Guesthouse/Boutique-hotel or exclusive rental property? Which is the right choice? What are the regulations?
Looking to invest in the Marrakesh medina and want a good return on investment? Marrakesh medina Riad is the perfect choice. Proximity, charm, quality of life, and high tourist traffic for nine months of the year… It’s a rare combination!
How to choose between a guest-house and an exclusive rental property (Airbnb like)? If you are still working in your home country, have limited time to dedicate to your riad project, want to spend a few weeks there each year, and are looking for a good return on investment, then the “Airbnb” model is right for you. You will rent out your entire riad, employ a maximum of 1 to 2 people, pay your annual rental income tax in Morocco (you won’t be taxed twice by your country of origin if you are French or Spanish for example), your maintenance and utility costs (water, electricity, internet, insurance), and that’s it! You can easily manage it yourself or even use a concierge service, which generally costs 20% of the rental income.
You can expect a gross return on investment of between 8% and 15%.
Properties in this category will most often have 2 to 4 bedrooms, and the sale prices for turnkey properties will generally be between €300,000 and €600,000, depending on the neighborhood and the riad’s amenities.
Drawback: regulations are still too vague if you want to be fully compliant. Numerous legal loopholes persist, despite regular press announcements over the past several years: how do you obtain an operating permit? What about the police reports and logbooks that are mandatory for all classified tourist accommodations (and therefore actually regulated by law, like hotels and boutique-hotels)? What about insurance, etc.?
These legal loopholes are being exploited, in particular, by foreign owners who are not residents of Morocco, so far. How? Why? Because the Moroccan state has not yet succeeded in systematically collecting taxes on the profits from these rental incomes.
If you wish to settle in Morocco or have more time to dedicate to your project, you might consider guesthouses/boutique-hotels. Accounting, staff management, and business management are all part of the process. This is a full-time job.
You will have set up a limited liability company (SARL), you will have monthly or quarterly meetings with your accountant, you will manage a team of at least 3.5 people, and you will have various taxes to pay: VAT, beverage tax, signage tax, tourist tax, etc. You will likely use a channel manager to manage your booking schedules, promotions, and so on.
You will be able to rent by the room or exclusively, and you will sell meals and drinks, excursions, massages, etc. A return on investment of between 20% and 25% can be expected.
Properties in this category generally have 5 to 10 bedrooms (a few rare riads have 15 and up to 20 bedrooms), and the sale prices will range from €500,000 to €2,000,000.
These riads, known as guesthouses, are classified by the Moroccan administration. They can offer anywhere from 4 to 20 bedrooms with en-suite bathrooms. A guesthouse must have this official accreditation; otherwise, it is not considered a guesthouse.
Until now, there were two categories of guesthouses: Category 1 and Category 2. All riads that received accreditation before January 2026 will display this classification.
If you are looking for a turnkey guesthouse, the first thing you should ask is whether the riad has the official guesthouse accreditation (which must be displayed at the entrance, by the way). Should you ask the seller for an occupancy permit? The oldest guesthouses were classified without requiring an occupancy permit. Since the property already has a title deed, there is no legal obligation to provide an occupancy permit.
If the riad has been completely rebuilt, or if it has undergone major restoration work (including structural alterations), the seller will be required to have an occupancy permit. They will provide you with the original Ne Varietur plan and the occupancy permit upon signing the deed of sale.
How to maintain the existing classification?
Either by purchasing the building AND the business (the value of which is included in the sale price of the riad/guesthouse) or by purchasing the building AND the shares of the limited liability company (SARL) operating the riad (the value of which is included in the sale price of the riad/guesthouse).
Buying a Business VS Buying Shares – Advantages and Disadvantages
Buying both the building and the business: you will purchase the building as an individual or through a French real estate company (SCI) (depending on your estate planning needs) and you will create a limited liability company (SARL) to operate the business between the preliminary sales agreement and the final deed of sale. This allows you to retain the brand name and the listed building status.
Notary fees to expect: 7% of the property value + 9% of the business value.value + 9% of the business value
You will be required to submit a complete file for your SARL (limited liability company) to the Wilaya (regional authority) or the tourist office so that your new company’s file can replace that of your seller, which is linked to the guesthouse classification. For the past few months, administrative services have been requiring a Ne Varitur plan (a type of building permit) and an occupancy permit, as is the case for a new application for a Historic Monument classification.
You will have to change your water, electricity, and telecommunications contracts. You will have to update your bank details with your service providers (Booking, Airbnb, etc). You will have to implement a number of administrative procedures and you will risk disrupting the smooth operation of the business.
Contrary to popular belief, even though you have created a new company, you will not benefit from the 5-year exemption from corporate income tax on foreign currency turnover, nor will you benefit from the 5-year exemption from business tax (called taxe professionnelle). Indeed, the tax authorities now consider that even though a new SARL (limited liability company) has been created, it remains a continuation of the operation of an existing business.
Summary: You’re starting with a new company, but at what cost?
– SARL creation: at least 10,000 dirhams
– Notary fees on the sale of the business: 9%
– Cumbersome administrative procedures to update the company’s registration in its name
– Risk of disruption to the continuity of operations with booking platforms
Purchase of real estate and shares: you become the owner of the building through the notarized purchase deed and you become the operator of the mobile home by purchasing the shares.
Notary fees to expect: 7% on the value of the real estate + 0% on the value of the shares
0 accounting fees; Everything is the responsibility of the seller, who will send their accountant to provide all the key accounting information to verify the company’s financial health.
Optionally, but we strongly advise it, consider a fee arrangement with the notary for their assistance in verifying important points, ensuring thorough oversight of the answers provided by the seller’s accounting firm.
A liability guarantee of at least 6 months to 1 year is recommended to protect you against any unexpected expenses owed by the seller and operator of the limited liability company (SARL) before your acquisition. A thorough review of the seller’s SARL will be necessary before signing the preliminary sales agreement and especially between the signing of the preliminary agreement and the final deed of sale. However, as soon as the final deed of sale is signed, you will be in place in your riad guesthouse, ready to continue operations.
In this case, you will experience complete continuity, peace of mind, without administrative procedures or difficulties. And you will save 9% in notary fees that you would have to pay when acquiring the business outright.
An example of an administrative procedure:
To be in compliance, ALL guesthouse operators must obtain a tourist accommodation register (commonly known as a “police logbook”) from the Marrakech police prefecture (Wilaya district). Each operator must also submit their police records daily (including civil status and length of stay for each guest) and have their tourist accommodation register, which remains with the police, stamped monthly.
How to obtain this police logbook? The following documents are required:
– CVs of the partners
– Legalized and registered company statutes
– Commercial register extract (form J)
– Negative certificate in the name of the guesthouse and the company
– Business license certificate (business tax)
– Classification decision + operating permit
– Lease agreement or management agreement or property certificate
– Manager: photocopy of national identity card or residence permit or passport + 4 photos
– Staff: photocopy of national identity card + 2 photos each
– Blank hotel register
– Police report copy
– Cardboard folder
If you have acquired the business, you must provide all these documents, but before that, you must also have obtained an updated file related to the listed building classification from the Wilaya (regional authority), declaring your new limited liability company (SARL). In the case of purchasing the shares holding the business assets of your guesthouse, only your CV, the amended articles of association, and a photocopy of your ID will be required.
A new charter is now in place. The Moroccan Ministry of Tourism has made available a website dedicated to the procedures for provisional classification and operating permits. These procedures apply to new classification applications.
Here is the link:
https://mtaess.gov.ma/fr/procedure-classement-provisoire-autorisation-exploitation
This is invaluable for anyone wishing to convert a residential riad, a ruin, or even a plot of land into a guesthouse. The specifications that must be met to obtain guesthouse or riad accreditation are very clear. Historic monuments already authorized will be reclassified according to these specifications, but we don’t know when this will begin. Setting up dedicated services will likely be a lengthy and complex process. In the meantime, riads already classified as historic monuments can continue operating with their existing Category 1 or 2 accreditation.