How To Start A Guest House In South Africa
What is a Guest House?
A guest house is a kind of lodging. In some parts of the world, guest houses are a type of inexpensive hotel-like lodging. In still others, it is a private home that has been converted for the exclusive use of lodging.
Overview of Guest House in South Africa
Guest house means a dwelling house which is used for the purpose of letting individual rooms for residential accommodation, with or without meals, and which exceeds the restrictions of a bed and breakfast establishment. ( Includes Self Catering units). Opening a guest house in South Africa offers the prospective immigrant with both a place to live and operate their business. Coupled with business friendly immigration regulations selecting South Africa as for opening a guest house becomes increasingly attractive.
How To Start A Guest House In South Africa
1. Understand the Industry
Indeed South Africa’s hospitality sector is expected to growth more in the next five years on the back of rising room rates and growing tourism numbers. Reports project the overall occupancy rate across all sectors in south africa to rise to an estimated 58.4% in 2018, with total room revenue expected to reach R28.7-billion.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
You can’t just wake up and decide to start this business. First and foremost, you will have to go through a hard core planning stage, and that includes researching the type of guests you can attract and planning how you’ll attract them. Below are typical target markets you can possibly attract in this business. If you can pull in two, or several, that’s great. But you’ll need to attract at least one, or get creative and come up with something else that will bring ample visitors.
3. Decide Which Niche to Concentrate On
Customers in this industry are always looking out for a great personal touch, so plan on offering services that will make their stay more comfortable. Have it in mind that vacationers at Guest houses typically look for relaxation, so you could build a secluded outdoor area for guests to lounge.
Know Your Major Competitors in the Industry
4. Decide Whether to Buy a Franchise or Start from Scratch
When thinking of starting this business, you have to decide if you will buy an existing guest house or build a new one. This is the first decision you’ll have to make when you settle on a town. You could either find a guest house an owner is looking to sell, or you could build a new one from scratch. But then there are positives and negatives to each option that you should weigh carefully before making your decision
5. Know the Possible Threats and Challenges You Will Face
When starting a guest house, you’ll probably need to get startup capital from either a bank or private investor. Either option will want to see a business plan to determine if your business is worth investing in
6. Get the Necessary Legal Documents You Need to Operate
Just like we stated above, a guest house is a commercial accommodation business offering between 4-16 bedrooms which has, as its primary source of business, the supply of tourist accommodation. Just like other countries, there policies you need to adhere to in South Africa if you hope to achieve success in this industry.
Choose a Suitable Location for your Business
Just before you start getting bothered about exact locations, you’ll have to think more broadly and decide what city or town you want your guest house in. At the minimum, you’ll have to consider what the tourism industry in a given area is like.
Hire Employees for your Technical and Manpower Needs
In this business, the size of your staff will greatly depend on the size of your guest house. A guest house with multiple rooms, even small ones like yours, usually need a team of workers to keep them running smoothly.
Frequently Asked Questions(FAQs)
Do you need a license to run a guest house?
A Guest House may also wish to serve liquor on the premises, and therefore a liquor licence would be needed. Ensure that you have consulted your Local authorities on the policy that governs the establishment of a B&B or Guest House in your area.
How much does it cost to build a guest house in South Africa?
Building a modular 600-square-foot guest house costs R814199. 64 on average. Costs range from R666163.
How profitable is a guest house in South Africa?
Dry spells aside, successful guesthouses can be very profitable endeavours, with relatively low overheads that scale according to occupancy. In terms of gross income, a guesthouse with four double rooms, charging R600 per person sharing could generate over R86 000 per month at an occupancy rate of 60%
What services do guest houses offer in South Africa?
Many provide breakfast and amenities such as tea and coffee, making them semi-catered. Unlike fully catered accommodation such as hotels, and completely self-catered accommodation such as villas, apartments and aparthotels, guest houses provide a bit of home comfort, while still offering some degree of privacy.
What should a guest house include?
Typically, a guest house will have, if not most, all the functionality of an actual home; running water, electricity, bathroom, living room, bedroom, and a kitchen. An accessory could be a washer and dryer machine, although many guest houses include these as well.
Do guest houses add value?
A guest house can add significant property value when it’s time to sell your home. Simply by having a guest house attached to your home, you’re adding a decent amount to the home’s total square footage.
Can you open a bed and breakfast in a residential area?
After deciding on the most appropriate business structure for your bed and breakfast, you need to approach your local municipality to find out if there are any by-laws or regulations that will prohibit you from converting your residence into a bed and breakfast
Do you need permission to run a B&B in South Africa?
If you plan to open a small bed and breakfast in your own home, you may not need planning permission to start your business. The key test to decide if you need planning permission is whether you will change the overall nature of the house. For example, a building changing from a private home to business premises.
How profitable is a bed and breakfast in South Africa?
Dry spells aside, successful Bed and breakfasts can be very profitable, with relatively low overheads if managed well. In terms of gross income, a Bed and breakfast with 4 sellable double rooms, charging R700 per person per night sharing can generate over R100 000 per month at an occupancy rate of 60%
How much should I charge for my bed and breakfast?
How much does a B&B cost? Nightly rates for 2 people can range from as low as $85 to over $250, depending on the specific B&B, room size and type, amenities, location, and season. Many B&Bs have accommodations that can sleep more than 2 people, usually with an additional charge.