Project Report for Paying Guest Accommodation
A paying guest accommodation business addresses one of the most persistent gaps in Indian urban housing: inexpensive, furnished, and managed housing for students and working professionals in places where rents are exorbitant and independent living is not yet feasible. The company is straightforward: rent or own a home, outfit it, and rent out beds or rooms to paying guests on a monthly basis. Sharda Associates creates CA-certified Paying Guest project reports. Starting at Rs. 2,999.
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What Is a PG Accommodation Business?
A Paying Guest (PG) accommodation business is a residential rental service that rents out completely furnished rooms or beds to students, working professionals, and others on a monthly basis. Unlike hotels, which charge per day for rooms, or traditional rental flats, which require long-term leases and self-management, a PG provides ready-to-move lodging with fundamental facilities such as beds, wardrobes, Wi-Fi, housekeeping, power, security, and, on occasion, meals. The approach is particularly popular in educational hubs, IT parks, industrial districts, and cities with a sizable migrant population looking for economical and hassle-free accommodation.
The company operates by purchasing, leasing, or owning a property with several rooms, equipping it to PG standards, and renting beds or rooms to multiple residents. Monthly occupancy charges produce revenue, but profitability is determined by occupancy rates, location, rent-to-revenue ratio, and effective utility and maintenance management. Because of the regular monthly income model and rising demand for structured rental lodging, PG enterprises are frequently financed with MSME loans, Mudra loans, and other service-sector funding schemes.
PG Accommodation vs Service Apartment — Key Difference
This page focuses on PG accommodation. For service apartments (fully serviced, higher-price, short-stay, corporate focus), see our Service Apartment project report page.
PG Accommodation | Service Apartment | |
Primary tenant | Students, young working professionals | Corporate travellers, relocating executives |
Stay duration | Monthly (3-12 months typical) | Nightly to monthly |
Pricing | Rs.5,000-20,000/month | Rs.1,500-6,000/night |
Meals | Sometimes included (mess model) | Usually not |
Location preference | Near colleges, IT parks, offices | Near business districts, hospitals |
Capital per unit | Lower | Higher |
Location — Where PG Businesses Work
The location of a PG business determines its success, not the quality of the furnishings, amenities, or marketing.
Near colleges and universities: Medical institutions, engineering colleges, law schools, and management institutes all require students to live nearby. A PG within 1-3 kilometers of a college that attracts students from distant cities is almost guaranteed to be occupied. This is the most dependable PG marketplace.
IT parks and office clusters: Working professionals who relocate to a new city for a job require housing for 6-18 months before settling into an independent apartment. Areas surrounding significant IT parks (such as Infosys, TCS, Wipro, and HCL campuses), industrial estates, and office corridors are strong PG markets.
Hospital areas: Medical students, nursing students, interns, and junior doctors from other cities require housing near hospitals and medical colleges, which is a steady and in-demand PG segment.
Government exam coaching centers: Cities with major UPSC, PSC, SSC, and GATE coaching concentrations (Delhi, Allahabad, Jaipur, and Bhopal) have a high PG demand from out-of-town test hopefuls who remain for 6-18 months to prepare.
Revenue Model — Per Bed and Per Room
Single occupancy room: One bed in a private room costs Rs.6,000-18,000 per month, depending on the city, location, and amenities. Students pay less, but working people pay more for privacy.
Double/triple sharing rooms have 2-3 beds and cost between Rs.4,000 and Rs.9,000 per bed per month. Lower per-tenant costs, but more revenue per room compared to single occupancy.
Meals included (messes model): Some PGs charge a flat monthly rent for breakfast and dinner, which increases revenue by Rs.2,000-4,000 per tenant per month while increasing food preparation costs and complexity. Meals greatly increase renter retention.
Revenue calculation example—20-bed PG at 85% average occupancy: 20 beds x 0.85 x Rs.8,000/month average = Rs.1.36 lakh/month total revenue.
Expenses include property rent (if leased, the primary cost, which accounts for 35-45% of revenue), staff (warden/caretaker, cook if mess model), energy, maintenance, WiFi, and loan EMI.
GST on PG Accommodation
PG accommodations have unique GST treatment that must be indicated in the project report.
Per-bed charges over Rs.1,000/day (Rs.30,000/month) are subject to 12% GST on rent. GST is not applicable on per-bed charges of less than Rs.1,000/day.
Most PG operators charge between Rs.5,000 and Rs.10,000 per month (less than Rs.333 per day equivalent) and are therefore free from GST. However, operators asking Rs.15,000-20,000 or more per month for premium single rooms approach the threshold. Your price should be used to appropriately identify the GST treatment.
Project Cost for PG Accommodation Business
Format | Capital Cost (Rs.) |
Small PG (10-15 beds, rented property) | Rs.4-10 lakh (furnishing, fit-out, advance rent) |
Medium PG (20-30 beds, owned or long lease) | Rs.10-25 lakh |
Large PG (40-60 beds, purpose-built or multiple floors) | Rs.25-60 lakh |
Property arrangement: Leased property – the principal operating cost is rent (paid monthly from revenue). Owned property is an investment in the property itself (much higher capital but no ongoing rent). The project report must state explicitly which arrangement applies.
Bed, mattress, study table, chair, wardrobe, drapes, and ceiling fan cost between Rs.15,000 and Rs.35,000 per room, depending on quality.
Why Choose Sharda Associates
- 45,500+ Project Reports – Hospitality and Accommodation Business Experience PG businesses have occupancy-driven revenue, ramp-up dynamics, and location-dependent expectations, which we accurately reflect.
- Property Arrangement (Leased versus Owned): Rent was correctly reflected as the principal fixed cost for leased property. Owned property: no rent, but more capital. Different financial structures—we reflect the correct model.
- Occupancy Ramp-Up Staged Realistically, a new PG does not fill to 85% on day one – months 1-2 are 30-40%, increasing to 80-85% by months 4-6 as word-of-mouth and discovery grow. Not an apartment with high occupancy from day one.
- GST Treatment Correctly Identified Per-bed pricing vs. Rs.1,000/day threshold — GST applicability was correctly assessed and reported in the financial model.
- Meal/Mess Revenue Where Applicable For PGs that offer meals, F&B revenue and food costs are separately modelled.
- Starting at ₹2,999 · 24–48 working hours ·
📞 +91 89899 77769 | All India service
Frequently Asked Questions
A residential lodging service that rents furnished beds or rooms to students and working professionals on a monthly basis, offering controlled housing with basic utilities at a lesser cost than independent unit rentals. Monthly rent per occupied bed, sometimes with meals included for added value.
Yes, Mudra Kishore/Tarun is suitable for small PG enterprises (Rs.4-10 lakh to furnish a leased property). Larger PGs (Rs. 10-25 lakh) are suitable for the Mudra Tarun or PMEGP service sector. CA-certified project reports with occupancy-based income, property arrangement, and ramp-up staging are required.
Near colleges and universities (medical, engineering, and management students from other cities), IT parks and office clusters (new-city professionals), hospital areas (medical and nursing students, interns), and test preparation centers. Occupancy is nearly guaranteed near a large institution or IT park; the difficulty is location rather than marketing.
PG: shared accomodation for students and young professionals, Rs.5,000-20,000 per month, includes modest furnishings, occasional meals, and a monthly stay. Service apartment: completely serviced private unit for corporate travelers and executives, priced between Rs.1,500 and Rs.6,000 a night, with premium furnishings and daily housekeeping, available for nightly or monthly stays. Varying market segments have varying pricing and capital requirements.
PG lodging charged at more than Rs.1,000 per day (about Rs.30,000 per month) is subject to 12% GST. GST is not applicable on amounts less than Rs.1,000 each day. Most budget and mid-range PGs (Rs.5,000-10,000/month, or far below Rs.333/day) are GST-free. Premium PGs priced at Rs.15,000-20,000 or more per month may approach the threshold; right GST treatment must be mentioned in the project report.
Depends on the availability of capital. Leased property requires less initial expenditure (advance rent + outfitting), but monthly rent is a set running expense (usually 35-45% of earnings). Owned property: more capital but no monthly rent, increasing per-bed profitability dramatically once the loan is paid off. Most MSME-scale PG enterprises begin with a rented property; the bank loan is mostly for furnishing and advance rent deposits.
Starting at Rs.2,999, with 24-48 hour delivery. Property arrangement (leased versus owned), per-bed revenue model, occupancy ramp-up, GST treatment, meals revenue (if applicable), and Mudra or PMEGP format. If the bank has any concerns, they can request a free revision. Call +91 89899 77769.
A realistic occupancy ramp-up is required for bank approval. Most new PG companies begin with 30-40% occupancy in the first 2-3 months, increase to 50-65% occupancy by month 6, and settle at 75-90% occupancy in 12-18 months, depending on location and amenities. Projecting full occupancy from day one undermines the credibility of financial estimates. A professional project report should show gradual occupancy growth based on local demand, surrounding institutions, and market rivalry.