How to Start a Guesthouse Business: Your Guide to Success

Welcome to our comprehensive guide on how to start a guesthouse business, created to help you navigate success in the hospitality industry. In this blog, we will cover all aspects of establishing and managing a guesthouse, from understanding the concept of a guesthouse to practical tips for running one efficiently. 

We’ll help you determine if starting a guesthouse is right for you, provide step-by-step guidance on starting your own guesthouse business, and discuss essential strategies for effective management. Additionally, we’ll share valuable insights on running a guesthouse, including top tips from industry experts. 

Furthermore, we’ll highlight the benefits of using all-in-one software, like RoomRaccoon, specifically designed for guesthouses to streamline operations and enhance guest experiences. Whether you’re a novice or an experienced business owner looking to enter the hospitality sector, this guide will provide you with the necessary tools to thrive in the guesthouse industry. 

So, let’s embark on this journey together and unlock the secrets to success in guesthouse businesses!

What Is a Guesthouse?

A guesthouse is a type of lodging that provides accommodation to travellers for short stays. These establishments are known for their cosy atmosphere, personalised service, and often homely ambience. guesthouses are usually smaller than hotels and may be independently owned and operated. 

They usually offer only a limited number of rooms, ranging from a few to a dozen, thus allowing for a more attentive service to guests. The amenities provided by guesthouses can vary, but they usually include comfortable rooms, breakfast, and sometimes additional services such as guided tours, airport transfers, or local adventure recommendations. 

guesthouses are often located in picturesque or culturally significant locations, which offer guests a unique and immersive experience beyond just accommodation. They cater to travellers who are seeking a warm environment, often emphasising a sense of community and interaction between guests and hosts.

Is a Guesthouse the Right Business for You?

Deciding to run a guesthouse is a big step and a significant commitment. You’ll want to cover the absolute basic questions that pertain to running any business. We’ve gathered the main questions you’ll want to consider and confront from Forbes’s extensive guide on how to start a business:

1. Determine your business concept
2. Research your competitors and market
3. Create a business plan 
4. Choose your business structure
5. Register your business and get licenses
6. Get your finances in order
7. Fund your business
8. Consider applying for business insurance
9. Invest in the right business tools
10.  Create a marketing strategy

Once you have answered these 10 questions, you should be able to decide if a guest house business is the right business for you. If you’re unclear on any of the above, you should pause and take time to brainstorm your business plan more clearly.

How To Start and Run a Guesthouse:

Starting a guesthouse is no easy feat. You need to treat starting a guesthouse like any other business. So, let’s discuss how to start your own guesthouse business. This means developing a business plan and ensuring that you have a unique value proposition. With the highly saturated property rental market with long-term, short-term and online rentals, your guesthouse must stand out! 

Ensure that you have mapped out your complete concept, identified a target market and researched a pricing strategy. It’s also essential to create financial projections and consider what marketing you’ll do to attract people to your guesthouse. You’ll also need a prime location with local attractions complementing your desired audience.

And then there’s the question of money – where will your funding come from? You’ll need to identify an initial investment that will help start your guesthouse business. There is a horde of costs associated with a property, such as leasing, renovation, decorating and furnishing, and operating expenses. 

Your guesthouse should be so good it’s illegal, but your business has to be legal. You’ll need to research any licensing that is required to operate a guesthouse in South Africa. The legal requirements may differ depending on location, amenities and services offered. You can learn more about licensing an operational guesthouse here!

Now, the fun part. Setting up your guesthouse! It’s time to crack open the cans of paint, whip out the vacuum and fluff the decorative pillows. It’s time to prepare your accommodation for guests and ensure that everything is just as it should be. First impressions matter, and you want to create long-lasting relationships with guests.

As far as operational efficiency goes, you’re going to want to set up some policies and procedures. This will help you and your employees establish clear routines and regulations for the running of your guesthouse.

Running a Guesthouse: Top Tips and Advice

Successfully managing a guest house demands keen attention to detail, unwavering dedication, and a genuine commitment to going above and beyond to guarantee guest satisfaction. Here are a few invaluable tips and advice to help you excel:

1. Be prepared to roll up your sleeves: 

Your active involvement in the day-to-day operations sets the tone for exceptional service and fosters a welcoming atmosphere for guests. You’ll have to handle guest satisfaction and communication, check-in, housekeeping and maintenance if you choose to go ahead without hotel front desk software.

2. Cultivate a strong digital presence: 

It is essential to have a strong online presence to draw in and captivate guests. We recommend investing in a professional website that highlights your guest house’s outstanding features, amenities, and location. It is also essential to be active on the most favoured and current social media platforms like Facebook, Instagram, and X to connect with potential guests, share engaging content, and promote offers.

3. Ensure open guest communication

Effective communication is key to delivering exceptional hospitality and ensuring guest satisfaction. You can enhance guest’s experience at your guesthouse with hotel applications. Using hotel applications to ensure guest satisfaction helps you save time on communications, creating content and gathering reviews from guests.

4. Immerse yourself in the local area

Another top tip is to become an expert in the area your guesthouse is based. This helps you provide guests with tailored local activities that will immediately enhance their stay at your property. You can also partner with local businesses, tour operators, and event organisers to offer exclusive discounts or packages that showcase the best of the area. 

3 Key Strategies To Manage a Guesthouse

1. Maximise your distribution

If you’re looking to sell your guesthouse online, you need a distribution strategy to increase your brand exposure and create brand awareness. One of the most effective ways to do this is by connecting with Online Travel Agencies through an integrated channel manager. You can easily link your guesthouse to multiple booking channels with RoomRaccoon’s integration options. Connect to channels like Booking.com, Expedia, and Google Hotel ads, which will help you reach a wider audience and promote your brand.

Connecting with OTAs can be a valuable strategy for maximising brand exposure, reaching a wider audience of travellers, and driving bookings for your guesthouse. By leveraging OTAs’ marketing reach and distribution channels, you can increase visibility, attract guests, and grow your business in the competitive hospitality industry.

2. Create a marketing plan

In order to communicate your guesthouse’s unique value proposition and its amenities, you’ll need an extensive marketing plan. You should start by setting SMART goals to guide your actions and set measurable goals. You’ll want to consider why guests should choose to stay at your hotel versus at a competitor’s property. These insights will be derived from your competitive market research. 

A guesthouse business’s marketing strategy is essential to attract guests, build brand awareness, drive bookings, engage with guests, and adapt to market trends. When you invest time and resources into crafting and executing a solid marketing strategy, you can position your guesthouse for success and achieve your business goals in the competitive hospitality industry.

Hubspot has a great blog to help guide you through the marketing strategy process. We’ve summarised all the steps you need to follow below:

1. Conduct market research.              
2. Define your goals.              
3. Identify your target audience and generate buyer personas.              
4. Conduct competitive analysis.              
5. Develop key messaging.              
6. Choose your marketing channels.              
7. Create, track, and analyse KPIs.

3. Utilise a revenue management tool

Revenue management allows you to price your guesthouse’s rooms optimally, balancing demand, profit and value for money. Considering all these aspects, staying on top of your pricing strategy can be challenging. Manual changes, price typos and human error all pose a threat to your revenue management. However, revenue management doesn’t have to be complicated with the right property management system. 

RoomRaccoon offers automated revenue management that dynamically adjusts your room rates with automated yield management rules based on time period, room price, competitor room price, and availability to maximise your RevPAR. So, what different hotel pricing strategies are there, and how can you use them for your guesthouse?

Here are our top 10 pricing strategies:

1. Competitor-based
2. Length of stay pricing
3. Forecasting-based pricing
4. Open pricing
5. Segment-based pricing
6. Upselling and cross-selling
7. Incentive-based
8. Loyalty-based pricing
9. Dynamic pricing
10. Cancellation policy pricing

 You can read the full blog on effective pricing strategies here.

5 Benefits of All-in-One Software for Your Guesthouse

1. Encourage direct bookings

Direct bookings form the basis of a successful accommodation business. Direct bookings bolster your profit by removing extra fees paid out in commissions. While external channels provide brand visibility, you’ll want a healthy number of direct bookings to be running through your guesthouse’s booking engine.

RoomRaccoon’s hotel booking engine is designed to enhance direct bookings by offering a suite of features that seamlessly convert browsing guests into instant bookers. Users can customise the booking engine’s appearance with their brand colours and logo, upload enticing room photos and detailed descriptions, and select preferred languages for a tailored user experience. This enhanced guest journey results in more direct bookings and better customer satisfaction.

2. Easily manage distribution

With a PMS like RoomRaccoon, it’s simple and painless to connect to your favourite booking channels. With our advanced channel manager, you can effortlessly manage all your rates and availability across multiple channels. Our state-of-the-art technology synchronises your rates in just 5 seconds, ensuring your calendar is always up-to-date and accurate.

With secure and direct API partnerships to booking channels, you can easily manage your bookings and effortlessly flow data across multiple channels. Plus, with their two-way connections, you’ll never have to worry about overbooking or missed reservations again!

3. Keep your guesthouse in perfect condition

No guest wants to unwind in a place that is untidy or just plain dirty. If you disregard cleanliness, you could be driving away return guests, setting yourself up for poor reviews and harming your guesthouse’s reputation. Remember always to ensure common areas are clean and tidy, and that guest’s rooms are spick and span. 

With a PMS like RoomRaccoon, it’s even easier to keep your guesthouse immaculate with our automated housekeeping. You can efficiently manage housekeeping and maintenance tasks with our software that enables task assignment, room status tracking, and streamlined communication.

4. Communicate clearly with guests

RoomRaccoon’s hotel booking engine not only captures online bookings but actively boosts direct bookings through a range of features engineered to turn lookers into instant bookers. When working at a guesthouse, communication and connection to guests is key. The experience at a guesthouse should be more intimate than staying in a large chain hotel.

With RoomRaccoon’s hotel reservation software, you can ensure that guest communications are personalised and relevant. RoomRaccoon has a wide variety of customisable documents like instant confirmation emails, exclusive returning guest discount codes and invoices. All of which can be edited to reflect your hotel’s brand identity.

5. Review and report on performance

Understanding how your guesthouse is performing is key to developing new strategies and identifying what contributes to success. When working with hotel booking software, you can access data reports on your guesthouse’s performance. So, how do you track performance if you’re new to reporting?

With our hotel reporting, you get all the key metrics presented in a visual dashboard for beginners’ easy understanding. You can access all the essential data to review without any manual calculations needed. If you’d like to learn more, you can check out our insightful blog about boosting your property’s performance.

Invest in a Property Management System for Your Guesthouse

We hope that our comprehensive guide has given you valuable insights and practical advice for starting and managing your own guesthouse business. We have covered every aspect you need to know! From understanding the fundamentals of guesthouse operations to implementing effective management strategies to help you succeed in the hospitality industry.

Whether you are a budding entrepreneur or an experienced business owner, we encourage you to apply your new-found insights to help you start your guesthouse journey. Please explore our pricing to find out how we can help your guesthouse thrive. If you are interested in taking your guesthouse’s performance to the next level with our Hotel Management Software, please book a demo today!