Lucrative guesthouse opportunities abound in prime tourism hotspots of Knysna and Plettenberg Bay

Increasingly popular as a holiday destination among both domestic and international tourists, the scenic Garden Route town of Knysna has evolved into a burgeoning resort which offers entrepreneurs rewarding hospitality opportunities – particularly in the buoyant guesthouse market, says Ling Dobson, area principal for Pam Golding Properties in Knysna and Plettenberg Bay.

This charming Heritage guesthouse in Knysna has been restored to reflect its old-time glory and is marketed by Pam Golding Properties at R9.9 million
“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 guesthouses 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.”
Dobson says 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 says, “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.”
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,” says Dobson.

Overlooking Knysna Lagoon, the joint guesthouses of Beauchamp and Art Deco include a restaurant that can be opened to the public as well as a three bedroom owner/manager’s house, marketed at a total price of R16.5 million through Pam Golding Properties.
She says from a hospitality perspective many guesthouses 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 bedroom B&B’s, with a further market segment offering four to seven bedroom guesthouses, also in the 3 Star, 4 Star and luxury category - which includes high quality boutique facilities.
“While hotels require a year-round occupation for a viable business, guesthouse infrastructure and overheads are lesser, 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 guesthouse offering, particularly well-run establishments which 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 percent over the previous year, with the exchange rate also contributing to growth in this sector,” she says.
Dobson’s advice for those looking to acquire a B&B or guesthouse 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 guesthouses; 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 says it is important to consider the number of rooms. In 3 Star establishments, from seven rooms and more tend 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.”
Pam Golding Properties is currently marketing two 3-4 Star guesthouse opportunities which enjoy excellent positioning, are well-priced and offer opportunities for sound return on investment of 9-11 percent and potential for expansion. The first comprises two adjacent guesthouses with a thriving turnover, positioned within walking distance of Knysna CBD with its eclectic restaurants, coffee shops and shopping malls, waterfront and museums. The joint establishments comprise Art Deco, which includes a well-appointed restaurant that could be used for functions and conferences, a second guesthouse – Beauchamp, and a separate three bedroom owner/manager’s cottage with its own private garden with deck and scenic views towards The Heads, all marketed at a total selling price of R16.5 million. The property is visible from the N2 and also has spectacular views over Knysna lagoon.
Yellowwood Lodge, steeped in history and a few minutes from the centre of Knysna, is a charming, restored heritage guesthouse with 14 guest rooms and 12 bathrooms (11 en suite), with a secluded swimming pool and spacious grounds of 3450sqm, priced at R9.9 million through Pam Golding Properties.
Renowned for its lush forests, tranquil lagoon, landmark sandstone cliffs - The Heads, whale watching and world class golf courses, picturesque Knysna is also well known for its festivals including the Oyster Festival, Literary Festival, Pink Loerie Mardi Gras & Arts Festival, car show and host of sports events - including athletics, mountain biking, cycling and the Jaguar Simola Hill Climb, among others. Plettenberg Bay is host to Plett Bubbly Festival, Dr Evil Cycle Race and Plett Rage.

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