A Complete Guide to Starting a Hotel Business in India

Over the past ten years, the tour and travel industry has experienced significant growth. The hotel industry has seen a huge expansion in the tourism market as more people travel for leisure and business, not just domestically but also internationally.     

The Hotel business in India is one of the most profitable and ideal business ventures in India. Because of the top attractions and diverse cultures of India, international travel is growing steadily. Therefore, starting a hotel business might be a lucrative venture.   

What is the Hotel Business in India? 
 

In India, the hotel business is a foundation that provides meals, lodging, and other guest services. In India, an establishment must have a minimum of six guest rooms, at least three of which almost certainly have to connect private bathrooms. Although hotels are categorised into “Star” categories (1-Star to 5-Star), there is no set method for assigning these ratings, and consistency with basic requirements is intentional. Read more

There are some crucial things you should take into consideration if you want to start a hotel business in India. You will learn about the crucial information to launch a hotel business in India in this article.

How to Establish a Hotel Business in India?
 

1. Select a name for your hotel 
 

Choosing a name for your hotel is the first step in launching a successful hotel venture. Because your hotel’s name will serve as your brand and be in use forever, this decision is crucial. Ideally, you choose a name that will stick in people's minds. Following are some suggestions for naming your hotel business:

• Check to see whether the name is available. Search trademark databases and the list of legally registered business names in your state to see if a name is already available. Check the availability of a decent domain name as well.
   
• Ensure simplicity. The best names are typically those that are easy to spell, pronounce, and remember.
   
• Consider marketing. Create a name for your hotel that expresses the desired identity and/or purpose of your establishment.

2. Create a business plan for your hotel
 

Making a thorough business plan is one of the most crucial tasks in starting a hotel business. You can be confident that you fully comprehend your market and business strategy because of the process of building your hotel business plan. You can use the plan as a guide as you proceed and, if necessary, show it to potential investors for your company.

The business plan you create for your business must include the following sections:
 

1. Executive Summary: This part should include a summary of your entire business strategy so that readers may immediately understand the most important information about your hotel. 
    
2. Company Overview:  The reader is informed about the background of your hotel and the kind of lodging you offer in this area. For instance, are you a boutique hotel or an inn?
    
3. Business Analysis: Here, you will record important data about the hotel business. Conduct market research to determine the size of the sector and the trends that are affecting it. 
    
4. Analyse your target customers: You will include the features of your ideal or target clients in this section. For instance, what is their income level? What services do people expect from a hotel? What factors do they consider crucial when selecting a place to stay?
    
5. Competitive Analysis: Here, you will list the main direct and indirect rivals you will confront and describe your strategy for gaining a competitive edge.  
    
6. Marketing Plan: Your marketing plan for the hotel should identify four Ps —Product, Price, Promotion, and Place.
    
7. Operational Plan: Here, you will identify the crucial procedures you will require to manage your daily business. You need to determine your staff requirements. The expected growth timeline you develop in this part of your strategy will highlight the milestone you hope to achieve in the next years.   
    
8. Team Management: This section consists of the details about the team management of your hotel.
    
9. Financial Planning: Finally, financial planning consists of the answers to the following questions: 

• What is the expenditure of starting a hotel business? 
• How will your hotel business make a profit?
• What are the expected sales and express for the coming five years? 
• Do you need to arrange funds for starting a business?

3. Select the legal structure of your hotel
 

The next step is to decide on the type of legal structure for your hotel and register it along with your business name with the secretary of state in each state where you can conduct business. Here are the top 5 legal structures:

• Sole Proprietorship
• Partnerships 
• Limited Liability Company

4. Arrange to fund your hotel 
 

You may have decided that you need to raise money to start your hotel business when creating your business plan. Your choice of whether to purchase and renovate an existing property or build a new one will have a significant impact on when you may open your new hotel and the amount of funding you'll require. 

5. Find a place to start building 
 

Appropriate space is crucial for any hotel, and picking the ideal location can have a significant impact on your bottom line. Think about these factors to find the perfect area

• Number of rooms your hotel will have.
• What are the zoning requirements for hotels in your area?
• Is the local market a good match for your target customers?

Working with architects to set up a schedule and calculate expenditures is also necessary if you want to develop a new building for your hotel.   

6. Register your hotel with IRS
 

The Internal Revenue Service (IRS) will issue you an Employer Identification Number (EIN) if you register your company with them (EIN).

You will often need an EIN in order to open an account with a bank. Additionally, since the IRS uses your EIN to track your payroll tax payments, you will need one in order to hire employees.

Note that you typically do not need to obtain an EIN if you are a single entrepreneur without workers. Instead, you would keep your social security number as your taxpayer identification number (instead of your EIN).  

7. Open a bank account for your business 
 

It's crucial to open a bank account in the name of your hotel. The stages involved in this straightforward technique are as follows.

• Find and get in touch with the bank you want to utilise.
• Obtain and provide the necessary paperwork, which typically consists of the articles of incorporation for your business, a driver's licence or passport, and a proof of address.
• Fill out the bank's application form completely and include all necessary details.
• To discuss your company's needs and build a connection with a banker, arrange a meeting.

8. Get Insurance for your hotel
 

To secure your brand-new hotel, you must have the appropriate business insurance. You should take into account the following business insurance coverage for your hotel:

• General Liability Insurance: This insurance protects your hotel operation from third-party claims of physical harm, property loss, and personal injury arising on your property or as a result of your operations. 

• Employees' compensation insurance: You may need to get worker's compensation insurance if you have employees. If your staff is hurt on the job or falls ill as a result, the insurance will protect them.  

• Property Insurance: This insurance includes loss or damage to your hotel's property as a result of fire, theft, vandalism, and other specified events. 

9. Hire staff for your hotel
 

The employees will be appointed based on the size and requirements of the hotel industry. They include front desk employees, housekeepers, line heads, directors, waiters, chefs, servers, etc. 

Necessary Licence and Registration You Need to Start a Hotel Business
 

• Company Registration
• Building Licence
• Police Licence
• Health Trade License or Trade License
• ESI Registration
• Sales Tax Licence
• PF Registration
• Bar Licence
• FSSAI Food Licence
• GST Registration
• Fire Safety Permit

Acquiring these licences and registrations is the challenging part of the establishment of a new hotel business in India, but still,  it is necessary for the smooth running of your business.  Therefore, you must consult professional teams who will help you complete the required registrations and get the licences easily. 

Conclusion 
 

If you follow the above steps, you ought to be in a fantastic position to develop a prosperous hotel business in India. You can also contact our legal experts at Online Legal India to obtain the necessary licence and complete your documentation. You will get the service completely online and hassle-free.