India has always been a popular destination for both domestic and international tourists. With growing interest in cultural experiences, eco-tourism, and affordable travel, homestay businesses in India are gaining significant traction. Unlike hotels, homestays offer travelers a chance to stay in local homes, enjoy authentic food, and experience real traditions. For homeowners, it’s a profitable venture that also promotes community-based tourism.

If you are planning to start a homestay business in India, this step-by-step guide will help you understand the process, legal requirements, investment, and tips to make it successful.

Why Start a Homestay Business in India?

Before diving into the “how-to,” let’s understand the advantages:

1. Growing Tourism Industry – India welcomed over 6.2 million foreign tourists in 2023 (source: Ministry of Tourism, India). Domestic tourism is even bigger, creating a huge demand for affordable accommodations.
2. Lower Investment – Unlike hotels, a homestay requires less initial investment as it often uses existing property.
3. Cultural Appeal – Travelers want unique local experiences, and homestays provide exactly that.
4. Government Support – The Ministry of Tourism encourages homestays under schemes like “Incredible India Bed & Breakfast (B&B) Scheme.”
5. Extra Income – Renting out unused rooms is a steady source of income.

Steps to Start a Homestay Business in India

1. Research and Planning

Conduct thorough research before starting:

• Identify potential tourist hotspots (hill stations, heritage towns, beaches, wildlife sanctuaries, pilgrimage sites, etc.).
• Study the competition in your area.
• Understand your target market (backpackers, families, foreign tourists, digital nomads).
• Estimate your budget and expected return on investment.

2. Choose the Right Property

Your property is the backbone of your homestay. Some considerations:

• A spacious home with at least 2–5 rooms for guests.
• Scenic location or proximity to tourist attractions.
• Good connectivity (road, rail, or airport nearby).
• Availability of basic amenities like clean bathrooms, reliable electricity, and internet.

3. Legal Registration & Licenses

To run a homestay legally in India, you need the following registrations and approvals:

• Registration under State Tourism Department – Many states like Kerala, Himachal Pradesh, and Uttarakhand have specific homestay policies.
• Trade License from local municipal authority.
• No Objection Certificate (NOC) from society or local panchayat.
• FSSAI License if you plan to serve food.
• Fire and Safety Clearance (for bigger homestays).
• GST Registration – If annual turnover exceeds ₹20 lakhs.

You can also register under the Incredible India Bed & Breakfast Scheme to get recognition from the Ministry of Tourism.

4. Prepare Your Property for Guests

• Renovate rooms and ensure comfort.
• Provide clean linen, hygienic bathrooms, and basic furniture.
• Install security measures (CCTV, locks, first-aid kit).
• Offer amenities like Wi-Fi, hot water, and power backup.
• Create a welcoming common space like a garden, balcony, or lounge area.

5. Design Unique Experiences

What sets a homestay apart is the personal touch. Some ideas:

• Local cuisine prepared at home.
• Cultural activities like folk music, dance, or cooking classes.
• Village tours, trekking, or farm visits.
• Yoga and meditation sessions.
• Storytelling about history, traditions, or local legends.

This helps you stand out from generic hotels and attract experience-seeking travelers.

6. Pricing Your Homestay

Your pricing should be competitive yet profitable. Consider:

• Location and demand.
• Facilities offered.
• Target customer (budget travelers vs. luxury tourists).
• Competitors’ pricing.

Example: A simple homestay in Himachal may charge ₹800–₹1,500 per night per room, while luxury homestays in Kerala or Goa can charge ₹5,000–₹8,000 per night.

7. Register on Online Travel Platforms

To attract bookings, list your homestay on popular OTA (Online Travel Agencies):

• Airbnb
• Booking.com
• MakeMyTrip
• Agoda
• Goibibo
• Yatra

Make sure to:

• Upload high-quality photos.
• Write detailed descriptions of rooms and experiences.
• Highlight unique features.
• Collect and showcase positive guest reviews.

8. Marketing Your Homestay

Digital marketing is key to building visibility:

• Create a website with photos, booking options, and contact details.
• Use social media platforms (Instagram, Facebook, YouTube) to showcase experiences.
• Run Google My Business listing for local visibility.
• Collaborate with travel bloggers and influencers.
• Offer referral discounts and loyalty programs.

SEO Tip: Use keywords like “best homestay in [location], budget homestays in India, authentic cultural stay in [state]” to rank higher on search engines.

9. Provide Excellent Hospitality

Hospitality can make or break your business. Always:

• Greet guests warmly.
• Maintain cleanliness and hygiene.
• Offer personalized services.
• Collect feedback and improve continuously.

Happy guests = better reviews = more bookings.

10. Financial Planning

A successful homestay requires careful financial management:

• Initial Investment – Property renovation, furnishing, licenses, marketing.
• Operating Costs – Utilities, housekeeping, staff salaries, maintenance.
• Revenue – Room tariff, food charges, cultural activities, tours.

Example: If you have 3 rooms charging ₹2,000/night and achieve 50% occupancy, you can earn around ₹90,000 per month. With added services, earnings can be higher.

Challenges in Running a Homestay in India

• Seasonal demand – Tourist arrivals vary across the year.
• Competition – Hotels and other homestays nearby.
• Legal compliances – Multiple approvals can be time-consuming.
• Guest management – Handling diverse preferences and complaints.

With proper planning, most challenges can be tackled effectively.

Tips for Success in Homestay Business

1. Keep your homestay authentic yet comfortable.
2. Build strong online presence and positive reviews.
3. Engage with local communities to create unique guest experiences.
4. Ensure transparency in pricing.
5. Continuously improve services based on guest feedback.

Conclusion

The homestay business in India is more than just accommodation – it’s about offering travelers a home away from home. With India’s booming tourism, cultural diversity, and government support, it’s a promising entrepreneurial opportunity. By choosing the right property, complying with regulations, providing warm hospitality, and marketing smartly, you can build a profitable and sustainable homestay business.

Whether you’re a homeowner with unused rooms or someone planning to invest in tourism, starting a homestay in India can be a rewarding venture – financially and personally.

Also read: Food Business from Home Kitchen: A Profitable Small Business