Profitability of Farm Tourist Accommodation

Technical articles - Pleinchamp - Diversification

The profitability of a farm accommodation comes down to calculating the investment, operating costs (cleaning, heating, etc.), as well as net income, over a period generally not exceeding 10 years (the tourist property ages and will require reinvestment to refurbish after this period).

In some cases, net profitability is not the primary goal (it may also be to maintain a real estate asset, or to create activity and visits on the farm and fight against loneliness), but the accommodation activity should not become a time constraint that results in a net loss for the farm.

Investment calculation

Example for setting up 6 tents:

Example of calculation in the case of A bed in the meadow - there are many variations of these Excel sheets and it is useful to obtain several.

The investment calculation depends on the type of accommodation implemented. By going through a structure like Parcel or A bed in the Meadow, the accommodation itself (modules) is not part of the investment (it remains the property of the partner structure), however all connection infrastructure remains the responsibility of the farmer (water, sanitation, electricity, common areas).

It is also possible to purchase the module in the context of unusual accommodation, for amounts ranging from 3 or 4000€ (lodge tent) up to 250,000€ (stilt cabin by the lake with filtration system, etc.), with an average of 40,000 to 80,000€.

For a gîte, a renovation budget of 1500 to 2000€/m² is generally required - depending on the initial condition of the gîte and the targeted comfort level. The acquisition of the gîte itself depends on the farm context and is usually already part of the building stock - whether or not to include the land depends on the project.

It is not necessary to plan special safety investments for the reception of the public beyond the elements already regulated on a farm (single risk assessment document). In general, you will be responsible for monitoring safety standards in case of an accident (for example, for a swimming pool, to provide the corresponding cover or barrier). However, be careful about proximity to forests regarding fire risks (see urban planning).

There are many spreadsheets that allow you to calculate all the necessary investments for this type of project (available from various providers, chamber advisors, etc.). It is important to get support to ensure compliance and not to forget important elements (see here or there, for example).

It is also important to do several simulations in Excel, with several possible scenarios in the farm context (number of accommodations, number of beds, etc.).

In investments, do not forget the cost of website design if applicable (on average around 5000€, see the article on marketing and communication), as well as signage, etc..

Nightly rate

Nightly rates vary from 20 to 400€ per night per person. Only a market study can provide a precise idea of the nightly rate depending on location, positioning, and type of accommodation.

Warning: The prices displayed on booking sites are not the net amounts received (for Airbnb for example, count 25% fees^[1]). Moreover, prices vary according to the season (sometimes weekly, on sites like Airbnb), so it may be necessary to create an Excel sheet simulating the number of nights each month and the price for each month, to have a high and low range of possible financial returns.

Additional services (catering, experiences, etc.) can be added to the nightly rates.

A serious and well-argued market study will make it easier to obtain bank loans or public partner aid.

Operating costs

From the nightly rate, operating costs must be deducted, which depend on the type of accommodation and level of equipment. If there is a swimming pool, it must be maintained, and if there is a lawn, it must be mowed.

Some costs can be borne by the farmer (laundry, maintenance, gardening), or by a third party. In some cases, unusual accommodation providers include module maintenance but not common areas.

Do not forget all catering costs if you offer this service, as well as consumables (charcoal for BBQ, replacement of dishes, welcome packs, etc.).

Charges also include all services necessary to operate your accommodation:

Concierge (reception by someone if you are not available during part of the season)
Channel manager (tool to synchronize bookings between Airbnb, Booking, etc.)
Management / invoicing tool
Hosting and maintenance of the website

Finally, add all insurance, taxes, energy supply, etc.

Example of monthly charges summary table^[2]

Occupancy rate

The average occupancy rate of the accommodation will strongly impact the profitability of your operation.

The average rate for unusual accommodation is 56%, but varies according to the type of lodging. Check with all contacts you can find to know the occupancy rates around you (some sites like Airbnb allow you to find this info).

The occupancy rate is understood over the full year - if you do not open your accommodation in winter (no heating and low season), but fill the rest of the year, the final rate remains 60% for example.

Depending on the type of accommodation and typical length of stays, rates can vary greatly. For example, a family gîte may be rented weekly all summer, thus having a very good occupancy rate during this period - whereas unusual accommodation will rather be booked for one or two nights maximum, on weekends, and thus have a much lower rate during the rest of the week.

If the attraction of the territory is linked to a site (Puy du Fou, Magny-Cours Circuit for example), the site's occupancy will follow opening dates if applicable.