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If you enjoy sharing your town with others and have experience in the hospitality industry, then starting a bed & breakfast might be an exciting business opportunity. Running a B&B gives you the chance to meet many different people and help ensure that they have a great vacation or trip. While opening this type of business requires significant work, many people who open a B&B do it because they love the industry and find the experience rewarding.
A bed & breakfast offers guests not only lodging, but also a more luxurious, personable experience. Unlike hotels, B&Bs give guests the experience of feeling like they’ve been invited into a home. Little touches, like mints on a pillow, lemonade on a porch, and meals in a warm and welcoming dining room transform lodging into a deluxe experience. Hosts live on site, giving the business a family feel.
Most B&Bs have between four and 10 rooms, which allows their owners to provide attentive, specialized customer service to guests. There’s much more personal interaction in a B&B than you’d find in a hotel, and that’s one of the benefits of this business. Hosts get to know their guests and often play an important role in their trips or vacations. When hosts have an intimate knowledge of the local area, they can help guests find ideal activities and make the most of their experience.
According to IBIS World, from 2014 to 2019, the bed & breakfast and hostel accommodations industry underwent annual growth of 4.4 percent. During that time, the number of businesses increased to 9,542 and industry employment great to 30,677. During 2019, the industry is expected to bring in a total revenue of $3 billion.
The B&B industry is influenced by the number of people who travel and take vacations, and that’s closely linked to the amount of disposable income available. With the improved economy and an increase in disposable income, travel has also increased, boosting the B&B industry.
The B&B industry is a competitive industry, and businesses need to keep up with current trends to bring in both new and returning guests. According to the B&B Team, many trends currently affect the industry. With the increased focus on health and healthy eating, B&B’s need to provide guests with healthy breakfast options, as well as their standard decadent breakfasts. Knowledge of and adherence to dietary restrictions, like gluten-free diets, is also increasingly important.
More and more travelers are seeking pet-friendly (in particular, dog-friendly) lodging options. B&Bs with a dog-friendly policy can draw in increased or even specialty clientele by advertising lodging for pets and their owners.
Personalized service for returning guests is another important trend, and B&Bs are in the perfect position to provide this higher level of service. Businesses can take notes about a guest’s favorite wine, restaurant, or local attraction or activity, and when the guests return in the future, a B&B can provide guests with a personalized gift and thank-you note. Such attention to detail stands out and can ensure that returning guests become loyal customers for life.
Retirees and millennials are often the target market for most bed and breakfasts, but that target market can vary according to a B&B’s business model. Some B&Bs specialize in offering lodging in conjunction with a local attraction, like a nearby concert hall. Other businesses may market luxury stays to a particular audience, or may want to market pet-friendly lodging to pet owners.
Skills, experience, and education useful in running a bed & breakfast
It’s possible to start a B&B without a business degree, but particular skills and experiences can increase the chance of the business becoming a success.
Experience in a hospitality setting. Hosts who have experience within a hospitality setting can step into the role of running a B&B more easily. Experience in a hotel or even with another B&B is ideal, since business owners will already have a working idea of how to keep the business running smoothly and the types of service that guests will expect.
Customer service skills. B&B owners need to be able to provide great customer service, so experience in this area is important. The quality of customer service can shape a guest’s perception of their stay, determining whether they leave a negative review or enthusiastically recommend the B&B to their friends.
Knowledge of the local area. A host who can help B&B guests to find events, restaurants, and other attractions in the area can make a guest’s vacation extra-special. Ideally, B&B owners will have lived in the area for years and will be familiar with local events and businesses.
Attention to detail. From mints on the pillows to how neatly beds are made, attention to detail in the B&B industry matters.
Meal preparation skills. Meal preparation experience is important in a B&B, since great breakfasts are essential to a great experience. If a host isn’t doing the meal preparation themselves, they need to be able to hire someone or partner with someone who is a talented cook and who can handle the meal preparation.
Interpersonal skills. Most guests choose a B&B because they want to stay in a warm, welcoming environment, so hosts need excellent interpersonal skills to deliver on this kind of experience. A host who is warm, outgoing, engaging, and genuine can establish important relationships with guests that make for a great stay and encourage guests to return.
The cost of operating a bed & breakfast will vary depending on the size of the business and whether the owner already owns the property to be used. Expect to pay $200,000 or significantly more for a suitable property, and then $20,000 to $40,000 per room for renovations. Smaller properties may cost $200,000 or more to open, but budget closer to $500,000 and up for larger properties.
Common startup costs for a B&B include:
- Home or property renovation costs
- Furniture, like beds and dressers
- Kitchen equipment and supplies
- Supplies like bedding, towels, and toiletries
- Inventory like food
Steps to Starting a Bed and Breakfast
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
Many B&B owners decide to make their current homes into a B&B, while some purchase an additional property. Rent or mortgage payments on a property will vary depending on down payments, property size, and location.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
Licenses required specifically for bed and breakfasts are occasionally required by the city, however most will need to be properly zoned to allow commercial activity. If food is being served, a food handling certificate and food service licensing may both be required, in addition to local health department licensing.
In addition, there are some common local, state and federal registrations such as a sales tax permit to sell food and beverages along with collecting tourism or hotel tax, Employer Identification Number, and Occupancy Permit among others.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a bed and breakfast is another. Funding to start a bed and breakfast can be difficult due to the cost of property. In order to get a loan, the borrower(s) will need to have good credit and be able invest 15-25% of their money towards the total start-up costs.
Step 6. Get your Marketing Plan in Place
Good marketing is important to a bed & breakfast’s success. Marketing will help to generate initial business, but is also necessary to keep the business fully booked, especially during off-seasons. A B&B can use many different marketing techniques, but some of the most common include print advertising, social media, and the development of a quality website. Marketing costs will vary depending on the activity, but business owners who can do some or all of the marketing themselves can save money.
Step 7. Get Insurance
A B&B will need multiple types of insurance in order to be fully covered:
- General liability insurance protects the business if any guests are injured while on the property or during a stay, and it can cover expenses like medical bills and lawyer fees.
- Commercial property insurance can help to cover expenses and damage if the business’ property is damaged, such as by a fire. This type of insurance can cover the cost of not only the building, but also of the equipment within it. Many times a homeowner’s property insurance won’t cover commercial activity so be sure to read your coverage carefully before charging guests.
- Commercial auto liability insurance covers business-owned vehicles and can pay for expenses or lawsuits that could result from an accident.
- Workers comp insurance is required if you have employees and can cover expenses like lost wages or medical bills if an employee is injured while on the job.
Insurance policy costs will vary based on factors like the size and value of the property, the business’ location, and the number of employees. To get an accurate idea of potential insurance costs, request quotes from multiple providers. Then, compare those quotes while looking at factors like premiums, coverage limits and exclusions, and deductibles.
Step 8. Hiring Employees
Most B&B owners do all the work themselves, but depending on the size of a B&B or the owners interest in doing all the work, it may be necessary to hire multiple staff. According to PayScale, the following are average hourly incomes for B&B staff:
- Innkeeper: $14
- Housekeeper: $12
- Bookkeeper: $17
- Property manager: $15
In addition to budgeting for employee salaries, a B&B will also need to budget for the expenses that come with hiring staff, such as workers comp insurance, health insurance contributions, and paid time off.
Related: Hiring your first employee
Amazon has several books that go into detail on starting and running a bed and breakfast:
Twenty for Breakfast (Free on Amazon Kindle Unlimited)
Optimize YOUR B&B: The Definitive Guide to Ranking #1 in Airbnb Search
How to Open & Operate a Bed & Breakfast: Where You Need to Start
How Not To Run A B&B (Free on Amazon Kindle Unlimited)
How much can you potentially make owning a bed & breakfast?
Data on the average income of B&B owners isn’t available, but owning a B&B isn’t regarded as a highly profitable venture. Trip Savvy references a survey of B&B operations that the B&Bs surveyed booked an average of 362 room nights per year. Assuming that the rooms cost $100 per night to rent, the resulting gross income is $36,200. Rates and success will vary according to each B&B. While owning a B&B won’t get you rich quickly, it does offer a rewarding lifestyle that can sustain a property’s mortgage payments and an owner’s basic needs.
Things to consider before starting a bed & breakfast
Owning a B&B is not just an entrepreneurial opportunity, but it’s also a lifestyle. This is one business opportunity where you truly need to enjoy what you’re doing in order to be successful. Great B&B owners and hosts love to share their home and town with visitors, and they’re fully invested in their business. With weekends and tourist seasons being the busiest times, plan to change up your personal schedule when you get into this industry.
Having a solid web presence is critical as many people are finding listings on sites like HomeAway, Air B&B, or linked to an area group of B&Bs in addition to your own website. Consider having a professional photographer take pictures of the home as good photos influence shoppers opinions of the property.
The B&B industry isn’t an easy one to succeed in. Bookings can fluctuate, and businesses may be fully booked up during their tourist seasons and have only minimal bookings in the off-seasons. Good marketing and a unique characteristic to the B&B, like being pet-friendly, can help to combat this to a degree. Still, it’s important to budget and plan for the income fluctuations that come in this industry.