Bed and breakfast innkeeping is an industry that provides short-term lodging in private homes or small buildings converted to hotels. Full breakfast is included in the room rate. The U.S. bed and breakfast (B&B) industry includes about 3,000 establishments with a combined annual revenue of about $1 billion.
Bed and Breakfast Innkeeping Demand & Competition
Personal disposable income drives the demand for bed and breakfasts. For example, larger bed and breakfasts may have advantages in providing various offerings and prices to suit various traveler budgets. Likewise, small establishments can compete effectively by offering superior customer service to target markets.
B&B inns compete for overnight accommodations with other hospitality establishments, such as hotels, motels, extended-stay inns, and country inns. Besides, other competition comes from RV parks and campgrounds. Moreover, they may also compete with short-term vacation rentals from provide home owners, some of which may be unlicensed.
Bed and Breakfast Innkeeping Operations
The major offering of B&B inns is the rental of guest rooms, which accounts for about 80 percent of revenue. Other sources of revenue are gift shops sales, food and beverage sales, and spa services. In addition, some B&Bs also rent their facilities for meetings or events.
B&Bs Are Typically Private Homes
B&Bs are typically private homes converted to accommodate overnight guests, primarily as a destination site, or less frequently, as an overnight stopover for travelers. Special features of B&Bs may include historical significance of the building, unique location, and attractive decor. Moreover, delicious gourmet breakfasts and luxurious guest hospitality and amenities appeal to guests.
B&Bs May Be Registered Historic Sites
Many B&Bs are registered sites on the National Historic Register, and the average age of the oldest structures is more than 100 years. Moreover, B&Bs can be found in vacation or resort areas as a short-term lodging alternative to full-week rental of condominiums or houses.
B&Bs Offer Personalized Guest Experiences
B&Bs are known for the high level of personalized customer service. Usually, a full-course breakfast is served in a common dining area of in-room and included in the room rate. Inns can offer hot tubs, in-room fireplaces, high-thread-count linens, and plush robes. Moreover, some have book libraries and afternoon tea and beverage service. Furthermore, inns have trimmed lawns, some have gorgeous gardens with hammocks and lawn chairs.
B&Bs Largest Financial Returns Typically Realized When Selling
B&Bs typically are owner-operated: about 80% of owners reside on the premises. In fact, many owners have chosen to operate a B&B more for the lifestyle experience than for potential financial gain.
Most importantly, the largest financial returns are typically realized when owners sell a thriving business. Moreover, this is especially true if the B&B is on a property that has risen in value.
Bed and Breakfast Innkeeping Technology
Nearly all inns have websites, and most also advertise on B&B aggregation sites. Many have online reservation systems to make it easier for guests to book reservations. In fact, more than 90% of B&Bs offer complimentary high-speed wireless internet to their guests.
B&B inns also rely more on online review sites such as Yelp and TripAdvisor. In addition, social networking sites like Facebook, play a role in their marketing efforts. Since the pandemic, according to Hospitality Net, some have implemented mobile check-ins and promoted contactless payments.
Bed and Breakfast Innkeeping Sales & Marketing
Typical B&B guests include couples, and many B&B inns market themselves as romantic getaways. Overall, word of mouth and internet presence are the primary forms of marketing and advertising for B&Bs. Virtually all establishments have websites.
Room rates vary widely, but some B&Bs may have a substantial price premium over standard motel/hotel accommodations. Some B&B accommodations aggregators (like BnBFinder.com) represent thousands of B&Bs to potential customers in a geographically-sorted context.
Seasons, Finance, & Regulation
Revenue can be highly seasonal, as most B&Bs experience a high and low season driven by weather, vacation travel, and holidays. Since nearly all revenue comes from room rentals, cash flow depends highly on occupancy rates.
According to Dun & Bradstreet, B&B occupancy rates may be over 90% during high season and drop to 20% or less during low seasons. Occupancy rates drive revenue. Thus, B&Bs, like most lodging facilities, need to ensure a thriving business and cash flow, which depends on occupancy rates.
Stimulating Off-Season Business
The most susceptible establishments are those where seasonal change and weather dictate traffic patterns. To stimulate off-season traffic, for example, B&Bs can reduce room rates and develop attractive package offerings to increase occupancy.
Health & Safety Regulations
B&Bs are subject to operating standards mandated by state and county health departments. Local, state, and national agencies enforce fire and safety regulations. Futhermore, many B&Bs belong to state or regional trade associations that impose standards on members, including an annual inspection to ensure compliance.
Zoning & Taxes
Zoning variances are usually required to permit the operation of B&Bs in residential neighborhoods. Thus, B&Bs typically face expenses related to zoning, permits, and local hotel taxes.
Bed and Breakfast Innkeeping Human Resources
The U.S. has about 17,000 bed and breakfast inns. More than 70% of B&B operators are couples, while about 20% are individual women, 5% are individual men, and the remaining 5% are non-couple partnerships, according to the Association of Lodging Professionals.
Most inns that hire workers typically have few employees. In addition, hiring at bed and breakfast inns is highly seasonal: the industry employs about 40% more workers during the peak summer month of August than in January.
Industry Growth & Forecast
Revenue (in current dollars) for U.S. travel accommodation services, an indicator for bed and breakfast demand, is forecast to grow at an annual compound rate of 5% between 2022 and 2026. This is based on changes in physical volume and unit prices.
Creating, Maintaining Marketing Niche
B&B owners must work hard to define and then maintain their property's individual characteristics. A B&B property might try to attract a following due to its architectural style. Moreover, inns that offer access to local attractions appeal to guests.
B&B inns may also appeal to socially conscious travelers by offering local and organic food or energy efficient and sustainable accommodations. Read our blog post about bed and breakfast niches.
Bed and Breakfast Innkeeping Business Challenges
Dun and Bradstreet list three business challenges common to B&B owners & operators. First, to meet the competitive challenge of vacation rentals, B&Bs could offer more personalized services or amenities.
Second, increasing local restrictions have been placed on B&B locations in recent years. Prohibition of signage, restricted parking access, and tougher environmental regulations can affect the operation of B&Bs.
Third, many local jurisdictions charge occupancy taxes on hotel rooms. This can inflate room charges.
Bed and Breakfast Innkeeping Business Trends
Dun and Bradstreet list three business trends B&B owners & operators are seeing. First, the trend towards digital and contactless services gained momentum in 2020. The widespread use of technology-aided options, such as contactless payments, and mobile check-in, have improved the guest experiecne. Thus, when it comes to convenience in accessing their rooms and efficiency, it can be worth the inn's investment effort.
Second, to increase occupancy rates and revenues, many B&B owners offer their facility for weddings, reunions, conferences, and retreats, if space and design permit. Third, agritourism is a growing opportunity for B&B inns, with hayrides, demonstrations, and other events, as well as accommodations, which are a good fit for rural B&Bs.
Special packages help B&Bs differentiate themselves from other lodgings and increase revenue per guest visit. Packages may include dinner, sunset cruises, horseback rides, in-room massages, flowers, food & wine trays, day trips with picnic lunches, and special event tickets. Typically, B&Bs offer one or more of these packages, with the opportunity for guests to customize the special offering.
A New Generation of Travelers
Gen X and Gen Y customers have different tastes in decor and food than older travelers, and may require more electrical outlets and Wi-Fi connections for smartphones and other devices. Moreover, B&Bs hoping to capture business from younger customers will need to ensure their websites are optimized for mobile devices.
Marketing Through Social Media
Social media tools and websites can help B&B innkeepers compete more effectively with big hotel chains. Thus, having a Facebook, Twitter, or Instagram presence can increase a B&B's online visibility, while offering guests the opportunity to post comments about their experiences.
Maximizing Occupancy Rate
B&Bs have a relatively high fixed cost, especially if the business is leveraged with debt, and incremental business is attractive. An increase in occupancy rates drives additional revenue and operating income. For example, the average occupancy rate of the B&B industry is about 45%, compared to about 70% for all lodging establishments.
Ensuring Good Word-of-Mouth Advertising
Word-of-mouth advertising is one of the best methods for attracting new B&B guests. Operating on limited marketing budgets, B&B owners rely on satisfied customers to tell others about their guest experience. Accordingly, owners typically interact personally with guests to ensure their satisfaction.
With around 80% of owners living on-site, few delegate the guest experience to hired managers or other employees. Owners understand the opportunity for good word-of-mouth advertising. They want to ensure their guests the best possible experience.
Optimizing Website Content
Over 95% of B&Bs have registered URLs. Since most B&B inns cannot afford extensive marketing and advertising campaigns, they rely on website content and effective search engine optimization. Thus, understanding search engine ranking, keywords, content aggregation, and placement is essential to the strategy.
Implementing Online Reservations
B&Bs are increasingly using reservation systems software. However, many establishments still want to offer the personal touch of a live voice when booking reservations. Some reservation systems, like ResNexus and Webervations, can be set up to allow full online booking or view an availability calendar only. Then, after viewing the availability calendar, the prospective guest must call (usually an 800 number) to finalize reservations.
Please check out any of the following industry websites:
American Hotel and Lodging Association (AHLA) (data and news regarding the U.S. lodging industry)
Association of Lodging Professionals (information on small lodging establishments)
BBCanada.com (bed and breakfast guide for travelers and owners)
Select Registry (a respected membership of luxurious independent hospitality properties in North America)
US Travel Association (statistics and information on travel and lodging in America)
VRBO (internet directory of bed and breakfasts with news and industry statistics)
If you're an innkeeper wanting to maximize your hospitality business, or if you are interested in buying or selling a B&B inn, please contact Rob Sales. The first conversation is always complementary, and Rob is happy to answer your questions.
Having owned and operated B&B inns with his wife Jane, Rob has the unique knowledge of best practices for B&B businesses. Moreover, Rob specializes in B&B real estate, so he stays aware of what inns are available on the market at any given time.
Licensed to sell bed and breakfasts in the states of North Carolina, South Carolina, and Georgia, Rob is happy to help. You're welcome to contact Rob, who enjoys helping innkeepers and potential innkeepers alike.