How to start a B&B or guesthouse

Content provided by a guest contributor.

Starting and running a bed and breakfast or guesthouse requires more time, commitment, and effort than you may think. That being said, it doesn't have to be uncharacteristically challenging. These three tips will help you better prepare for the realities of owning a B&B or guesthouse.

Before looking at the tips, it is first important that you understand the difference between a guesthouse and a B&B:

  • Bed & Breakfast: This is an informal, periodic-accommodation establishment which is run from a private dwelling. It is restricted to having a maximum of 3 guest bedrooms.
  • Guesthouse: This is a commercial accommodation establishment with between 4 and 16 bedrooms. Its primary source of business is to supply tourist accommodation. Guests are also provided with breakfast and dinner.

Once you've decided what type of accommodation you would like to provide, the following tips will help you establish it.

1. Find the right property

There are two options available to you when opening a B&B or guesthouse. You can either choose to buy an existing establishment or convert a residential property into a guesthouse or B&B. Each of these options are looked at in a bit more detail below.

Buying an existing establishment

The advantage of buying an existing establishment are that you may save time and money you would have otherwise spent on renovating a residential property, and you may have access to a clear idea of the rate of occupation and the expense to turnover ratio from the previous owners. However, guesthouses, for example, are often considerably more expensive to initially buy than residential properties. To make a decision about whether or not to buy an existing establishment, you will need to compare the purchase price with the potential future earnings and possible capital appreciation on the property.

It is also important to check the zoning permissions before buying the establishment to make sure it is legal.

Converting a residential property

While converting a residential property may seem like the more affordable option, and the one that allows more freedom in terms of your goals for and view of the guesthouse or B&B, it also has significant disadvantages to keep in mind.

Converting a residential property requires renovations which are often costly and time-consuming. It also requires you to think about and make provisions for guest parking, and to ensure you obtain the correct zoning permission.

2. Be mindful of your cash flow and finances

Due to the seasonality of the hospitality industry, it is likely that you may experience dry periods with few or no guests and income. Adequately plan your finances to ensure that you have sufficient savings to see you through these periods. You can secure your savings by not overextending yourself when it comes to monthly repayments on your bond, for example. When planning your finances, it is also important to keep in mind that rates and taxes tend to be more expensive for guesthouses than for ordinary residential-zoned properties.

That being said, guesthouses and B&Bs can be considerably profitable if run successfully, and rates and taxes should not have a significant impact on your profits.

3. Embrace the lifestyle

Owning your own guesthouse or B&B can be a rewarding experience, both financially and personally. However, it does have its challenges such as long work days, and the need to manage and address various complications ranging from day-to-day maintenance to guest management. The accommodation industry is very customer centric and, as an owner or manager, you need to be ready and able to please and placate guests. It is because of this that, if you are running your business alone, any free time you may have will need to be spent on or near the property to ensure your guests can always reach you if need be.

Being the owner of a guesthouse or B&B is no easy feat, but if you have the dedication and personality necessary, you will find it satisfying and profitable.

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