Starting an accommodation business
Get the tourism business basics here and find out specific information on starting an accommodation business below.
What is an accommodation business?
It is important to start with a clear understanding of what are and what aren't 'accommodation businesses' in Victoria. The legal definition comes from the Health (Prescribed Accommodation) Regulations 2001.
Businesses covered by the Prescribed Accommodation Regulations are:
- Bed and breakfasts accommodating more than five people
- Hotels and motels
- Guesthouses and boutique hotels
- Self-contained accommodation
- Farm stays.
Businesses not covered by the Prescribed Accommodation Regulations are:
- Caravan parks
- Public hospitals and nursing homes
- Retirement villages
- Premises where five or less people can be accommodated.
The decision to commence an accommodation business requires careful consideration regarding the type of property you intend to develop.
- Which type of accommodation property do you want to develop? E.g. mass resort, boutique motel, B&B, budget accommodation?
- Who are your competitors? How will your property be significantly different to other accommodation providers in your region?
- How much will the operation realistically cost to set up and how much money do you have available to invest in the business?
- Can you obtain affordable insurance cover to operate the business?
- Could you cover operating costs from other income sources or savings until the business breaks-even (typically 2-3 years)
- What types of customers will be attracted to your property? Are they readily accessible? Are there enough of them to sustain your business?
- Where and how will you find your customers?
- What knowledge and budget do you have at your disposal to market your accommodation property?
- Will your accommodation property represent quality and value for money?
Your main local, state and federal Government requirements are as follows.
Applying for a planning permit
To set up a new business, undertake land or building development, or change the purpose of a property, your first step is to apply for a planning permit from your local council. The planning permit provides evidence that the council has given you permission to develop your property.
Tip for B&B owners
A planning permit is usually not required for a Bed & Breakfast accommodating five guests or less, but registration is still required.
Do I also need a building permit?
If your development involves construction, demolition, alteration or extension of a building, you will probably need a building permit. This can be issued by either your local council building surveyor or a private registered building surveyor.
The building permit gives the surveyor’s permission for building work to go ahead and ensures that building regulations are followed. If you are unsure if you need a building permit, contact either your council building department or the private registered building surveyor of your choice.
A building permit is usually required for a pool or spa more than 300mm deep, and for the installation/alteration of a pool or spa safety barrier.
Registrations with your local council
- Registration of Prescribed Accommodation Under the provisions of the Health (Prescribed Accommodation) Regulations 2001, an accommodation business will need to apply to be registered with its local council. The application must include a plan of the premises, drawn to a scale of not less than 1:100, and showing the proposed use of each room.
- Registration of Food Premises Under the Victorian Food Act 1984, an accommodation business that provides food also needs a Registration of Food Premises from their local council. Contact an Environmental Health Officer from your council health department who will take you through the registration process, and ensure you comply with state and federal legal obligations.
Further licences, registrations and permits
Any further licences required will depend on the activities to be included in your business operations. As an example, a motel with a restaurant is likely to need:
to register a business or company name: business name registration with Consumer Affairs Victoria, or company name registration with the Australian Securities and Investments Commission.
to register for tax: Tax File Number, Australian Business Number and GST / PAYG withholding registrations from the Australian Taxation Office.
to sell and serve alcohol: a planning permit from the local council and general liquor licence from Consumer Affairs Victoria.
to play recorded music: music licences from the Australian Performing Rights Association and Phonographic Performance Company of Australia.
to have tables and chairs on the footpath: a permit to establish an outdoor eating facility from the local council.
Make the job easy – use ABLIS
The easiest way to identify the range of licences, registrations and permits you will need is to use the Austalian Business Licence Information Service (BLIS).
Go to ablis.business.vic.gov.au answer the questions and ABLIS will create a report of your relevant licences, application forms for those licences and details of the authorities you will need to contact.
As well as insuring your premises and assets, the following additional insurances can be critical for touring businesses:
- Public liability of at least $10 million to cover paying guests and visitors
- Product liability to cover prepared food or other products offered to guests
- Motor vehicle insurance if your vehicle is used for business purposes
- Personal injury and/or income protection, especially if WorkCover is not applicable to your business. Personal injury and income protection are often taken out by sole traders and partnerships.
Tip for B&B owners
The public liability part of a home and contents policy is void when a business is started on the premises. Additional insurance is essential.
Learn more about insuring your business on the Tourism Excellence website
Last Updated 22nd February 2013