How To Start A Homestay Business? Homestay Business Model.

. 9 min read
How To Start A Homestay Business? Homestay Business Model.

Table of Contents:

1. Homestay Business Plan

2. What Is Homestay In India?

3. How To Start A Homestay Business?

4. Homestay Business Ideas

5. Risks In Homestay Business Plan

6. Is Homestay Business Model Profitable?

FAQs On How To Start A Homestay Business

1. Homestay Business Plan

Are you interested in earning a good income by starting a homestay business? Then you are at the right place! In this article, we will provide you with all the pros and cons of running a homestay business. While planning a holiday, the first thing you need to decide is accommodation. You need to choose between a hotel, hostel, or a homestay. Those who are travelling solo, prefer to stay in a hostel. Those who are travelling with their families, usually want to stay either in a hotel or a homestay.

A homestay is a form of hospitality where guests share the home with a resident of the city or village where they are travelling. Less crowd and a taste of rural life are making homestays the most preferred choice of tourists in India. Many homestays are located in beautiful locations, in places that are often outside the normal tourist’s radar. It can be in the mountains, or a village, or near forts or forests. A homestay offers several benefits than a normal hotel like a glimpse into the everyday life of the residents and a lower carbon footprint.

2. What Is Homestay In India?

Many homestays are fully furnished with smart TVs, refrigerators, washing machines, etc. One disadvantage of home-stays is that many of them don’t offer Wi-Fi internet services. Another point is that there is a fixed time-table for foodservice and room cleaning. Himachal Pradesh is emerging as an attractive market for homestays.

According to sources in the Tourism Department, the number of homestays in the state till the end of 2019 was 2305. Other places that are seeing increasing interest from tourists are North Bengal and Kerala. It is an excellent low investment business that can also support local tourism.

3. How To Start A Homestay Business?

You can start a homestay business with minimum investment and earn some passive rental income. The three main factors contributing to the success of this business are the layout, cleanliness, and hospitality. Here is a guide on how you can begin a homestay business:

1. Space

You can partner with a friend to hire a cottage or a house in your chosen location. It need not be very large-even a spare bedroom in your flat can serve the purpose. From a minimum of one room to a maximum of six rooms without a restaurant, can be utilised for one homestay.

2. Office

You can easily run this business from a home-office. All you will need is a laptop with an internet connection and a mobile. The Facebook Business page is another tool to help you in this.

licensed tag on white background
What Is Homestay In India?

3. License

Getting a homestay license for your home or property should be one of your top priorities. You have to register with the tourism department by filling up and submitting an application form. You also have to take permission from the local panchayats and the police. Each state tourism board has its standards for basic amenities, room dimensions, safety protocols, etc. as a basis for granting licenses to home stays. Another important criterion for a license is that the owner of the homestay should himself live there with his family. If the property is rented, you have to inform the landlord about the sub-leasing and get his approval.

4. How To Promote Homestay?

Construct an active marketing plan. Know who your customers are and how and where to reach them. If you provide good service your customers will recommend your homestay to others, and you will get repeat business. You should post the feedback and reviews of your guests on your home page. Think about your competitive advantage.

Find what makes your homestay unique, or create exciting activities, and use this to attract guests. You can advertise your homestay on online travel portals and get clients through the booking platforms. However, you have to pay some homestay commission to these tour operators. An online presence is very important and you have to create a unique brand name for yourself. It will be good to create a website and provide details such as prices and photographs in it.

5. Keep Systems In Place

Your homestay should be clean, organised, safe, and well-stocked. Provide the cleaning staff with a checklist to ensure that everything is spick-and-span. It should provide a healthy and hygienic environment for the guests, and maintain the proper standards as laid down by the regulatory authorities. Fire safety is very important, and so is security. Since home-stays are often located in remote locations, you should have a vehicle and driver on standby for any eventualities, a guest falling ill for instance.

6. Customer Service

Look for ways to continuously improve your customer service and solve any problems guests may have. Try to look at things from your guest’s perspective. For most guests, high-speed internet is a must, and you must provide this facility. It is best, to be honest with your guests. For example, if they have to climb some stairs to reach the apartment, it is best to give them this information beforehand.

7. Cost Control

There are several costs in running a homestay. You have to keep proper records of income and expenditure. Once you know how much it costs you to host guests, you will form an idea about how much to charge for the services. Also, try to find out what other similar accommodations are charging before you set your price.

8. Precautions

You should carefully select the guests before allowing them to use your premises. Unruly guests who party hard, and those with alcohol or drug addiction, can mar your reputation. Small families and groups from a company will be your ideal guests.

4. Homestay Business Ideas

If your homestay is located in a hilly area, you can offer trekking services to your guests, to break the monotony. Other offbeat activities that the tourists might find interesting are apple picking, growing organic vegetables, etc. You have to involve the family members of the local resident whose accommodations you will be using for the homestay. The guest has to be made to feel like he is an extended member of the host’s family and experience how they actually live and learn about a foreign culture. You need to build a house that has double functions, one as a private home, and second, that can be also used as a lodging.

5. Risks In Homestay Business Plan

Running a homestay business is not always a smooth affair; you might have to face some problems. There are no telecommunications signals in several villages in India. Internet is very crucial for homestay owners to market and promote their business. So, you should find a good service provider for this. Since this business is highly competitive, some of your competitors might give ‘bad’ or ‘false’ reviews in the guise of guests. Some of their associates can post remarks on forums about your homestay stating it to be ‘expensive’ or, having ‘poor service’.

You can counter these claims by giving your replies on these forums, and asking for proof. Lack of proper marketing is another problem from which this business suffers. Homestay owners lack the big marketing budgets of large hotel chains to advertise their products. To promote this business, you have to employ cost-effective and innovative tools. Posting high-quality pictures on Facebook and Instagram of happy guests can beat any costly ad campaign.

6. Is Homestay Business Model Profitable?

Homestays are transforming the way people take vacations, and India is no exception. Against the backdrop of the pandemic, people have become more aware of the benefits of healthy living. They are beginning to prefer homestays over traditional hotels because being close to nature would boost their immunity. The Ministry of Tourism has promoted homestays as “ Incredible India-Bed and Breakfast/Homestay establishments” for both domestic and foreign visitors. Unlike hotels, which have huge overheads due to high salaries and taxes, the costs of running a homestay are quite low.

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What Is Homestay In India?

A good homestay business decision would be to charge 50 percent of the total amount at the time of booking. This will protect you from the risk of a guest cancelling his reservation at the last moment. Guests have been given importance in India since ancient times, and there is a popular saying called “Atithi Devo Bhava”, meaning guest is God. Homestays are fast becoming a popular business option for owners who have extra space in their properties to accommodate travellers. It is a profitable and low investment business idea for any smart entrepreneur.

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FAQs On How To Start A Homestay Business

Q. Is homestay business profitable?

Ans- Homestays are fast becoming a popular business option for owners who have extra space in their properties to accommodate travellers. It is a profitable and low investment business idea for any smart entrepreneur.

Q. How do you make money from homestay?

Ans- Some of the best ways to make money with your Homestay Business Model are:

  • Low investment and high returns
  • You don't need to hire too many people
  • You don't have to share the profits
  • Maintenance charges are closer to the ground
  • No bougies expense
  • Registration is easy and affordable

Q. How much does it cost to make a homestay?

Ans- In a general Homestay Business Plan it takes around 10 to 20 if you are building upon an existing house. But if you're building a home from scratch it can easily cost you over 2 crores depending on the type of location and size of house you pick.

Ans- The permission for Incredible India Homestay Establishment is given only in cases where the owner or the promoter of the establishment along with their family is physically residing in the same establishment and letting out a minimum of one room and a maximum of six rooms.

Q. Is homestay income taxable?

Ans- Homestay is generally considered a private or domestic arrangement with no taxation implications in the same manner the students are taken in by a family and treated in the same way. For example, a guest may be asked to clean their room or be required to help with household duties.