Know your legislation

For many people, one of the key attractions of entering the tourism accommodation industry is that there are very few barriers to entry compared to starting other forms of businesses. At the very basic level, all someone needs to open a Bed and Breakfast business is a spare bedroom and a willingness to share parts of the house with other people.

Accommodation benefits

There is very little in terms of start-up costs, you don’t need a qualification or specialist training to operate the business or to register the business with a council or a grading authority. In addition, many small start-up accommodation businesses do not require planning permission, a change in tax status or the employment of staff. And, should it not turn out for the better, there is very little cost in closing the business and turning the house back into a home.

The “low barriers of entry” status of small accommodation businesses provides operators with considerable benefits. Businesses can be successfully operated on a seasonal basis to take advantage of fluctuations in demand, they can be operated part-time to provide supplementary income and they can be operated in areas where other types of businesses would require (and usually fail to get) planning permission such as on farms or in conservation villages.

The tourism generated by these businesses, in turn, provides considerable benefits for small communities, especially in rural and seaside areas, in that the spending of visitors often helps sustain local shops, pubs, attractions and services.

Legal requirements

However, while the low barriers to entry are beneficial to operators and local communities, successfully running a bed and breakfast, guesthouse or self-catering cottage is not easy. One of the difficulties is that there is a large amount of legislation that applies to the accommodation and hospitality sector. A major reason for this is that, unlike many other businesses, when you run a business in this sector, your customers are placing their care and safety (as well as that of their belongings) in your hands.

It is obvious that in taking on this responsibility for the wellbeing of your guests you need to know the relevant legislation because it is mandatory to operate within the law and you will be penalised if you don’t. However, there is an equally compelling reason why you need to keep abreast of the law as it applies to accommodation businesses - and this is so you can maximise your profits.

Maximising profits

There are two ways that a good knowledge of legislation will help you to maximise your profits. The first is by reducing your costs. Knowing how legislation applies to your businesses allows you to look at the services and facilities you provide and determine where you can adapt your offering to reduce costs. Here are just a few examples of how a good knowledge of accommodation-related legislation can help you reduce your costs:

Knowing how much floor space should be private in a bed and breakfast to avoid paying business rates Knowing what discounts are available on TV and copyright licensing (and how to avoid some copyright licensing altogether) Knowing how to avoid losses if a customer cancels a booking at the last moment Knowing how to halve your capital gains tax when operating a self-catering property Knowing how changing one item in your welcome pack could save you up to £400 per annum

The second way that a good knowledge of legislation will make your business more profitable is by minimising your exposure to risks. While there are risks involved in running any business, the operators of successful businesses invariably have a very good understanding of the risks associated with not fulfilling their legal requirements, and spend appropriate amounts to mitigate them (not too much and not too little). Again, here are a few examples on ways in which knowledge of legislation can help you to minimise risks:

Knowing how detailed your fire safety assessment needs to be Knowing how to word advertising so that it doesn’t break consumer protection legislation Knowing how to avoid discrimination – some forms of which can lead to unlimited damages being sought Knowing when damage to customers’ belongings is your responsibility – and when it is theirs. Knowing when you are responsible for the health and safety of the contractors you use.

Keeping up-to-date

Of course gaining a good knowledge of the legislation that pertains to running a bed and breakfast, guesthouse of self-catering businesses is only half the solution to making your business more profitable. The real benefit comes with staying up-to-date, because the legislation that relates to accommodation businesses has a tendency to change regularly.

This year alone will see changes to the Furnished Holiday Letting Rules, discrimination legislation (including the introduction of age discrimination), the introduction of Energy Performance Certificates for many self-catering properties, changes to how councils can charge for waste collection, proposals to change the rules for Brown and White tourism signs and further restrictions of the sale of alcohol to guests.

This is where a resource such as Accommodation Know-How is essential if you are to maximise your profits.