🛏️ PG / paying guest hostel business — investment, profit & project report
Plan a paying-guest / hostel operation: rooms, double-sharing beds, occupancy %, food cost, staff, break-even and 5-year profit. Currency-aware (₹/$/€/£/¥ — pick from the header dropdown). Includes downloadable project report in Word & PDF for loan applications.
📸Gallery
📋Eligibility — by region
🇮🇳India
- State Hotels & Lodging House Act registration. Shop & Establishment Act licence. GST registration if turnover > ₹20L.
- Mandatory Police Tenant Verification (Form C). Fire NOC from local fire dept.
- FSSAI licence if serving food (almost always for PGs). Municipal Trade Licence.
🇺🇸USA
- State Lodging / Bed-and-Breakfast Licence. Local Zoning (residential vs commercial conversion approval).
- Health Department food permit if serving meals. ADA accessibility compliance for new builds.
🇬🇧UK
- Council HMO (Houses in Multiple Occupation) Licence — mandatory for 5+ unrelated occupants. Selective Licensing in some council areas.
- Annual Gas Safety Certificate (Gas Safe). Fire Safety Order 2005 risk assessment.
🇪🇺EU
- Country-specific lodging-house licence — e.g. Spain CC.AA. tourist registration, Portugal AL alojamento local. Tourist tax collection where applicable.
🌏Australia / Canada / others
- AU: State Boarding-House / Hostel Licence (NSW Boarding Houses Act 2012) + Council DA.
- CA: Provincial Boarding-House licence + municipal short-term-lodging rules.
🏗️Setup requirements (capex breakdown)
Edit any value to match your local prices — totals update live and flow into the calculator below.
| Item | Specification | Cost (₹) |
|---|---|---|
| Building lease deposit | 6-month rent on 15-room property | |
| Furniture | 30 beds + mattresses + lockers + study tables | |
| Common amenities | WiFi + TV + RO + washing machines | |
| Kitchen setup | Commercial + gas + utensils | |
| Boundary + CCTV + security + branding | Compound wall + 6 cameras + entry-board | |
| Working capital (2-month) | Food + staff + rent + utilities buffer | |
| Total capex | ₹16,60,000 | |
| Year | Revenue | Cost | Profit | Cumulative |
|---|
⚠️Risks & mitigation
- Occupancy volatility (semester pattern): Student-PGs empty for 2 summer months. Mitigate via short-stay tariffs / corporate intern blocks.
- Bachelor-tenant police verification: Form-C burden + RWA pushback. Use digital verification platforms (e.g. Stayqo) + tenant-agreement templates.
- Fire-safety / asbestos / structural issues in old buildings: Get structural certificate + electrical audit before lease signing.
- Complaint-driven RWA / municipal action: Maintain quiet hours, paid parking, written house rules + monthly community meetings.
💰Funding & support programs
🇮🇳India
- MUDRA Tarun: up to ₹10L collateral-free term loans for hospitality micro-enterprises.
- PMEGP: 15–35% margin-money grant for service-sector micro units.
- NABARD Tourism Promotion: rural / semi-urban PG loans at concessional rate.
- Stand-Up India: ₹10L–1Cr for women-operators / SC-ST entrepreneurs.
🇺🇸USA
- SBA 7(a): up to $5M for boarding-house leasehold + furniture.
- USDA Rural Hospitality: Rural Business-Cooperative Service guarantees.
🇬🇧UK
- Start Up Loans: £500–£25k at 6% APR for new HMO operators.
- Local Authority Regeneration: capital grants for converting derelict HMOs.
🇪🇺EU
- EU Tourism + country bed-and-breakfast grants: e.g. Italy "Bonus Affittacamere", Spain Junta tourism aid.
🌏Australia / Canada
- AU: Tourism Australia grants + NEIS allowance for new boarding-house operators.
- CA: BDC Tourism Loan for accommodation-sector SMEs.
📄Generate project report (Word + PDF)
Fill in your details — defaults are pre-populated. Click Print as PDF for a browser-printable PDF or Download Word for an editable .docx file usable in bank loan applications.
❓FAQ
Lease vs own building — which is better for a PG?
Leased buildings dominate the PG market because building purchase needs ₹2–10 Cr capex. Lease arbitrage (charge tenants more than the lease cost + opex) works well in tier-1/2 metros where rent yields are 3–4% but PG yields are 10–15%.
How important is food in a PG?
Food is the #1 differentiator after location. 90% of PG tenants choose a property based on home-cooked food quality. A bad cook will empty your PG in 2 months — pay above-market for an experienced one (₹25–35k/month).
Do I need GST registration?
Yes if your annual turnover exceeds ₹20L (₹10L in special-category states). PG services are taxed at 12% GST. Many small PGs operate below threshold but lose corporate clients who need invoices.
What's the typical occupancy assumption?
80–90% for student PGs near colleges (drops to 40% in summer). 85–95% for working-professional PGs near tech parks (steady year-round). Plan capex on 75% occupancy to stay safe.
How do I handle police verification?
Submit Form-C (Tenant Verification) to the local police station within 24 hours of new check-in. Photo ID + previous-address proof. Several apps (RentMojo, Stayqo) automate this digitally now.