn very well through domestic guests as well.

Understanding the Investment Model

The most important thing to do in the hotel business is to deeply understand the investment model before establishing it. Additionally, many aspects will affect the investment needed in the hotel business. It includes the size, type, location and nature of the company, the government regulations, permits, required licences, etc. 

Based on the amount of money that you’ll have to invest, the class of the hotel must be chosen wisely. In addition, if you require financial assistance, there is always an alternative option available in terms of loan facilities. Many loans are available by the leading banking institutions in India that you can get pretty easily if you have a proper business plan.

Also Read: Everything about Homestay Business

How to Start a Hotel Business in India?

Type and Location

Find the most visited places in India. Lists are available on business and travel websites. Write down the locations frequented all year round by travellers or professionals. If you are already established in an area, you could think about moving to a more popular place to increase the number of visitors and consequently increase revenue. Opening a successful hotel business in India is more difficult if you are in a location where there is an increase in demand for seasonal products.

After you have decided on the location, you can decide on the kind of hotel and amenities you want to include in it. For instance, business travellers may require Wi-Fi connectivity and workstations with computers/printers. Tourists from abroad might appreciate taxi and tour guide services offered with lodging. Making these arrangements will increase the amount that you'll need to cover your day-to-day operations.

Hotel Logistics

To make your hotel business successful, one essential element you need to carefully consider is the right infrastructure and transport services to the hotel premises. It must be simple for guests to get to the hotel in a short time. The hotel could be close to the railway station, bus station, shopping malls and airports. The most appealing thing is that more customers will be attracted to your establishment in such locations, resulting in huge income.

Hotel Area Plan

The size of the hotel depends on your planning. If you're looking to construct a moderate-sized hotel with between 80 and 100 rooms, then the estimated space required is 10000 to 50000 square feet. For a 5-star hotel with greater than 100 rooms, you could go for about 100,000 sq ft.

Hotel Layout Plan

To plan the design for your establishment, get help from professional interior designers who will offer you attractive and appealing plans with an estimated budget. They can assist you in designing stunning layouts that attract more guests. If you want to connect with professional interior designers, you can search the internet or browse for advertisements.

Financing Your Hotel

You can get hotel business loans from numerous public and state-owned banks if financial aid is needed. In general, 30% of the capital needs to be set up by you, while the remaining 70% will be made available directly by the banks through loans. It is essential to establish the hotel budget before contacting the bank. Banks will assess your creditworthiness and your liabilities before offering the required loan amount. For more information, you can read about the types of loans to know about financing your hotel in a better way.

Also Read: Simple Yet Effective Tips To Open A Travel Agency

Design Your Hotel’s Strategic Goals

Once you have a clear understanding of the needs of your market, you'll need to develop an effective solution to address that gap. Your unique blend of hotel concept, marketing service, location, amenities and decor can make you stand out from the rest and gain significant profit if you plan it strategically.

  • Establishing a proper revenue management system: The key to success is establishing a solid revenue management system for managing the overall revenue.
  • Measurement and improvement plan for satisfying your customers: Consider working with a consultancy firm to avoid the typical hurdles that new hotel owners encounter. Also, develop a measurement and improvement plan to satisfy your customers in consultation with your chosen consultancy.
  • Establishing a solid understanding of the market: Staying sure about the requirements of your market and intended audience and your own business requirements assist you in determining your objectives. You can be sure that everything you do is beneficial to your customers and your business's bottom line.

Hotel Licence

When you've decided to begin your hotel first, it is time to move forward with the hotel licence. If you're planning to establish an alcohol bar in the hotel, you require a permit. Also, you need to obtain a Pollution Control Board licence. 

If you're also planning to host events within the hotel, a separate licence is required. You'll need valid verification from the concerned authorities regarding the safety of elevators, fire protection, etc. Below are the necessary licences to run hotels in India.

  • Eating House Licence: you can obtain this licence through the Licensing Police Commissioners of your city.
  • Food Safety Licence: You will obtain this particular licence from the food safety and security authority of India (FSSAI).
  • Fire Department Licence: This is available through any fire department in your region.
  • Health/Trade Licence: The licence is available through the local civil authority in your area.
  • Liquor Licence: If you're looking to open a bar or liquor establishment within the hotel, you will require this licence from the local excise commissioner of the city you plan to operate in

Hire and Train Your Hotel Team

Hotel business in India can be successful only if the employees play a role in its success. When you recruit top employees from all levels, you'll be able to offer quality service to your guests and be an industry leader. Many hotels choose to employ executive and departmental positions initially, which sets the guidelines and tone. The leaders will then determine the goals they'd like to see in their teams and the number of employees they require. Every team must determine the roles and abilities they're looking for in an employee and establish an action plan to find great new employees as well.

Check that the application and interview process is simple for applicants to avoid unnecessary friction. Find ways to promote your mission, values and the way you approach this business in all stages of hiring. This will make it easier to find applicants aligned with your goals.

Conclusion

With these insights, you already know how to open a hotel in India and the challenges that follow. It's a tough process, and it needs a deep dedication. If you're interested in offering hospitality, and if you're confident enough with your resource availability, you shouldn't hesitate to proceed further.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: How to start a small hotel business in India?

Ans:

If you've already decided on opening a hotel on a small scale, follow these steps:

  • Conduct market research related to the Indian hotel industry
  • Decide the type and location of the hotel business.
  • Get the necessary funding.
  • Complete all vital documentation
  • Arrange logistics services and area required
  • Plan your hotel's layout
  • Hire qualified staff
  • Get star ratings and promotion for your hotel business.

Q: How big is the hotel industry in India?

Ans:

The Indian hotel industry is forecasted to hit the value of ₹1,210.87  billion by the end of 2023.

Q: What is the cost of starting a hotel in India?

Ans:

It can be very challenging to figure out the exact cost of starting a hotel in India. It depends upon the size of the hotel, what amenities you'll offer, what the rate of land in your city/region and so on. You can consult an expert builder for getting a rough estimation.

Q: How to open a hotel in India with less funding?

Ans:

If there's a lack of funding, you can either approach your nearby banks for a loan or open a hotel business in India in partnership with a tested person.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.