The decorating part should be simple - light colors, warm tones, good lighting. For guests , you will want to consider a small kitchenette ( small ref, 2 burner cooktop, microwave ) , nice round table ( good for dining or for games ), comfortable sofa ( maybe a pullout bed ) and tv ( for the rainy days ), a cozy chair for readers, a dresser or closet with some drawers. Keep it simple and comfortable so it is nicer than a hotel but not loaded with stuff you don't need on vacation like a regular house.

Depending on how many people this place can hold, you may want to consider a powder room as well. My friends and I will only rent if there is more than 1 toilet in the house.

Good luck!!

To save money back any plumbing to Laundry & bathroom wall. Less distance & digging.

@elcieg Your Cape Cod town must have the most extreme codes in the world. 10,000 sq.ft. per bedroom???? We have a 2 bd.rm. + den house on a 10,000 sq.ft. lot and it's one of the largest lots in our area. Also, she's just finishing off a room. Unless doing a renovation by adding a bathroom or complete kitchen , which isn't being done here, a permit may not even be required as this is not an "addition" of square footage, it's just finishing off existing space. Your point, however, about using it as an airbnb is valid. Many areas have very strict rules regarding that. As to suggestions for the space, I would add counter space & cabinet or shelves above with a small mini sink, microwave, small fridge & coffee maker on the wall outside of the bathroom. Also a love seat or two small scale comfortable chairs, a TV and a small table and chairs. Keep thing very light in color.......perhaps white with blue and/or gray accents to give you that beachy style. Are you going to board in the garage door area and add a window or two to bring light into the area? I would. The only problem with the idea of changing your garage into a guest suite, IMO, is where do your cars go??? Do you have another garage? Good luck.

@judygilpin, Judy, I'm not putting on an addition or turning my garage into another room. It is the OP who is asking for suggestions. And, no, my Cape Town does not have the most extreme codes.

Keep in mind, my "island" is surrounded by ocean. We have Title 5's. The limit of how many bedrooms one can have is driven by the ecology.

@EastCoast Designz, good inspiration in this article.

https://www.bhg.com/decorating/makeovers/before-and-after/tiny-home-garage-conversion/

@elcieg I was just pointing out that 10,000 sq.ft. per bedroom sounded extreme. That would mean 20,000 for a 2 bd.rm. house. We also own a summer home on island property in Washington state, so I am aware of the EPA rules, but nowhere is there a 10,000 sq.ft. per bd.rm. in the mix there. The main point here, is these people are not adding on. Just converting a space into something that is more usable for them. Like making a dining room into a library.

IMO garagres are not built to be actual living spaces so first they need to find out what is required by code where they live. The 10,000 sq ft is the lot size not the house size it does seem extreme to me too but I don't live in Cape Cod. This is in no way the same as using a room in the house for another purpose. For instance that space IMO needs a bathroom how will that happen They need to check the code then come back .Where I live this conversion would be just like adding an addition where all codes would need to be met

Patricia Colwell, The drawing shows that it does have a bathroom. I'm with you re: not liking to convert a garage to living space because there is no longer space for autos. But in my area, you can do about anything you want inside the confines of the footprint as long as electrical & plumbing codes are followed.

Since what you really asked for is coastal decor ideas, not architectural or code advice, I would like to make some simple suggestions. Sherwin Williams has a color called "Sea Salt." It is light and lovely. We used it in a beach house and we always get such positive feedback. A comfy sectional sofa in your large room would be nice. I would also consider some swivel rocker recliners. We have some placed at the edge of a living area. That way, people can swivel toward the sofa and be part of the conversation, or they can swivel in the other direction for the water view. That has worked nicely and ours are battery operated. We have to string a cord to recharge them about every six weeks, but if they are near a wall outlet you can leave them plugged in. Someone suggested a round table and I think that is a wonderful idea, both for meals and board games, puzzles, etc. Best of luck with your project. I hope it turns out just how you wanted.

P. S. Sea Salt walls

Great idea barring code restrictions! In our communities in PA, not too many use their garage for actual car housing anyway-LOL. They usually have them storing miscellaneous "crap" from the last twenty years that seems to never sell at their yard sales. Regardless, I would use colors of blue, and tan (sand). for a beachy color scheme. You could go with bird, beach, ocean creatures or even lighthouse decor if you wanted to throw some knicknacks in for ambiance.

"Since what you really asked for is coastal decor ideas, not architectural or code advice, I would like to make some simple suggestions."

Wow, @kimberlake, should I erase my comment to the OP? You sound so critical of my input.

@judygilpin, Holy Cow what is going on with you two today? The main point here, is these people are not adding on. Just converting a space into something that is more usable for them.

I shared my information about issues the OP may run into, and suggested checking with the town. Code, also, can be involved with converting space. Without going to the building department, should OP have done something to the garage (even though there was no intent to cover up a remodel) he could be forced to remove what was done that does involve pulling a permit. There will be plumbing work, electrical work, changing out the garage doors. There maybe strict guidelines for what can and can not be done.

Why are you so sure of yourself that you would deign to negate my response? Do you know something I do not about his town?

You're a long way from needing "Decor" ideas so maybe that wasn't what you were asking. Can you be more specific as to how far along in this project you are? Location? As @elcieg mentioned there can be a lot of restrictions to these types of projects. Right now there a septic system conundrum for homes on the Southcoast (where I live) and Cape Cod regarding new regulations. More info would be nice or just tell us you are doing a little dreaming ahead of the project on how to make it look. Too a lot of people taking away a garage is a sacrilege.

@elcieg @jck910 To clarify my home is a raised beach style home. The first level is entirely garage, so the part that I am going to finish is only half of the garage. On the other side I have a three car garage for my cars. I know that everyone is very concerned with architectural and code advice but I am already working with a local contract who knows the building codes. I will be using the space for friends and family who come to stay and not renting it.

@judygilpin I have found this https://saniflostore.com/collections/full-bathroom

I am using it for the bathroom so I don't have to install a drain.

I'm doing the same to my garage in the near future. I just remodeled after a fire and put in all the infrastructure for when I convert it. I'm going to use a modular kitchen kit like this.

You can use this Costco kit for heating and cooling.

@elcieg There are no garage doors that I have to cover up because I have an extra large garage that is my entire first floor and we are finishing the storage part. I have a "reversed living floorplan" where my bedrooms are on the second floor and my kitchen living and dining rooms are on the third floor. and we are finishing the storage part

@kimberlake I love that paint color it is gorgeous! Could you please share a picture of your living room with swivel rocker recliners because I really like that idea

@elcieg @jck910 @kimberlake @judygilpin Here are some inspiration photos of what decor and furniture I was thinking for the space? Light greys white and blues. I want guests to feel like they are away on vacation with a relaxing color scheme. What do you think?

East coast Designs, here you go!

@kimberlake That looks so good by the sliding door! I am going to do that as well. I love the color scheme of cools grays and that beautiful blue. Its different because I was originally thinking whites and navy but now I might consider this

Elcieg, oh no ma’am! I’m sure your experience on the coast is valuable to Eastcoast Designz. I was just trying to keep her original question on the table and offer some options.

@Paul F. Where do I buy a modular kitchen like that? How much?

@EastCoast Designz, , the inspiration photos you submitted are perfect. Now I can't understand why you asked for anyone's advise. I think kimberlake's room is pretty, but the furniture is a bit too heavy for a guest bedroom. Where's the bed???

They are anywhere from a few hundred on Wayfair to several thousand. This one from HomeDepot for $2700.

@EastCoast Designz I assume the kitchen is for breakfast/snack/beverage use, since you and your guests will have lunch and supper at your main home or restaurants. I wouldn't bother with a built-in. You need a sink but not a dishwasher. You need a microwave and quiet refrigerator. But you don't need an oven or stovetop. A toaster oven and plug-in induction cooker will do. I'd keep things separate and replaceable as they fail, not one big unit where if something fails, you have to replace it all. 

I like the idea of two toilets if that's possible, especially if there will be a family, but families survived a long time with only one. Cabinets are ok, but this is one time you can go with shelving for just a few pieces of  pretty dishware, so nobody has to guess where things are. You could even set up a bar-like kitchen and get the ol' island in there if you want. But you can do with a simple setup. I do like a freezer for ice cream when I'm at the beach … Or a trip to the ice cream parlor.

A washer dryer is nice. A heated stone floor would be a great flooring choice to deal with sand, have cheap air conditioning, and still have a warm floor when needed. An outdoor rinse off spot with a tub for feet soaking would be great. Shoe storage just inside the door might help keep sand from spreading. Nice shoe storage is something to get more ideas on from HOUZZers. 

I don't know what your beach routine is, but ours includes naps. When we go on vacation it takes time for the adrenaline of work to wear off, and it happens at different times for the two of us, so one naps in the bedroom and the other naps on a sofa or loveseat. I vote for a pair of loveseats or sofas over a sectional or chairs. At least consider it. We also nap on the beach. 😁

Early morning is key for our enjoyment too. I like to get up early and have an iced mocha while I sit outside and let my brain sort through and clean up all the clutter of my regular life. I'd like a covered patio with a view and some protection from sun and rain. Somewhere I don't have to worry about being seen in my jammies with my morning face. Expanding this space could be a real bonus for a vacation spot. If it's covered, have ceiling fans to make sure there's always a breeze. There could even be room for a table and multiple chairs. Or just chairs with side tables. A storage wall for them would be good if they are lightweight and could blow in a storm. 

I like your color pallet, light with blue and blue-greens in a sophisticated way, not a typical beachy way maybe a darker teal for the bedroom walls to induce napping. And mixed with wood so it doesn't look sterile. But I think wood furniture and cabinets instead of wood floors. I like pine because pine trees are common on beaches. Again, I like real stone floors for natural cooling, resistance to sand, easier to seal than porcelain and nicer to the feel with bare feet, especially with radiant heating under it for colder months or just mornings and nights. 

For a bathroom, we like the vanities to be separate from the toilet room. Our favorite beach hotel has a small bathroom plus a vanity and sink just beyond that. If you don't have room for that, have a mirror at the kitchen sink... Like a bar but could double as a makeup or shaving spot. My grandparents' kitchen had a shaving mirror at the sink. 

Here are some good ideas for beach vacation homes. You probably know them all, but there was one or two I hadn't considered. https://www.xpressmats.com/how-to-keep-sand-out

https://www.merrymaids.com/cleaning-tips/seasonal-cleaning/cleaning-sand-from-your-house/