A guest house or guesthouse is a private house offering accommodation to paying guests. Alternatively, you can call it a boarding house or a bed and breakfast (BnB). This is a thriving business due to the ever-present demand for guest house services. Guest houses are usually relatively cheaper than other forms of commercial accommodation e.g. hotels. Starting a guest house is a lucrative venture you can consider. There are 3 ways in which you can start your own guest house business. You can build one, you can purchase one, or you can renovate (a building or a house). A guest business is a very lucrative business to set up especially when there are plenty of attractive tourist destinations in the country. Guest houses provide a lot of income for a lot of entrepreneurs but before setting up such a business there are a lot factors to consider. Determine the size of your guest house, its location as well as your target market. Think about the amenities you will offer, the number of rooms you will provide as well as the packages you will offer. All these factors will be determined by your startup capital and target market. Therefore, conducting market research should be one of your first priorities before setting up a guest house. You also need to carry out a feasibility study and draft a guest house business plan. This article will highlight how to set up a guest house business, and a guest house business plan – PDF, Word, and Excel.
Guest House Business Model
The basic business model for a guest house is charging clients for occupancy. Guests can also pay for several other services or amenities that may be onsite. For instance, you can provide catering services onsite. You can provide a service for guests to get their laundry done and they pay. It could even extend to providing car wash services. There are so many things you can make money from when running a guest house business. Whilst just occupancy charges can suffice, you can still have add-ons to maximize on revenue generation.
Location & Premises
The location of your guest house can have a huge effect on the success or failure of your business that is why you need to determine the right location and premises. After determining your target market you need to select a location for your guest house that is close to your target market. Factors to consider when selecting the right location for your guest house include road traffic and accessibility. Another important factor to consider when selecting a location for your guest house is the environment such as neighbouring businesses. The environment you choose to set up your guest house in will have a direct effect on the performance of your business. The premises should be large enough to accommodate both your guests and staff. It should have sufficient parking space. The type and number of rooms of your guest house will be determined by your target market and budget. The guest house business plan should include the costs of acquiring or leasing the guest house.
Permits/Licenses, Insurance & Business Bank Account
Permits Or Licenses
Permits and license dynamics differ depending on your location and the circumstances.
For example, there are many people who start guest houses by turning their homes. In most cases there might be no obligations to get licensed. This is especially so when the approach will simply entail occupancy. As in, other aspects such as cooking, laundry and the like, the guests will be doing it themselves. It will be akin to renting out your house for a day or some days. In that scenario there usually is no need to apply for any type of permit or licensing.
Another common approach nowadays is to register your guest house with Air BnB. Thus you would have to satisfy AirBnB’s registration or listing requirements. However, the moment you want to formally, standalone run a guest house you will have to get the applicable license or permit. You can consult your respective local authorities to get guidance. Plus you would have to formally register the business or company.
Insurance And Business Bank Account
Any form of business tied to a physical building must be properly insured. There is a long list of possible incidentals so contact a reputable insurance provider. Even if it seems unnecessary, do not mix personal and business finances. That is why you must open a separate business bank account for the guest house. This brings financial order and more importantly, protects your personal money and assets.
Equipment For A Guest House
Every business requires the right equipment to operate successfully. For a guest house the required equipment include beds, furniture, essentials such as towels, kitchen equipment, and other amenities. The size of your business as well as the number of rooms you offer, together with your packages will determine the furniture and equipment you will need for your guest house. If you plan to offer transport services, you may need to purchase vehicles too. The costs of purchasing the equipment and furniture should be included in your guest house business plan.
Products And Services
There are several packages you can offer at your guest house and these will be determined by your target market. You can offer basic packages that are priced economically with a few amenities such as a single bed with access to WI-FI or premium packages where you can offer king sized beds, access to WI-FI, room service and other amenities. Each guest house has its owned tailored amenities for different prices. In order to attract more guests, it is best to add other complimentary services. Meals can also be offered to guests at an extra cost. You can also research on the kind of packages and amenities other guest houses offer. Your guest house business plan should have a clear description on the kind of products and services your business will offer as well as the costs you expect to incur in order to provide these products and services.
A guest house business falls under the hospitality industry. As the name suggests, it is about hospitability. The guest house that is more cordial and generous towards guests, emergences tops. You have to closely study all other guest houses close by – direct or indirect competitors. You can even book a stay to experience them personally. Your thrust will be to find out how they operate. You will no doubt identify gaps and loopholes to capitalize on. Go online as well and find out what people are saying about them. Emulate the positives and ride on the negatives by providing better.
Staff & Management
When running a business such as a guest house you need to have the right team. You must hire employees who are able to work well with people from different backgrounds, and who are passionate about the hospitality industry. It is even better to hire people who already have experience in this kind of field. A service business such as a guest house needs to have people who know how to interact with guests and maintain an accommodating environment. Customer service must be on point in order to attract and retain customers. Your guest house should always be attractive with clean rooms, kitchen, common areas, as well as friendly staff. The size of your guest house will determine the number of people you will employ. You will need to hire housekeepers, cleaners, cooks, chefs, security and management and the costs associated with hiring them should be included in your guest house business plan.
Digital Marketing Is Key
You must have a website set up for your guest house business. You should set up social media accounts as well. You must get listed on applicable online listing platforms. Find relevant online communities and online marketplaces where you can market the guest house. You have to invest in getting high definition visuals created for it. Prospective clients should easily visualize themselves at the guest house because of how good the visuals will be.
Work With Social Media Influencers
Engage some social media influencers to market the guest house. Have them over to stay for free. Then they speak positively about their experience to their followers; it works wonders.
Invest in big and colourful signage e.g. billboards, posters, and banners. Do this onsite and in the vicinity of the guest house.
Solicit Online Reviews From Clients
Every client you get is the most effective tool you can ever use. After their stay encourage them to drop a review or make a mention and tag you online. This will generate the much-needed social proofs to lure more clients.
There is a very huge demand for guest house accommodation. Potential customers include both local & international tourists, couples, families, individuals, students, companies and organisations. The market for guest houses is directly affected by what happens in the hospitality sector. Accommodation services are seasonal with very high demand during the holiday season. The festive Christmas season being the peak season. Everyone wants to have a unique experience with the country’s diverse culture and enjoy what the country has to offer. More people now value experiences more than buying tangible assets so the demand for accommodation due to an increase in the number of people visiting the country is likely going to increase.
The hospitality sector is very competitive with a large number of hotels, guest houses, and lodges already dominating the market but there is still a lot of room for more guest houses. Setting up a guest house can be a rewarding business if done well. Factors such as your target market, the location you want to set up your guest house, and your strategy will determine whether or not your business will be profitable or not.
Before venturing in any kind of business it is important to develop a business plan. A well researched business plan can help you determine whether your business idea is profitable or not. With a business plan, you are forced to think through your operational plan, your finances, the risks associated with your business as well as the ways to minimise them. A guest house business plan will set you apart and will help you prepare for the road ahead.
Keys To Profitability
Provide A Holistic Experience
One of the keys to profitability when running a guest house business is providing holistic hospitality. This entails including much more than just accommodation. Make your guest house feel like a consummate home. For instance, you can incorporate wellness and fitness equipment or facilities.
Your guest house must be easily discoverable online. This is because prospective clients do online searches. That is why it is important that you have an active online presence. Solicit reviews from clients, particularly Google reviews. Take advantage of user-generated content too. Social proofs are a huge driver of occupancy for a guest house business. See to it that your Google Maps location is accurate so that clients can easily find you.
Be Big On Making Your Guest House Sustainability-Focused
Upholding environmental social governance will boost your brand image. More and more clients are leaning more on brands that value sustainability. This can include the use of recyclable material, use of renewable energy, and responsible water usage, amongst others.
Privacy And Security Are Imperative
‘Private’ in the definition of what a guest house is, is a pertinent element in profitability. Clients ideally prefer guest houses with sufficient privacy and security as well. If those aspects are in abundance for your guest house, you are good to go.
That is what you need to know in starting a guest house business. It is highly competitive and ever-evolving; you need to stay abreast with the trends. Make guests truly feel like guests, not clients per se – that is the secret.
Pre-Written Guest House Business Plan (PDF, Word And Excel): Comprehensive Version, Short Funding/Bank Loan Version and Automated Financial Statements
For an in-depth analysis of the guest house business, we encourage you to purchase our well-researched and comprehensive guest house business plan. We introduced the business plans after discovering that many were venturing into the guest house accommodation business without enough knowledge and understanding of how to run the business, lack of understanding of the financial side of the business, lack of understanding of : the industry, the risks involved , costs and profitability of the business; which often leads to disastrous losses.
The StartupBiz Global guest house business plan will make it easier for you to launch and run your guest house business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. This is a complete business plan for a guest house. It will be easier to plan and budget as you will be aware of all the costs involved in setting up and running the guest house business.
Uses of the Guest House Business Plan (PDF, Word And Excel)
The guest house business plan can be used for many purposes including:
- Raising capital from investors/friends/relatives
- Applying for a bank loan
- Start-up guide to launch your guest house business
- As a guest house business proposal
- Assessing profitability of the guest house business
- Finding a business partner
- Assessing the initial start-up costs so that you know how much to save
- Manual for current business owners to help in business and strategy formulation
Contents of the Guest House Business Plan (PDF, Word And Excel)
The business plan for guest house includes, but not limited to:
- Marketing Strategy
- Financial Statements (monthly cash flow projections, income statements, cash flow statements, balance sheets, break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortization)
- Industry Analysis
- Market Analysis
- Risk Analysis
- SWOT & PEST Analysis
- Operational Requirements
- Operational Strategy
- Why some people in the guest house business fail, so that you can avoid their mistakes
- Ways to raise capital to start your guest house business
The guest house business plan package consists of 4 files
- Guest House Business Plan – PDF file (Comprehensive Version – 73 Pages)
- Guest House Business Plan – Editable Word File (Comprehensive Version – 73 Pages)
- Guest House Business Plan Funding/Bank Loan Version- Editable Word File (Short version for applying for a loan/funding – 43 pages)
- Guest House Business Plan Automated Financial Statements – (Editable Excel File)
The business plan can be used in any country and can be easily edited. The financial statements are automated. This implies that you can change eg the number of rooms, salaries etc, and all the other financial statements will automatically adjust to reflect the change.
Click below to download the Contents Page of the Guest House Business Plan (PDF)
Get the Guest House Business Plan (PDF, Word And Excel)
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