Scene:

You are in your 40's, 50's, or 60's and feel like you want to do something new with your life...something international, related to travel. Remembering your fondest feelings of traveling internationally, you suddenly realize you would love to have your own guest house. A place where wonderful guests visit from all over the world, enriching your life and the lives of each other with delightful conversations and a shared experience in your beautiful rooms, garden, guest lounge, and dining room. New friendships emerge and you feel that you are offering a truly special part of yourself to people through your guest house experience.

Another Scene:

You live in South Africa. You are trying to improve your life and the lives of your family. Owning and running your own guest house would be a way to work towards a better life and would also empower you to be free of having to do a low-paying job for someone else. You could learn and grow your life while building something that you could be proud of. And you know you would really love to host wonderful guests from South Africa and from around the world!

These are two scenarios taken from years of visiting guest houses around the world, helping owners, speaking with guests, and through this web site, communicating with over 100 different people interested in running a guest house, or already doing so. This web resource is the result of my research. As a marketing professor for 25 years, I was fascinated by how successful hospitality businesses market themselves. I wrote and published case studies of some interesting ones. And rather than leaving my findings on how to run a successful guest house gathering dust, I am sharing them here in the hope that it will help others interested in starting their own guest house or those wanting to do so in a more profitable manner. Can you add your own thoughts and wisdom? Please contact me!

Why a "Guest House"?

A guest house is a romantic notion. It is quite different from a "bed and breakfast", hostel, lodge, hotel, or motel. Here are some differences between these types:

• Bed and breakfast: A room or rooms in someone's home that are let out for a night or two, with breakfast included. You are actually staying in someone's home. A personal and intimate experience. Usually a private bathroom. "B & B's" can have high prices in many places as they are considered a special experience. Great for people who really dislike the impersonal experience of a hotel.
• Hostel: A minimalist accommodation in a dedicated building, often with primarily shared rooms of a dozen or more people in a room. Sometimes breakfast is included. Usually shared bathrooms. Usually preferred by young travelers wanting the very lowest price, the opportunity to meet other travelers, and the freedom to party.
• Lodge: Usually a geographically remote hotel which provides meals due to being remote. Not cheap, but guests are willing to pay more for the access to nature, geography, or special experiences a lodge can offer.
• Hotel: Simply the renting of a dedicated room by the night, with varying features and services available, resulting in varying price levels. A generally impersonal experience, but lots of privacy.
• Motel: This is similar to a "hotel" but designed for people to drive and park their vehicles there. Hence the "motor hotel" short form "motel", first used in California, USA. Typically 10-30 rooms in size (hotels can be hundreds of rooms) and specifically designed for travelers driving places. Normally modest in price and amenities to reflect their more transient nature.

There are many variations on these definitions, but the purpose of stating them is to make clear that they are different from a "guest house" in certain ways. These differences include:

• A guest house has "guests". A more personal experience where the owner greets and checks in guests, helps them feel welcome, often provides travel advice and booking help, and sometimes even engages with guests socially, giving them a connection to the town or city where it is located.
• A guest house usually offers more privacy than a bed and breakfast, but
• A guest house's central offering is an intimate, friendly, relaxed, easy-going, social place to stay. It does not usually have luxury services like a pool, such as hotels have, nor usually shared rooms, like a hostel. Bathrooms may be shared or private.
• The owner most often lives in the guest house, or on the property somewhere.
• Guests can be any age, but younger travelers don't like the prices being higher than hostels.
• Guests are primarily international independent individual or couple travelers, not large groups, families in general, or large families specifically.
• Guest houses sometimes provide breakfasts, adding to the social and personal nature that many travelers enjoy.

Guest House Principles and Practices

Here are some key principles of successful guest houses, and how these principles result in specific practices:

Principle #1: Guests feel welcome, safe, certain, comfortable, and relaxed in the best guest houses

Practices:

• The owner or a staff member speaks the local language and usually at least one other, such as English.
• Guests of all ages, sexes, and styles of being are welcomed and made to feel at home.
• The owner has good welcoming skills.
• The owner is friendly and hospitable.
• The owner is available during the day to greet, settle, and help travelers.
• Guests are primarily international independent individual or couple travelers, not large groups, families in general, or large families specifically. This is an important distinction to make as in many relationship oriented countries, families travel in large groups and would not stay at a guest house. Instead, they would book two or more rooms in a hotel, expecting to have a social experience among themselves. International independent travelers expect the opposite: The chance to meet and socialize with each other and with the owner and staff. Guest houses that "get it" make sure that the social atmosphere and owner + staff leadership in socializing is provided.
• Staff are managed well, treated like family, and paid well. This results in the staff, and not just the owner, being friendly with guests.
• Staff have a clear and professional system for doing their jobs. They are clearly trained and empowered to feel part of the success of the guest house.
• The owner and staff are culturally adept and adaptable, meeting the needs of different traveler profiles.
• The owner and staff have good problem solving skills.
• Staff are able to take initiative in meeting guest needs and in managing guest expectations proactively and in response to issues that arise.
• Staff have uniforms, making clear they are staff.
• The guest house handles online booking queries promptly, professionally, and personally, creating a relationship with potential guests before they even arrive.

Principle #2: Rooms are intimate, safe, comfortable, and private

Practices:

• A locking door that provides proper noise, light, and intrusion protection.
• Windows with natural light coming in. Thick, full curtains or blinds.
• Comfortable, newer mattresses.
• Mattress covers and full sized higher quality bed sheets. Both are newer and in excellent condition
• Generous blanket options, for people who need more warmth.
• At least 2 full sized, thick, newer pillows per double or larger sized bed.
• Decorated - the room has some character.
• Warm colored paint
• No fluorescent lighting in the room. The room is well lit with incandescent, halogen, or full spectrum LED bulbs.
• A side table with a reading lamp.
• Storage space such as a shelf, dresser, luggage stand and/or closet.
• Wood that adds to the feeling of warmth in the room.
• Very clean
• Recently painted
• Very well maintained. Everything works in the room.
• Simple but strong, solid furniture. Not clunky, tiny, or worn out.
• Double pane windows for quietness, if in a noisier and colder area. At least solid single pane windows in places where double pane are either not available or prohibitively expensive.

Principle #3: Bathrooms are sanitary, nurturing, available, and certain.

Practices:

• Very clean. If shared, cleaned 2 or more times a day if there are many guests using them.
• 24x7 hot water.
• Sufficient water pressure.
• A spacious shower stall
• Well lit with warm, bright, incandescent lighting.
• Instructions posted for anything unusual or potentially unclear about the bathroom facilities.
• Well stocked with toilet paper and hand towels.
• Bath towels provided for guests.
• Ventilated with an exhaust fan.
• No drain smells. Plumbed properly.
• If shared, a locking door that provides full privacy protection.
• Sufficient space to move around and change clothing when showering.
• Ceramic tiled throughout.
• Modern fixtures.
• Well maintained - paint, appliances and fixtures, tile grout, lighting.
• Decorated - with some character.
• A shelf for belongings. Hooks for clothes. Bars for towels. Soap shelf in the shower. Vanity or shelf for toiletries. Little details such as these are important!

Principle #4: Spacious, friendly, comfortable, welcoming, and social common area(s).

(pictured at right: A lovely rooftop guest lounge with couches, tables and chairs, hammocks, plants, decorations, and wifi)

Practices:

• Common area is separate from the bedroom area to protect from noise transference.
• Spacious
• Contained space (intimate) but open and bright.
• Quiet spaces and social spaces.
• Variety of seating options, including couch, hammock, armchair, and table & chairs available.
• Chairs have cushions.
• Lots of plants.
• Optimal: A rooftop terrace, patio, or lounge in a warm climate country. Even better: With a nice view.
• Clean.
• Non-smoking
• Decorated - character.
• Books and games.
• Guests feel free to be themselves - not being watched suspiciously by staff.
• Not a thoroughfare for staff.
• No fluorescent lighting. A mix of festive, functional incandescent, halogen, and full-spectrum LED lighting.
• Lit well at night.
• Lots of electrical outlets for computer and smartphone users.
• Good wifi service in common area(s).

Principle #5: Logistics are relaxed, trustworthy, professional, clear, certain, and feel safe.

Practices:

• Good reservation system - online bookings, deposit taking, payment method options, clear and simple cancellation policies.
• Each room is bookable online individually and separately. This gives guests the feeling of certainty in what they will be getting upon arrival.
• Lots of recent photos of the rooms, bathrooms, and common area(s) on the guest house's web site.
• Comprehensive web site. Local and English languages at least. German, French, and other languages included even better.
• Group bookings options made clear, if offered.
• Clear check-in and check-out policies and practices.
• Extra services available and clearly signed and priced. Example: Travel bookings.
• Clear and friendly signage, information provision, and instructions throughout.
• A positive welcoming tone rather than a suspicious and punitive tone in all dealings.

Principle #6: Extra value and special character - the "wow!" factors

Practices: (not all required)

• Organized social events
• Free breakfasts that are both tasty and generously portion-sized.
• Towel service for rooms and local beach (if applicable)
• Internet computer station with printer.
• Free filtered water access.
• Beer, soft drinks, juices, and snacks for sale.
• Kitchen for guests to use.
• Wifi service throughout the guest house.
• "Above and beyond" service from the owner and staff.
• Bicycle, boat or other rentals available at low cost to guests.

Economics of a Guest House - Business Model Comparisons

The very best guest houses have solid business models and practices. Prices at these places are usually higher than competitors, not lower. A strong business model, professional practices, and higher prices allow the owner to continually update, refresh and maintain the facilities, and pay staff well. A virtuous cycle develops for guest houses that operate professionally. A quickly degenerating cycle develops for those guest houses that operate without care for facilities, staff, and guests. Most disheartening are those guest houses which try to offer a really low price and skimp on everything, with guests trading off financial savings against a poor experience.

Getting the business model "right" for a specific town, city, and country situation is necessary. The recipe will be a bit different in each place but there are some foundation pieces that seem to be universal. Below is a comparison between a typical guest house business model and those of other types of accommodation:

Type	Source of Profits	Description
Guest House	Majority of revenue and profits come from private room fees. Mid-range pricing of room rates, relative to a specific geographic area. + travel booking commissions (secondary source of revenue and profits) + drink and snack sales (minor source)	All ages, though >25 years old are more willing to pay for the quality. Private rooms primarily. Shared and private bathroom options. Social atmosphere where guests specifically want to meet other travelers. Location: Good access to the "centre" of things in a particular place. Standards of the facilities, cleanliness, and service are high Feeling of coziness important. Staff are mature, caring, friendly.
Party Hostel	Revenue and profits come from a mix of 3 parts: shared room fees. Low-end pricing of room rates. + alcohol and snack sales (A very significant source of revenue and profits) + travel and tour booking commissions (Another significant source of revenue and profits). At one top guest house, these commissions were very important to the overall profitability of the establishment.	The party hostel provides just that: A party place for younger travelers who are very price conscious. The ability to meet and connect with other young travelers is essential. The hostel is really three businesses that feed off each other: Maximum revenue per shared room, alcohol sales, and travel and tour commissions. The more beds/bunks in a room the more revenue and profit. Guests willing to trade off quality of facilities for cheap price and a highly relational atmosphere. A party space and energy is expected. Not necessary to be in the "centre" of a city, but in the "buzz area for young people". Staff must be young and friendly.
Eco-Lodge	Majority of revenue and profits come from private room fees, which are higher due to the special natural nature of the lodge location. + alcohol and food sales (significant and necessary secondary source of revenue and profits) + extra services, such as yoga classes, mountain bike or kayak rentals, etc. .	Mixed travelers. Can be the young eco-hippie set or older travelers looking for a natural, peaceful experience. Longer guest stays lower room change over costs and increase profits. Must provide good food at a carefully priced level. Must manage guest expectations VERY well before they arrive, when they arrive, and during their experience. Absolutely key for a lodge of any kind. Logistics getting guests to and from the location are very important for guest comfort. Personal relationship building is very important between guests and staff/owners due to the isolated nature of a lodge. This puts pressure on staff and owners to be available and socially "on" 12+ hours a day. Full services required. "Eco-lodge" does not mean washing in a stream! Full hot showers, proper beds & rooms, electricity, and wifi required. Clear instructions and processes give guests comfort. The best eco-lodges are not free-flow dope smoking places, but actually professionally run businesses that give guests a great experience from start to finish.

In summary, the business model of a guest house is primarily focused on the quality of the room, the overall facility, and owner's manner of running the place. To maximize profits, the guest house owner provides a social, non-party atmosphere, cozy comfortable rooms with character, and excellent facilities such as bathrooms. The guest house, then is a "safe sanctuary" from which to explore a city and area. A place to return to at the end of a day of exploring to share experiences with others, get advice, rest, refresh, feel emotionally safe, and get culturally grounded. In exchange for crafting this experience, the guest house owner can charge much more than a hostel and have longer-staying and better guests.

Marketing the Guest house - How to get lots of bookings

By now it should be obvious that the best guest houses have some pretty clear principles and practices that make them successful.

But is it enough to simply operate professionally, in a friendly manner, and with awesome service? In other words, does "build a better mousetrap and the world will beat a path to your doorstep", as the old saying goes, work?

The owner of one guest house in Belize said that actually yes, "word of mouth" (WOM) is their most powerful marketing tool. This is an established guest house, in a good location in town, and with many added services available. The owner is also very customer focused, ensuring the absolute best service.

The result is that he estimates that some 50%+ of his customers are WOM and repeat customers, 25% come from Trip Advisor and the rest from walk-in and other sources.

Having top Trip Advisor reviews is certainly important, but not everyone uses Trip Advisor and the majority of his business comes from doing the right thing - offering an exceptional experience.

Marketing Principles of Top Guest Houses:

Principle #1: Awesome service is #1

Practices:

• Guests are communicated with over the internet in a rapid time frame when they contact the guest house with a query or reservation booking. Best: Within 12 hours. At worst, within 24 hours. In some countries, 12 hours might even seem long, but we must recognize that guests may be inquiring from other time zones and no guest house owner is expected to answer emails 24 hours a day.
• Guests are greeted warmly upon arrival by the owner or a staff member. 100% of the time. No excuses for less than 100%. This is the first time the guest may be in the country, city, and culture. They are hyper-sensitive to everything. First impressions in this case are huge. And they may be tired from traveling, adding to the impact that a warm welcome can give. Having personally experienced the sense of relief when being greeted warmly at a guest house after a long day of traveling, I can attest personally to the power of a warm welcome. Finally, I observed a #1 rated guest house owner not only meet every single guest upon arrival, but help them with luggage and do the same when they left, staying outside with them until their transportation arrived and seeing them off with a hug and a cheery wave. Did I mention that this guest house was #1 on Trip Advisor for their area and category?
• Guests are shown personally to their rooms and are given a full introduction to the guest house, making them both feel at home and feel safe that they understand how things work there. Often guests have things on their mind when they arrive, such as an attraction booking they need done urgently. This is a great time to answer any questions they have and help relieve their anxieties at the same time - anxieties that can be heightened by their tiredness after having traveled a long time before arriving.
• Guests are supported fully with their travel information, comfort, and social needs during the stay. Guest house owners and staff learn very quickly how to personally and professionally manage guest social needs.
• Guests are treated just as well when they leave as when they arrive. This cements the relationship and creates the natural opportunity to ask them for a Trip Advisor rating and referrals.

Principle #2: Build mutually beneficial relationships within other hospitality service providers in the area.

Practices:

• It is almost ridiculous how well some highly successful guest houses integrate with other hospitality service providers, including local restaurants, shuttle operators, and tour guides. Not only does everyone earn a commission on bookings in both directions (room bookings coming and on tours, for example) but guest house owners are in the perfect position of trusted advisor to the guest, building their own credibility and customer satisfaction from awesome integrated guest experiences. Making the effort to build and maintain strong relationships with trusted "partners" in the area is what the best guest houses do. So the key here is "trust". Everyone wins with trust. There is no benefit for the guest house owner if the service being provided by partners is not excellent.
• The nature of the relationships are transparent to the guest. This ensures that the guest does not feel they are simply being sold the service with the highest commission, or that nepotism is happening. In highly relational countries nepotism can be particularly problematic for guest house owners, as expectations are that family and friendship relationships are #1. A brother who offers to tour guests around is completely incompetent? Doesn't matter: Family comes first 100% of the time. Guest house owners must carefully manage local relationships, particularly in smaller centres or places with entrenched bureaucracies. Nepotism works both ways - helping family and friends and hindering enemies.
• Understanding what partner services guests want is crucial. For example, one guest house offered an overall great experience to guests but kept booking too inexpensive shuttles for guests. The worn out vans that appeared at the door did not make guests happy. The underlying assumption was that guests wanted the cheapest service. The reality was that guests wanted a modestly-priced service, not the cheapest. The difference had a huge impact on other potential bookings as guests assumed that tours, restaurants, etc. would be similarly the cheapest...and poorest quality, too. This limited the marketing success of travel and other bookings. Interestingly, once the guest house corrected this anomaly, they began getting more walk-in travel bookings from people staying at other accommodations! As this guest house was well known for being top quality, the nice vans that began showing up were noticed by other travelers. A virtuous marketing cycle developed.
• Understanding each separate guest, and treating their visit as unique and deserving of personal attention for the offering of partner services is key. It is quite a turnoff for guests to feel railroaded into a package deal that really doesn't fit their interests and needs.

Principle #3: Have a great internet presence.

Practices:

• A really comprehensive web site. Multiple languages if appropriate, lots of pictures, clear information, and a top reservation system. A poor or missing internet presence does not mean "our guest house is a secret gem". It means an unprofessional, backward, uncaring, and poorly run place in the minds of potential guests. With little information to go on when looking for a place to stay, an internet presence is the determining factor for many potential guests who live far away and who have never visited your country before. Problematic for relational countries is that potential guests want great information and reservation *processes* that lead to self-help bookings. This is a problem because to the relational mind frame, a personal interaction is key, not processes. Many a great guest house on all other accounts sits empty, waiting for the phone to ring with a guest wanting to book through a personal telephone interaction.
• A social media presence, such as a FaceBook page, with occasional event and celebration postings, communication with past and future guests, and the creation of a relationship with guests.
• "To Airbnb or not to Airbnb - that is the question!" To misquote Shakespeare, Airbnb is a powerful system for offering guest house rooms. It has some attractive features, and some detracting limitations and costs. If you are stuck not knowing how to market your guest house, Airbnb can be a great way to start. But if you are able to make a bigger commitment to your marketing, be sure to assess if Airbnb is your best tool. For EVERYONE reading this: Use Airbnb to LEARN best practices for marketing. It is a wonderful tool to learn everything from how to take photos to how to word your ads well. Use the Airbnb internet site to learn all you can about places that are similar to yours, competitors in your area, and about what guests are looking for.
• Great email interaction. As with the web site and social media, interactions with guests who are abroad has heightened importance. Guests read every word carefully as it the only information they have. Email tone, professionalism, and comprehensiveness are all key to ensure with email.

Marketing is one area that can be frustrating for guest house owners. On one hand they know that spending time with their guests and offering a great place to stay are the keys to their business. But on the other hand, the business world seems to be telling them there are expensive advertising and marketing services that need to have money spent on. The most successful guest houses understand that marketing is not magic. It is relationship building. It is building relationships that lead to high ratings and word-of-mouth with guests before their visit, during their visit, and after they leave. And it is building value-added relationships with local hospitality "partners".

Frequently Asked Questions - FAQ

"How do you know what guests really want?"

When starting a guest house you will not get everything perfect right away. For example, you may think that your guests will come from one area of your country or the world and find out you are getting bookings from very different places than you imagined. Or you may think "everyone wants a coffee maker in their room" when what your type of guests really want is hot water to make tea instead.

Suggestion: Make it a point to really understand the needs of your first 100 guests. One guest house owner noted that they had a kettle to make tea but some guests brought their own "loose leaf" tea and needed a metal tea strainer for it. So she bought one. A little thing but it illustrates listening closely to your guests to identify who they really are, what they like and don't like, and what will make their experience really outstanding.

"How should I decorate my guest house and guest rooms?"

A hotel or motel will usually be quite neutral in decor because they serve a wide range of guest types and don't want to have a particular look that stands out. A guest house can have "personality". And done tastefully, as can be seen in the photo here, it can be a memorable part of a guest's experience.

Note: The place seen in this photo is rated at 4.95/5.00 by 100+ guests on AirBnB, which is an absolutely top rating on that system. They are constantly listening to guest needs and using this feedback to improve their place, all areas are kept spotlessly clean, they are friendly in welcoming guests to their place and the town they are in, and their place has "personality", making the guest experience a special one.

"How do I find capital (investors, loans) to start my guest house?"

This is the most common question I hear from readers. And it is a challenging one to help with as each reader has a specific country and guest context, personal financial circumstances, and desired type of guest house.

There are several ways that successful guesthouses get the money to start:

• Personal capital. The owner(s) have a sufficient amount of money from an inheritance, from selling other real estate they own, from a business they already own, from stock market gains, from savings over many years of work, from a family member or close friend who partners with them, etc. This is the most common way that guest houses are financed.
• A third-party partner. There are many people who have money to invest and are looking for a safe place to do so. Real estate - the building the guest house will be in - is a safe investment. Sharing your guest house idea with people in your community or region who have money to invest may result in a financial partner willing and happy to help you get started by buying the building you want to operate in.
• Banks and other financial institutions. If you have collateral from another property you own, a business, or from other assets you can borrow money from a financial institution to get started. If you are starting with few assets as the basis of collateral then consider finding a partner (noted above) instead of trying to find a financial institution to finance your guest house.

From a reader in 2021:

"I have just read your article on Starting your guesthouse and laughed so hard on the Rock Paper Scissors illustration. It’s very sad on my part that I think I offer a great place and thought low prices would help but it does not. The neighbouring competition performs way better though they offer less and pricier: I guess word of mouth really works because they have been in business for a long time while I am only in the third month."

Do you need help with your guest house startup and marketing?

The author of this site is a former marketing and international business professor in Canada, who is pleased to hear from you about your plans and needs. "I am usually able to answer specific questions by email and offer guidance and suggestions." Contact Paul Kurucz for more information.

The Guest House

The above is one snapshot of what makes a guest house both a wonderful place to welcome guests and a financial success, too. Hopefully these research findings help anyone starting or running a guest house. If you can add any comments, insights, photos, or other suggestions, please contact me!

Interesting footnote question: Over the years I have heard from many people starting guest houses around the world. But one country stands out far and above all others for the number of people interested in doing so: South Africa. Like 10x the interest from other countries! If you have an insight as to why this is please let me know! I am really curious to understand the reason...

Thanks!

Paul Kurucz

Latest update: April 2022