Bed and Breakfast Business-Industry note for discussions before negotiation exercise

It’s an image that puts you in an instant state of relaxation—a roaring fireplace in a cosy rural bed and
breakfast, sharing stories with fellow travellers while enjoying a cup of coffee.

The romantic notions so closely associated with a bed and breakfast have made owning one a popular dream
for many people. This is one of the reasons the bed and breakfast (B&B) industry has grown so significantly in
recent years.

What is a bed and breakfast?

If you’ve never had the unique pleasure of staying in a bed and breakfast, you may easily confuse it with other
small, privately run inns and motels. A bed and breakfast are a hybrid which blends the luxury and comfort of
an upscale hotel with the atmosphere and décor of a beautiful private residence. As the name would suggest,
the nightly fee includes a hearty, home-cooked meal the next morning.

The state of the B&B industry

In the United States alone, the B&B industry is a $3.4 billion industry with an estimated 17,000 establishments
across the country. Unlike major hotel and motel chains, bed and breakfasts are typically not owned by
corporations. According to the latest figures, B&B ownership in the United States breaks down as follows:

72 percent of owners are couples; 18 percent of owners are individual females; 5 percent of owners are
individual males; 5 percent of owners are non-couple partnerships and 79 percent of owners live on the
premises.

The average American bed and breakfast has an occupancy rate of 43.7 percent and an average daily rate of
$150. A successful bed and breakfast owner plans for cash flow, hire and manage staff, strategize to maintain
maximum occupancy rates, and negotiate with contractors and suppliers.

To be successful and stand out amongst the competition, there should be something unique and attractive to
the building you plan to use. Many bed and breakfasts use a historic angle to draw guests. Often a Victorian
home can give travellers a sense of what it would be like living in the area in the late 1800s. Others may use
proximity to the waterfront or other notable features as a way to entice guests to stay there. You may have
the most beautiful, well-maintained vintage property that seems perfectly suited for bed and breakfast
conversion, but if it is in a strictly residentially zoned neighbourhood, it may be over before you begin. Like
any other part of the hospitality industry, staying at a bed and breakfast is really a luxury which is not available
to everyone. It is crucially important that B&B is located within a community that has a proven tourism track
record and a local economy that can support it.

Questions for discussions:

1. How bed and breakfast business differ from Hotels and Inns?
2. What are the personality characteristics and skills needed for the owner of bed and breakfast
venture?
3. Identify some critical success factors and potential risks for a bed and breakfast venture