A hotel business plan is required when thinking of starting a new, expanding your current, or buying an existing hotel.
South Africa has been of the top tourist destinations in the African continent. The COVID-19 pandemic however, has had a severe economic impact on South Africa’s hotel sector, with a number of hotels facing bankruptcy and permanent closure. As governments implemented extraordinary measures to contain the virus, such as travel restrictions and physical separation, the hotel industry came to a halt during the pandemic. Job losses, reduced pay, and layoffs have all had a significant impact on employment.
Concerns for hotels include cash flow, travel restrictions, guest cancellations, low consumer spending, and the industry’s overall economic uncertainty, during the COVID-19 pandemic. However, the measures were subsequently lifted in April 2022 and the tourism industry has started recovering. As per Bureau for Economic Research, since all Covid-19 restrictions have been lifted, there has been an increase in the number of patrons from the previous quarter, and this is what has caused this growth in the hospitality sector in South Africa in 2022.
The hospitality industry in South Africa is emerging with a rising number of travellers who are visiting the country for business and leisure purposes. According to Stats SA, at the ports of entry and exit into and out of South Africa in April 2022, a total of 1,696,851 travelers (arrivals, departures, and transits) passed through South African ports of entry/exit. A comparison of movements in April 2021 and April 2022 depicts that the volume of arrivals, departures, and transit travelers increased for both South African residents and foreign visitors. Arrivals increased by 145.4% for South African residents (from 117,557 in April 2021 to 288,430 in April 2022)
In order to accommodate rising travelers, the hospitality industry is expanding rapidly in the country and is scoring dynamic key performance indicators. Africa is at around 2.8 million for 2020 and 2.5 million for 2021, far from the 2019 figure of 10.2 million, let alone the projected figures for the two respective years had the pandemic not occurred. Furthermore, the growth of hotel rooms is growing with an additional 3,500 rooms which are going to be added in the coming years. The short-term home rentals like Airbnb has been growing rapidly in the region.
The main elements of a well-developed Hotel Business Plan include:
•Executive summary: Provides an overview of your business plan. It includes key information about top management, the amount and purpose for funding or grant acquisition, the service and/or product.
•Company analysis: Includes the current business stage and legal structure. Outline important past milestones, such as securing key funding or hiring a noted hotel manager. Provide more information about your hotels’ unique attractions.
•Industry analysis: Focus on your relative market, which is the portion of the hotel industry that mirrors your hotel. Decide what niche you want to target, and then research the trends and projections that affect your niche. Create a plan for overcoming any hurdles that you find in your research.
•Customer analysis: Includes your customer’s demographics and preferences. Identify their unique needs and draw up a plan for meeting those needs.
•Competitive analysis: Describe direct competitors that targets your market, individually and explain how your hotel differs from theirs.
•Marketing plan: Is the strategy the business uses to sell its product/service. Marketing hinges on the 4 P’s- Product, Price, Place and Promotion. Product refers not only to your hotel nights, but also any products or services you sell. Price is how much you charge for each product, along with your rationale for each price point. Place is your hotel’s physical location, as well as your website and any third-party booking sites you use. Promotion is your way of convincing customers to stay at your hotel, while customer retention is how you will get them to come back.
•Operations plan: This section describes your methods for meeting the goals you defined earlier. Everyday short-term processes are the individual tasks involved in booking reservations, checking in clients, cleaning and maintaining the hotel, handling luggage, and settling accounts. Long-term processes are the ways your business will meet defined business goals, such as hitting a certain occupancy rate or adding a restaurant.
•Management team: A strong management team will convince financiers that your business has solid potential. Highlight your key team members’ backgrounds, focusing on those elements that prove their ability to grow a company.
•Financial projections: Eight documents comprising of the management account, income statement, balance sheet, cash flow, cash forecast, break even analysis, loan amortisation schedule, and fixed asset schedule. Charts, ratios, graphs, and calculations are included.
•Annexures: Includes statutory information such as management ID’s and CV’s, company documents, and other relevant additional documentation. This information is required by funders in an application (contact us for the complete list).
At DTC…
We understand the requirements and criterion for a tailoured and accurate business plan. Our developments are used to create a vision for businesses, secure funding, secure non-repayable business grants, or manage the business. If using the plan to raise funding and/or non-repayable business grants, we guide you throughout the process and provide access to our wide network of funders. These include, to name a few, venture capital companies, private equity companies, angel investors, banks, Government BBBEE initiatives, Silicon Cape investment organisations, rent to own asset funding companies, and crowd funds. Let DTC develop your Hotel Business Plan today!
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