How to start a hotel business in India

The Ministry of Tourism's NIDHI register defines each kind of place to stay. The ones a new owner most often chooses between:

• Hotel: at least a reception and rooms, and it may serve food and other services.
• Guest house: rooms with meals.
• Homestay: a room for rent in a house or flat the owner lives in, with meals.
• Bed and breakfast: rooms and breakfast.
• Resort: stay with leisure, at a tourist place such as a hill station, a beach or the countryside.
• And farm stays, lodges, tented camps, houseboats, motels and heritage hotels, each with its own definition.

The kind you choose sets the rules you build to. For the Ministry's voluntary schemes, a star hotel needs at least 10 lettable rooms, an approved guest house at least 6, and a homestay or bed and breakfast between 1 and 6. Your state may set its own lines, especially for homestays (see the guide on starting a homestay).

Before you commit to land or money, find out who comes to the place and when.

• The Ministry of Tourism's India Tourism Statistics gives the tourist visits to each state every year.
• On Google Maps and the booking sites, list the places to stay near your site, with their ratings, review counts and prices on weekdays, weekends and festival dates across the year.
• Talk to the people who send guests: travel agents, companies, colleges, hospitals, temples and wedding venues near you.

Write down every figure with the date and where you read it. They go straight into the business plan (see the guide on writing a hotel business plan).

• Decide who owns it: a proprietorship, a partnership or a company. The Ministry of Tourism's forms ask for the proprietor's registration, the partnership deed, or the company's memorandum and articles, so keep them ready.
• A PAN for the business, or the proprietor's PAN. The GST portal says PAN is mandatory for GST registration.
• A bank account in the business's name.
• GST registration, once your turnover passes the limit for services, or earlier if you choose to register.

To register, the GST portal's own user manual gives these steps:

1. 1Go to www.gst.gov.in and click “Services”, then “Registration”, then “New Registration”.
2. 2In “I am a”, select “Taxpayer”, then your state or union territory and district.
3. 3Enter the legal name of the business as it is on the PAN, the PAN, and the email address and mobile number of the person who will sign for the business, then click “PROCEED”.
4. 4Enter the two one-time passwords sent to the mobile and the email. The portal gives you a Temporary Reference Number (TRN).
5. 5Sign in again with the TRN and fill in Part B, tab by tab: business details, promoters or partners, the authorised signatory, the principal place of business with proof of it, the goods and services, and Aadhaar authentication.
6. 6Submit within 15 days of getting the TRN, or the portal deletes what you filled in.

The manual says that if you apply within 30 days of becoming liable to register, your registration counts from the day you became liable. As proof of the place of business it takes, for your own premises, a recent property tax receipt, municipal khata copy or electricity bill, and for rented premises the rent or lease agreement with proof of the owner's ownership.

The Ministry of Tourism lists the approvals a hotel shows when it applies to be classified. Even if you never apply, they are the papers your local offices will ask about:

• Land use permission for a hotel on that land.
• Building plans sanctioned by the competent authority, and the occupancy certificate once it is built.
• A no objection certificate (NOC) from the fire department.
• Consent to operate from the state pollution control board.
• A sewage treatment plant, which the Ministry doesn't insist on for hotels with a completion certificate from before 1 April 2012.
• Where they apply: an NOC from the Airports Authority of India near an airport, coastal regulation zone (CRZ) clearance, and the environment ministry's NOC.

The Ministry says plainly that these are the owner's responsibility and that its own approval is no substitute for any of them. In hills and ecologically fragile areas it asks for architecture in keeping with local style and materials, built for sustainability and energy efficiency.

Which licences you need, and from which office, depends on your state and city. Those the Ministry of Tourism asks a classified hotel to show:

• A trade licence to operate as a hotel, from the municipality or panchayat.
• A health clearance from the municipal health officer or sanitary inspector.
• An NOC from the police.
• The fire NOC and the pollution control board's consent.
• A bar licence, if you serve alcohol.

From other offices: food safety registration or a licence from FSSAI for the food you serve, and your state tourism department's registration where your state's law asks for one. Each is explained in the guide on licences to open a hotel in India.

Write the plan before you ask anyone for money (see the guide on writing a hotel business plan). For a small unit, banks and other lenders give loans under the Pradhan Mantri MUDRA Yojana.

MUDRA says it uses no agents or middlemen: apply to a bank or lender yourself. Some states publish incentives for tourism units: Himachal Pradesh's tourism website has its guidelines for incentives and concessions for tourism units, and Uttarakhand's links its tourism policy and the operational guidelines of its tourism entrepreneur incentive scheme of 2024.

The Ministry of Tourism classifies hotels from 1 star to 5 star deluxe under a voluntary scheme, through its NIDHI+ portal. A committee called the HRACC, with members from the Ministry, industry associations, hotel management institutes and the state government, inspects each one. The Ministry says classification gives a place to stay credibility.

You can apply at two points: for approval at the project stage, while you build, and for classification within three months of opening if your project was approved. An operating hotel can apply at any time (see the guide on getting your hotel star classified).

NIDHI itself is the Ministry's register of places to stay, travel agents, tour operators and restaurants. Its registration page says registering is voluntary, doesn't mean the Ministry has approved you, and doesn't replace any licence you need.

• Create your Google Business Profile as soon as the hotel has an address and an opening date, with photos, so guests find you on Google Maps and Search (see the guide on Google Business Profile for hotels).
• List on the booking sites you have chosen, knowing what each keeps (see the guide on booking site commission).
• Build your own website with a booking engine, and connect it to Google's free booking links (see the guides on a hotel website that turns visitors into guests and on Google's free booking links).
• Answer the questions guests ask before booking on your website and listings: parking, food, how to reach you, check-in times (see the guide on the questions guests ask before booking).
• Ask every guest for a review from the first week (see the guide on asking guests for reviews).

• Foreign guests: every place to stay sends Form III, earlier called Form C, for each foreign guest to the Bureau of Immigration within 24 hours of arrival, and the departure within 24 hours of leaving, on its online portal. Overseas Citizen of India cardholders are now included. Register on the portal before your first foreign guest arrives.
• Keep the records your licences ask for: the guest register, bills, and the food safety and fire safety records.
• If you were classified, report occupancy and digital payments online by the 20th of every month, as the Ministry asks of classified hotels.
• Watch your prices against the hotels near you, and read every review, every week.