Business plans specifically for hotels

Annual business plans are ‘a dime a dozen’ on the internet but they lack specifics relevant to the hospitality sector.

If you are new to the industry or struggling with planning, AHA|SA honorary treasurer and GM of the Hurley Group, Sam McInnes, offers the following advice:

1. Be clear about what you want to achieve in the next 12 months and beyond. While most hotels aim for general overall growth, set goals for each department.

2. Hospitality can be a numbers game: stock control, pricing, growth, wages etc. For most hotels, about half of gross profit goes in wages, so it’s very important to achieve the optimal staff structure and have the right system so that you’re accurate with payroll.

3. Work through how you can achieve both sales growth and wage control. Analyse each aspect of your business. A kitchen, bar, gaming room and bottle shop all have very different percentages. You may need assistance from a finance professionaland AHA|SA partners have a wealth of experience to tap into.

4. A substantial 5.75% wage rise went through at the start of July, which really applies to every employee. A good business plan will include modelling for wages moving forward.

5. The industry is now doing away with ‘zombie agreements’, so you also need to work out the flow on cost of that.

6. If costs are rising, it is vital to review your pricing. If you feel that you are guessing, get advice from a good accountant. Remember that you should also take into account what your competitors are doing and what your local market will pay.

9. Do your research. More information is available than ever before - who lives locally, how old they are, occupations, how many dogs they have etc. This will influence what your offer, how it promoted, pricing etc.

10. How will facilities be used? Are you a suburban hotel that is pulling from your local area, or are you more of a destination hotel that is weighted towards functions and events, acting as a meeting place and a go-to spot.

11. What are the threats and opportunities within our area. Is there a new licensed café opening, which is going to take some of your business? Or is there a

club you can sponsor and build a better relationship with? Are there changes to road conditions nearby? Is there a development close by that could attract a flow of tradies if you offer specials at lunchtime or after work?

12. For new projects, check off and document every aspect, including licensing, building regulations, neighbour issues, planning rules etc.

13. It is important you have a good relationship with your bank. Be transparent with them about where you are and what your plans are. Be prepared to shop around for a good relationship and good pricing.

14. Overextending with capital projects is a risk and has definitely caused some failures in the past. For the cost of funding, don’t stick with a ‘here and now’ interest rate. Take a realistic, longer term view of interest rates.

15. Understand the arrangement you have with the landlord about renovation. What’s the lessee paying? What’s the increase in rental following the renovations if the landlord’s paying?

16. Tap into the AHA|SA network. Industry partners can offer a wealth of advice. So, too, can other publicans that you meet at regional meetings or other AHA|SA events.