What costs to expect when starting your own holiday rentals agency or tour operator services in Mauritius?

In my first article in my blog I wrote in depth about “What are the future outlooks of agencies in the holiday home rentals industry of Mauritius?” My article is quite long and covers in a whole how to get started and what challenges you will face. I also address my own pessimistic view of the industry and if you are considering to get started you should read that. What I didn’t address in my previous article are the costs that you will encounter.

Costs of running a vacation rentals business in Mauritius

Costs of running a vacation rentals business in Mauritius

In this article I will give an approximate overview of costs that you will have to face if you wish to launch professionally your own company that offers vacation rentals and other tourism related services. When I got started I didn’t know which costs to expect. I hope this article will help you in your planning and also to get a clear overview if your idea is realistic to get started in this industry.

Items

Fees (some one off and some yearly)
1. Make your business plan and then apply at the Mauritius Tourism Authority for the appropriate licence. If you are going to run a villa agency you will need to apply for a Tour Operators licence. You will have other costs when its the first application.

Rs. 11000

2. If you want to set up a limited company. You can do so at the Companies Division in Port-Louis. You will have a yearly licence fee to pay.

the application for incorporation and accompanying certificate is now Rs 3,200 (since 2016)

Rs. 2500
Yearly licence feee Rs.500 (since 2016)

3. Once your business has been approved and you have received your Tour Operators licence you will also need to pay a Trade Fee at your District Council.

22.01.15: This has currently been cancelled.

Rs. 8000

4. You also need a public liability insurance in order to obtain the Tour Operators licence. This price depends on which insurance you choose and the coverage.

Rs. 2500

5. Every year when you need to renew your Tour Operators licence you will need to go to the companies division and apply for certified copies which display who are the shareholders of the company.

03.03.2016: You don’t have to do this every year if there is no change of directors! When you do your renewal you just tell them there is no change. We keep on learning.

Rs. 450

Total (around)

Rs. 17 500

For a small business, especially when getting started, these are quite some burdensome fees! And keep in mind that you have to pay this every year. And there are constantly changes every year with the implementation of new rules and new fees.

You will also have to consider that in order to pay those fees, you will incur additional charges such as your own personal time, transportation, paper work. Also estimate that mistakes will happen and that sometimes you will have to travel several times to these government departments.

Here is another list of costs you can consider when starting your own office.

Items Fees (monthly)
Office 30m² Ideal for a small team to get started or just you and a colleague.

Rs.10000

Electricity plus Air Con

Rs. 2000

Orange (Phone + ADSL 1Mbit)

Rs. 3000

Total

Rs. 15 000

When getting your office you will additional costs for purchasing your furniture, PC equipment, setting it all up and you might also need to repaint the office and have some maintenance work done or get an aircon installed. Here you need to consider a budget of around:

Items Prices
3 Desks

Rs. 18 000

3 Pcs

Rs. 75 000

1 Printer

Rs. 15 000

3 Phones

Rs. 2000

1 Modem Router

Rs. 2000

Cables

Rs. 500

3 Office chairs

Rs. 6000

A water dispenser

Rs. 6000

Cupboards

Rs. 6000

Office materials

Rs. 2000

Aircon

Rs. 12 000

Painters, Electrician, Aircon installation

Rs.15 000

Backup capital for worst case scenarios

Rs. 25 000

Total

Rs. 172 500

When starting to run the business you also should have some reserves to be able to hold for 1 year. Also you might have some employees. And for these employees you will have additional charges to pay to the state and last but not least you shouldn’t omit having an accountant. You can find various accounting companies in Port-Louis whose services you can book. You don’t need to hire a full time accountant. If you are considering employing 2 employees this is what you might need to consider:

Items Costs (monthly and yearly)
Wage of the Director (You) When you start your business you might be the one earning the least! You need to cover up first all the running costs and your employees come first. Therefore before you employ any one make sure you have enough reserves to pay them for at least one year. Else you will be running on high risk of making a loss.

Rs.0

Employee | This depends on the tasks and qualifications of the person you are employing. Salary minimum should start at around Rs.15 000. You also need to pay the employees transportation and  after the first 6 months of employment the employee is entitled to paid 1 local leave + 1 sick leave per month. Then, once he / she reaches 1 year of employment, he / she gets the full leaves entitlement.

Rs. 15 000 monthly

You need to pay your employee two wages in December.

Rs. 30 000 yearly

You also need to pay NFS, NPS, Levy to the state which is deducted from the employer and employee. It’s a percentage with a limit.

You will most likely have an accountant bureau that will assist you on this. They will have a yearly fee. Their fee can vary. I will use a mid value.

Rs. 15 000 yearly

Since you will be operating in the tourism industry you must also pay the TEWF which is the Tourism Welfare Fund. This charge is really low and you can pay it 1 year in advance.

Total monthly wages of 1 employee for one year

Rs. 195 000

Other costs such as accountant per year

Rs. 15 000

Then at the end of your financial year you must work out your balance sheet with your accountant. It is good practice to submit 3 months before the deadline of submitting your turnover details to the MRA all your bank statements and bank reconciliation files to your accountant. If you have had a profit you will also need to pay TAX.

By the way, since I mentioned TAX if you are going to collaborate directly with villa owners you must also pay TDS at the end of every month to the MRA which you can do via your accountant and at the end of the year you must submit to each of your landlords a certificate of how much TDS you paid for them in advance. Currently TDS is at 5%. How TDS works would be another article.

25.05.17: Please note that any company having an annual turnover of less than Rs6m is not required to comply with TDS regulations. You can check here:
THE INCOME TAX ACT | Section 111A. Interpretation | (g) (b)

And you will also have to pay VAT once your commissions exceed Rs.4 Million. Please note that for agencies VAT is not on the turnover but on your commission since you don’t own the properties. If you are doing some research work on this I would appreciate if you can submit me any references of rulings as this info is still vague even though it applies. Am sure in the future you need to expect tougher regulations of how this will be handled by the state.

25.05.17: Please note that VAT rulings & limits can change and my article might not be uptodate by the time you read it, in each of the past budgets the limits have been raised or adapted. To get the actual limits please check with the MRA. Here is a good place to start:
→ VAT (Value Added Tax) FAQs 

From the figures above I hope you will now have a rough estimate what it can cost to run a small agency in the tourism sector. Thus from these figures you must calculate how many bookings you must generate per month. In the tourism sector for a booking you can make various profit margins which can vary from 3% till 20%.

Before you take an office which is a high additional running cost, seek in avoiding this cost as long as possible by either working from home or building your office on your property or on your roof. Here also keep in mind in order to get your Tour Operators Licence the police will come and check if you have adequate parking space to receive clients. In my previous article “What are the future outlooks of agencies in the holiday home rentals industry of Mauritius?” I share more details about this. For acquiring the Tour Operators licence you must go through a lot of steps and verifications such as the Fire Department will check that you have a correct fire extinguisher, the sanitary department will check your premises as well and each of them will need to issue clearances and submit approvals. If one of them says you are not in line of regulations then you must adapt your office or you will get a total decline from the Tourism Authority. But this is more covered in my previous article. This article is more about costs.

From the costs listed above and the fragility and very competitive sector of tourism – while it might be easy to start an agency by just making a website – once you want to run it as a serious company and with all the required certifications and registrations you will see that it will keep you very busy and also cost you a lot. Be sure of what you have in mind before you burn up all your hard earned capital. This could also be another article – how to target your market, reach customers, generate bookings, cover costs – finally make profit and earn a living!

Feel free to submit in comments recommendations, items you find missing and that should be added and your own experience. Questions are welcome and feel free to join the discussion even just out of general interest.

25.05.17: Please note that over the years with inflation my values mentioned above might not reflect anymore what such items listed might cost now. Most likely prices might have increased!

Image reference: Morguefile

What costs to expect when starting your own holiday rentals agency or tour operator services in Mauritius? by

19 thoughts on “What costs to expect when starting your own holiday rentals agency or tour operator services in Mauritius?

  1. Yashvin

    Small correction in regards of “after 1 year of work your employee is entitled to take paid sick leaves and local leaves.”.

    This has changed now and an employee has the right to 1 local leave + 1 sick leave per month after the first 6 months of employment. Then, once he / she reaches 1 year of employment, he / she gets the full leaves entitlement.

     
    Reply
    1. Dietmar Reigber

      Thanks Yashvin for your valuable input. I have applied the necessary corrections. Do you also know regarding the accumulation of unused sick leaves? It’s possible for a maximum of 5 years to accumulate them and then if you weren’t sick you can get them paid out (if the company wants to pay them out?). I know some companies do it yearly to avoid accumulation and also to motivate the workers in not using up all their sick leaves and to be more present at work.

       
      Reply
  2. Yashvin

    Yes, I know that my previous employer allowed someone to get the un-used sick leaves from the previous financial year but I dont know more details about this unfortunately. But however, some companies reward their employees if ever they do not take any sick leave. This makes healthy employees happy, financially 🙂

    btw, can you please try to install a plugin which automatically notify previous commentators about new comments? I had to visit the page again today to check if you posted any replies. Perhaps, you can consider moving to Disqus. I love it ever since I added it to my blog.

     
    Reply
    1. Dietmar Reigber

      5 years should be correct but we can check the work act some of these days or maybe someone else might wish to comment this. As a company owner myself I would prefer to pay out unused sick leaves than accumulating them and on top 5 years is a long time. Employees often leave after 2-3 years, well it varies. Thanks a lot for notifying regarding the email function when posting a comment to get a message. I thought it was already included in the comments option – I just installed a plugin. Hope it works?

       
      Reply
  3. Zayan

    Hi,
    What are the procedures for opening a Tour Operator.
    Need advise on the Business Plan as well. Do you need to mention the amount of money you will invest? I have read that there is the need to do a presentation at the Tourism authority. Please give some details.
    Thank you

     
    Reply
    1. Dietmar Reigber

      Hi,

      there are several procedures that you will have to go through with the Tourism Authority, located in Port-Louis, close to the Caserne, the building next to PKL. The best way to start is to give them a call or fix an appointment to be advised how to get started. Their rules and regulations constantly change so you will be getting most upto date info from them.

      Yes, you will definitely need to make a full fledged business plan including financial forecasts. Your business plan will go through a committee, and if you cannot make up your case or proove to them that you mean business, they will not approve your application. This doesn’t mean you should give up, you can then re apply and improve it. Once they approve your business plan there will be more steps that will follow such as site visits on your premises where you plan to do your activities. You will need clearance from Fireman, Police and Sanitary departments. When they have all given their OK all these clearances will then be processed at the tourism authority. You will also need a public liability insurance. But all these steps will be explained to you during the application procedure.

      What kind of services are you looking forward to offer?

      Here some links:
      Templates for the business plan
      http://ta.gov-mu.org/English/Pages/default.aspx

      Formular for making your first application
      http://ta.gov-mu.org/English/Licence%20Categories/Pages/Tourist-Enterprise-Licence.aspx

       
      Reply
  4. Dietmar Reigber

    UPDATE REGARDING THE TRADE FEE

    Hello,

    today I went to the District Council of Mapou to the TRADE FEE for Tour Operators. When I arrived there, I was advised that this has been cancelled. Things are back to how it was 2 years ago where you just pay in full the Tour Operators licence.

    Such a pity though that the Tourism Authority didn’t DEEM NECESSARY to inform all licence holders of this change while they have an email database of all licence holders to whom they regularly send emails such as cyclone alerts.
    I lost half of works day, fuel costs etc. This could have been avoided! …so unefficient!

    Cheers,
    Dietmar

     
    Reply
  5. Cenzo

    Hi, I jus spent the last hours reading your very interesting website. i still have one question though. In the page ”holiday home rental futur…” and in the ”cost” page you speak about creating a limited company. How is it limited in ? Do you still need an office to start it or can you start a virtual or ”home” company and transform it into a proper agency after it hopefully starts to kick off ?

    Thank you,

    very interesting articles

     
    Reply
    1. Dietmar Reigber

      Hi Cenzo,

      I appreciate your feedback on my articles and that these might prove to be of help in your endeavours. In these days of fast paste, indeed it does take some extra effort to read my particularly long articles! Now to your enquiry. A limited company provides you protection in the sense that what you trade as the company concerns only your company and not your personal belongings, it’s a separate entity, and it is a direct separation of your business to what you own privately. If your company messes up, its the company who then has the responsibility for which, you as the Director work for. If your company runs into debts, it’s not who is then in debts. These are just a few examples.

      It can be quite mind confusing especially in the beginning to THINK and LIVE the separation of what belongs to the company, and to you. With a limited company you will also be able to open a business bank account where you do your payments and receive payment and use your company to apply for various licences depending on what you have in mind as a business. My tip to you would be to right in the beginning make a clear separation of what is for the company, and what belongs to you. Don’t mix stuff. Don’t buy private stuff on the companies credit card because then it actually belongs to the company and not to you. A clear distinction is important. Especially if you will be starting from home office.

      The moment you have a limited company, you will be the Director. As a director, the income you generate, you pay out yourself a salary from those revenues, and/or commissions. If your revenues are low or you are starting with a decent capital, I would suggest you to always pay you out a salary even if its a symbolic Rs.1000 per month. It’s psychological and works on your motivation. If you earn zero for a long time and just make investments and losses, you will see in the long run that you get affected by this.

      A company is a like a LIVING separate ENTITY that lives and dies on its “own” and even if you set it up, you SERVE it 🙂 This is just a way to put it in perspective. When you serve the company, even if it makes losses, you are working for IT and it should pay you something for the work you are doing. There are times where the company simply cannot come up with funds if its broke or you investing a lot.

      When you pay yourself a salary you must also pay all the social fees such as NPS, NFS, Levy, PAYE if you earn above a certain limit. If you are planning to operate in the tourism field don’t forget that you must also pay the TEWF which is the Tourism Welfare Fund.

      But you are in beginning phase right now. Do you have an accountant or contact to one? The moment you have a company and make real turnover, it’s practical to have an accountant to assist you with all those fees and deductions plus taxes and end of year balance sheet. You don’t need to employ an accountant, you can use the services of one – and you only pay for the services he has done for you. In the beginning his/her rates should be low as you will not mean a lot of work yet.

      And last before least, when you want to open a limited company, you can do that at the companies division at Cathedral Square. It’s best you go there with time and patience. They can advise you there how to set-up the company. You must then also indicate how many shares you’ll create. It doesn’t take long to make a limited company. What will take you longer is:
      + A business plan
      + Getting a business account at a local bank (you should at least have one at the MCB – why? Because most companies trade there, if you are going to trade in EUROS you will have less bank charges. If for example you do a EURO bank transfer from AFRASIA to MCB or vice versa it will cost you around EUR 35-40 in bank charges!)

      Hope this brought a little light on your enquiry? Please do not hesitate to ask further questions if you are still lost. Would you be so kind to share with us a little of what kind of business you have in mind?

      Best regards,
      Dietmar

       
      Reply
  6. Seán

    Hi, some very helpful information here. I wanted to ask some questions about the Tour Operator document checklist if you have time?

    1.(c) Business Plan: how much detail do they require for the marketing plan and competitor analysis? We were told one example would suffice but I wonder if that’s correct.
    1.(d)(e) Location/ site plan and Master layout plan: is there a specific professional that has to do this? E.g. a surveyor?
    1.(f) Building and land use permit: what’s required this? I know a council officer has to visit and we’re hoping to have a residential property approved initially.

    2.(a) You mentioned requiring a fire extinguisher. Is there a specific make they expect to be used? Do you need smoke and any other alarms? Do health just check it is clean and hygenic?

    How many car parking spaces are expected as a minimum.

    Your quote for public liability insurance, is that from shopping around and what level of cover would that provide.

    Many thanks in advance.

    Seán

     
    Reply
    1. Dietmar Reigber

      Hi Seán,

      my article is starting to get a bit old and might not be up to date anymore to what the Tourism Authority might require from you for getting the Tour Operators licence. While the logic might remain, There are often changes… Especially also when gov/regime changes to.

      1.(c) The mistake you can make here is to take them easy on that one and filing something plain and your papers will then not make it through the committee. It needs to be a full fledged business plan.
      1.(d)(e) Yes if location doesn’t exist yet or you use plans of your existing location. You need to have some plans. You could make some temporary plans on your own but then you risk that it doesn’t make it through the committee and you will have to wait a long time again. (better you double check with them what precisely they want made by whom.)
      1.(f) You have to place an ad in the newspaper I suppose first and then bring the ad to your district council and fill out forms. Then the other steps will follow. They can advise you best about all this at the district council and they do have a template for that purpose! You do not need to drive there first you can also download the forms here: http://www.dcrempart.mu/ and contact them per email for questions and you might want to call them to remind them you emailed them…

      2.(a) Yes, specific in the sense that it must fulfill their set standard. Minimum 2Kg Co2. You can contact S N D Quick Fire Shield Ltd from Curepipe who can supply and service them every year. Number: +230 58 64 63 90. You will not need that immediately…

      My quote for the public liability is most likely one of the cheapest from the company GFA to cover for up to Rs.100 000 and it is just to fulfill the requirements as I do not really need this insurance when I look at my scope of activities which take place mostly over internet. Yet if you are involved a lot outside meeting with your clients you might want to take a higher coverage.

      Bon courage in your endeavour and please do let us know how things are progressing!

      By the way the yearly company limited fee of Rs.2500 has been reduced to Rs.500 by the new Gov.

      Best regards,
      Dietmar

       
      Reply
      1. Seán

        Merci beacoup Dietmar.

        That’s very helpful. To note, the yearly company fee has been reduced to Rs 500 but the application for incorporation and accompanying certificate is now Rs 3,200 (valid at the time of writing). I will keep you posted on developments.

        Regards,

        Seán

         
  7. Avi

    Hi dietmar

    It is really great that you are reaching out and helping the people that are willing to start a business in this industry. Great article!! i would like to know if i will need to show a minimum fund in order to obtain the TEL. The expenses are mentioned on your blog but am not sure whether the tourism authority emphasize on your capital in order to start and run the business.. I am a Mauritius citizen but currently living in Abu Dhabi. Do i also need a fleet of vehicles in order to obtain the license. Is it possible to rent the cars on a long term basis instead?

    Many Thanks,

    Avi

     
    Reply
    1. Dietmar Reigber

      Hi Avi,

      I appreciate that you like the content of my blog! I think the minimum fund is more for foreigners wishing to establish a business here. For MU Citizens the rules might be different but still strict and usually didn’t include a minimum capital. Meaning you will have to submit your business plan at the Tourism Authority whose committee then will scrutinise your project. Make sure to only hand in the very BEST you can hand in as they are very serious and strict! I would even advise before you submit it to get advise or seek out some experts. Other option could be to make use of those places here in Mauritius that help entrepreneurs / startuppers before they launch to guide and analyse their project and also give you advise how feasible it is. You will need to make an analysis of the market and have a clear idea how you will sell. It’s good to know before hand to reduce the chances of a rejection at the authority.

      I think you will also need to submit your CV and display proof of competencies that you are up to what you have in mind. They are very serious about this too. (I say “I think” as the rules keep changing and I’m not uptodate!). My expenses refer more to the costs once you are up and running – but yes, indeed depending on what you have in mind, you might need to budget for other costs as well. Especially for your business plan which should be very detailed.

      the tourism authority emphasize on your capital in order to start and run the business.

      Yes & No – depending on what you have in mind. It’s a long way from that. Different business models come with different costs. It will probably be smart, yes, to be able to confirm that you can finance the project or if there are investors willing to support it. Before you will have to make your case for what you have in mind – that you have a business idea that will sell, and why! From where will the clients come from, why they will book through you, what do you have to offer, who will be your partners etc. What will make you stand out from the norm and masses. It’s a long procedure, have a look at their templates… If you are going to propose a model that many are already running on, this will not be very convincing as the market is quite saturated – and you will get rejected.

      Do i also need a fleet of vehicles in order to obtain the license. Is it possible to rent the cars on a long term basis instead?

      When you enter the premises of the Tourism Authority they have big posters that inform that you shouldn’t do any investment before they have approved your licence. Therefore, NO, you shouldn’t buy any fleet of vehicles, that will be a high cost and you will sit on a lot of maintenance costs while you wait for your approval. There are many other options how you can operate instead of buying; renting, or work with owners such as van owners who have the contract to be allowed to drive tourists.

      Disclaimer: This is only my opinion to your question. Not professional advice. To get started, visit the Tourism Authority website, contact them, check their application forms etc.

       
      Reply
  8. Avi Gopaul

    Dietmar, many thanks. i appreciate you taking the time to respond to my question. yes i agree with you, its a noisy market out there in the tourism sector. To get through the process, you have be able to burst through the noise and show them you mean business. i will get in touch with them to be informed on the exact requirements for my project. i am currently designing my business plan. i hope it gets approved on the first attempt itself. 🙂

    Regards, Avi

     
    Reply
    1. Dietmar Reigber

      You are welcome. Try to get some second opinion from someone knowledgeable / well versed in business plans before you submit. Try to get recommendations – whatever you can! Submit if necessary more than what is requested – it can help to make a good and serious impression. Also visually, try to use a nice appealing design that will make reading through the project more fun 🙂 don’t forget it’s still humans that will go through the docs 😉 BON COURAGE!

       
      Reply
  9. Dev J

    Hi Dietmar,

    WOw that a very nice article i came on as i am planning seriously to do some business out here in tourism sector. I am working as a guest relation officer in a hotel. Many time guest are asking for recommendation what they can do in mauritius such as tours, sea trip, places to vsit etc. I advise them places and excursion they can do.

    I know some taxi drivers(they have a necessary touristic licence) whom i recommend. They give me a commission for each excursion i do. The same apply for sea trips, i know many catamaran owners, i send guest to them they give me a commission.

    My idea is to make a webpage where i can put all these information about excursions, tours and sea trip. The guest can go on this page and get the requested information. I will integrate a booking system like you have on your webpage (www.isla-mauricia.com). It will be the same like marideal.com or deals.mu.

    My Question is do i really need to have a tour operator licence to make a webpage like this? I am actually doing an e commerce business acting as an agent.

     
    Reply
    1. Dietmar Reigber

      Hi Dev,

      thank you for your appreciations of my article. Let’s have a look at your idea from various angles. A lot of businesses in Mauritius run on the basis or recommendations, that is you refer a client to a taxi, the taxis brings the client to a shop, and everyone gets a share of a commission from each supplier – a win win situation for all. In fact some shops wouldn’t even operate at all if there were no taxis bringing guests by.

      Before you start a business you need to ask yourself a series of questions, the important ones being:
      Where will the clients come from or how will I get clients to sell my products?

      If you make a website to showcase your products or services, you’ll need to have good google rankings or be easily found through search. Right now you are working as a guest relation officer in a hotel, this gives you first hand direct exposure to guests who have already past the level of sorting their accommodation, they are in Mauritius, and after a few days at the hotel, wish to do something – it’s ideal and comfortable for the guests to follow your recommendations. The personal contact is the most valuable, even more than a web page. If you quit your job to run such a website full time, you might encounter various difficulties such as where will you get your clients from? There are hundreds of websites… you could see the website like a business card that presents your offers, but the website on its own might not be enough to generate you any sales. On the other hand there could be conflict of interest between you and the hotel if you are acting as a canvasser for tours with guests that have booked through tour operators or directly with the resort while you are performing your job as guest relations officer. Be careful that such an activity on the side doesn’t lead to job loss, check your contract or superiors. There are also licences for canvassers.

      Where I am hinting at is, that the moment you quit your job, if you have that in mind, you need to ask yourself that question i mentioned above, from where you will get your clients. To make a good website and have it rank well in Google takes time. There is also competition in this segment. Do a search in Google like “Mauritius Activities”.

      Definitely you are also asking the right question regarding licensing. If you go to the Mauritius Tourism Authority, they usually have a big poster there that says: Do not start your business before you have made your application and business plan. Of course this also depends on what kind of activity you have in mind. It’s always good to double check with them.

      It depends also on how you model your business regarding the licences. To create a limited company for example is easy. To get a licence like a Tour Operator one is difficult. Very difficult currently because they aren’t giving out licences easily as the market is full. (This is my own interpretation of the situation.)

      If you make a website to market offers and where you do not act as the person selling, that is companies pay you an advertising fee to present their offers on your website and clients can book directly with them, then you do not need a tour operator licence. BUT if you sell the products directly to clients, or combine products like an airport transfer + accommodation + car rental + activity for example then you are a tour operator. And also to benefit from tour operator rates from these suppliers you will need such a licence.

      An idea could be …If its too complicated, you could do a partnership with an existing tour operator with whom you partner up. You could then make a deal with them that you split the commissions on the sales you generate through your website on which the offers of the tour operator are presented.

      Hope this helps!

      Disclaimer: Whatever I say is my own personal opinion! Please do your own research and also check with the Tourism Authority.

       
      Reply

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