Getting on board the hospitality industry is a great business plan. The tourism sector in India is on the rise. However, the recent pandemic has hampered tourism and the hotel business plan as a whole, but, since things have begun settling down, the hospitality industry will bounce back. Moreover, as people are refraining from international travel on health grounds and restrictions, tourism within India is on the rise. So, how to start a business in India?
Here’s a complete guide to start a hotel business.
Investment
While the major cost of investment is the premises, renovation of the building or constructing a new one, and the furniture. Other costs include size, location, nature of the business, government regulations, licenses and other permits. Correspondingly, depending on the scale of investment, the category of the hotel can be decided. However, if you run short of finances, you can approach a bank for assistance. Usually, banks give out around 70% of the total investment capital to start a hotel business.
Identify The Perfect Location
Location plays an important role in a hotel business plan. There are several locations that become favorites among travellers for various reasons. For example, having a hotel in the heart of the city which is close to commercial spaces can be fruitful. As most people visiting cities come for businesses or trade. Similarly, if your hotel business plan includes setting up hospitality at a tourist destination, it should be at a scenic location that highlights the essence and the things that particular area is famous for.
Furthermore, the hotel should be easily accessible via various modes of transportation. However, you can always have a pick and drop service for your guests from the nearest airport or railway station. Nevertheless, the location of your choice should not exceed the set investment plan, as you also have to look at returns, and the projected turnover should justify the initial capital investment.
You can look at purchasing a place to start your hotel business, or you can search for a premises that is available to rent depending on your investment. Legally you would require to produce the Title verification documents including the sale or mortgage deed if you have your own premises. For a rental property, you will need to submit the lease deed or rent agreement while applying for licenses.
Articulating The Pros and Cons
Once you have identified your scale of investment and the location for your new hotel business, you should start articulating the pros and cons of running your business. Start with identifying the number of tourists visiting the location of your choice, and gain a fair idea on future predictions. Having a future proof location helps in the long run. Equivalently, study the competing hotels in the same location, understand their business models, room rents that they charge, and the average number of occupancy per year.
Furthermore, you must analyze the cons of running a hotel business. Like we mentioned earlier, the cost of investment should justify the return on investment. Have a look at the availability of labour and staff in the locations. If you’re planning on including a restaurant, check if good cooks or chefs are easily available. Also, you need to include the amount of salaries that you need to pay each month taking into account what others are paying and what needs to be paid by government law.
Required Licenses
- NOC From The Ministry of Tourism
To start a hotel in India, you will need to apply for permission from the Ministry of Tourism. The Ministry will scrutinize the documents and grant you permission to run a hotel. Additionally, you will need to get in touch with the Tourism department under the jurisdiction of the location in which you are going to start the hotel.
- Construction Permit
If you are going to construct a building on the purchased land, you will need to apply for permissions from the local town planning department. In case of renovation, you will need a permit from the Town Planning or Development of Municipality departments. Equivilanently, you will need to have a sanctioned building plan.
- Fire Safety Certificate
As per the rules and regulations set by the FIre Department, you will need to meet the necessary requirements to get the Fire Safety Certificate. Similarly, you need to construct fire prevention and safety measures throughout the premises.
- Eating House License
If you are going to cater food to your guests, an Eating House License is required. The Eating House License is a necessary requirement if any kind of food or drink is supplied to the guests in your hotel.
- Signage License
If you are going to put up any kind of logos, posters, pictures, and symbols, you will need to have a Signage License. The License is a legal document for hotels or restaurants, to put up advertising posters.
- Police Permit
When you want to start a hotel business in India, you will need to apply for a Police Permit from the local police station. To get the permit, you will need to have a muster that records all details of the visitors. Moreover, you will need to submit the necessary documents that require you to follow all the local, state and central government’s rules and regulations for hotels.
- Trade License
The trade licence is issued by the local municipal authority. The officials may require you to produce relevant documents to ensure that your business is following the necessary hygiene and safety regulations.
- Registering The Hotel As A Company
You must register the name of your hotel as a company for taxation and other purposes. Depending upon the category, it is advisable to register the hotel as a private company or an LLP.
- Bar License
If you are planning to serve liquor in your hotel, you will need a bar license. The bar license is issued by the state government. However, you will need to understand local or state regulations as to what type of liquor is permitted for sale.
- FSSAI Certificate
The Food Safety and Standards Act is required for any business that is an eatery in India. Under the FSSAI department, your restaurant or hotel needs a clearance by the department to serve food to your customers.