No matter what business that you are doing, there are always risks. To run your business well, you need to possess essential knowledge required for the industry where you are in. Doing homestay is attractive and competitive in the accommodation sector, but you should know how to do it well before jumping into it. Addressing possible risks and preparing for avoidance are the must to mitigate adverse impact when investing on the business.
What are the risks of running a homestay business?
Homestay is a favorite accommodation style for young people who love to immerse in local experiences. Homestay locations which have a perfect mergence with nature such as forests, mountains, beaches will gain most advantages to be chosen by travelers. As travelers are becoming younger and the huge demand for this accommodation type is recognized, homestays are now growing everywhere.
As a result of potential growth, the competition among homestays are getting more and more severe, so risks are unavoidable. Some problems faced by homestay owners which increase risks for them are identified, such as:
- Lack of financial knowledge: It is challenging to manage the financial situation of homestay, especially the incurred costs if the owners have cursory knowledge regarding finance.
- Legal barriers (explained below): The legislation in homestay business is not clear enough; therefore, owners must be careful and learn as much as possible about this business type.
- Vague homestay regulation: The minority of customers with low awareness may cause damages to your homestay’s facilities if you are not strict enough.
Things to know for risk mitigation.
Followings are things to know before starting your own homestay business.
Equip yourself with financial management knowledge
You need to take a close look at the homestay’s cash flow through operations, such as cash in from new sales from room and extra services and cash out from spending on housekeeping, employees, or maintenance activity. The strict follow-up process and good understanding about finance management can help you analyse expense, revenue and profit effectively and build a good financing plan for your business. Some popular expenses can be anticipated for your homestay, including decoration, employees salary, room-cleaning, food/beverages purchase, ect. Depending on your business scale, you can apply professional accounting software to control the finance or manage it manually. However, homestay owners in any scale are all required to supervise the finance strictly enough to make sure that the business is effective and avoid any loss.
Understand the legislation well before starting the business
Legislation is imperative in any line of work. While homestay regulations are well established in some developed countries such as the United States, it is still vague in some other countries. Therefore, the owners should always update the legal news of this segment in the home country such as regarding license, tax, legal standards of hygiene or public health, ect., and commit to these practices.
It would be useful to join in the community of similar business owners like you. For instance, Airbnb is a leading digital booking platform in the apartment, homestay, property service sector and it has a large community of listed homestay owners, where they can exchange ideas, hosting experiences and ask for advice.
State clear homestay regulations to be adhered by guests
A clear list of “Do & Don’t” things applied for your homestay will restrict your place’s possible damages. There are some restrictions and notes for guests that you can mention before they start their stays such as:
- Homestay owners are not responsible for customers’ loss.
- Guests are responsible for their caused problems related to damaging your homestay’s household appliances and they have to follow the applied compensation rules.
- Restrictions about safety, fire prevention, smoking, stimulant-using, drugs are strictly banned …
Above are a few suggestions that help reduce risks while running homestay business. Hopefully, with all the information shared, Hotel Link would give you a few hints to deliver the most effective marketing and business strategy.