Understanding the homestay business risks will help the hosts predict the best solution. Therefore, make sure your operation is efficient!
* In this article, homestay business is generally understood in various types of accommodation services such as hostel, BnB, villa, apartment,… Let’s explore with Luxstay.
- 1 The homestay business risks from guests
- 2 The homestay business risks from crime
- 3 The homestay business risks from partner
- 4 The homestay business risks from law
The homestay business risks from guests
Guests’ inaccurate reviews
There are a lot of guests in these types, who cause plenty of problems to hosts. Leaving a bad review, low-star rate without any specific reason actually affects the listing a lot. The next guests will read reviews and see ranking to decide whether to book or not. Bad reviews will diminish your credibility, even the value of your apartment in a long run.
“A Korean person rent my homestay, he gave me 3*. The problem is that when getting something dissatisfied, he does not complain to me. I am always ready to fix the problem for guests. But they do not communicate, they checked out and rated 3*. Too bored, do not know what to do now, does it have any bad impact? “-The risk of homestay business from a host on the group of hosts.
With this kind of guests, you keep feeding back and reporting on the OTAs or explaining/removing the review if it’s posted on your homestay channel.
“Use as breaking” type of guests
Psychology and behavior of customers are diverse. There are civilized guests but there are also guests lack of awareness, some are even irresponsible for what they have caused. Many host instances have to “swallow the bitter pill” when encountering this type of guests.
“Leave air-conditioner to run all day (although they are not at homestay), littering, complaining or requesting, although they know it is homestay, not 5* hotels.
“Vietnamese guest stay for 3 days and blow out the fuse, the iron, I asked for compensation, she told me to cover it by the fabric, she have done so at her house. Then she said that I was negative, would meet karmic retribution, samsara. “(L.N)
However, for these visitors, the thing that the host needs to do is to carefully review the rules, even write the text and describe how to handle, clear compensation to solve when a problem occurs. Many claims about wasting electric power has been reimbursed by the guests, do not worry!
Drug and prostitution
This is the biggest fear, the worst business homestay risk of all the hosts. There is nothing more disturbing than someone blatantly sin in your homestay. If this case is exposed, you will be charged with harboring. And if not, cleaning up the homestay has caused you to waste much energy.
According to experience, many hosts said:
- Avoid groups of guests booking for 1-2 days.
- It is necessary to declare a temporary absence or residence and sign a tenancy agreement for the purpose of staying (avoid being prosecuted for harboring)
- If there are signs of suspection, you need to check (assume to supple furniture, check room,…)
- You should also keep track of booking blacklist from other hosts to identify these groups early.
Guests booking and cancelling continuously to reduce the price, guests cancelling before check-in time, guests booking unpaid but absent,… are the types of guests making hosts annoying most. You have to waste time, effort and also lose revenue.
The best way is to make a prepayment of 50%, charge for cancellation after a fixed time, and select a reputable OTA guaranteeing of the host’s rights like Luxstay (require 100% money transfer to keep room).
The homestay business risks from crime
Defrauding and bilking
This is usually a group of guests booking and then being absent or cancelling near the check-in day. In addition, this group also book for a fixed number people but the people in reality is more, which cause many losses. What hosts should do is set rigorous payment mode/deposit and check the number of guests, declare accurate in public so that criminals are not aimed at you.
They often access to your online information to steal data. Especially in recent days, there is a kind of criminals defrauding by technology which is warned by many hosts. They are characterized by the quick and hasty decision to book the room, then, demanding for international payment.
You will need to verify your bank account via a link to receive money. However, when entering information in this link, the money in that account will vanish as this “VIP” guest.
You absolutely do not declare the account number and information on any link, only believe in previous applied payment methods!
No matter how rare this case is, many criminals have chosen homestay to lurk thanks to the strong development of nowaday accommodation services. Just a few clicks for booking homestay, they easily become your guests. Always be aware and report to the police if you have any suspitions.
The homestay business risks from partner
From the house’s owners you rent to do homestay business
Most of the hosts usually sign in long-term contracts and renovate available apartments to do homestay business. Therefore, also many people are in half laughing and half crying situations: The owners take back the house before the validity date with little or even no compensation!
You need to:
- Be aware of the compensation provisions and time prior to the taking back in the lease for you to handle the guests already booked. About the compensation money, make sure that you cover the cost you invest.
For example: You need to write in the contract: “If Party A cancels the contract on his own initiative, he will be fined the investment cost in facilities and opportunity costs of party B into the rental house and pay Party B a sum compensation is 200 million VND. The compensation will be deducted according to the lease period of 05 years equivalent to 20% per year and will be reduced until the cancellation of the contract. And Party A must notify Party B two months in advance.”
- Be aware of the legality of the tenancy agreement. If the Land Use Rights Certificate includes the names of both the husband and wife, then both people must sign the agreement. 1 person signing leads to no effect. It is best to call a notary public. Two-party contracts signing with each other for a period of more than six months without notarization is also of no legal value.”
From Investor/Building Managemant (with the hosts of apartments)
To avoid these risks, you just have to lobby Investor/Building Management.
Intermediate party (OTS, payment platform)
Late payment from OTA, foreign currency difference,…? These are minor issues, but you need to deal with them from the beginning, avoid future loss.
The homestay business risks from law
Make sure you have all necessary permission and related paperwork. In addition, you also need to prepare fire and Fire Protection Certificate and Security & Order Certificate as well.
You need to declare at least 23 hours before the sudden “visit” of the local police!
The above are guidelines for minimizing homestay risk. Wish you best luck!
More information: The poplular types of guests