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How To Start A Hotel Business In India - Business Guide


Introduction: Hotel Business in India

Travelling and Tourism industry is expanding over the last decade. Living in hotels can make you feel content with yourselves and give an amazing experience leaving behind all the stress of professional and personal lives. In fact, because of globalization and tourism, people are becoming more and more aware of what they deserve. Did you know the Indian hotel industry is predicted to hit a value of Rs. 1,210.87 billion by the end of 2023? India is one of the leading countries when it comes to travel and tourism contributing to the nation’s GDP. At present, demand for hotel accommodation is growing at 6% per annum. Now, imagine, what if you could have your own hotel, fascinating right? The domestic market in India is much larger than the international market. It is very important to make them feel comfortable and relaxed.

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The more good feedback is, the better will be for tourism and your business shall flourish. Hotel Businesses are one of the best businesses to start in India. Travelling is increasing and more and more people are traveling than before. This gives hotels a great opportunity to grow and increase their finances. In this article, we shall talk about starting our own hotel business in our very own country filled with diversity, India. 

If you want to open a hotel:-

  • Research well related to the Indian hotel industry. 
  • Decide the location and type of business 
  • Get required funding 
  • Complete the important documentation 
  • Arrange logistics services and are required 
  • Plan your hotel’s layout 
  • Hire qualified staff 
  • Get promotion for services

Investments Are One Of The Biggest And First Steps To Consider While Planning To Start A Hotel. 

  • It is very essential to understand what sort of investment would be required for your business. 
  • There are certain factors to be kept in mind while thinking of investments i.e. location, size, nature of business, government regulations, licenses, permits, etc. 
  • For financial assistance, a loan is one option.

You can consult with a financial agent. He shall require a specific commission for the services.

Finances can be arranged by existing savings, selling of a property, financial institutes, banks, or other sources. 

Strengths of Starting a Hotel Business

  • High-profit market 

Though investments are huge, profit margins are also higher.

  • Helps you travel

If you are a manager for a long-chain hotel, you’ll have a chance to travel locally, nationally, and internationally.

  • Creative Input

You'll have to implement new ideas and keep trying to improve the services you offer.

You’ll have to be flexible when it comes to some necessary changes to be done.

Weakness of Starting a Hotel Business

  • Lack of Control

It is not easy to trust an outsider but for operations, the hotels are dependent on insiders. 

  • Competitions

Hotels tend to lose customers because of inside and outside competition.

The affordable ones lower their standards of services and maintenance 

  • Setup Expenses

Setup Expenses are huge. Money and efforts, both tend to be huge. 

It takes a lot of effort to manage and the cost of infrastructure is also high.              

Location and Other Things

When it comes to establishing a business, location plays a very important role.  The first thing is to find a location and look for its present or future demand.

  • It will help to widen your scope in terms of visitors as well as revenue. 
  • After you have decided upon the location, it is time to look for what kind of hotel and amenities you are willing to go for.

Hotel Area Plan

The size of your hotel depends on your planning. If you wish to construct a moderate-sized hotel with around 80 to 100 rooms, then the estimated space required is 10000 to 50000 square feet. For a five-star hotel consisting of more than 100 rooms, you can go for 100,000 sq ft. 

Need Research in the Market

  • The first step is to familiarize yourself with the global and local hospitality industries.
  • Research and remain up to date with the latest hotel news.
  • Gain some experience in the market. 

To Start A Business, Various Licenses Are Required. The Multiple Licenses Are- 

Building Permit

The National Building Code of India was prepared by the Bureau of Indian Standards to unify building regulations throughout the county. 

According to National Building Code, no person shall carry out development, make alterations or demolish any building.

All hotels shall have a proper building permit as per the relevant town planning Act or Municipal Act.

Fire Safety Permit 

Fire Safety Permit is essential for Fire Department and is necessary for operating a hotel business. Fire Safety Certificate is provided if the building has facilities for proper fire prevention as mentioned under the relevant fire safety rules and regulations. 

Police Verification License for Hotel 

Hotels are closely monitored by the police department. Therefore it gets more necessary for hotels to follow regulations and maintain a valid permit from the Police Department. 

Health Trade License 

Health Trade License is obtained from the local health department or Municipal Corporation. 

It gives permission to for performing trade and business specifically for those items having a direct impact on public health. 

If you issue this license, the Municipal Corporation certifies your establishment compiling with hygiene and security standards essential for public health. 

Food Safety License 

This license is administered by the Ministry of Health and Family Welfare, Government of India.

It lays down the standards for articles of food and regulates the manufacturing, storage, distribution, sale, and import to ensure the availability of sale and wholesome food for human consumption. 

Business Registration

Under an artificial legal entity, a hotel is set up. 

By operating under an artificial legal entity, the liability of the promoters with respect to the business can be limited.

Bar License

  • If your hotel serves alcohol or operates a bar, a bar license will be required from the relevant authorities. 
  • Bar license is provided by departments operating under the State government. 

PF Registration

  • Required for any establishment that employs more than 20 people in India.
  • PF Board administers a contributory provident fund, pension scheme, and insurance scheme.

FSSAI Food Business License

  • FSSAI is required for operating a restaurant in Inda.
  • It is provided for a year and is renewed at the end of the year.
  • FSSAI is managed by the local FSSAI office.
  • This does not fall under the purview of the Central Government. 

Eating House license

  • Eating House is any place where people can consume food.
  • This is provided by Licensing Police Commissioner of the city.

Steps to Start a Hotel Business 

  • Prepare a Strategy

This should include your goals, obstacles, and plans to achieve the desired goals. 

When your business plan is to be presented for getting a loan, the investors and lenders usually go through the first page and it’s upon them to read further. 

They could even wish to read more so it is important to lay out the critical information. 

  • Industry analysis

You need to figure out the niche you are willing to target, is it going to be a small motel with basic amenities; an upscale boutique hotel, or a luxury resort with modern amenities?

First of all, you’ll need to decide what niche you are willing to target and then analyze the trends likely to affect the market niche.

  • Planning the marketing

There are four p’s to be considered 

  1. Product 
  2. Price 
  3. Place 
  4. Promotion 
  • Operations

Operations include daily tasks of-

  1. Booking reservations
  2. Housekeeping,
  3. Accounting
  4. Check-ins and check-outs. 
  • Management

Management is the backbone of your hotel venture, it can only convince financiers to invest money in your venture and also ensure smooth functioning of operations. 

  • Financing

Get a loan for your hotel venture. There will be various lenders like banks NBFC’s, willing to invest in your market. 

There Are Licenses Required Especially If You Wish To Host Events.

These are the licenses required:-

  • Eating House License:- This can be obtained through the Licensing Police Commissioners of your city.
  • Food Safety License:- This can be obtained from the food safety and security authority of India 
  • Fire Department License:- This can be obtained from any fire department in your region
  • Health / Trade License:- This is obtained from the local civil authority in India 
  • Liquor License:- This can be obtained from the local excise department 

Strategies to Run a Hotel

  • Hotels require human resources, especially the management team.

The prerequisites of having a management team are they should be qualified and experienced.

  • Meet various hotel owners and gain the required experience from them.

It can be a lot profitable and helpful in the long term.

  • Connect with financial institutions because many financial institutions such as banks provide financial assistance and flexible repayment options to create business establishments.

Factors To Consider While Planning The Establishment Of A Hotel Business

  • Research and calculate minute details and other aspects such as feasibility, viability, and future sustainable growth. 
  • Take the help of a financial expert who is well-qualified and capable enough to calculate all working capital expenditures and expenses.
  • Location and amount of staff required 
  • Plan should include the type of business with details such as rooms, amenities, capacity, and infrastructure requirements.

Types of Business Plans 

  • Externally Focused Business Plan:

Plans target goals essential to external stakeholders. It contains detailed information about the organization reaching its goals. For a hotel business plan, external stakeholders include customers and investors. 

  • Internally Focused Business Plan 

It is when a company’s growth is funded by the revenue of the business itself.  This includes estimated expenses and projected sales but does not need to go into details relating to the company or product. 

  • Growth plan business

They are in-depth descriptions of proposed - growth and are written for external and internal purposes.  If company growth requires investment, the growth plan will include complete descriptions of the company, its managers, and officers. 

  • Operations Business Plans

They are internal plans consisting of elements related to company operations. 

The operations plan outlines the responsibilities of employees.      

  • Feasibility Business Plans

There are two things you need to ask yourselves:

  1. Who will purchase the service or a product a company wants to sell
  2. If a venture can turn into a profit     

They also include target demographics, capital required, and recommendations to go forward.

  • Strategic Business Plans

It is all about setting high plans and how to fulfill them. And also It helps in knowing the bigger picture motivating employees to work together and complete the big goals altogether.


In this article, we talked about how one can start a hotel business and what are the requirements. There are both pros and cons when it comes to the hotel business so one should calculate and bring a balance for the same. There are some licenses that are quite essential for opening a hotel. One must obtain all the licenses and for that services shall be facilitated by Corpseed

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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