According to the most recent Dun and Bradstreet research report in 2024 about Bed and Breakfast Inns, the United States B&B industry has a combined annual revenue of about $1 billion. This blog post will relay some of their key findings as they currently pertain to the innkeeping industry.
Competitive Landscape
The profitability of individual bed and breakfast businesses depends on occupancy rate (the percentage of rooms that are occupied out of the total possible) and operational efficiency (how well the inn is managed). An increase in occupancy rates drives additional revenue and operating income. The B&B industry’s average occupancy rate is about 45%, compared to about 70% for all lodging establishments.
Larger B&Bs may have advantages in providing a range of offerings and prices that suit a variety of traveler budgets. Small establishments can compete effectively by offering superior customer service to target markets.
Products, Operations, and Technology
B&Bs are known for their high level of personalized service and unique customer experience. B&Bs are typically owner-operated with about 80% of owners residing on the premises. The largest financial returns are typically realized when owners sell a thriving business located on property that’s risen in value. Most B&B owners have outside income.
Nearly all inns have websites and most also advertise on B&B aggregation sites. B&Bs are also relying more on online review sites such as Yelp and TripAdvisor as well as social networking sites such as Facebook to play a role in their marketing efforts.
Sales & Marketing
Typical B&B customers include couples, and many bed and breakfasts market themselves as romantic getaways. The majority of B&Bs are located in rural locations or villages.
Word-of-mouth and internet presence are the primary forms of marketing and advertising for B&Bs. Room rates vary widely, but some B&Bs may command a substantial price premium over stand motel/hotel accommodations. B&Bs use their websites as a primary way to reach prospective guests. They are increasingly using reservation system software.
Owners relay on satisfied customers to tell others about their experience. Owners understand the opportunity for good word-of-mouth advertising and want to ensure their guests the best possible experience.
Finance & Regulation
Bed and breakfast revenue can be highly seasonal. B&B occupancy rates may be over 90% during high season and drop to 20% or less during low season. To stimulate off-season traffic, room rates are reduced substantially and special promotions are offered.
B&Bs are subject to operating standards mandated by state and county health departments. Fire and safety regulations are enforced by local, state, and national agencies.
Many B&Bs belong to state or regional trade associations that impose standards on members. Association standards may require an annual inspection to ensure compliance.
Since many establishments operate within residential neighborhoods, zoning variances are usually required to permit the operation of a business in those areas. B&Bs are typically faced with expenses related to zoning, permits, and local hotel taxes.
B&Bs in most states must charge both state sales tax and a local occupancy tax for overnight stays. Occupancy taxes can vary by county or municipality within each state.
Human Resources
According to research, the United States 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 do hire workers typically have few employees. Maintaining a reliable, competent, and courteous staff is critical to a successful B&B business. To help with employee retention, a majority of B&Bs provide some form of benefits to employees.
Critical Issues
First, occupancy rates drive revenue. B&Bs, like most lodging facilities, need to ensure a thriving business and cash flow depends highly on occupancy rates. Second, B&Bs must create and maintain a market niche. Customers are generally drawn to bed and breakfast inns that offer experiences that are unique from major hotel chains, so owners must work hard to define and then maintain their property’s individual characteristics.
Business Challenges
First, there is vacation rental competition. Short-term vacation rentals have become a popular alternative to traditional hotels and motels as well as bed and breakfasts. Second, zoning and permit rules must be followed. Prohibition of signage, restricted parking access, and tougher environmental regulations can affect the operation of bed and breakfasts. Third, there are local hotel taxes and other fees to consider. Many local jurisdictions charge occupancy taxes on hotel rooms that can inflate room charges as well as other travel-related taxes that can discourage tourism and business travel.
Business Trends
First, there has been an increase in contactless technology due to the ongoing pandemic. Hoteliers may need to manage and provide a more digitalized experience through contactless technology. Second, some bed and breakfasts earn income through hosting meetings and events. 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, also known as “agritainment” is a growing opportunity for bed and breakfast inns. Rural B&Bs may offer hayrides, demonstrations, and other events, as well as accommodations.
Industry Opportunities
First, special packages can help B&Bs to differentiate themselves from other lodging and increase revenue per guest visit. Packages may include dinner, sunset cruises, horseback rides, in-room massages, flowers, food and wine trays, dray trips with picnic lunches, and special event tickets. Bed and breakfasts with package offerings like these offer them as a value-added service.
Second, research shows that Gen X and Gen Y guests may require more electrical outlets and Wi-Fi connections for smartphones and other devices. B&Bs hoping to capture business from younger customers may need to upgrade their websites to ensure that content is optimized for mobile devices.
Third, more marketing is done through social media. About 97% of millennials say they will share posts of their vacation on social media.
Fourth, Urban B&Bs are becoming increasingly popular. Urban B&Bs typically target business travelers.
Operations, Products, & Facilities
B&Bs are typically private homes converted to accommodate overnight guests. Many structures are more than 100 years old and registered as historic. The average bed and breakfast has six to eight guest rooms or suites.
B&Bs are almost always owner-operated. According to research, about 80% of U.S. B&B owners reside on the premises. Since operating income often doesn’t cover loan payments, many B&B owners have outside income.
Typically a full-course breakfast is served in a common dining area or in-room and is included in the room rate. Many B&Bs offer hot tubs, fireplaces, high-thread-count linens, plush robes, afternoon tea and beverage service, gardens with hammocks and lawn chairs, DVD players, and libraries.
Customers, Marketing, Pricing, & Competition
Couples make up the majority of B&B customers. Many B&Bs market themselves as romantic getaways. Most B&Bs have a minimum age of 12 to 15. Most B&B visitors are vacationers, not business travelers, though many owners actively reach out to business travelers.
Word-of-mouth and internet presence are the primary forms of marketing and advertising for B&Bs. Websites like BnBfinder.com represent thousands of B&Bs to potential customers in a geographically sorted context.
Recommended Websites
American Hotel and Lodging Association (AHLA): Data & news regarding the lodging industry in the United States.
Association of Lodging Professionals (ALP): Information on small lodging establishments.
U.S. Travel Association: Statistics and information on travel and lodging in America.
VRBO: Internet directory of B&Bs with news and statistics of the industry.
B&B Consulting
Licensed Realtor Rob Sales, along with his wife Jane, successfully owned and operated bed and breakfast inns. Moreover, Rob is an experienced hospitality real estate professional.
If you are looking to buy or sell a hospitality property in the states of North Carolina and/or Georgia, contact Rob for a complimentary first conversation to discuss your goals. Rob knows the right questions to ask to make sure you get the most from buying or selling your bed and breakfast inn or small hotel.