Start by removing the equipment that is usually found in your garage like the door, cables, automatic gears etc. They can also be incorporated inside if you have a decent plan. Build a wall in the open area which is wide enough for a door. To give an overall uniform look to the house, match the paint of the wall. Also, use the same window and door design. Usually garages do not have insulation, so you will need to insulate the new area. There are two techniques to insulating which include the blowing method or adding it before the dry wall. You may need some professional help to get the insulation installed properly. Try to follow a basic plan to ensure that everything that is required gets done and that extra work is avoided to save time and money.
Add a closet in the room if you want one, otherwise a wardrobe will also work fine. Using the garage means you should already have electrical wiring and outlets ready to go. Match the lighting with the rest of the house and install it. You can also change the plugs and switches to match the rest of your house. The garage door will need to be changed as they are very heavy and spring loaded. The room will look like a part of the house if it has the same door.
Paint the new room with any neutral colours. Think about the materials you will use in the room like drapes, carpets, bed sheets etc. A carpet will most probably be necessary as the flooring is concrete so it needs to be covered. You could also use lamination or tiles for a more elegant feel. There are many different options available for flooring but remember to keep it simple so to save some extra money. The room is ready now so arrange the furniture and get ready for your new guests.