Looking at guest houses for sale? Here’s what to consider
Date of Article
Jan 05 2022
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Stephen Richards
MRICS
Associate Partner
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Stephen Richards heads up the Carter Jonas leisure team, with over 20 years’ experience in the valuation and sale of holiday cottages, lodge parks, campsites, caravan parks and glamping businesses.

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If you’re scouring the market for guest houses for sale, our leisure expert answers common questions so you can make an informed decision.

 

FAQ's

A guest house, in broad terms, is the same as a bed and breakfast.

Traditionally, a guest house would have fewer than 10 rooms, smaller than you’d expect from a hotel. Each bedroom would typically have tea and coffee making facilities, and an en-suite bathroom, but it would not be luxury.

Breakfast – either a full English or a simpler continental breakfast – would be served at a set time in a communal room. But, with changing habits, exacerbated by the pandemic, many guest houses have stopped serving breakfast altogether. While this might work for business guests, it can be disappointing for those travelling for leisure.

The other fundamental change in guest accommodation is the variety that’s now on offer. More and more private individuals and families are responding to the increase in demand for this type of accommodation by opening up their annexes or guest rooms, or even converting outbuildings or barns, to offer small-scale holiday accommodation.

Websites such as Airbnb and Booking.com make it possible for very small businesses to thrive – if they get good reviews!

For those looking to buy a guest house, they would normally be thinking of the business as being the main source of income for the household – or at least for the individual who runs it.

Those letting out one or two rooms in their main home would be doing this to supplement another income.

Either way, prices can be up to £100 per room per night. It’s driven of course by supply and demand – and currently demand is up as result of restricted overseas travel.

Small-scale guest accommodation can trade between £6,000 and £10,000 per room a year and individuals that are letting a single room can earn up to £7,500 tax-free under The Rent a Room Scheme.

The key is to think about where there is demand for holiday accommodation. The best hotspots will be in coastal locations or in national parks.

It’s worth considering that the chain no-frills hotels are going to be the main competition as the price-point, and what they offer is a larger room, king-sized beds, powerful showers and space for a desk and a sofa in the rooms. We see the future of guest houses being fewer, larger rooms – or even suites or interlinked rooms for families.

Guests want high quality, warm, sizeable rooms with good en-suite facilities and good tea and coffee making facilities (we’re talking more than instant coffee!)

With guest houses, clients will normally only stay one or two nights so there’s a high turnover and not a long time to make a good impression. Reviews will drive your next booking so it’s important to offer what the guests expect and respond to their feedback.

Guests will also want and expect their hosts to be accommodating and friendly – they want to feel at home in your home!

Changing consumer habits and expectations have meant that many traditional basic seaside hotels and guest houses have closed due to lack of business. Whereas the older generation might have wanted to stay in a simple hotel for their main summer holiday, the modern family – even when they can’t go abroad – desires a little more from their accommodation. See ‘What do guests want from a guest house?’ for more information on this.

Hotels are often redeveloped or significantly upgraded, whereas guest houses are turned back into residential dwellings.

See What do guests want from a guest house? for more on the basic expectations.

If you have the time, inclination and finance, the best value purchases will be those that have potential but need work.

By the time you open for business – parking and decent en-suite bedrooms are the absolute essentials. Parking can be much more difficult to add retrospectively, so think very carefully before investing in a guest house without it.

Guest houses will cost less to purchase than holiday cottages, but they are more labour-intensive and provide less income – so make sure you don’t overpay!

The price will depend on the size and quality of the property and the location – but also on the success of the business in recent months and years. Some guest houses close after October half term and don’t reopen until the Easter holidays, so you need to make sure they earn enough during the rest of the year!