Welcome to the Zulu Kingdom, KwaZulu-Natal

How To Establish A Bed & Breakfast of Guesthouse

How To Establish A Bed & Breakfast or Guesthouse Note that legislation now requires all businesses providing services to tourists be registered with the provincial tourism authority, Tourism KwaZulu-Natal. Kindly contact TKZN if you are not sure whether registration is mandatory or optional for your business, as well as information on how to register.

DEFINITION A Bed & Breakfast establishment (B&B) is an informal, periodic accommodation operation undertaken from a private dwelling. The maximum number of guest bedrooms in a B&B is 3. Any application received by the Authorities for a B&B establishment with more than 3 bedrooms is automatically treated as a Guesthouse.

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A Guesthouse is a commercial accommodation establishment offering between 4-16 bedrooms, which has as its primary source of business the supply of tourist accommodation. Breakfast and dinner are made available to guests, particularly where the latter is not readily available in the vicinity of the establishment.

POLICY

A Draft Policy prepared by the Provincial Planning and Development Commission (PPDC) states that the following standards should be adhered to regarding B&Bs.  A minimum of 50% of lettable rooms is to be maintained for private home use.  Breakfast is the only meal which needs to be served to guests.  The predominant land usage i.e. a residential dwelling, and the residential character of the home are to be maintained.  The size of the house and size of the land are to be taken into consideration, and negative impacts controlled. This is at the discretion of the Local Council.  The minimum facilities to be provided to all guests are:  A bedroom.  Access to a bathroom and toilet, separate to that of the hosts.  A dining room area where breakfast is served.  All facilities and breakfast are for the sole use only of overnight registered guests.  Utilisation of the owner's garden or any other facility in the home, by the guest, is at each owner's discretion.  No kitchen facility will be provided to guests in the lettable room; only one kitchen facility per dwelling unit is permissible.  One off- road parking space, per lettable room, is to be provided, or at the discretion of the Local Council.  It is compulsory to have a fire extinguisher in the kitchen, which is to be tested regularly, to ensure the safety of guests at all times.

On making application to establish a B&B, the draft PPDC policy states that the following steps should be taken: Neighbours are to be advised about the proposed business. Any objections received from neighbours must be motivated by the person objecting (complainant). A Special Consent application can then be made in terms of the Development and Planning Act, by the owner, to the Local Council. For Group Housing / Cluster Area Applications, the owner is to obtain consent from the Body Corporate or the Home Owner's Association, prior to submitting an application to the Local Council. Title deed conditions / restrictions become applicable only when the predominant use of the land is other than that of the current usage. Road and directional signage is to be in line with the existing character of the locality, and to adopt the signage policy of the Local Council, or any other regulations that exist. Signage erected on State roads in rural areas will be subject to policy of the Provincial Department of Transport. Neon lighting shall be in line with the existing character of the locality, and to adopt the policy of the Local Council, or any other regulations that exist. Bylaws of the Local Council regarding noise shall be adhered to and the environment and general area be preserved and kept in good condition. The rates base on the property concerned will not change for typical B&B establishments. However, should the establishment require rezoning, the rates base will change. This will be at the discretion of the Local Municipality.

If you propose to open your B&B in a rural / farm area, the same regulations as those applicable in urban areas will apply. Accommodation facilities on farm land will become rateable, and the District Municipality will collect these rates where applicable. Any application outside of the Ingonyama Trust Land will be bound by the same regulations as those in all other areas.

Your Local Municipality or the PPDC can assist you with planning controls and TKZNTKZN and the Department Arts, Culture and Tourism should be consulted for updates on policy.

LAND AND PLANNING ISSUES

Available Space

Discuss with TKZN whether you have enough space to cope with the number of people you wish to accommodate.

Amenity Value

The following questions should be asked: Is the site you have chosen quiet enough for people to sleep undisturbed? Are the street surrounds well kept and maintained? Is the site free from unpleasant odours?

Accessibility / Roads

Is the site easy to find for people using their own transport or using public transport?

The Local Municipality has controls for the erection of any signs. If new access onto streets is needed, the Local Municipality will usually construct them, at the cost of the developer. Permission must be obtained from the Provincial Department of Transport to construct new access points onto main roads outside of Local Municipality areas.

LEGAL REQUIREMENTS

Land Use Zoning

Approach the Local Municipality to establish whether the Town Planning Scheme permits the activity on the site you have chosen.

The establishment of a new enterprise in which the present use is substantially changed may require a scoping report to be prepared in terms of the National Environmental Management Act (107 of 1998). The Provincial Department of Agriculture and Environmental Affairs should be consulted in this regard.

In the case of the establishment of a Special Consent in terms of the Planning and Development Act (5 of 1998) must be obtained from the Local Council prior to establishment.

Licensing and Registration

Approach the Town Planning Department* of the Local Council for permission to go ahead with your plans. Once permission has been obtained, register with the District Municipality.

A trading licence must be purchased from the Business Licencing Department of the Local Council at a cost of R200, for the sale of perishable food.

Your application for a trading licence will be circulated by the Local Council to the Health, Fire and Building inspectors, the Town Planning Department, and in some cases the Development Services Board (DSB). These bodies will ensure that your plans comply with their regulations before the application can be approved.

You must register your establishment with your provincial tourism authority, in this case, Tourism KZN. Contact their Registration Executive for the relevant forms by telephoning (031) 366 7500, or writing to them at PO Box 2516, Durban 4000.

Other Legal Requirements

If you wish to erect a road sign in the road reserve area (as distinct from on your own property)advertising your business then you need approval from:

Department of Transport in the case of national roads; The Facility Signs Committee in the Provincial Department of Transport in the case of secondary roads; The Local Municipal Engineer in the case of local roads within a Local Council area.

Also read the brochure on How To Apply for Tourism Road and Outdoor Signage in KZN.

BUSINESS ISSUES

Structure of Your Business

You may be registered as a Sole Proprietor, or your business may be registered as a Private Limited Company (Pty) Ltd Company, or Close Corporation (cc). Chambers of Commerce are a good contact through which to obtain details of organisations that can give advice on the structuring of your business. Advice may also be obtained from Business Advice Centres.

Managing Your Business

Management of your business will involve:

a decision on the types and packaging of services; bookkeeping and accounting; arrangement of VAT and taxes; record-keeping for your own records, for advertising reasons and for tax purposes; taking and managing bookings from clients; employment and labour conditions which includes employment equity, labour unions and conditions of employment; training of staff: it is vitally important that staff are trained in customer care and to be professionals in their field; and insurance cover which includes both security and public liability.

Chambers of Commerce* are a good contact through which to obtain details of organisations that can give advice on the management of your business.

Marketing and Advertising

Marketing and advertising may be done through a variety of mediums such as printed brochures, internet, television and word of mouth. TKZN should be approached to enter your business into their tourism assets database for the Province which provides freely available information on tourism facilities. The Regional Council has a copy of the same database. Publicity Associations should be approached to help disseminate your information.

Any brochures produced to advertise your establishment should include an easily readable map of where to find it.

Voluntary Requirements

Membership of the Southern Africa Tourist Services Association (SATSA) is advisable to ensure that minimum standards are adhered to. Membership of SATSA can be used as a marketing tool and provides tourists with an assurance that certain standards are being maintained. The requirements for membership of SATSA are available from the SATSA website: www.satsa.com or requests for application forms should be addressed to:

The Chapter Secretary of SATSA c/o Gooderson Leisure Corporation P.O. Box 10305 Marine Parade, 4056

SATSA represents the private sector organizations which service the incoming Southern African tourism industry. Membership includes airlines, coach operators, accommodation establishments, vehicle hire companies, attractions, conference organisers, and related marketing organisations.

You must have a registered Private Limited Company ((Pty) Ltd Co) or a registered Close Corporation (CC). Sole Proprietors are not eligible for membership.

There is a joining fee of R627.00. The annual subscription for Chapter membership is R1425.00. The annual subscription for National membership is R2850.00. The subscriptions are in addition to the entrance fee.

The first year is a provisional membership only and is subject to SATSA approving your full membership.

The costs of joining and subscribing are reviewed every few years.

The SATSA application form requires the applicant to sign an Agreement to abide by the SATSA Code of Conduct.

The company must produce a copy of their brochure (describing services offered and prices) used for marketing the organisation. SATSA evaluate whether the product being offered falls within the SATSA parameters and ensure that prices are market-related.

If the applicant is not a South African citizen then they must produce proof of residency in South Africa and a copy of their work permit.

The application is to be made in the name of the company or close corporation, not in the name of the individual owner (s).

The application will require details of general public liability insurance. (This type of insurance is to cover your business in the event of someone slipping on your carpet (for example) and they sue you for negligence).

The application must be accompanied by a letter from the firm's accountants/auditors indicating that they are the appointed auditors and that the firms financial record books confirm that the company is in a sound financial position.

The criteria set out in SA Tourism's * voluntary grading system which has been established in terms of the Tourism Act (72 of 1993) are also useful as practical guidelines for achieving a specific standard of service. Participation in the grading system provides a good marketing tool and ensures a high level of service. Booklets may be purchased from SA Tourism which outline the minimum standards required for the grading system. SA Tourism keeps a record of all persons with accommodation establishments who are members of this scheme, and of all establishments that are graded and classified in terms of the scheme. Owners of establishments that are part of the grading scheme must be prepared to undergo periodic assessments by SA Tourism and must pay an annual accreditation fee as determined by SA Tourism.

Sources of Information

A useful source of information for B&Bs is TKZN website (www.zulu.org.za). TKZN also has a resource centre which may be used to obtain information about similar establishments and products being offered.

FINANCIAL ISSUES

Sources of Finance

Finance for your proposed business may be obtained from various sources. It can either be in the form of individual savings, loan finance, or in some instances, State subsidies.

Sources of loan finance include:

Business Partners Limited Ithala Development Finance Corporation Limited Industrial Development Corporation Development Bank of Southern Africa (DBSA) Joint Venture Financing Commercial Banks.

The Department of Trade and Industry provide limited subsidy for certain small and medium sized enterprises in the Tourism field. They should be consulted.

TKZN may be approached for advice on potential funders.

Business Plan

Loan organisations (like banks) normally require a comprehensive Business Plan to be prepared in applying for a loan. Such a Business Plan should include:

business analysis; financial forecasts, based on rational assumptions and experience; budgeting guidelines; schedules determining the amount and kind of finance most appropriate for the business; details on proposed financing sources; and useful information about the planned business which will aid decision making by the loan organisation.

Advice on business planning may be obtained from:

the Tourism Market Research Division of TKZN Business Advice Centres the Department of Economic Development and Tourism Commercial Banks Business Partners Limited Ithala Development Finance Corporation limited TKZN How To Draw up a Business Plan brochure

You may employ Consultants to advise you or to draw up your Business Plan with you. This would be at your own expense. TKZN could give you a list of such persons who could assist you.

Financial Record Keeping

Good record keeping systems provide information for managing finances. The key items in record keeping include:

Original records e.g. keeping your sales slips, receipts, invoices etc.; Journals which record the details of every transaction in chronological order e.g. the cash book; Ledger where information obtained from journals is made more useable; Trial balance is a list of all ledger accounts balances taken out to prepare financial statements;

Financial statements:

Income statement Balance sheet.

The minimum requirements for a small business operation are:

Cash Book Cash Control Systems Assets Register Debtors Record Creditors Record.

Budgeting

Budgets are based on past experience current state of affairs and future expectations. Budgets will help provide an estimate of financial requirements in the execution of plans in the business operation. Kinds of budgets include:

Sales budget: a forecast of expected monthly income; Materials budget: expected purchases; Capital budget: expected fixed assets expenditure e.g. machinery, land etc; Cash budget: expected working capital requirements over a specific period.

Tariff Structures

Tariffs should be based on those of your competitors and a detailed analysis of income and expenditure for the proposed operation. Research will therefore be needed in order to set realistic tariffs.

Advice on setting of tariffs may be obtained from:

TKZN tourism asset database, Publicity Associations, and SA Tourism. LIST OF USEFUL CONTACTS Bed & Breakfast Association 031-561 3795

Business Advice Centres Durban: 031-309 5432 Pietermaritzburg: 033-345 4604 Tongaat: 032 944 3814

Business Partners Limited Durban:031-266 7130 Richards Bay: 035-789 7301

Department of Arts, Culture and Tourism 031-309 7559 Ithala Development Finance Corporation 031-907 8911

Tourism KwaZulu-Natal (TKZN) 031- 366 7500

South African Tourism (SA Tourism) Head Office Johannesburg 011-895 3000

Southern Africa Tourist Services Association (SATSA) 031-261 2525

Department of Trade and Industry 012-322 7677 Provincial Planning and Development Commission 033-395 3066

Department of Agriculture and Environmental Affairs Pietermaritzburg 033-355 9100

FEDHASA 031-209 1025

A Guesthouse is a commercial accommodation establishment offering between 4-16 bedrooms, which has as its primary source of business the supply of tourist accommodation. Breakfast and dinner are made available to guests, particularly where the latter is not readily available in the vicinity of the establishment.

POLICY

A Draft Policy prepared by the Provincial Planning and Development Commission (PPDC) states that the following standards should be adhered to regarding B&Bs.  A minimum of 50% of lettable rooms is to be maintained for private home use.  Breakfast is the only meal which needs to be served to guests.  The predominant land usage i.e. a residential dwelling, and the residential character of the home are to be maintained.  The size of the house and size of the land are to be taken into consideration, and negative impacts controlled. This is at the discretion of the Local Council.  The minimum facilities to be provided to all guests are:  A bedroom.  Access to a bathroom and toilet, separate to that of the hosts.  A dining room area where breakfast is served.  All facilities and breakfast are for the sole use only of overnight registered guests.  Utilisation of the owner's garden or any other facility in the home, by the guest, is at each owner's discretion.  No kitchen facility will be provided to guests in the lettable room; only one kitchen facility per dwelling unit is permissible.  One off- road parking space, per lettable room, is to be provided, or at the discretion of the Local Council.  It is compulsory to have a fire extinguisher in the kitchen, which is to be tested regularly, to ensure the safety of guests at all times.

On making application to establish a B&B, the draft PPDC policy states that the following steps should be taken: Neighbours are to be advised about the proposed business. Any objections received from neighbours must be motivated by the person objecting (complainant). A Special Consent application can then be made in terms of the Development and Planning Act, by the owner, to the Local Council. For Group Housing / Cluster Area Applications, the owner is to obtain consent from the Body Corporate or the Home Owner's Association, prior to submitting an application to the Local Council. Title deed conditions / restrictions become applicable only when the predominant use of the land is other than that of the current usage. Road and directional signage is to be in line with the existing character of the locality, and to adopt the signage policy of the Local Council, or any other regulations that exist. Signage erected on State roads in rural areas will be subject to policy of the Provincial Department of Transport. Neon lighting shall be in line with the existing character of the locality, and to adopt the policy of the Local Council, or any other regulations that exist. Bylaws of the Local Council regarding noise shall be adhered to and the environment and general area be preserved and kept in good condition. The rates base on the property concerned will not change for typical B&B establishments. However, should the establishment require rezoning, the rates base will change. This will be at the discretion of the Local Municipality.

If you propose to open your B&B in a rural / farm area, the same regulations as those applicable in urban areas will apply. Accommodation facilities on farm land will become rateable, and the District Municipality will collect these rates where applicable. Any application outside of the Ingonyama Trust Land will be bound by the same regulations as those in all other areas.

Your Local Municipality or the PPDC can assist you with planning controls and TKZNTKZN and the Department Arts, Culture and Tourism should be consulted for updates on policy.

LAND AND PLANNING ISSUES

Available Space

Discuss with TKZN whether you have enough space to cope with the number of people you wish to accommodate.

Amenity Value

The following questions should be asked: Is the site you have chosen quiet enough for people to sleep undisturbed? Are the street surrounds well kept and maintained? Is the site free from unpleasant odours?

Accessibility / Roads

Is the site easy to find for people using their own transport or using public transport?

The Local Municipality has controls for the erection of any signs. If new access onto streets is needed, the Local Municipality will usually construct them, at the cost of the developer. Permission must be obtained from the Provincial Department of Transport to construct new access points onto main roads outside of Local Municipality areas.

LEGAL REQUIREMENTS

Land Use Zoning

Approach the Local Municipality to establish whether the Town Planning Scheme permits the activity on the site you have chosen.

The establishment of a new enterprise in which the present use is substantially changed may require a scoping report to be prepared in terms of the National Environmental Management Act (107 of 1998). The Provincial Department of Agriculture and Environmental Affairs should be consulted in this regard.

In the case of the establishment of a Special Consent in terms of the Planning and Development Act (5 of 1998) must be obtained from the Local Council prior to establishment.

Licensing and Registration

Approach the Town Planning Department* of the Local Council for permission to go ahead with your plans. Once permission has been obtained, register with the District Municipality.

A trading licence must be purchased from the Business Licencing Department of the Local Council at a cost of R200, for the sale of perishable food.

Your application for a trading licence will be circulated by the Local Council to the Health, Fire and Building inspectors, the Town Planning Department, and in some cases the Development Services Board (DSB). These bodies will ensure that your plans comply with their regulations before the application can be approved.

You must register your establishment with your provincial tourism authority, in this case, Tourism KZN. Contact their Registration Executive for the relevant forms by telephoning (031) 366 7500, or writing to them at PO Box 2516, Durban 4000.

Other Legal Requirements

If you wish to erect a road sign in the road reserve area (as distinct from on your own property)advertising your business then you need approval from:

Department of Transport in the case of national roads; The Facility Signs Committee in the Provincial Department of Transport in the case of secondary roads; The Local Municipal Engineer in the case of local roads within a Local Council area.

Also read the brochure on How To Apply for Tourism Road and Outdoor Signage in KZN.

BUSINESS ISSUES

Structure of Your Business

You may be registered as a Sole Proprietor, or your business may be registered as a Private Limited Company (Pty) Ltd Company, or Close Corporation (cc). Chambers of Commerce are a good contact through which to obtain details of organisations that can give advice on the structuring of your business. Advice may also be obtained from Business Advice Centres.

Managing Your Business

Management of your business will involve:

a decision on the types and packaging of services; bookkeeping and accounting; arrangement of VAT and taxes; record-keeping for your own records, for advertising reasons and for tax purposes; taking and managing bookings from clients; employment and labour conditions which includes employment equity, labour unions and conditions of employment; training of staff: it is vitally important that staff are trained in customer care and to be professionals in their field; and insurance cover which includes both security and public liability.

Chambers of Commerce* are a good contact through which to obtain details of organisations that can give advice on the management of your business.

Marketing and Advertising

Marketing and advertising may be done through a variety of mediums such as printed brochures, internet, television and word of mouth. TKZN should be approached to enter your business into their tourism assets database for the Province which provides freely available information on tourism facilities. The Regional Council has a copy of the same database. Publicity Associations should be approached to help disseminate your information.

Any brochures produced to advertise your establishment should include an easily readable map of where to find it.

Voluntary Requirements

Membership of the Southern Africa Tourist Services Association (SATSA) is advisable to ensure that minimum standards are adhered to. Membership of SATSA can be used as a marketing tool and provides tourists with an assurance that certain standards are being maintained. The requirements for membership of SATSA are available from the SATSA website: www.satsa.com or requests for application forms should be addressed to:

The Chapter Secretary of SATSA c/o Gooderson Leisure Corporation P.O. Box 10305 Marine Parade, 4056

SATSA represents the private sector organizations which service the incoming Southern African tourism industry. Membership includes airlines, coach operators, accommodation establishments, vehicle hire companies, attractions, conference organisers, and related marketing organisations.

You must have a registered Private Limited Company ((Pty) Ltd Co) or a registered Close Corporation (CC). Sole Proprietors are not eligible for membership.

There is a joining fee of R627.00. The annual subscription for Chapter membership is R1425.00. The annual subscription for National membership is R2850.00. The subscriptions are in addition to the entrance fee.

The first year is a provisional membership only and is subject to SATSA approving your full membership.

The costs of joining and subscribing are reviewed every few years.

The SATSA application form requires the applicant to sign an Agreement to abide by the SATSA Code of Conduct.

The company must produce a copy of their brochure (describing services offered and prices) used for marketing the organisation. SATSA evaluate whether the product being offered falls within the SATSA parameters and ensure that prices are market-related.

If the applicant is not a South African citizen then they must produce proof of residency in South Africa and a copy of their work permit.

The application is to be made in the name of the company or close corporation, not in the name of the individual owner (s).

The application will require details of general public liability insurance. (This type of insurance is to cover your business in the event of someone slipping on your carpet (for example) and they sue you for negligence).

The application must be accompanied by a letter from the firm's accountants/auditors indicating that they are the appointed auditors and that the firms financial record books confirm that the company is in a sound financial position.

The criteria set out in SA Tourism's * voluntary grading system which has been established in terms of the Tourism Act (72 of 1993) are also useful as practical guidelines for achieving a specific standard of service. Participation in the grading system provides a good marketing tool and ensures a high level of service. Booklets may be purchased from SA Tourism which outline the minimum standards required for the grading system. SA Tourism keeps a record of all persons with accommodation establishments who are members of this scheme, and of all establishments that are graded and classified in terms of the scheme. Owners of establishments that are part of the grading scheme must be prepared to undergo periodic assessments by SA Tourism and must pay an annual accreditation fee as determined by SA Tourism.

Sources of Information

A useful source of information for B&Bs is TKZN website (www.zulu.org.za). TKZN also has a resource centre which may be used to obtain information about similar establishments and products being offered.

FINANCIAL ISSUES

Sources of Finance

Finance for your proposed business may be obtained from various sources. It can either be in the form of individual savings, loan finance, or in some instances, State subsidies.

Sources of loan finance include:

Business Partners Limited Ithala Development Finance Corporation Limited Industrial Development Corporation Development Bank of Southern Africa (DBSA) Joint Venture Financing Commercial Banks.

The Department of Trade and Industry provide limited subsidy for certain small and medium sized enterprises in the Tourism field. They should be consulted.

TKZN may be approached for advice on potential funders.

Business Plan

Loan organisations (like banks) normally require a comprehensive Business Plan to be prepared in applying for a loan. Such a Business Plan should include:

business analysis; financial forecasts, based on rational assumptions and experience; budgeting guidelines; schedules determining the amount and kind of finance most appropriate for the business; details on proposed financing sources; and useful information about the planned business which will aid decision making by the loan organisation.

Advice on business planning may be obtained from:

the Tourism Market Research Division of TKZN Business Advice Centres the Department of Economic Development and Tourism Commercial Banks Business Partners Limited Ithala Development Finance Corporation limited TKZN How To Draw up a Business Plan brochure

You may employ Consultants to advise you or to draw up your Business Plan with you. This would be at your own expense. TKZN could give you a list of such persons who could assist you.

Financial Record Keeping

Good record keeping systems provide information for managing finances. The key items in record keeping include:

Original records e.g. keeping your sales slips, receipts, invoices etc.; Journals which record the details of every transaction in chronological order e.g. the cash book; Ledger where information obtained from journals is made more useable; Trial balance is a list of all ledger accounts balances taken out to prepare financial statements;

Financial statements:

Income statement Balance sheet.

The minimum requirements for a small business operation are:

Cash Book Cash Control Systems Assets Register Debtors Record Creditors Record.

Budgeting

Budgets are based on past experience current state of affairs and future expectations. Budgets will help provide an estimate of financial requirements in the execution of plans in the business operation. Kinds of budgets include:

Sales budget: a forecast of expected monthly income; Materials budget: expected purchases; Capital budget: expected fixed assets expenditure e.g. machinery, land etc; Cash budget: expected working capital requirements over a specific period.

Tariff Structures

Tariffs should be based on those of your competitors and a detailed analysis of income and expenditure for the proposed operation. Research will therefore be needed in order to set realistic tariffs.

Advice on setting of tariffs may be obtained from:

TKZN tourism asset database, Publicity Associations, and SA Tourism.

LIST OF USEFUL CONTACTS

Bed & Breakfast Association 031-561 3795

Guest House Association of Southern Africa (GHASA) 021-762 0880

Business Advice Centres Durban: 031-309 5432 Pietermaritzburg: 033-345 4604 Tongaat: 032 944 3814

Business Partners Limited Durban:031-266 7130 Richards Bay: 035-789 7301

Department of Arts, Culture and Tourism 031-309 7559 Ithala Development Finance Corporation 031-907 8911

Tourism KwaZulu-Natal (TKZN) 031- 366 7500

South African Tourism (SA Tourism) Head Office Johannesburg 011-895 3000

Southern Africa Tourist Services Association (SATSA) 011-886 9996 / 0861272872

Department of Trade and Industry 012-322 7677 Provincial Planning and Development Commission 033-395 3066

Department of Agriculture and Environmental Affairs Pietermaritzburg 033-355 9100

FEDHASA 031-301 5385

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