Lodging industry research, from Dun & Bradsteet, is the focus of this post. The U.S. lodging industry consists of about 70,000 establishments. Specifically, this includes single-location companies and units of multi-location companies. Moreover, their combined annual revenue is about $260 billion. On the positive side, bed and breakfast inns can compete by offering personalized service and a unique customer experience.
Most lodging companies have websites, some with virtual tours, and online reservation systems. In addition, many have listings on third-party reservation and travel systems. Mobile payment methods, such as PayPal and Amazon Pay, for example, are also gaining popularity.
Dun & Bradstreet share that lodging operators can also market their investments in improved in-room technology. This includes flat screen televisions, wireless internet services, and other convenience technology-related amenities in high demand from guests.
Lodging rates vary by location, season, and occupancy rates (the % of beds occupied). Moreover, bed and breakfasts command a substantial price premium over standard motel/hotel accommodations. According to Dun & Bradstreet, the average room rate for a B&B is about $150. Moreover, industry revenue is highly seasonal, with peak seasons varying by location. Thus, in certain locations, room rates are reduced during the off-season.
Critical Industry Issues
Dun & Bradstreet identify two critical industry issues. First, there is a dependence on customer travel. Since a significant portion of guests come from tourists, travel regulations and customers' willingness to travel can greatly affect profitability. Second, the demand is linked to the economy. Thus, as consumer confidence rises, so do stays at resorts and B&B inns.
Lodging Industry Business Challenges
Dun & Bradstreet share some business challenges within the lodging industry:
- Cybersecurity: maintaining reliable information systems. This protects the privacy and security an inn's guests, third-party networks, & the inn's own security
- High level of competition: a lodging property's ability to remain competitive. This depends on the inn's success in distinguishing the quality, value, & efficiency of its accommodations.
- Access to capital: companies need the resources to buy, develop & improve properties. Moreover, the resources to handle needs for repairs and refurbishing costs.
- Reputation management: a lodging company's ability to manage its business reputation. This contributes to the success or failure of the inn.
- Dependence on online travel agencies: the lodging industry relies heavily on bookings made through online travel agencies (OTAs). To increase their own bookings, some inns offer guest incentives to book direct.
Lodging Industry Business Trends
Dun & Bradstreet share some business trends within the lodging industry:
- Content marketing: writing blogs, posting social media content, sending e-newsletters, sharing photos & videos. This can allow lodging properties to interact and engage with new & returning guests.
- Green initiatives & sustainability: green initiatives are a trend among lodging companies in response to consumers' growing environmental concerts. For example, current green efforts affect the frequency of laundry operations, types of lighting, & packaging of bathroom supplies.
- Travel demand is tied to energy prices: declining gasoline prices often contribute to upticks in domestic vacation travel by car and RV. In addition, lower jet fuel prices drive down the cost of airline tickets
Lodging Industry Opportunities
Dun & Bradstreet list some opportunities within the lodging industry:
- Younger travelers: younger traveler generations can represent a critical base for the hospitality & travel industries. Your website and blog can feature things that will likely appeal to younger guests (such as ziplining).
- Mobile marketing & social media: 60% of all reservations are done digitially, according to Hospitality Net. Make sure your website adapts to the size of the device it is being viewed from. In other words, that your website is mobile responsive.
- Baby boomers: Baby boomers are a key demographic for the lodging industry, together with millenials and Gen Xers. You can feature things that will likely appeal to more mature guests (such as historic tours).
- Food and beverage services: restaurants, bars, & other food & beverage segments are becoming more important for lodging operators looking to become competitive. Moreover, this diversifies a hospitality business' operations & revenue streams.
Lodging Industry Management
Dun & Bradstreet share insights for those who own and/or manage lodging properties:
Maximize Revenue & Employee Relationships
- Maximize occupancy & revenue: when setting room rates. Carefully anticipate demand from business & leisure travelers. In addition, react quickly to changes in competitive pricing. For example, consider raising your prices for times when there is something special happening in your local area (such as a popular local festival that attracts tourists).
- Account for seasonality: lodging establishments in many markets experience season fluctuation in occupancy rates. This requires operators to carefully manage revenue & set room rates based on anticipated demand at different times of the year. In addition to offering discounted rates in the low seasons, inns can offer special packages to guests.
- Recruit & retain employees: offer bonuses & incentives to keep & motivate experienced staff. For example, motivate employees to each come up with a suggestion for a change that could bring additional business to your inn. If you can tie the implementation of that employee's suggestion with an increase in your revenue, then you can reward them for that.
Online Reservations & Digital Marketing
- Manage online reservation systems: company websites must be well designed, easy to use, mobile responsive, & informative to keep guests from booking elsewhere. As mentioned, some offer incentives for customers who book through their websites (vs. third-party travel sites).
- Implement digital marketing strategies: manage search engine optimization (SEO), social media, & mobile marketing. Moreover, monitor & manage your inn's reputation. Regularly look at your guest reviews--especially if they share their reasons for staying with you.
- Differentiate properties: offer guests unique experiences so they stand out. Pay attention to what your guests say that they like about your accommodations and local area. Consider adding guest packages.
- Finance repairs & renovations: smaller independent B&B establishments can have a greater burden to keep their accommodations modernized. Keep a list of desired projects and note the urgency (if any) to complete them.
Protect and Reward Guests
- Prevent data breaches: protect customers' financial information and other sensitive data. Consumer trust is a key part of your business reputation.
- Reward customer loyalty: offer programs to attract & retain customers and collect guests' personal information through marketing purposes. Email addresses allow you to stay in touch with guests.
Lodging Industry Websites
Dun & Bradstreet recommend some lodging industry websites, including the following:
Innkeepers and aspiring innkeepers, if you would like to have a complimentary conversation with Rob Sales about the current B&B lodging industry, you're welcome to contact him. Are you thinking of buying or selling a B&B inn? Rob is a licensed real estate agent (in Georgia, North Carolina, and South Carolina).
Rob, alongside his wife Jane, successfully owned & operated bed and breakfast inns. He combines his expertise in both B&B hospitality business and the real estate industry, to offer valuable insights to his clients.