Guide to Buying and Operating a Guest House in South Africa (Part 2)

Still Here, Then?

3. Who Are Your Customers? And How Do You Reach Them? They won't just come.

Business travellers (people travelling with a purpose) or tourists (people at leisure)?

3.1 Business Market

Let's cover the "business market" first because there are more opportunities here than you might imagine. Here's an example. There's a successful guest house in Johannesburg, close to a specialist plastic surgery clinic that caters for patients from all over the world. This creates a steady inflow of guests looking for a week to 10 days of fully-catered privacy.

So don't limit your thinking to passing sales reps or corporate business. There are endless possibilities.

The "business market" is characterized by one important thing though - it's based on relationships. The only way you reach this market is by being "connected" to the right people. So you've got to be prepared to develop and sustain these relationships.

3.2 Tourists

On to tourists. If this is your market, you're not dependent on relationships with specific people. Tourists these days research their accommodation options on the Internet. So, the only thing you need is a decent web site that comes up on Google in the first 2 or 3 pages for the search terms that people are most likely to use to find you.

(Caveat: It doesn't matter how good your web site is - if it doesn't get found, you're invisible - and virtually nobody goes past the 3rd page on Google.)

Side Bar

Brian says..."Why am I rabbitting on about Google? Because it's the only search engine that matters. It handles more than double the number of searches of its nearest competitor - Yahoo."

Is that it? Yup, that's it. Pick one that's going to dominate - is it strategic relationships or the Internet? One or the other is going to drive 90% of your bookings.

4. Your Location and the Internet - Finding Your Niche - You need the Internet. Relax. It's not that difficult.

If you're primarily going for the "business market" your location choice has probably been made for you. You're almost certainly going to find yourself in an urban situation and you'll have a very good idea of the relationships that are going to matter to you.

If it's the tourist market you're after, you could choose either an urban or a rural situation.

What you won't have is a choice about how you're going to reach your target market. The Internet is by far the cheapest and the most effective. In fact, it's the only thing that works.

Side Bar

Brian says..."You're sceptical. Well, let me tell you the things that don't work.

Travel agents and inbound tour operators. They want a commission of 20% - 25% before they're interested. They prefer expensive places for obvious reasons. They also don't believe in up-front payment, so you've got to run a debtor's book and manage the associated credit control and cash flow issues.

This might be an option if you've been able to differentiate yourself in some unique way that creates very high margins - like some of the "foodie" places run by well-known chefs. But generally, travel agents and tour operators are not going to be a significant source of business.

What about these innumerable accommodation guides you can buy in the CNA? The AA does one. There's the Portfolio Collection. The Tourism Grading Council does one and so do a whole raft of people. The problem with these things is that there are hundreds if not thousands of listings for each geographic region. And unless you're a marketing genius, it's difficult to stand out from the crowd (you've normally only got 50 words of your most persuasive prose and a picture). And the listing is expensive. You've got to get quite a few bookings a year to cover the cost.

I can count on the fingers of one hand the bookings we've had from these sources. And I need 2 hands, three times over, to count the thousands of rands, I've wasted on them.

And these travel and accommodation portals? Like www.safarinow.com; www.wheretostay.co.za; and www.sa-venues.com to mention a few. Yes...they cover their costs but they're not generating enquiries at the rate your own web site will."

Since the Internet is going to be so important to you, there are a few location-specific things you need to consider. From an Internet point of view, to be a "good" location you need to have a manageable level of "Internet competition" and command a respectable level of "Internet interest". You want an example?

Let's say (hypothetically) that you've decided you want to set up in KwaZulu Natal. You're undecided as to whether or not it should be the big city (Durban), the mountains (Drakensberg), a game reserve (Zululand) or the seaside (Umhlanga Rocks).

The first question you need to ask is how difficult is it going to be to get the web site you inherit, or the web site you're going to build, displayed on page 1, 2 or 3 of Google for the most likely search term people are going to use? That's "Internet competition".

Second, you want to know if you do get a page 1, 2 or 3 ranking, how many people are actually using that search term? Are you going to get enough "hits" to generate enough business? That's "Internet interest".

Let's answer the first question first. Go to www.google.com. Put in "durban accommodation". It will tell you (top right) "Results 1 - 10 of about 3.3 million" (at the time of writing - Jan 2008). Try it.

So what does this mean? It means make a new plan. You will never get a page 1, 2 or 3 ranking for any web page when you've got 3.3 million competitors. In fact anything over half a million is tough. Now try "drakensberg accommodation". Competition's down to 420 thousand. Better. Do the same for "zululand accommodation" (280 thousand). Better yet. And "umhlanga rocks accommodation" (a mere 135 thousand).

Now the second question, how often are these terms actually searched for? Let's find out. Go to:

http://inventory.overture.com/d/searchinventory/suggestion/

and put in "durban accommodation". (This free tool is powered by Yahoo. So it reflects less than half the searches that are actually happening. If Google had the same thing I'd use it. It doesn't matter though it gives you a very good relative indication of "Internet interest").

What does it tell us? It tells us that in the month of January 2007 (no, I don't know), 379 people asked Yahoo to help them find accommodation in Durban. Try "drakensberg accommodation". We find that 213 people asked Yahoo to help them find accommodation in the Drakensberg. Try "zululand accommodation" and "umhlanga rocks accommodation". Not so good. Zero in fact.

Conclusions? If you're keen on setting up or buying your B & B or guest house in Durban you need to know right from the start that your web site is never going to get anywhere near the front pages of Google for such a general search term as "durban accommodation". Unless you find a "niche", the Internet is not going to be a significant source of customers.

If you're keen on Zululand or Umhlanga rocks you know that from an Internet point of view you can build a web site (or optimise an existing web site) in a way that will completely dominate the front page of Google. You can probably get several pages from your site on page 1 relatively easily. The only problem is it appears that not too many people are looking for what you're going to be selling.

So? You're going to have to find "niches". Like what? Scuba diving, whale watching, big game fishing, birding, 4x4 trails, golf. Whatever.

Side Bar

Brian says..."This just covers the research principle. You should test every keyword phrase or search term you think might work. For Durban and Umhlanga you might try "kzn golf accommodation". For Zululand you might try "zululand safaris". You might be surprised at the niches you uncover...and the niche(s) you choose to target."

You've got to have customers. And since the Internet is the only way to get them, you must find a niche (and the associated search terms) that offers an acceptable trade-off between "Internet competition" and "Internet interest".

Other "location-related" things to think about:

* Potential customers are either travelling for business purposes or they're on holiday. In the right urban location you can attack both markets. In a rural location business travellers are going to be rare.

* Do you have any special skill sets that you can use to diversify your income stream? Are these best exploited in an urban or a rural situation?

* In an urban situation people like plumbers, electricians, firemen, hairdressers, dentists and doctors are readily available, when those little, and sometimes not so little, disasters strike. You need to be a lot more self-sufficient in the country.

* Getting supplies in is a lot easier in an urban location. Life's more difficult if the nearest Woolies is 60 or 70 kilometres away.

Side Bar

Janette says..."Living in the boondocks has its pleasures but I hate the drudgery of shopping for supplies. It means I'm getting into the car every second day for a couple of hours. I have to do it though. Some things I've just got to have fresh and I'm very fussy about quality. I can't delegate this."