How to start a profitable guest house business in 3 simple steps?

Starting a guest house business sounds like an EXCITING task, but what if you go with your GUT and open a boutique property, then you would face 3 things -

• struggle to fill rooms, 
• get poor reviews and 
• can’t cover initial investments.

This happens as they underestimate the importance of having a business plan, financial projections and marketing strategy.

That creates a financial burden on guest house owner.

Let's talk about what a guest house is, whether it is feasible for you to open one, and the exact four steps you need to follow to run such an accommodation. 

What is a guest house?

A guest house is simply a small establishment where the property owner rents the property to travellers for a short- and long-term period. Unlike B&Bs, these lodging businesses are larger, but the owner of the property doesn't live there.

These accommodationscan range from standalone rooms to apartments and offer facilities such as clean bedrooms, appetizing cooking meals and alcoholic beverages.

The owners who run a guest house business don't have in-depth knowledge of hospitality management. But they have a good knack for cooking skills, know how to maintain clear hygiene and delight guests in the best possible way.

Travellers who want a relaxing environment on a short-term basis prefer to stay at a guest house. 

Should you open a guest house business or not?

Before starting a guest house business, here are a few questions you need to ask first - 

• Understand your WHY first. Do you want to open a guest house business just because you want to make more money, or do you want to be your BOSS? Generally, people who want to run guest house business do it as their side project.

They wanted to earn more revenue by giving the property on lease and management contracts to get more revenue share.

• Are you the right fit for operating a guest house business? If you possess these traits, then becoming a guest house owner is a no-brainer for you - 
• Multitaskers who are good at multiple things 
• Comfortable with tasks such as cooking and cleaning 
• Ready to experiment with new things 
• Always in their research mode and keen to know more about the location aspect 
• Timing matters a lot before you open a guest house business. Do your homework to see what's going on within the hospitality landscape.  
• Do you have a cash flow for running a guest house? For that, you need to have a financial plan that shows how much money you will make every week, and then you will assess key metrics such as average room rate, RevPAR and occupancy rate. 
• Do you want to operate the guest house business? Then make yourself ready to manage routine operations such as check-in, housekeeping processes and all that marketing jazz.

3 steps to start your guest house business in 2025

Starting a guest house business is an incredibly hard thing, and location plays a vital role in attracting tourists and vacationers. Here are a few steps on how you can run a successful guest house business- 

1. Find the right place for a guest house business

Starting a guest house business from scratch is never a bed of roses; it requires you to have a business license which is costly affair but without which you can't operate your property. 

Finding a right place also decides what type of travellers will visit your property. Are they leisure or business travellers?

Then you need to comply with certain health and safety regulations to ensure that you maintain that hygienic standard.

It all starts with finding the right property, which can be either purchasing a new property, buying an existing guest house business, or renovating the property.

• When deciding to buy a new property, you can do everything that you thought of in your business plan, number of guests that your accommodation will serve and what features you want in a property.
• The other way can be buying an existing establishment, which will save your expenses and can be comparatively cheaper than purchasing it from scratch. 

Make sure to estimate the value of the property with earnings. 

Does this existing property get more guest traction or not? 

Does it get more occupancy during peak season, or are people aware of this property? 

Downside? If the property has had a bad reputation in the market and people have left negative reviews on OTAs, that means your profits are going to suffer.

Keep in touch with the owner of the guest house and ask about the current cash flow that this property receives, is there any system set up, or what are the go-to operating expenses involved?

Ask him to provide you with training so you can know the ins and outs of this business. 

Have limited funds? 

• Transform your residential property into a guest house business. Bad side? You need to think of providing parking facilities to guests and zoning permissions.  

Note – You always have to do homework in each of the 3 cases.

2. Start a business plan for a guest house

A good business plan is important for you to start a guest house business and ensure that you stay aligned with your core business goals.

Most guest house businesses don't create a business plan, which makes it difficult for investors to consider investing in your property. 

Here are three things that you need to be clear about when drafting a business plan for your future guest house business-

• What is the bigger picture you've in your mind for a guest house? 
• What's the reason behind your guest house's existence? 
• What are the main goals of running a guest house property, and what is your roadmap to achieve them? 

To help you get started, here are a few things to include in your business plan -

• Who is your target audience? Their demographics, preferences.
• What's your USP that makes your guest house business stand out? 
• Spend some time doing competitor research and see what services/amenities other guest house businesses offer. 
• How will you sell the hotel rooms? Would you have your website or rely on other sources to get bookings online? 
• Think about policies and processes that you keep handy. How will you manage your day-to-day hotel operations, such as check-in/check-out, housekeeping operations and other property maintenance expenses?
• How will people know about you? Think of marketing activities you will do to improve your brand visibility. These include content marketing, SEO, PPC, and maintaining your presence across OTAs. 

In marketing, you need to see how many people are willing to pay for the services and how you will get in touch with them. 

• Highlight what your future revenue will be? Give some rough figures and estimates about your profitability and revenue plan. Delegate this work to an accountant who will prepare a financial plan for you. 

3. Time to welcome your guests

You finally launched your guest house business, but travellers don't know about you. Spread some buzz about its opening. Social media is one of the ways to share some cool stuff, exciting updates and behind-the-scenes moments. 

Invest in your hotel's website so that people can reserve a room with ease. Provide the most important information to them so they know what they will get after reserving a spot at your accommodation. 

Make sure to think about guests' safety, as that's a #1 priority for you since it's a client-centric industry. Keep your rooms ready and pamper your guests with unique experiences, such as a consistent theme and design everywhere or lip-smacking meals.

How much should it cost to run a guest house business?

The cost of building a guest house depends on various factors such as - 

• Whether you want to create a new guesthouse business or convert the existing space into a guesthouse.
• It also depends on the location of the guest house. A guest house located in a rural area is comparatively cheaper than running it in the city.
• Whether the property is owned or on lease? What are the recurring operational expenses involved?
• What would be the number of guests you want to cater to in the guest house? What will it look like?
• Do you want to add other amenities in that business, like a swimming pool, a game roomor a relaxation area? But it increases your operational expenses and investment. 

What Tips do you follow to Attract Guests to Your Guest House Business?

Here are a few tips that you can follow to bring more guests to your property. These are as given below - 

1. Know your guests inside out and be clear about who you want and who you don't want.

Not all guests can be treated as equal. You need to understand whether they are leisure travellers or vacationers, then you can know what amenities/services attract them most.  

If you think of buying an existing guest house business, then you need to talk to existing guests who usually come to your area.  

This way, you can tailor every message as per each guest's profile.

2. Keep communicating with guests regularly. The contact information should be clear on website and socials that they can find you.  

3. List your property on different OTAs to ensure that you've a pipeline of guests coming to your property. Then, there will be money coming in. But don't heavily rely on OTAs, as they will take 25-30% commission of the total bookings. 

4. The website is the first impression that travellers generally look for before they click on the book button. Keep your website SEO optimized so you rank at the top of SERP.

Make sure that the hotel's website matches the brand identity and should convey the features, popular things and USP that make your property stand out. Make sure to focus on the benefit side of things. 

5. Travellers always read reviews before deciding on a place to visit. The number is significantly higher when they come to reserve a spot at the accommodation. 

A study states that 81% guests read the reviews frequently before deciding to stay at a property. 

6. Take feedback seriously. The positive feedback tells you you've been doing well in these things, while the negative feedback will tell you where you're lacking. This way, you can spot gaps and enhance the guest experience. 

7. Make sure to keep your rooms tidy and clean before guests can spot the gaps and complain about room cleanliness. Such things become worse when they are highlighted in reviews.

8. Whenever people leave your guest house, ask them to share their reviews on OTAs and social media. This creates the first impression of your property, but if you have more negative scores, then that's a red flag for travellers.

Join groups on social media to find what travellers are struggling with most and create content on that topic consistently.

9. List your property on Airbnb and optimize it for better visibility. 

This way, whenever a travelers runs searches for finding a suitable guest house, your property will be visible at the top. 

To get more eyes on the guest house, write a compelling description and hire a professional photographer to capture the best photos. 

10. Technology should always be at the forefront of running a guest house business.  

11. Investing in hotel management software such as PMS, channel manager, and an SEO optimized website with a booking engine integration can take your small guest house business to the next level. 

12. Guests aren't just interested in fancy bed linen or top-notch rating, they want-

• unique experiences, 
• an insider view of the hotel, 
• explore the place and want to stay at a place which provides them a cosy feeling and gets them out of their daily habits and thinking patterns. 

How can BOTSHOT help you manage your guest house business?

Starting a guest house isn't a cakewalk, and it does not demand huge resources from your side; it requires your unconditional commitment, a place where unique experiences are shared. 

Not every guest will look at 200 glossy reviews, of course, some of them will do their research carefully, but what if glossy reviews fade away when they enter your property? 

No cleaners, Poor guest service, Bad location, where no one likes to come, with disappointed guests along the way. 

This means you need to take care of every single element, from funding to deciding what goes inside your property, to how people will know about you. 

To help you manage the hassle, you need to have a technology-first mindset, and BOTSHOT can help you manage your routine operations with ease. 

• PMS to manage your hotel from check-in to check-out. Through a single dashboard, you can get insights on the number of bookings made, how many rooms are occupied and even manage your housekeeping processes.
• Channel manager to manage the room rates and availability across 100+ OTAs in real time. These include Expedia, booking.com, etc.
• Hire a revenue manager to help you increase your presence across different OTAs.