Unlicensed homestays thrive amid regulatory hurdles in Keralam

Despite Keralam’s growing tourism potential, the homestay and serviced villa sectors remain largely unregulated. Thousands of establishments are reportedly operating without official classification and the proliferation of unlicensed units, particularly in major tourist destinations, are raising concerns over the quality of services and safety of accommodation offered to visitors.

The homestay concept envisages guests staying with hosts and experiencing their food, culture, traditions and lifestyle. However, many establishments operating under the label do not follow this model. Although the State government has introduced a classification system to ensure quality standards, unlicensed units have mushroomed across Keralam’s hospitality sector, particularly in Idukki and Wayanad, two major hill destinations in the ecologically fragile Western Ghats. While only around 1,200 homestays have official recognition, nearly 7,000 unlicensed units are reportedly operating in major tourist destinations and offering services through various online platforms.

Speaking to The Hindu, Shine K.S., Managing Director and CEO of the Muziris Heritage Project, said Idukki accounted for only 23% of the State’s classified homestays, even though there is huge demand for accommodation in the hill district during peak tourist seasons, with restrictions on development in large parts of the ecologically fragile region.

Simplified system

This vacuum creates an opportunity for unlicensed operators, who often provide services without meeting the standards and conditions prescribed under the government’s classification system, he said. A simplified regulatory framework, coupled with greater awareness among investors and government officials, including local body secretaries and police personnel, could help bring more establishments under the regulated system while expanding accommodation capacity at tourist destinations, he added.

The problem is compounded by separate licensing procedures followed by local self-government institutions and the Tourism department, said M.P. Sivadathan, director of the Kerala Homestay and Tourism Society (Kerala HATS). The government should introduce a unified licensing system under which local body licences are issued to homestays classified by the Tourism department following physical inspections. Such a system would make the sector more investor-friendly and bring more establishments under regulatory oversight, he said.

Prashanth Vasudev, former Deputy Director of Kerala Tourism and chief tourism consultant with the North Malabar Tourism Organisation, said official data as of September 12, 2026, showed that Keralam had 1,172 recognised homestays and 243 serviced villas — where properties are managed by caretakers, taking the total to just 1,415 units.

Untapped potential

With more than 15 lakh houses lying vacant across the State, including in prime tourist destinations, the serviced villa segment has significant untapped potential. However, it continues to face regulatory hurdles, such as the requirement for a local body accommodation licence and a minimum bathroom area of 40 sq. ft., compared with 20 sq. ft. permitted for homestays.

The government should remove unnecessary regulatory barriers while retaining essential safety, hygiene and quality standards, said Mr. Vasudev. Serviced villas are currently treated as commercial establishments and subjected to commercial tariffs and additional requirements. A clear, uniform regulatory framework should establish whether a property meets prescribed tourism standards, while avoiding duplication of licences, he added.