Starting a Homestay or Resort Business in Kerala: Licences and Approvals

Tourism is central to Kerala’s economy, and homestays, villas and resorts are among the most common businesses started by returning NRIs and landowners. The licences depend on the size of the property, the services offered and its location, particularly near the coast, backwaters or forest areas.

This article lists the registrations that usually apply to a homestay or resort in Kerala. Restaurants and hotels are covered in licences for a restaurant or hotel in Kerala.

Choosing the structure

• Homestay run by the owner family: often run as a proprietorship.
• Resort or several properties: a private limited company or LLP is usually preferred, particularly where there are partners, investors or bank finance.

Where the land is owned by family members and the business by a company, a written lease between them avoids problems with banks and approvals.

Registrations and approvals

Approval	When it applies
Classification by the Department of Tourism, Kerala	Homestays and other accommodation seeking classification under the state’s schemes, which is also useful for listings and promotion
Local body licence and building approvals	All properties operating as a business
Consent from the Kerala State Pollution Control Board	Resorts and larger properties
Fire safety approval	Depending on the building and number of rooms
FSSAI registration or licence	Where food is served
Licence under the Abkari laws	Only where liquor is served
Coastal Regulation Zone clearance	Properties within the CRZ along the coast and backwaters
GST registration	Turnover above the threshold, or where required by booking platforms; see GST registration

Foreign guests

Every accommodation provider must report the stay of foreign guests to the Foreigners Regional Registration Office through Form C, within the time allowed, usually online. Many properties also need to keep a guest register for police inspection.

Practical points

• Check the land and building records before investing, particularly the land use classification and any restrictions near water bodies.
• Register the property’s name as a trademark if it will be marketed as a brand. See trademark registration.
• Insurance for the property and guest liability is advisable.

Frequently asked questions

Is classification by the Tourism Department compulsory?

Classification is generally voluntary, but it helps with credibility and some benefits. Local body, safety and other approvals apply regardless.

Can a residential house be run as a homestay?

Yes, subject to the conditions of the homestay scheme and the local body’s requirements for running it as a business.

Can NRIs invest in a resort business?

Yes. Investment in hotels and tourism is permitted, subject to FEMA conditions. See NRIs starting a business in Kerala.

ചുരുക്കം (Summary in Malayalam)

കേരളത്തിൽ ഹോംസ്റ്റേ, റിസോർട്ട് എന്നിവ നടത്താൻ ടൂറിസം വകുപ്പിന്റെ ക്ലാസിഫിക്കേഷൻ (ആവശ്യമെങ്കിൽ), തദ്ദേശ സ്ഥാപനത്തിന്റെ ലൈസൻസ്, മലിനീകരണ നിയന്ത്രണ ബോർഡിന്റെ അനുമതി, ഫയർ NOC, ഭക്ഷണം നൽകുന്നുവെങ്കിൽ FSSAI, തീരപ്രദേശത്താണെങ്കിൽ CRZ അനുമതി, GST എന്നിവ വേണം. വിദേശ അതിഥികളുടെ താമസം ഫോം C വഴി FRRO-യെ അറിയിക്കണം. ഭൂമിയുടെ രേഖകളും ഉപയോഗ വിഭാഗവും നിക്ഷേപത്തിന് മുമ്പ് പരിശോധിക്കണം.

This article gives a general overview of licences for accommodation businesses in Kerala. Schemes, rules and procedures are revised from time to time; for accurate and current requirements, check with the Department of Tourism, the local body and the other authorities concerned. The article is not advice on any particular case.