Introduction: Hotel Business in India

The hospitality business was prospering all over the world until COVID-19 arrived in the country. India was no exception, with hotel reservations sold out months in advance. It wasn't just the luxury hotels that did well; consumers enjoying quick weekend trips also helped to boost revenue in the inexpensive boarding and lodging sector. While the current scenario has slowed the expansion of these enterprises, working in or starting a hotel in the hospitality industry is always a rewarding experience. As of 2019, the hotel business has a market value of $1 billion. However, because to the present pandemic crisis, revenues have decreased by 48%, but the industry is expected to grow by 2021-2022 as a result of a number of causes.

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Similarly, there are a few things to know before starting a business, and Corpseed is here to assist you with a start-up guide on how to start a hotel business in India. In addition, India is one of the top countries where the travel and tourism industry provides a significant portion of the country's GDP. The demand for hotel rooms is increasing at a rate of 6% per year, according to the present trend. Supply, on the other hand, is growing at a rate of 3% per year. As a result, for someone wishing to establish a new business, the hotel industry has a lot of promise.

To control and direct a steady growth as well as obtain funding from outside investors and lenders, it is critical to first sketch out a clear road map of your business strategy, just as it is with any other firm.

A Step By Step Strategy For Starting A Hotel Business Is As Follows:

• Step 1: Prepare a strategy- The first phase in the process is to create a business strategy that shows how the hotel will grow over the following five years. This should include foreseeable objectives, barriers, a SWAT analysis of the industry, and detailed plans for achieving the objectives. In other words, it should be a concise, straightforward description of the overall business strategy.
• When you present your business plans to investors and lenders in order to obtain a business loan, they usually read the first page and decide whether they want to read more, so it's critical to lay out all of the critical information upfront, such as your market analysis proving the need for a new hotel and your unique skills and qualifications for meeting your objectives.
• Step 2: Industry analysis- Given the sheer amount of hotels opening across the country these days, this may appear daunting at first. However, you must concentrate your efforts just on the hotel industry that corresponds to your hotel plan. Is it a small motel with only the bare essentials? Is this a high-end boutique hotel? Or perhaps a five-star resort with modern amenities? You must first identify which market niche you want to target, and then research the trends and projections that are likely to affect that market niche.
• Step 3: Customer analysis- Even in the hotel industry, understanding the needs of your target clients is critical. As the saying goes, "the customer is the king of the market." You must obtain answers to queries such as who is most likely to select your hotel. Is it for work or pleasure that they are traveling? Are they accompanied by children? How often do you think they'll come to the hotel? What would their ideal spending limit be? What do you think their expectations will be? What are the most recent amenities? Interiors with opulence? What about outdoor activities? And so forth. It is critical that you determine the demographics of your potential customers and develop a plan to suit their needs.
• Step4: Competitor’s analysis- There are two kinds of rivals to consider: Direct competitors include hotels that target your market, as well as indirect competitors such as restaurants and other businesses that are only a portion of your market. As a result, you'll need to devise a strategy to ensure that your hotel stands out.
• Step 5: Planning the marketing- Product, price, location, and promotion will be the four Ps. The product is your hotel and its services, the price is the price of your products and services, the place is your hotel's physical location as well as its website or other booking sites, and promotion is your way of persuading people to stay with you not just once, but repeatedly.
• Step 6: Operations- Your short-term operations will consist of day-to-day tasks such as booking reservations, checking in and out clients, luggage handling, housekeeping, accounting, and so on, whereas your long-term operations will consist of how you plan to meet your objectives such as achieving a certain rate of occupancy, adding more restaurants, and other such additional services to attract more visitors.
• Step 7: Management- A good management team is critical to the success of your hotel business since it will not only persuade financiers to participate in your enterprise, but it will also ensure that operations run smoothly.
• Step 8: Financing- Finally, but certainly not least, obtain business financing for your hotel venture. Given the potential for expansion in the Indian hotel sector, a variety of lenders, including banks and non-bank financial companies (NBFCs), including digital NBFCs like Lending kart, are eager to invest in this expanding market.

List of Licenses and Permits Required

A list of licenses and registrations are necessary to obtain for beginning a hotel business in India 

NOC from the Ministry of Tourism

If someone wants to start his or her hotel business then firstly they have to get a no-objection certificate from the ministry of tourism. The applicant has to register himself on the site of the ministry of tourism to obtain the no-objection certificate.

Premises/Building Permit

After getting the NOC from the ministry of tourism, the Applicant has to apply for the building permit because every hotel must get an appropriate building permit according to the specific city/town from planning or development or municipal Act.

Get a Fire Department NOC!

A NOC from the concerned fire department is required as well before starting the business. The applicant should apply through an application accompanying necessary documents like- building plans, building model, and certificate from the architect. A questionnaire related to compliance with fire safety rules and regulations shall also be filled out by the applicant. An inspection of the premises will be carried out by the fire department officials after the verification of the documents.

Eating House License

An Eating House License is legal permission to operate a business where any type of food or beverage is legally supplied for consumption. This license is governed by the Delhi Police Act and is required. Along with other fundamental licenses, the Eating House license is a requirement for performing food business.

Signage License

Police License for Hotel

The Police Department keeps a careful eye on hotels because they are public areas. As a result, all hotels must keep a proper log of all Guests who have stayed at the hotel, obey all applicable regulations, and have valid Police Department permission. The power to license Places of Public Entertainment, which is held by the Commissioner or Additional Commissioner of Police, mainly applies to hotels.

Health Trade License or Trade License

For restaurants and hotels, a health trade license from the local Health Department is normally necessary. The Municipal Corporation is normally in charge of issuing health trade permits. Businesses that have a direct impact on public health must get a health trade license. The awarding of a health trade license is contingent on compliance with appropriate hygiene and safety standards that are critical to public health.

Business Registration

It is recommended that a hotel be established under a fictitious legal organization such as a corporation or limited liability partnership (LLP). The promoters' liability for the business can be restricted by operating it under an artificial legal structure, and the business as a going concern can be readily transferred to another individual.

ESI registration

ESI is a government of India-owned Corporation that is under the Ministry of Labour and Employment. In India, businesses with ten or more employees must register for Employee's State Insurance (ESI). Employers must contribute 4.75 percent of salaries to ESI employer dues for all employees earning Rs.15,000 or less to stay in compliance with the ESI Regulations. The employee must pay 1.75 percent of his or her wages in ESI contributions.

PF registration

Any business in India that employs more than 20 people must register with the Employee Provident Fund (PF). The PF Board is responsible for administering a contributory provident fund, a pension system, and an insurance scheme for workers in India's organized sector.

Bar License

A bar license will be necessary from the relevant authorities if the hotel operates a bar or offers alcohol in its restaurants. Departments under the State Government are usually the ones who issue bar licenses. As a result, the requirements for obtaining a bar license differ from state to state.

FSSAI Food Business License

One of the necessary conditions after registering a business entity is to obtain Government License / Permit. In case you are in the food industry e.g. hawker, itinerant vendor, temporary stallholder; food distributor in any religious or social gathering events except a caterer, or by any way related to manufacturing, transportation, storage, or distribution of food product or tiny food business, one must obtain an FSSAI Registration or FSSAI License before starting operations. Below are the categories in which FSSAI has divided License/Registration based on the turnover limits of the company. Every food company owner, including petty vendors and hawkers, must obtain an FSSAI food license. The Food Safety and Standards Authority of India is abbreviated as FSSAI.

The FSSAI license is of 3 types:

• FSSAI Registration 
• FSSAI State License 
• FSSAI Central License

FSSAI Registration / License applications can be submitted either offline or online. The food company owner must submit an application to the Licensing Authority together with the required fees to receive the license offline. However, the Food Licensing and Registration System (FLRS) site, which was developed by the FSSAI, can be utilized for online license/registration. The food business operator receives an FSSAI license number after completing the registration process.

Shops & Establishments Act Registration:

The Shop and Establishment Act (the "Act") is enacted by each state. The Act's general requirements, however, are the same in every state. The Labour Departments of several states are in charge of enforcing the Shop and Establishment Act. All stores and business establishments in the state are governed by the Act. The registrations are issued by the individual states under the Act, and so they differ slightly from one state to the next. Under the Act, shops are defined as places where items are sold to clients, either retail or wholesale, or where services are provided to them. It encompasses offices, godowns, storerooms, and warehouses that are used in the course of a trade or business.

Certificate of Environmental Clearance

Environmental clearance is a technique for obtaining government approval for undertakings that pollute the environment. The government has compiled a list of projects that require environmental approval, such as mining, thermal power plants, and infrastructure. The projects are divided into two categories in the EIA Notification: Category A and Category B. Category A projects are approved by the Ministry of Environment, Forestry, and Climate Change, whereas Category B projects are approved by the State Environmental Impact Assessment Authority.

Lift Clearance

Electrical lift installations in commercial, residential, office complexes, and other locations (excluding those covered by the Factories Act of 1948) are examined and licenses are issued/renewed to ensure the safety of those who use the elevators.

Service Tax registration

The hotel's accommodation services and the culinary services offered by the hotel's restaurant are both subject to service tax. As a result, hotels must register for service tax and keep it up to date. Hotels with room tariffs of Rs. 1000/- and more are required to pay a service tax of 14 percent on 60 percent of the room charge (the net rate of Service Tax comes to 8.4 percent). The service tax is applied to 40% of the food and beverage bill at a rate of 14% for restaurants (the net rate of service tax comes to 5.6 percent). Furthermore, the use of a banquet hall where considerable food is served is subject to a 14 percent service tax with a 30 percent rebate (the net rate of service tax comes to 9.8 percent).