§1What this business is
The host family lives on the premises and gives guests a clean room with attached toilet, toiletries and breakfast; other meals cost extra with advance notice. Guests get a homely stay and a taste of local culture. The profile plans three rooms (six beds) with air-conditioning or heating, TV, fridge, tea maker and wardrobe, a dining room for eight and a lounge shared with the family. Under the Government of India guidelines a homestay has one to six lettable rooms and can be graded silver or gold; approval is optional but adds trust. Most bookings come through online homestay and travel portals.
Capacity: 3 rooms (6 beds). Tariff ₹2,500 a night double and ₹2,300 single, with breakfast (average ₹2,400); occupancy 40% in year 1, 60% in year 2, 65% in year 3 and 70% from year 4.
§2Is it right for you?
Who it is for
A family with surplus rooms in a tourist town, city or business hub — for example a retired couple whose children have moved away.
Who it is not for
A family that values privacy over hosting or cannot keep rooms spotless.
Advantages
- Uses rooms you already own, so the cost is mostly furnishing
- No credit — guests pay up front
- Online portals bring guests from anywhere
Drawbacks
- Strangers stay in your home — screening and house rules matter
- Occupancy swings with tourist seasons
- Booking portals take about 10% commission
Skills you need
- Hospitality and guest relations
- Housekeeping to hotel standard
- Home cooking for guests
- Managing online listings and reviews
Why difficulty 2/5: Low risk if you own the house, but success depends on hospitality and online reviews.
§3Market
Who buys
- Individual foreign tourists
- Domestic tourists, students and young professionals
- Long-stay business travellers and families
How it sells
- Online homestay and travel portals (about 10% commission in the profile)
- Guest reviews and repeat visitors
- State tourism department listings
Good to know
- The profile says the market is at an early stage and expects brisk growth.
- It lists 279 homestays approved by the Government of India (September 2016), with the most in West Bengal, Haryana and Uttar Pradesh.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Construction of an additional room and bathroom | 1 | ₹3,00,000 |
| Bathroom fittings and accessories | lot | ₹2,00,000 |
| Repair and painting of the property | — | ₹2,00,000 |
| Furniture, furnishing, beds, linen and blankets for three rooms | 3 rooms | ₹3,00,000 |
| TV, air-conditioner, fridge and tea maker for three rooms | 3 rooms | ₹3,00,000 |
| Lounge, dining area and kitchen refurbishing with TV and AC | — | ₹3,00,000 |
| Additional kitchen equipment | lot | ₹1,00,000 |
| Cutlery, crockery and linen | lot | ₹25,000 |
| Water heating and safe drinking water | — | ₹75,000 |
From: SIDBI Stand-Up Mitra project profile — Homestay Facility (2018) — private guide — confirm locally
- Breakfast and meal ingredientsbreakfast costed at ₹30 per guest, a meal at ₹80
- Toiletries, consumables and laundry₹20 per occupied room
From: SIDBI Stand-Up Mitra project profile — Homestay Facility (2018) — private guide — confirm locally
§5Licences & registration
- Registration under your state tourism department's homestay scheme (desirable, says the profile)
- Optional approval and grading by the Ministry of Tourism
- Fire safety clearance (the profile names this as the specific requirement)
- Shop and establishment or local body registration
- Report foreign guests to the police/FRRO through Form C
- GST registration once turnover crosses the limit
§6Schemes & subsidies
- MudraCentralActiveLoan up to ₹20 lakh, no collateral
- CGTMSECentralActiveNo collateral, up to ₹10 crore
The profile assumes a ₹10 L term loan against movable assets — a MUDRA Tarun loan with CGTMSE cover fits that.
§7Money
How the investment is worked out: Extra room and bathroom ₹3 L + bathroom fittings ₹2 L + repair and paint ₹2 L + furniture, beds and linen ₹3 L + TV, AC, fridge and tea makers ₹3 L + lounge, dining and kitchen refurbishing ₹3 L + kitchen equipment ₹1 L + cutlery, crockery and linen ₹0.25 L + water heating and drinking water ₹0.75 L + preliminary and pre-operative (10%) ₹1.80 L + working-capital margin ₹0.20 L = ₹20 L. Term loan ₹10 L against movable assets, own ₹10 L.
Working capital: ₹0.20 L only — guests pay in advance or at check-in; no working-capital loan.
Profile from 2018 — machinery and material prices will be higher now.
§8Export potential
Rooms let to foreign tourists earn foreign exchange, but this is a service with no goods export.
§9Risks — where people fail
- Poor reviews hurting bookings
- Difficult guests
- Off-season vacancy
- Rule changes in state homestay schemes
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working homestay (bed and breakfast) unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Registration under your state tourism department's homestay scheme (desirable, says the profile), Optional approval and grading by the Ministry of Tourism), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
Associations, clusters and training institutes — the directory is being built. Connect
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Homestay (Bed and Breakfast)?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.