PGP reports guest house opportunities in Knysna, Plett

Yellowwood Lodge

"Approximately 70km from George airport, Knysna has a population of approximately 65,000, which increases to some 110,000 in season, while Plett's residential population of about 40,000 also rises to about the same number during season. Renowned for their own unique beauty and quaintness, these areas are seeing more and more international tourists visiting throughout the year. We constantly see visitors wandering through the streets - the restaurants are busy and there is a buzz about the towns. Whereas previously you could walk into most restaurants after high season, bookings are a must and many guest houses are even turning clients away due to the demand. In 2012, Conde Nast Travel Magazine ranked Knysna as runner-up on its World's Best Cities list, which further boosted this as a prime tourism destination," she said.

Dobson said that during the summer season visitors are predominantly international as those in the northern hemisphere travel south to escape the cold winter months. In low season, from May to September, visitors are mainly South Africans, many of whom stay in self-catering establishments, which are more cost effective for families. "However," she said, "there are other overseas markets that travel here during our winter months, such as the Middle East, Italy, Brazil, Holland (year round tourists), India and China."

Business opportunities

Historically, business opportunities in the Knysna and Plett areas have tended to be limited by their distance from major cities. Knysna's industrial area caters mainly for the wood industry and other light industries, while the town has, in recent years, become a mecca for the car collector fraternity, having hosted the International bi-annual MG Indaba 2014. "Attracting car enthusiasts from all walks of life, Knysna is rapidly becoming an international classic car destination," said Dobson.

She said that from a hospitality perspective many guest houses in these areas have been established by those retiring to the Garden Route or relocating for a change in lifestyle and then finding they can derive an income from paying guests. Today there are over 400 accommodation establishments - inclusive of hotels - in Knysna, Sedgefield and Plett, providing in excess of 6000 bed nights. These comprise small three- and four-bedroomed B&Bs, with a further market segment offering four- to seven-bedroomed guest houses, also in the three star, four star and luxury category, which includes high-quality boutique facilities.

"While hotels require a year-round occupation for a viable business, guest house infrastructure and overheads are less, making it easier for owners of these establishments - who also live on the properties - to offer accommodation in the peak periods and ride out quieter periods during the year. As there are no plans for any more large hotels in the area, with an ever-increasing tourism market, there is definitely room for expansion of the guest house offering, particularly well-run establishments that provide good service. Many visitors also book out houses for accommodation over the holiday season, and during the past year (2014) our holiday rentals reflected an increase in excess of 30% over the previous year, with the exchange rate also contributing to growth in this sector," she said.

Buy an existing property

Dobson's advice for those looking to acquire a B&B or guest house is that it is better buy an existing property as starting from scratch is not easy and requires considerable marketing spend, while there are a number of viable establishments for sale in the area for various reasons.

"If you own the property outright then the income derived during the summer months should be sufficient to sustain the slower off-season months. It is, therefore, advisable to purchase the property in cash so that the income is not required to pay off a bond - bearing in mind that the banks are generally not providing bonds on guest houses; instead they take into account the value of the residential property. In terms of location, an excellent position is either on the beach on Leisure Isle (Knysna) or in Keurbooms (Plettenberg Bay), or very close to the CBD."

She said that it is important to consider the number of rooms. In three-star establishments, from seven rooms and more tends to translate into lucrative returns, whereas it the luxury category this can be achieved with as few as four to five rooms. "It is imperative to maintain ongoing marketing as well as an innovative and inviting website. Register with the Department of Tourism, work with tour operators and travel agents for recommendations and network with other establishments to facilitate referral business. Also, ensure you know the town and all the restaurants and facilities available."