If you’ve ever wondered how to earn money from your home while offering travelers a warm, authentic experience, starting a homestay in India can be one of the most rewarding ventures you’ll find. The demand for homestays is growing rapidly as travelers prefer unique accommodations over cookie-cutter hotels, especially in places like Himachal Pradesh, Goa, Kerala, and Rajasthan. But before you list your property on Airbnb, Booking.com, or other platforms, you need to understand exactly what the legal requirements are, how much it costs to start a homestay, and what profit margins you can realistically expect.
The first thing any aspiring host should know is that operating a homestay in India requires proper licensing and registration. While rules differ somewhat across states, most tourism departments have clear policies defining what qualifies as a homestay versus a guesthouse or small hotel. In Himachal Pradesh, for example, the Department of Tourism categorizes homestays as owner-managed establishments with up to six rooms for guests. If you exceed that, you fall under hotel regulations, which involve stricter compliance.
The homestay registration process typically starts with submitting an application to your state tourism office. You’ll need to provide proof of property ownership or a no-objection certificate if you’re not the owner, along with address verification, photographs of the rooms, and an affidavit declaring your intent to run the business. Some states also require a safety certificate, most commonly a Fire Department No Objection Certificate (NOC), and a declaration that your property adheres to sanitation and hygiene standards.
For hosts who expect to cross the threshold of ₹20 lakh in annual revenue (or ₹10 lakh in special category states), GST registration is mandatory. This is often overlooked by new hosts, but failing to comply can lead to penalties later. GST compliance means maintaining records of all bookings and invoices and filing returns every month or quarter, depending on your turnover. If you list your homestay on major OTAs like Airbnb or MakeMyTrip, they will deduct TDS (tax deducted at source) before payouts, so you must also account for this when calculating net income.
Another critical part of meeting homestay legal requirements is ensuring your property has necessary safety measures in place. This includes fire extinguishers on each floor, clear emergency exits, first aid kits, and often, display of safety instructions for guests. Many travelers now expect basic safety infrastructure, especially international tourists who are familiar with stricter standards abroad.
One of the most common questions new hosts ask is: “How much does it cost to start a homestay?” The answer depends largely on whether you are converting existing space in your home or developing a dedicated property from scratch.
If you already have spare rooms in your house and your infrastructure—plumbing, electrical wiring, and ventilation—is in good shape, the initial costs are relatively modest. A basic homestay setup might cost anywhere between ₹4 lakh to ₹10 lakh to renovate two or three bedrooms. This includes upgrading bathrooms, painting walls, installing air conditioning, purchasing comfortable mattresses and good-quality linens, and adding tasteful décor to make your listing attractive. You’ll also need to budget for a professional photoshoot, which can have a huge impact on your booking rate.
For those who plan to build or buy a standalone villa or heritage property to convert into a homestay, the costs are obviously much higher. In tourist-heavy areas like Goa or Manali, acquiring a small villa could range from ₹50 lakh to ₹2 crore depending on size, location, and amenities. After the purchase, you should expect to invest another ₹10–₹20 lakh to furnish the property to a standard that appeals to guests searching for premium experiences on homestay platforms.
Running costs can also add up quickly. You’ll pay for utilities such as electricity, water, and high-speed internet. Regular housekeeping is essential to maintain cleanliness and earn positive reviews, so you may need to hire staff, which adds monthly expenses. Maintenance and repairs—everything from plumbing leaks to AC servicing—are ongoing costs you must be prepared for. Another cost is platform commissions; most OTAs charge between 10%–20% per booking. Many hosts forget to factor this into their pricing strategy, only to realize later that their margins are thinner than expected.
Because regulations vary across Indian states, you should always consult your local tourism office for exact requirements. However, the general homestay license process looks like this:
First, collect all necessary documents: ownership papers, ID proof, photographs of the property, a floor plan showing guest rooms, and a safety compliance declaration.
Second, fill out the homestay registration application available from your state tourism department. In some states like Kerala and Himachal Pradesh, you can download forms online and even apply digitally.
Third, arrange an inspection of your property if required. Officials will verify your application details and check the safety standards. If everything is in order, you’ll receive your registration certificate. Keep in mind this certificate needs periodic renewal, usually every one to five years.
Finally, if you expect your revenue to exceed the GST threshold, register for GST before you start accepting bookings. Many OTAs will ask for your GST number during onboarding. It is also wise to open a separate bank account for homestay transactions to keep your finances clear and simplify tax filing.
The profitability of a homestay depends on several factors: location, property type, the seasonality of demand, and the quality of service you offer. In destinations like Goa, a well-furnished homestay with three bedrooms can charge anywhere from ₹5,000 to ₹15,000 per night. Assuming an average occupancy rate of 60% over the year, you could see gross earnings of ₹9–₹25 lakh annually.
In hill stations such as Manali or Shimla, occupancy peaks during summer vacations and long weekends. During lean months, you might only host guests on weekends, so it’s critical to forecast cash flow accordingly. Here, the average nightly rate could be ₹3,000–₹7,000 per room, depending on amenities like private balconies, bonfire facilities, or mountain views.
For homestays in emerging destinations like the Northeast or smaller heritage towns, pricing can be lower—sometimes ₹2,000–₹4,000 per night—but you can often tap into niche markets such as eco-tourism or heritage tourism, which help drive higher occupancy. The homestay profitability in these regions also depends on how well you market your property, the uniqueness of your offering, and the strength of repeat business.
After deducting all costs—utilities, housekeeping, platform commissions, maintenance, and taxes—most established homestays see net profit margins between 20% and 35%. This means if your gross income is ₹12 lakh a year, you can expect to take home ₹2.5–₹4 lakh as profit after expenses.
Before you start welcoming guests, it’s smart to develop a homestay business plan that outlines your goals, target market, pricing, marketing approach, and financial projections. Define whether you’ll cater to backpackers, families, or luxury travelers. Each segment has different expectations, so your décor, amenities, and service standards must align with your audience.
Think carefully about your pricing strategy. Should you adopt dynamic pricing that fluctuates with demand, or offer stable rates all year? Many successful hosts use seasonal pricing—higher rates in peak season and discounts during slower months to maintain steady bookings.
Finally, consider how you’ll market your homestay. Professional photos, detailed property descriptions, and clear house rules are essential for standing out on Airbnb, Booking.com, and niche platforms. Building a direct booking website and leveraging social media also help reduce reliance on OTA commissions over time.
The homestay business in India offers real opportunities for anyone with the right property, attention to detail, and a genuine interest in hosting. It combines the satisfaction of hospitality with the potential to generate steady income. Still, it is not passive income. You must be prepared to invest time in managing guest expectations, handling maintenance issues, and maintaining compliance with evolving regulations.
If you do your research, build a strong foundation with proper registration and safety measures, and deliver consistently excellent guest experiences, your homestay can grow into a profitable and fulfilling venture. With the Indian travel market booming, there has rarely been a better time to get started.
Ready to make the most of your hosting journey? Partner with Homeyhuts to simplify property management and maximize your rental potential. Our platform offers cutting-edge solutions to help you attract more guests and achieve greater success.
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