Fun Boutique Hotel’s Business Plan

Executive Summary

Fun Boutique Hotel is a 30-room accommodation space that will also incorporate food and beverage options to improve the company’s profits. Indeed, there are numerous hotels in Paris, which is the region where Fun Boutique Hotel will be established. However, there are numerous gaps, which have been identified and can be filled by different services offered at the hotel. First, consumer engagement is poor in a significant number of hotels in the region. This has been enhanced by the ever-increasing number of people who need hotel services in the area. Fun Boutique Hotel will cater to this by providing maximum customer satisfaction and unforgettable experiences. It is expected that this will be one of the key reasons why the hotel will be successful. The hotel will be categorized as stylish, innovative, with high levels of service, and provide more of a personal experience than a branded hotel. This is a growing industry in the city, as mentioned, more tourists visiting the area for different reasons. Furthermore, apart from the tourists, there is an increased percentage of people who visit Paris for business purposes. These will also be targeted using different marketing approaches.

The tourism and hospitality sector is large and diverse (Lwin and Phau, 2013). There is often a need for better hotels and even food and beverage places for both locals and tourists. It is due to this stated factor that a hotel in Paris can be perceived as a feasible business idea. It is important to note that customer satisfaction is key in the industry. These will be enhanced using technology and innovation (Lwin and Phau, 2013). Moreover, the quality of services and products is also important to attract clients and retain them. It is essential that hotels train their personnel in customer management to enhance customer loyalty. Critically, negative feedback also must be strategically managed within the customer journey in order to attract more clients. This business plan proposes the establishment of a 30-room hotel that will target business executives, holiday lovers and backpackers. Critically, one of the management’s ambitions is to ensure that the hotel offers quality service to all its guests. This will be achieved through proper training of staff to manage the individual customer relationships across channels, functions, and products. They should also do their best to understand the consumer journey and how to improve it.

Elevator Pitch

Fun Boutique Hotel is a 30-room hotel that will be situated in Paris the capital of France. The name of the hotel suggests its competitive advantage – it ensures that guests not only receive quality services but also have significant fun while on their stay at the hotel. It is expected that the name of the hotel will attract a target market that is young and interested in having fun whether they are on a business trip, holiday or backpacking in the city. Currently, there is no company or hotel that can be affiliated with the chosen name. The name of the company will run with the strapline “where fun and accommodation meet” to enhance the mentioned competitive edge that the hotel will offer to its clients. Despite targeting three different types of clients (business executives, holiday lovers and backpackers), the hotel is able to fully cater to the needs of each of the stated target audiences. This aspect makes it quite different from other competitors in the marketplace.

Products and Services

Fun Boutique Hotel will have 30 rooms that will be divided into three categories. The three categories are gold, silver, and bronze, with gold being the most expensive and bronze the most affordable. It should be noted that the hotel will appeal to different types of people including business executives and backpackers. Therefore, product differentiation is key for the different segments of the target market. It is important to emphasize that the hotel will also have a cafeteria and bar where guests can get their meals and drinks. Critically, both the bar and restaurant will also be open to the public, not just the residents of the hotel. This is expected to help the company improve its bottom line.

In addition, one of the factors that make the hotel unique is that it considers the needs of the different segments of its target audience. Importantly, unlike other hotels in the area, Fun Boutique Hotel, as the name suggests will also have fun activities that the residents can engage in. For example, the hotel will not only have a swimming pool, which is a common feature for hotels in the region but will also have equipment for water games that all residents will have access to as per their needs. It is expected that the hotel will be successful due to the mentioned activities that add a competitive edge to the business. Furthermore, Fun Boutique Hotel will be successful due to excellent customer service, smooth customer journeys and the affordability of its rooms. The pricing strategy will be used as a key element in advertising the hotel.

The Market

Market Research

Comprehensive market research was done to check the sustainability of the business. It is critical to note that the market research touched on the design of the hotel, including layout and where the cafeteria and bar should be located, food menu for the restaurant, type of bedding to be used and other similar factors. Shaw (2020) notes that there are numerous factors that have to be considered when setting up a hotel. However, it is important to always listen to the target audiences in order to understand what they prefer (Baker and Hart, 2016). This makes marketing research and getting clients to the hotel that much easier.

It is expected that the company will have broken even in one year’s time. Various elements will be considered to make it a real possibility. The first is that the restaurant and bar will also be open to the public, as previously mentioned. This will ensure that the firm still makes money even when there are only a few clients in the hotel. Further, the sporting and fun activities mentioned will also be available to the public at a fee. This, coupled with room fees for guests will be enough to ensure the company breaks even within the first year of operation.

The company will hire additional members of staff on a contractual basis for the added services mentioned. This ensures that the company can still lower costs if the projected financial targets are not achieved. Critically, the firm will not be able to succeed if the projected financial targets are not achieved. There will be flexibility in regard to how the company can lower operating costs in the unfortunate event that this happens.

Marketing Strategy

The marketing strategy is shaped by the target market. Critically, due to the categorized rooms, there are three types of people who will be targeted for a stay in the hotel. The demographics of the first (gold) is business executives staying in the hotel for work purposes. The second group (silver) will be individuals who are working and are looking for a place to stay during their vacations. The last group (bronze) is the backpackers. The marketing strategy will identify different strategies that will target the individual groups mentioned.

Overall, it is important to note that the company will employ the use both traditional and digital approaches to market the hotel to potential clients. Traditional media such as newspapers, radio, television, and advertisements will be used to attract the masses (Chaffey and Smith, 2017). It should be noted that these will be used mostly before and during the first few months of the hotel being in operation. One reason why this is the best time to use the stated approach is that it reaches the masses, regardless of the category. Due to this, the approach offers general information on what the hotel offers, where it is located and why it is better than its competitors.

In addition, the digital technology approaches will be the most used in the marketing of the hotel. The creation of a website to gain and attract customers from the internet (Baker and Hart, 2016). One of the reasons for this is the fact that it is easier for the firm to target the three mentioned groups directly through digital platforms (Ray and Yin, 2019). Basically, Word of mouth increased through viral and social marketing including conversations on social networks, blogs, and online review sites such as Twitter, Instagram, and TripAdvisor (Horner and Swarbrooke, 2016). Further, they are more affordable compared to the traditional approaches. Therefore, the digital space will offer more value for money. This will lower the operating costs, thereby, improving the bottom line.

Competitor Analysis

There are numerous hotels in the area. Therefore, it can be argued that the new hotel will have significant competition in the market. There are various advantages that the competitors have compared to what Fun Boutique Hotel will be offering. The first is that they have more rooms. This gives them the unique advantage of hosting conference members who visit the region. Secondly, a significant number of the hotels have larger conferencing halls compared to Fun Boutique Hotel. Crucially, conferencing is one of the key income earners in the hotel industry (Pride and Ferrell, 2015). The fact that Fun Boutique Hotel has a smaller conference hall means that the company will miss out on numerous large meetings. Thirdly, a significant percentage of the competitors also have been in the industry for a long time. This means that they have been able to build their brand and have loyal clients.

Despite the advantages that the competitors have, Fun Boutique Hotel has a competitive advantage that will help the management acquire a significant percentage of the target market. It should be noted that there are currently no hotels in the region that have clearly differentiated their target market. Due to this, some hotels have fully focused on tourists while others are only interested in business executives (Cheng, 2013). This is a unique concept by Fun Boutique Hotel that ensures that everyone can be accommodated within the hotel. It is important to note that due to this, all customers will also be treated to the same kind of customer service regardless of the room they are in. This will enhance the guest experience and is highly likely to not only attract clients but also help in retaining them.

Operations and Logistics

The hotel will be located in Paris. One of the reasons for the city selection is that Paris gets approximately 33 million tourists per annum (Statista, 2020). The tourists do not include people who have gone to Paris purely for business. The market in the city is significantly huge, ensuring that there is a need for more hotels in the area. The majority of the hotels in the area are not only expensive but do not cater to the core needs of their clients. These are some of the gaps that Fun Boutique Hotel will seek to fill.

The hotel will have numerous suppliers and will not use one dealer to provide different services. One of the reasons for this is the fact that it lowers the bargaining power of the contractor (Cheng, 2013). Shaw (2020) notes that when suppliers have high bargaining power, they can affect the profit margins of the company. This strategy will help in lowering the operational costs, which is one of the main financial objectives in the first year of operation. Some of the key suppliers that will be used are providers of beddings, kitchen equipment, furniture and even Internet fiber. It should be noted that the contracts of these dealers will run for two years. Procurement laws will be used to determine which suppliers are awarded tenders to provide the required items.

There are some supporting services that will be outsourced. First, in the first year of operation, the company will outsource its human resource needs. A trusted company will be consulted to help identify the right candidates to be hired for different positions in the hotel. One of the reasons for outsourcing this service is that it will be much more affordable as the hotel becomes functional. However, the management will hire in-house human resource personnel by the end of the first year of operation. All contractors will sign a suppliers’ contract, thus, will also be viewed as an outsourced service. The internet cable and fiber will also be outsourced as well.

The distribution of the company’s service will be physical due to the nature of the business. It is important to note that there are two main elements that have to be considered when discussing distribution. The first is ensuring all the rooms are well maintained and that clients do not wait more than 5 minutes before being assigned a room of their choice. Secondly, one also has to consider the fact that there are other products within the hotel that will also be affected by distribution. For instance, meals can be delivered to customers through room service. However, they will also have the option of eating their meals at the restaurant.

The company will offer employees two-year and short-term or part-time contracts. The short-term or part-time employees will help provide the necessary support when needed. It is expected that there will be seasons when the hotel will be at full capacity, therefore, more staff members will be needed. This is one of the instances in which part-time employees will be used. Overall, the company will have 15 employees on a two-year contract basis and 10 on part-time basis.

Costs and Pricing Strategy

Critically, the start-up capital required is approximately £750,000. It should be noted that a significant percentage of the starting capital will be received in the form of a loan. However, there is also a possibility of getting a partner who can fund the whole project in exchange for equity Currently, I am looking for a partner who can also bring in the food and beverage expertise due to the fact that the hotel will also have a restaurant and bar. An important point to remember is that an experienced partner, someone who has worked in the industry, will be more influential than just a partner who provides the required amount to start the hotel. It might be feasible to get more than one partner for the business. The maximum number of investors, however, will be limited to three. These will be enough to enhance the co-creation process. In the event that no investor can be secured on time, a loan will be the only option for funding. The loan will be sought from the local bank and from micro-finance institutions. It is expected that any loan that is taken should be repaid within the first 7 years of operation.

Critically, the company will charge its service in a strategic way to ensure that the company is profitable by the second year of operation. For example, gold rooms will be charged £450 per night while silver rooms will be charged £200 per night. The bronze rooms will be the most affordable at £100 per night. Additionally, the hotel will charge £5 for room service and £40 for laundry services for guests in need of these services. The restaurant and bar will align their prices to the industry standard.

There are several assumptions that have been made in order to come up with the financial projections above. The first assumption made is that summer will be the best time for the company to make a profit. This is based on the fact that this is also the best time for tourists to visit Paris. It is expected that this trend will not change making the season the busiest for the company. Additionally, it is also assumed that the bronze category will be the most preferred during these stated months. The assumption extends to the fact that backpackers do not stay in one place for long. Therefore, it is assumed that the hotel will have more short-term stays during this time as opposed to extended ones. Secondly, it is also assumed that the licenses and other similar certificates will not change in the first year. This is due to the fact that all certifications for the first year have been considered under the start-up capital of £750,000.

Financial Projections
Figure 1: Financial Projections

Risks and Back-Up Plan

One of the risks of this business is that it relies fully on a promising economy that allows people to travel. Political goodwill is vital in the tourism and hospitality sector. Critically, due to the fact that tourists are the primary target audience, the company risks political issues that arise in different countries where the tourists will be coming from.

It is also important for the management to have a backup plan if some of the key issues such as overstay checkout where guests would have to check out when the next person booked into their room arrived. It should be noted that the management is aware of the potential risks and has put in place measures to deal with such issues.

The seasonality and the perishable products are also some of the risks the hotel will be facing which required proper management.

Finally, as mentioned, in regard to funding, if no investor is found on time, the management will take out a loan from the bank and other micro-finance companies. The management is also willing to change course and use different approaches to ensure the success of the business.

Reference List

Baker, J. M. and Hart, S. (2016) The marketing book. New York, NY: Routledge

Chaffey, D. and Smith, P. R. (2017) Digital marketing excellence: planning, optimizing and integrating online marketing. New York, NY: Taylor & Francis

Cheng, D. (2013) ‘Analyze the Hotel Industry in Porter Five Competitive Forces’, The Journal of Global Business Management, 9(3), pp. 52–57.

France Tourism Statistics & Industry Trends (2020). Web.

Jones D, Day J, Quadri F. (2013) ‘Emerging Definitions of Boutique and Lifestyle Hotels: A Delphi study’, Journal of Travel & Tourism Marketing, (2013), pp. 78–88.

Horner, S. and Swarbrooke, J. (2016) Consumer behavior in tourism. New York: Routledge Lwin, M. and Phau, I. (2013) ‘Effective advertising appeals for websites of small boutique hotels’, Journal of Research in Interactive Marketing, 7(1), pp. 18–32.

Pride, M. W. and Ferrell, C. O. (2015) Marketing 2016. Los Angeles, CA: Cengage Latest

Ray, S. and Yin, S. (2019) Channel strategies and marketing mix in a connected world. New York, NY: Springer

Shaw, R. (2020) Generation priced out: who gets to live in the new urban America, with a new preface. Los Angeles: University of California Press

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