INVEST in Guest Houses for a SMART Financial Future

Today, we're going to talk a little bit about guest houses, overnight accommodation, and see how we can help.

Basically, in the big cities, you find a lot of overnight accommodations, but many of the owners are struggling. When you speak to them, you'll find that only a handful are actually doing well. The biggest problem is that everyone's doing the same thing—they’re just waiting for the business to come to them. That doesn't work anymore. You've got to chase the business.

Overnight Accommodation vs. Guest Houses

If you're doing overnight accommodation, there’s a difference between that and guest houses. People often call themselves guest houses when they don’t really offer all the facilities of one. I always say, "If you’re offering just a room and self-catering options, call yourself overnight accommodation." Guests who stay overnight simply come in and move out.

Guest houses, on the other hand, offer meals, venues, and a more comprehensive service. That’s how I see the distinction.

The most important thing I always say to everyone is this: Look at your costs. Once you reach about five, six, or seven rooms, people often start bringing in staff to run the place. At this stage, it might not really make money because having staff (like a receptionist) becomes costly. Only after reaching a certain scale do you truly start to make money.

Tips for Starting an Overnight Business

If you’re looking for a second income, overnight accommodation can be a great option. It’s especially useful for the elderly. My advice to those starting out: Don’t spend tons of cash upfront. Start small with two or three rooms, and focus on building a good reputation. Once people know your place is nice and family-friendly, you’ll start getting regular customers.

Some cost-saving tips:

• Credit Card Machines: Don’t rent expensive ones. You can buy a machine for about 1,300 to 2,000 rand.

• M-Net Channels: Avoid costly TV packages. Stick to smaller ones with sports channels.

• Laundry Services: Don’t do your own washing. Hire a laundry service and budget effectively.

One of the biggest issues is that most guest houses don’t market themselves. For example, during major functions, soccer games, or rugby matches, they do well. But in general, many of them don’t make steady money.

Marketing Your Business

You need to think outside the box and understand your competition. Make sure you’re not overpriced, but don’t underprice yourself either—you’ll hurt your own business.

Here are some strategies for marketing your overnight accommodation:

1. Facebook: Create a page for your place so people can find you.

2. Agencies: Partner with agencies that bring in business. They take a commission, but as your business grows, you’ll rely on them less.

3. Supermarket Boards: Advertise on notice boards in supermarkets and hospitals.

4. Estate Agents: Connect with agents. Offer packages for people waiting to move into new properties.

5. Other Guest Houses: Partner with larger guest houses nearby. If they’re full, offer to take their overflow customers in exchange for a commission.

Key Features to Attract Guests

1. Wi-Fi: This is non-negotiable. In today’s world, everyone wants Wi-Fi.

2. Entertainment Areas: Add features like a braai area, a pool table, or table tennis. Small additions make a big difference and attract families.

3. Cleanliness: Your place needs to be spotless. Guests care about reviews, and clean rooms will lead to positive feedback.

Always ask yourself: Would I stay here? Is this up to the standard I would expect? This mindset will help you improve continuously.

Building Long-Term Success

The reality is, guest houses and overnight accommodations do work if you’re willing to put in the effort. Don’t just sit and wait for the business to come to you. Always be promoting your business. For example:

• Offer long-term stays to companies for employees needing accommodation for weeks at a time.

• Partner with estate agents to host clients temporarily.

• Encourage guests to leave reviews and recommend your place to others.

If you can do all of this, you won’t be one of those owners who complain about their business struggling.

Final Thoughts

At the end of the day, overnight accommodations and guest houses can be the best business to invest in. But you must market yourself, manage your costs, and keep improving. Promote, promote, promote. That’s the key to success.