Key motivating Factors for Homestay Business

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Key motivating Factors for Homestay Business

By Dripto Mukhopadhyay

We at ACRA worked on a study on economic contribution and other functional aspects of homestays in India. The study was conducted with the help of primary survey as well as secondary data available from different sources. The primary survey covered six states, namely, Himachal Pradesh, Rajasthan, Sikkim, Goa, Kerala and Maharashtra. A total of about 200 homestays of various size and 600 tourists were covered in the survey.
In recent past, till the covid 19 pandemic marred all economic activities throughout the world, India witnessed considerable growth in the number of tourists, both domestic and international. But evidences suggest that there are not enough tourist accommodation services, even in well-known tourist destinations. The situation is relatively worse in new destinations or rural and remote areas that can be potentially developed as new tourist attractions. An estimate suggests that there is a shortage of nearly 2 lakh rooms for tourists in India. In recent time it is noticed that the new age millennial traveler is looking for a more authentic, bespoke and real experience that he or she can call her own.
This creates a space for alternate accommodations such as Homestays and vacation rentals to emerge as suitable and sustainable alternatives.

ACRA study focused on a few key areas relating to homestay business both operational as well as regulatory. One of the key issues that the survey attempted to unfold was why people do stat a new homestay business. Or in other words what are the motivating factors that allow people to start homestays as a business opportunity.
Four key motivating factors were identified that triggered to launch new homestays in various states. In this blog I am presenting an overall view of the six states covered in the survey. These motivating factors include income generation, opportunity social interaction that allows extra income for family, spending time productively and combination of these three. The key findings are given below:

  • The survey revealed that homestay can be considered as a super beneficial micro-entrepreneurship opportunity. Most of the homestay owners reported that income generation with low investment was the prime factor that sparked the idea of staring a homestay business
  • About 78% of the respondents said that income generation is the prime reason for stating their homestay business.  But, apart from income generation other reasons were also significant contributor for the same.
  • About 15% reported that though income generation is a factor, but along with that increase opportunity to meet new people, knowing their culture etc. also play major role behind their decision. Some of the homestay owners reported that this will enable them to spend their time much better since they entered into a retired life and their children stay somewhere else. Starting a homestay will allow them to spend quality time.
  • Interestingly, about 7% of the respondents reported that income is less important for them as a motivating factor. Spending their time more productively and social interaction were the prime motivations for them.
  • It was also found during discussions with the owners that launching homestays by neighbours or other known people and the government schemes for promoting homestay business played a catalytic role in their decision making.

Income generation being the key motivating factor for launching homestay business, it is essential to understand how important homestay business as contributor to household income of these families is.

  • About 19% reported homestay business as their only source of earning.
  • About 23% said that earning from homestay was the primary source of income and critical for their livelihood.
  • About 57% reported that earnings from homestay business was secondary income for them. This additional income is used for better education to children, health facilities as well as savings for future. Many of the homestay owners or their household members were engaged in other income generating activities including business (such as eateries, shops, transport operators etc.), cultivation and other services. For them, homestay is a support business activity rather than core income generation activity.

Keeping in view the findings of the study it is pertinent for the government to promote homestays as an alternate accommodation for a sustainable tourism development in the country.

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