Homestay, also known as a house with rooms for rent to tourists, has become a rapidly growing business model in Vietnam's thriving tourism sector. For travelers, staying in luxurious hotels can be unnecessarily expensive so homestays offer a more affordable alternative. Homestays not only meet the need for comfortable accommodation during a trip, but they also provide unique experiences by allowing tourists to connect with locals and immerse themselves in the natural environment.
Homestay, also known as a house with rooms for rent to tourists, has become a rapidly growing business model in Vietnam's thriving tourism sector. For travelers, staying in luxurious hotels can be unnecessarily expensive so homestays offer a more affordable alternative.
Homestays not only meet the need for comfortable accommodation during a trip, but they also provide unique experiences by allowing tourists to connect with locals and immerse themselves in the natural environment.
This homestay business model also benefits locals, particularly those who lack the capital to invest in luxury hotels or resorts. It provides them with a stable and sustainable source of income from tourism activities. However, operating homestay businesses must comply with the legal requirements for tourist accommodation facilities. In this article, NPLaw will introduce readers to various aspects related to homestay business services.
I. What is Homestay Business?
Literally, "home" means house, "stay" means to stay or reside and “homestay” means to stay or reside at a house. Therefore, homestay can be understood as a type of accommodation service where tourists stay at the houses of locals in the places they visit.
In a broader sense, it allows tourists to live and experience the daily life of the locals, thereby exploring and understanding the customs and traditional cultures of each region they visit. This also gives tourists the opportunity to discover the wild nature, untouched by concrete unlike other resorts or hotels.
1. Characteristics of Homestay Business
As a business model based on locals, a homestay has its own unique characteristics that distinguish it from other accommodation establishments, including:
- Low investment cost: Homestays are built in existing houses, making use of available spaces. Owners only need to renovate and add a few amenities (equipment) to serve tourists. Additionally, homestays often allow multiple tourists to share a room, which keeps the initial investment cost low.
- Opportunities to interact with locals and other tourists from different regions and learn about many local cultures: As a community-based business model, homestays encourage interaction and cultural exchange between tourists and locals, thereby helping their communication be more easy and creating remarkable trips to tourists.
- Small scale and affordable prices: Since homestays are built in houses with low investment costs and shared accommodation, the rental prices are also very reasonable for tourists. Usually, a homestay can accommodate 10 to 30 tourists with prices ranging from 80,000 to 100,000 VND per person per night.
2. Roles of Homestay Business
Homestays are playing an increasingly important role in promoting local tourism in places where luxury resorts and hotels are difficult to build.
- Creating income for locals: Providing accommodation services for tourists helps locals have a stable income to improve their living standards.
- Promoting cultural exchange and spreading local identity: Tourists can easily and conveniently learn about the customs and cultures of the locals.
- Saving costs for tourists: Homestays provide services at affordable prices, allowing tourists to explore and enjoy their vacation without spending too much money on accommodation.
II. Types of Homestay Business
- Nature style: This design style uses natural materials such as wood, bamboo, rattan, leaves, etc., and is located as close to nature as possible.
- Classic style: With its antique design, classic homestays allow tourists to experience the lifestyle of decades past.
- Industrial style: This style of homestay is designed like a factory or warehouse, providing tourists with a new experience.
III. Conditions for Operating a Homestay Business
To operate this type of accommodation service, enterprises must meet the following conditions (as stipulated in Article 49 of the Tourism Law 2017 and Article 27 of Decree 168/2017/NĐ-CP amended and supplemented in 2018):
Conditions for operating tourist accommodation services include:
a) Having a business registration in accordance with the law;
b) Meeting the requirements for security, order, fire fighting and prevention, environmental protection, and food safety in accordance with the law;
c) Meeting the minimum requirements for technical infrastructures and services for tourists.
Specifically, the minimum requirements for technical infrastructure and services for tourists include:
- Having a common living area; having an accommodation area for tourists; having a kitchen, bathroom and toilet;
- Having beds, mattresses or mats; having blankets, pillows, curtains, face towels and bath towels; changing mattress or mat covers; changing blanket covers, pillow covers, face towels, and bath towels when new tourists arrive.
IV. Procedures for Registering a Homestay Business
For a homestay to be allowed to operate, the enterprise owners must complete the procedures to obtain the following licenses:
1. Business registration certificate for accommodation services with rooms for rent to tourists: The enterprise owners can choose to register business enterprises or business households under the regulations of the current Law on Enterprise. However, for homestay businesses, it is recommended that the enterprise owners choose to register business households because the procedures are quick and easy.
2. Fire fighting and prevention certificate: This is an important certificate in the operation of a homestay business, aiming to ensure the safety of tourists and the owner in case of a fire.
3. Certificate of meeting the requirements for security and order.
V. Frequently Asked Questions about Homestay Business
1. What are the differences between the conditions for operating a homestay and a campsite?
Homestays and tourist campsites are both types of tourist accommodation establishments. Therefore, to operate these two types of services, enterprises must meet the conditions for operating tourist accommodation services according to the Tourism Law 2017. The conditions for operating a homestay and a tourist campsite are different, specifically:
The minimum requirements for technical infrastructure and services for tourist campsites include:
1. Having a reception area, a tent or camp area, and a shared bathroom and toilet.
2. Having a first-aid kit.
Having security guards on duty when there are tourists.
Therefore, operating a tourist campsite requires having a first-aid kit and security guards on duty when there are tourists. This is not required for homestays.
2. Whether can it convert agricultural land to establish a homestay business or not
Operating a homestay business on agricultural land is an illegal business activity. Therefore, to operate a homestay, the enterprise owners must convert the land use purpose.
According to the Law on Land 2013, the authority to allow land use conversion for households and individuals belongs to the District People's Committee. In cases where households or individuals are allowed to lease land and convert agricultural land use for commercial and service purposes with an area of 0.5 hectares or more, there must be a written approval from the Provincial People's Committee. Land use conversion procedures are implemented in accordance with the provisions of the Law on Land.
3. Difficulties in operating a homestay business
First, the small business scale and low service fees make it difficult to recover the initial investment capital. To operate profitably, homestay owners must constantly innovate to attract tourists and manage costs effectively to optimize their profits.
Second, the fierce competition from other accommodation establishments is also a significant challenge for homestay owners. Nowadays, there are many homestays with beautiful designs and modern equipment. Besides, guesthouses and hotels also offer services at affordable prices, so homestay owners are under great pressure from these competitors.
Third, for some homestay owners, receiving negative feedback from customers can be a nightmare. Modern technology can spread information very quickly. A negative feedback from a tourist can spread to hundreds or thousands of other tourists, leading to a decline in homestay revenue.
The above are the basic contents about homestay business that NPLaw would like to introduce to readers. With a team of experienced lawyers and legal experts, NPLaw is a reputable and responsible law firm in consulting and supporting Clients in implementing legal procedures related to homestay business licenses in particular and other legal services in general in the fastest time and with the highest efficiency.
