The hotel / motel business launch plan
Every step from deciding to opening, in the order it happens, shaped to your situation, with your own numbers beside it. About 47 steps in 8 phases, 23 of them specific to a hotel / motel business. Free to read; ticking steps off and putting in your own numbers come with membership.
The plan47 steps
- 01Not started0/6Fold
Decide with the numbersa week or two
Before a dollar is spent. Most expensive mistakes happen here, and this phase costs nothing.
A hotel makes money by selling the same rooms over and over, and the order you grow the levers decides the .
Typical for one unit is $500,000 to $5,000,000 a year; the owner keeps 22 to 32% of it before paying themselves. If that band does not cover what you need, that is the signal to pause and look again.
~50-60% survive 5 years. Roughly half of new U.S. businesses reach five years.
Twelve questions about your money, time, experience and temperament, scored. Then the 5 questions this business asks of its owner, about the hours and the work. Answer both before you spend a dollar.
Rule of thumb: if you can buy a well-located property with a real history and a PIP you have scoped and funded, buying buys you a running asset. Answer it in your situation above and the plan reshapes.
Customers, prices, rent, staff pay, what it costs to open. We filled in typical numbers; change what you know and everything on this page follows.
- 02Not started0/5Open
Plan the moneya week
What it costs to open, where the money comes from, and the cushion that keeps you alive until the business pays for itself.
Most owners buy an existing hotel or motel rather than build one, so the stack is mostly the purchase price, then the money it takes to close and bring the rooms up to standard.
The itemized cost to open9 lines
- Purchase of the property (land, building, furniture in place): $1,200,000 to $3,400,00040 rooms at about $30,000 to $85,000 a room; flagged properties in good markets ask more
- Closing costs, lender reports & SBA fees: $34,500 to $257,000Title, escrow, legal and lender fees at 2 to 5 percent of the price, plus appraisal, environmental and condition reports
- Guestroom renovation (brand PIP level): $0 to $600,000Case goods, flooring, bath and lighting at $7,500 to $15,000 a room; a midscale brand PIP can run far higher
- Mattresses, linens, TVs & wall units: $39,425 to $233,340
- Key card locks, Wi-Fi, front desk technology & cameras: $3,817 to $78,446
- Laundry, housekeeping, breakfast & opening supplies: $1,400 to $74,707
- Road sign, website & relaunch marketing: $7,200 to $72,000
- Licenses, first insurance premium & business setup: $13,400 to $68,000Lodging, health, pool and fire permits in your name, plus property and liability insurance due at closing
- Initial working capital: $100,000 to $300,000Two to six months of payroll and fixed costs while bookings rebuild under your ownership; the plan computes your own figure
Costs start on day one; customers take months. Map the first twelve months of cash so the business does not run out of money while it is getting going.
The business has to earn your pay like any other bill. Set it in your numbers and watch the month it move.
How deals in this business are financed5 lines
- SBA 504 loan (Up to 25 yr fixed on the SBA share · 0.5% upfront guaranty fee (FY2026))The usual route for an owner-operator buying the land and building: a bank first mortgage of about half the price, a long-term fixed-rate SBA debenture through a certified...
- SBA 7(a) loan (Up to $5M · up to 25 yr with real estate · 2-3.75% guaranty fee on the guaranteed share)Can fund the purchase, the refresh and working capital in one loan; rates are usually variable and tied to prime.
- Conventional hotel loan (Typically 25-35% down)A bank or lender that specializes in hospitality, for larger or flagged properties; it asks for a bigger down payment and a stronger operating history.
- Seller financing (Often 10-20% of price · 5-10 yr)Common on independent motels.
- FF&E and PIP financing (Secured by the equipment · 3-7 yr)Mattresses, TVs, locks and wall units can be financed or leased separately to keep cash for the purchase and working capital.
Most new shops pair an with 10 to 20% of your own cash. Know the monthly payment before you look at a single space.
Before you shop. A lender tells you what they would fund, what they need from you (credit, your cash in, a plan with numbers), and a pre-qualification letter makes a landlord or a seller take you seriously.
- 03Not started0/4Open
Set up the companya day or two
A day of paperwork, and it has to come before the space: a lease, a loan application and every permit are in the company’s name.
Your state’s business name search, the trademark register, and the domain, before the name is on a sign, a van, or a lease.
A , an , and the S-corporation election each change what you keep and what you are exposed to. Compare them with the numbers, confirm with a CPA and an attorney, then file with your state.
After:The is free from the IRS in minutes once the company exists. The bank account needs both. Keep business money separate from day one.
After:Pick the accounting software and connect the bank account now, so every cost of opening is captured and the numbers you later are real.
- 04Not started0/5Open
Find and secure the spaceone to three months
In lodging, location is not a detail; it is part of the asset.
What decides it for this business: strong demand generator nearby, visibility & access from the road, demand spread across the year, reasonable competitive set, rate the market will bear.
One call to the planning desk with the address: is this use allowed there, and what will it take (, permits, fire sign-off)? A space that needs a change of use can add months.
Rent, free months for the , who pays for what, the and the renewals, subject to financing and permits. The lender needs this letter or a draft lease to take your application.
After: ,, renewal options, increase caps, what the landlord adds on top of rent, and what happens if you have to leave. For a location business the lease is part of the purchase price.
After:at minimum; property, workers’ compensation and the rest as the business needs. The landlord asks for a certificate at signing and the lender at closing.
- 05Not started0/2Open
Get the loanfour to eight weeks
Four to eight weeks with an SBA lender, longer if the file is incomplete. Everything else waits on this, so send a complete file.
Your plan with numbers (download it as a PDF from this page), the company’s papers, the or draft lease, the and equipment quotes, your personal financial statement, and proof of the cash you put in.
After:The lender approves against the ; you sign the lease once approved; the loan closes against the signed lease and the insurance certificate. Ask for the to match the or longer.
After:
- 06Not started0/10Open
Permits and the build-outone to three months
A hotel houses guests overnight, so it carries lodging, health, fire and tax registrations, and most of them must be reissued in your name when you buy.
Bind the policies you had quoted before a contractor, a vehicle or a customer is in play. Keep the certificates; the landlord, the lender and the city will ask.
After:Permits for any renovation, and a if you change the use or the room count.
After:Local approval for a new sign face, a new sign or new lighting.
City or county business license, federal , and state withholding, unemployment and accounts for your staff.
State and local hotel tax accounts (often filed monthly) and a for anything you sell.
A state or local license to operate a lodging establishment, usually tied to a health inspection of the rooms, linens and water.
Accessible guestrooms, routes, parking and, for pools, a lift or sloped entry under the 2010 ADA Standards; a purchase does not grandfather barriers that are readily removable.
If the property flies a brand, the franchisor must approve you as the new owner and will usually issue a property improvement plan (PIP).
Fire marshal inspection of alarms, extinguishers, exits and sprinklers.
After:State and local hotel tax accounts (often filed monthly) and a for anything you sell.
After:
- 07Not started0/10Open
Set up to runduring the build
During the build, so the business runs from day one: the systems, the prices, the people and the routine.
The backbone: reservations, check-in and check-out, room status, folios, and the night audit.
Pushes rate and availability to Booking.com, Expedia, and your own website at once, and drives direct bookings that avoid the OTA commission.
A dedicated account and clean books keep room, ancillary, and operating money separate, essential for managing the property and for any future sale or...
You own a building full of guests.
See the price the the business needs implies, then check it against what the market pays.
City or county business license, federal , and state withholding, unemployment and accounts for your staff.
After:Wages are the start: , insurance, training time and the hours you stop billing. Owners usually post the jobs a month out and hire two to four weeks before opening so training happens before the doors open.
Early morning: Night audit closes the books, breakfast goes out, and the desk preps... Checkout (late morning): Guests check out and housekeeping starts the turn. Daytime: Housekeeping turns rooms, maintenance handles work orders, and...
Opening, closing, the sale, the complaint, the cash. One page each. This is the manual a franchise would have sold you.
Free, and it is how most people will find you. Address, hours, photos and the menu or price list, live before opening day; then the sign, the soft opening and the first regulars.
- 08Not started0/5Open
Open and measurethe first ninety days
You own it. Now run it on the numbers.
Friends, neighbors and a short menu or list. Find the problems while the room is forgiving.
Enter the real numbers and see every cost line against the for this business.
The fixed base (mortgage plus core staff); OTA commission; Housekeeping & turnover .
Growth consumes cash before it produces it. Find the rate your own cash funds before you push.
You are buying an asset you will eventually sell, and in lodging you sell both a building and an operation.