The Algarve has a lot going for it, it draws millions of visitors a year, the weather is great for 7 to 8 months per year and the dream of running a small guesthouse or Bed & Breakfast  close to the ocean is one of the dreams that many people want to pursue. After having had a guesthouse for 8 years, we can confirm without any doubt, it’s a good business to be in — but a romantic idea and a working, profitable
B&B are two different things. This series of blogs will try to walk you through the decisions that
actually matter: what kind of Bed & Breakfast are you setting up, how to license it legally, how to survive the seasons, and how to get started without expensive mistakes.

Part one: decide what you’re actually buying and building

Before a single guest arrives, be honest about the concept and your budget. A B&B in the Algarve can be almost anything: a couple of rooms in a townhouse in Olhão or Tavira, a restored farmhouse in the hills behind the coast, a design villa with a pool, or a small collection of rural cottages. The concept and budget drive everything else — the property that you purchase, your licence type, your average room price, your average guest, your season and ultimately your income… A boutique property in a historic town centre attracts a different traveller (and commands a different rate) than a family-friendly rural retreat. A townhouse in a town centre at the coast will have more occupation in winter, but typically the average stays are shorter. Old (renovated) buildings in the countryside will find guest easily but unless you invested in comfort, these old houses are not suited for winter. Pick a lane. The properties that struggle are the ones trying to be everything to everyone; the ones that thrive have a clear story and a guest they genuinely understand.

Compared to when we started in 2015, the competition landscape has significantly changed. AirBnb and
Booking.com have grown their offering and sometimes it seems that every house in Algarve is for holiday rent. If you want this business to provide your (only) income, you need to have 70% occupation throughout the season. The important question is why would a guest choose you?

Make your own businessplan and be realistic about costs. If you are going for rooms, the
rule of thumb dictates that you need minimum 5 rooms to get to break-even. So the more rooms the better. We believe that location is not absolute. You can compensate a less interesting or prime location with a good concept. We were a good example of this, São Brás de Alportel is not exactly considered the most exciting town in Algarve, but it never bothered our guests. The town offered a feel of authenticity and quietness that was widely appreciated by the people who stayed with us. 

There are currently several B&B’s for sale, also at our real estate agency Signature Properties Solutions. But prices are reflective of the current state of the real estate market in Algarve. Plan your purchase well.  If you err, your whole plan might go down with it. For example, in case you would purchase a property in Agricultural Reserve, you cannot expand the property (number of rooms) unless you would become a real

farmer and grow and sell produce. Consult a good lawyer and in case you have plans for renovation or expansion, an architect.