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hey guys this is Kyle at projection hub and today I'm going to show you how to create a business plan for a hotel that is likely to get you approved for financing I guess maybe I can't guarantee that but the purpose purpose of this video is I'm going to show you five key points that your lender is going to look at and can really give you the edge when they're trying to make a decision on whether or not they're going to approve that or even an investor if they're trying to choose to make an investment and I'm going to do that is based on the experience of app projection hub we've helped over 50 000 businesses create Financial projections for you know their startups for their loan applications for their business fans from the pitch decks including many hotels boutique hotels airbnbs all of them in that category and actually before my time with projection hub I was a small business lender for about seven years and reviewed hundreds if not thousands of business plans and applications to help businesses prepare for you know getting their loan approved and giving them feedback on that so I'm familiar with that with that process so what we're gonna do in this video is I'm going to use this free Hotel business plan template you can get this down in the description of the video totally free no strings attached and I'm going to use this as a guide I'm going to walk through this I'm not going to write the business plan for you it's pre-filled out with like a fictitious Hotel example and I'm I'm going to kind of cover the structure of the business plan and as I'm going to go through it there's going to be those five key points I'm going to stop and I'm going to give some additional detail and then some examples of how you could do that section in your business plan to hopefully increase the likelihood that you would be approved for funding or you know convince an investor to come on board for you so if any point you like this video please give it a thumbs up that really helps us and what we're doing here at projection hub also consider subscribing to the channel if you want more content of course not all of our content is about hotels but just about managing businesses in general and your finances around that and growing your business and so without further Ado let's go ahead and jump in okay so why is your business plan necessary or important probably obvious to you but in an industry like hotels and you know kind of hospitality industry the purpose of your business plan isn't to educate the lender or the investor on what the industry is it's obviously it's been around for a while it's pretty clear but the purpose of the business plan is to focus on demonstrating your specific plan for Success you know so it's not just describing what it is that you're doing it's demonstrating the research that you're doing the ideas that you have the numbers that you're you're planning to hit it's a lot more about the specifics of not just trying to predict the future but saying this is what I plan to do and I believe it's going to reach this outcome and so you know as I kind of start to scroll through this initially you're going to see here in this table of contents it's not super long this is just a free template of course so you're going to see you know headings and subheadings and then each subheading is going to have a brief description of what should be contained in that subheading and then a one to two cents example for that fictitious Seaside Crest in Key West Florida is what we're going to be using our example so there's gonna be several sections in this business plan where your real example should contain more content than this does or maybe even this section section that you think is pertinent to add in and so your the length of your business plan is probably going to fluctuate but I want to encourage you that you know contrary to popular belief you don't have to have a 50 page business plan 100 page business plan for it to be good I actually think that the opposite is more true when I was a lender people would hand us these really long business plans and that is a lot of work you know it's your life work maybe to put into this business plan but your lender whoever's reviewing it has other things to be doing too and so that means they're gonna end up skimming a lot of that right they're going to try to pull out highlights and that increases the chances of them missing some really important details that might be strengths in your hotel's business plan so jam pack your business plan with the really important details and try to keep it in that 15 20 page range now if you need to create a 50-page business plan for you know your peace of mind to feel like you've covered all your bases and have a good plan do that as a good exercise for you but refine create a separate version where you refine that down to like 20 pages to hand that over to like the potential you know stakeholder in the business because you know that's just a higher concentrated version for them is greater success to you so with that being said let's start going through the structure of this business plan so initially we've got the executive summary and similar to that as a company description but the executive summary I want you to think about this as if it was a cover letter to a resume for like a job application so it's really going to be like a one-page summary of some of the quick highlights to kind of to introduce your business to whoever is reading it so obviously the overview is going to be things like what's the name where is it located a quick description of you know what makes it special what are your goals you can have mission statement that kind of stuff but you know today it's just like a hotel it's not you know doing anything super groundbreaking some people like to include a little section that's like a financial highlight so maybe that's like what the total investment cost is going to be the startup costs the sources you are planning to secure that funding for from maybe when you what is your target occupancy rate some of that kind of stuff maybe highlights so you can choose to do that your executive summary and then your company description is kind of just more of like a it's an extension of that but more technical details so you're gonna have some some company history in here your your entities legal structure your target market that kind of stuff so these these first two sections are I don't want to call them make or break it because they can break your business plan if you don't include them but they're not going to make the difference probably in getting approved for something so but they're still important to have okay now moving on to the market analysis the market analysis is where we are basically basically going to try and outline that there is room in the market for our hotel and you know we're going to try to demonstrate that with with some real examples some real research and if it is a saturated Market there's not a ton of room in the market then we also need to demonstrate what are we bringing to the table that's different what opportunity are we recognizing is that you know poor reviews of the hotels in the area poor customer service in other hotels in the area maybe there's a different price point that has been occupied so that's what we kind of want to outline and this is going to bring us to key Point number one which is well market analysis but the key Point itself is when I mentioned specific examples of some research we could do anything we can provide you know any data to help reinforce what we're saying the state of the market is so you're going to have in here you know industry overview that doesn't mean like National or Global that means like local like where your competitive market is and and you're you know you can analyze some competitors who's your specific target market you know who's your target audience in the market opportunities and so maybe you know there's one way you can do this where that's pay for a market research study and do that whole you know nine yards and pay for that professionally to be done but maybe some examples of a free version of that is just do some research on your own and some boots on the ground research and so you can see some examples here like one would be conduct a survey amongst certain areas so if you're local to that you could kind of hustle and and do some surveys of people in the area and I think these two are actually pretty good examples example two would be make a list of all of the hotels in your area right you know this example is Key West Florida which maybe wasn't the best example because obviously that's a really big tourist destination and you may not be trying to start a hotel in that popular or touristy of a you could probably build any hotel in Key West Florida and it's probably not going to have a super difficult time you know getting people to show up but something you could do and there's a ton of hotels in Key West Florida but make a list in your area of all the hotels that you think you're competing with and then try to try to check their occupancy you can try and call them or go online and see if you can book it and just see see what their occupancy is like is that you know you can see what their Peak rate might be just do some general research and try to find out like how full are the hotels in your area is there any opportunity there and then one thing I really like to do is you can create a free Google AdWords account and then there's a tool here called the Keyword Planner and you can essentially put in keyword search phrases that people would search on Google and it's going to show you how often that search phrase is being searched and some Trends around and some other ideas of related keyword Search terms and so I just put in here hotels in Key West Florida hotels in Key West so you want to think about what your Target customer might be searching for when you want to show up for what they're searching for and so I have the location set to all locations right you could you could set this to maybe we just want it to be the United States right because I'm thinking okay anyone in the United States could be looking for a hotel now it could be anyone in the world but you get it you can kind of do whatever you want but a hotel you're a destination so you don't want to just know what people in your area are searching for and so here we can see you know one thing to point out is the seasonality of the nature right you can see all these search how they like kind of peak which is probably in the spring or early summer but what I'm more important what I'm more interested in here is this trend data so the three month change of zero percent and that's probably because you know we're we're kind of in the throes of summer so spring break is behind us and so we've reached the peak and we're coming back down you know to Earth so that's not super interesting to me what's interesting to me is the year of a year change so that kind of levels out the seasonality and what this is telling me is there's still an 83 percent year-over-year growth in hotels in Key West that to me is is indicating that there's a demand it's growing significantly for people looking for hotels there now this doesn't tell me if there's enough hotels there to support that that might be where you're checking in on occupancy occupancy rate of the hotels around you which ones you think you're going to compete price point what are their reviews like and you're just basically gonna you want to combine all this data to reinforce the fact that there's demand in the area there's four other hotels and you're same price point two of them have terrible reviews and they're all booking out you know a couple of months and have really low vacancy rates or something like that that is reinforcing your point that there's demand there for that so repeat that same practice for your Target location and that might give you some some supportive ideas and you can get idea for whatever other things people are searching for down here you know but they're all growing a lot in this area so that's an indicator that you know it's pretty high that you're probably going to have a good market share there okay jumping back into and include that stuff in your business plan that's what I mean by real examples of research versus just like we're gonna build it and people are going to show up you know you want to give some examples here okay next is the marketing sales strategy so we're going to highlight the products and services products and services so this will be your chance to kind of outline the type of Hotel you know how what what's your price skill going to be what kind of amenities are you going to offer again your pricing strategy how are you going to sell to them your distribution channels you're going to have a website you're going to have social media okay so all of those things are expected that's kind of like your minimum your minimum lift your minimum effort is to include these things now what you can do to set it apart is key Point number two which is customer acquisition demonstration so similar to market analysis we demonstrated research that the market exists same thing in key point two we can talk about what we're going to sell and maybe how we're going to sell it in a few different places but to really make it shine is specific examples or ideas of things we've done or we're planning to do to get those customers in the door that are more detailed than just we're gonna have a website right so we want to avoid the sentiment of build it and they will come we want to give some sort of assurances that we are hustling and doing what it takes to make sure that this is a success now a hotel in Key West Florida again maybe not the best example because you probably can't build it and people will come but just think about this for a hotel in any other place so let's think about a hotel is an industry where you know we have the word traction here which is very Tech word and that is related to Industries where maybe before launch or official launch you can do some things to get some momentum rolling right that might be like beta testers or you know pilot tests and all that kind of stuff where's the hotel that's kind of tricky to do because it's not cheap to acquire or build a hotel and you can't really do a lot of pre-revenue work before the building actually exists so people aren't going to book in advance and all of that stuff so some ideas of this might be okay again collaborate with local local travel agencies and form some Partnerships that's probably not going to happen pre-launch that is a good thing to do I like this example two and three organize a pre-launch event you start getting maybe sign ups for it that gives you an indication that like okay we're building some awareness people know this is happening people are interested do some social media giveaways for like the grand opening or launch get some influencers interested and people applying to to win a free trip to your hotel and you're gonna offer the lodging for free or something like that and try to like build some Buzz around it that'll build some some hyper remote you're doing even if you're not located in like a tropical spring break location there's still some things you can do you know partner with attractions and amenities of things in your area to try and build a comprehensive you know offering you know to someone that wins a giveaway they'll get their free lodging and then four or five excursions in your local area have things to do and give that away as a as a you know sweepstakes or something like that so you can talk about those ideas but the example of traction is actually doing it it's it's the list of games so let's say you did example number three in your business plan you might say we built we built a following of 20 000 people we have a sweepstakes going right now of people signing up to potentially win a trip and we have 1700 names on it or you know something like that or maybe before you launch the hotel people that sign up on this list get a discount on a stay there for the first year and you've got you know 3 500 people on that list those are examples of traction you're not just sitting there waiting to open the doors and expecting people to show up include those numbers those ideas those initiatives in your business plan okay moving on facility and maintenance operations plan this is kind of like the logistics of how you're actually gonna operate your hotel I don't think that this is anything probably all that surprising to you but there is a key Point here and as we want to make sure that we reference and you could also scroll back up here when we were talking about the company description you could do it here as well but what you want to highlight is your relevant industry experience so you don't have to have a lifelong career in the hotel or Hospitality space to necessarily justify opening your own hotel but it's not a small Endeavor or a small investment and not massive margins on hotels sometimes especially smaller hotels and so it's important that your lender has confidence that you know what you're getting yourself into you know what you're doing when I was a lender we would often see people who would spend a lifetime in a certain career and then they would decide they wanted to start a business in something they had zero experience you know in doing that and it's not that that was an immediate no as the lender but it did create a lot of questions and some skepticism and so the reason I say that is because it just becomes another hurdle to overcome when your lender has concerns about you you know having the experience to get the job done so include your relevant experience if that's really obviously if it's a really obvious experience like you work in a hotel or you manage the hotel perfect that's great even if it's not necessarily that but maybe you have experience doing business development or advertising or I don't know you know cleaning or or any aspect of the business include that or if you have a partner or key employees that have significant experience in the industry include that as well give some of that that assurance that you guys know what you're getting yourself into okay and here's the big one the financial projections so obviously projection hub we're a little biased but even in my time again as a lender before production Hub this was by far the most important part of any business plan that we would review we would spend a lot of time reviewing it so you can see what's included in here there's a breakdown of the startup costs that those are estimated at the breakdown of where we expect those funds to come from we've got some breakdown of the revenue projections here as well as like the Costco gross profit operate expenses net income just in like a quick snapshot there some Hotel specific data like the total nights we're planning to sell over the next five years our hotel is going to include a restaurant and a spa and an event space so there's some details around that included we've got some key ratios for this industry breakdown of our monthly operating expenses we've got a five-year financial statement pro forma for the income statement and cash flow you can also include balance sheet I've got a break-even analysis here and all of those charts were generated using this Hotel restaurant spawn Event Center template that you is available on our website I've also linked it down in the description below if you stick around at the end of the video I'll also give you a discount code if you'd like to give it a look and give it a try but real quick overview it's just super simple it's four input tabs where you're gonna just fill in these blue boxes with your relevant information you know you have a loan what assets you need to purchase do you have any investors it's going to cap you know as you filter projection it's going to calculate if you have enough cash to do what you're trying to do what makes this template different is you can pick up a lot of templates out there where it'll just ask for your estimated monthly Revenue this is actually going to help you calculate it based upon industry or hotel specific assumptions so you'll have your your you know unit types or your room types the price for those your costs your direct cost for those your vacancy your occupancy rates there's a season now there's a seasonal version of the temple as well that comes with purchase and you know you're you your direct labor that's involved if you have a restaurant again inside the hotel room service if there's a spa you can do that there's an event space so operating expenses and then if you have any salaried employees those will go in here and the Temple's just going to generate all these charts and the financial statement performance that you're going to need that your lender is going to want both broken down by year and month for five years so quick Shameless plug that's linked down the description below if you pay somebody to have your projections created or you already have your projections great but make sure you get those included in here okay so Financial Productions are not key Point number four because they should you should just expect to include them their their requirement to be in your business plan key Point number four is that they need to be realistic you might be wondering well if I've never had a hotel before how do I know exactly what's realistic and I guess you wouldn't but the internet knows so when if we go back up to our projections here you're going to see especially on this page here these right here we're going to see all kinds of Hotel specific jargon and terminology that we can just go and look for averages industry averages especially this key ratios Okay so two places you can look for this just go to Google typical profit margin for a hotel you could even try to get specific and typical profit margin for a hotel in Florida or Key West and see if it gives us some data so we know we're talking healthy rule applies around 10 okay let's go back to our business plan and okay profit margin we're four percent ten percent thirteen percent two percent so that's a really good place to be it's okay for years four and five to get a little optimistic a little inflated as long as yours one two three maybe a little more conservative to be realistic there you could also use an chat tool if you like chat GPT or Bard you can ask questions there it's going to give you a little bit more detail answers to those but again it's still giving us that similar range so do that for as many numbers as you can in your projections just to make sure you feel like you're in range you know if that's your your operating expenses as a percentage of your sales look that up you know those are great things to to kind of wait how realistic are your projections based on industry averages and do those checks before you turn over your projections if you use someone like projection hub to help create your projections we offer complimentary reviews of your projection so we'll kind of give it a once over and make sure it seems pretty good for us and that there's nothing sticking out before you you know hand it over to A lender but yeah and that is our fourth key point but we're missing one more I'm right into the business plan and that is demonstrating skin in the game now this is a tricky one especially for something like Hotel because we're talking pretty big numbers and so especially if a hotel is involved or a large loan this is probably it could get up into the side of like maybe it's not so much small business anymore it's getting a little bit bigger all this is to say is basically be prepared to put things on the line for your business now and in like a hotel you got the building so that's pretty much your collateral right there you're getting a loan probably to buy the building so buy the building and then like that's your collateral so collateral isn't going to be as much of an issue you just need to kind of prove that cash flow is going to work out well in the event that for some reason there's a collateral shortfall you might have to consider personal assets if you have any to to be able to secure that but just be prepared to demonstrate what you're what you're putting in don't expect the lender to finance 100 of the project or for you to have nothing to lose you know if it goes under so just be prepared for that you don't have to walk to the banker and say Here's all the things you can have just just be prepared to know what you have to offer if that conversation comes up and there you have it that's the five key points to make your hotel business plan as good as you can for a lender again grab this business plan template for free down the description of this video as promised I was going to give you a promo code for sticking with me if you are interested in the projection templates and here you go pH 20 BP when you do 20 off that would sell Financial projection template if you have any questions reach out at support projectionhub.com and we will personally follow up and answer any questions you've got and even help you out with you know if you can buy the temple we can answer questions about that too so like the video if this is helpful for you and we will catch you on the next video thanks foreign [Applause]