Do you dream of owning a bed and breakfast? You’re not the only one.
In response to increasing demand, more people are converting their private property into an inn. It offers the opportunity to make money from home and meet new people from all walks of life.
Opening your own bed and breakfast is easier said than done. It takes a considerable amount of planning and elbow grease to get it up and running. But with the right strategy, you can maximize your chances of running a successful business.
We’ll explore the benefits of having a bed and breakfast business and offer a tutorial on opening one. We’ll cover all the important factors you should consider before making the jump.
Table of Contents
What are the fundamentals of a bed and breakfast business?
A bed and breakfast is a mix between a hotel and a home. As the name suggests, it provides a room and morning meal for each guest.
Due to lower prices of plane tickets and traditional holiday accommodation getting more expensive, bed and breakfasts are getting more popular among travelers.
Their key selling point is in providing a unique, local, more affordable, and personal experience that can’t be found at hotels or other styles of accommodation.
Starting a bed and breakfast is popular among people who are looking to break from a 9-to-5 routine or simply want a way to monetize their properties to cover rent or mortgage repayments.
Be warned, though, upkeep and maintenance can be expensive, particularly for older buildings. Additionally, if you want to use your own house, you must check if your local government permits you to turn your home into a business.
If you’re renting a property, you can still use it for running a bed and breakfast, just make sure to work it out with your landlord, and ensure you get any agreements in writing.
Benefits of operating a bed and breakfast business
As for benefits, owning a bed and breakfast could be perfect if you like the idea of running your own business.
Even if you have no relevant background, you’ll be able to learn along the way.
You can provide a more personal service to your guests since you won’t have hundreds of visitors to manage. This way, you can ensure that each guest gets the best hospitality possible and your prices can reflect that.
You’re likely to not make a profitable income right after the grand opening. But with the right marketing strategy, you can eventually expect to make a decent income from your property.
Though the salary between bed and breakfast owners vary, you can expect to make about $60,000 a year.
Regardless, opening your own bed and breakfast is easier than building a hotel. Since it’s smaller in scale, management is cheaper and easier. You don’t need to spend as much on hiring employees and maintaining your property.
6 steps to build a bed and breakfast business
If you want to know how to start a bed and breakfast, read the steps below.
Step 1: Choose your location
Whether you want to use your home or purchase another property, the first thing to do is to scout your location.
Research the local community, tourism industry, and main attractions. If it’s an in-demand area, there will probably be more guests visiting your bed and breakfast.
On the other hand, if the area is less popular, use that as an advantage and market your bed and breakfast as a “hidden gem” or a “secluded paradise”.
If you cannot or don’t want to use your own property, decide what kind of building you want your business to be based on. Many bed and breakfasts are located in historic houses. Modern or luxury inns could be a great option as well.
Next, determine if the location is a year-round or seasonal destination. This will help in deciding your rates and availability later on.
Inquire whether it’s permitted to open a bed and breakfast in the area. It’s important to research this aspect to avoid any legal issues in the future.
Better pick a location that is zoned for bed and breakfast businesses than choosing a strictly residential area. Seek professional advice from an attorney should you need it.
Whichever property you choose, make sure it can work with the theme of your bed and breakfast.
It could have a retro feel, a spooky character, or a Victorian atmosphere – the options are endless.
It’s always preferable to cater to a niche market so that you know exactly who to target when branding and marketing.
Once you’ve made a decision, secure your property and move on to the next step.
Step 2: Set up your bed and breakfast
First things first, find out if there are any special building regulations on establishing a bed and breakfast in the region so that you can comply with them. For instance, some regions might limit the number of guest rooms to control the size of your operation.
At this point, you should have prepared a theme or style for your property. Now you can design the overall aesthetic – from paint colors and wallpaper to furniture and decoration.
If you can, modify the layout of your rooms so that it’s helpful for receiving and serving guests.
After that, think about the improvements you can make. You might want to add facilities like a swimming pool, garden, laundry room, and parking lot.
Consider building more bedrooms to accommodate more guests. You might also want to refurbish your kitchen and bathroom so that they’re modern and function properly.
It’s a wise idea to have your overall property inspected first for any issues. This way, you’ll know what other renovations you need to make.
For room supplies, get new beds, towels, and toiletries. It’s preferable that you buy ones that are allergy-friendly. Also, always have extra stock for emergencies.
Before shopping, decide on the amenities you can provide. In most cases, it’s somewhat expected that your property has WiFi and among other basics. You can also include daily housekeeping and complimentary snacks and drinks.
If you want, offer some extra services for an additional charge. For example, you can give a guest a guided city tour or a custom themed package for certain occasions like honeymoons. Some bed and breakfasts also provide lunch and dinner meals at a cost.
Step 3: Get the required permissions
Your property is nearly ready! But before the grand opening, you must acquire the required licenses for your bed and breakfast to make it legal and official.
The documents you should acquire will vary by state, region, and county. In general, you should get a business license and insurance for your bed and breakfast.
You might also have to request a compliance form to ensure that your lot follows the zoning ordinance. But this depends on how your state or county views your business.
If your bed and breakfast is quite small, some counties might consider it a residential business. This means you might not be allowed to put up signage.
In other cases, your bed and breakfast could be considered a commercial business, which means you should comply with certain other rules.
Other than that, you will also need a certificate of occupancy to verify that your property is suitable for accommodation.
Remember to register your bed and breakfast for business taxes. In the US, you must pay income tax, self-employment tax, estimated taxes, and excise tax in most cases. If you hire employees, you must also file employment taxes.
Charging your guests for sales tax will also be necessary. Check your country’s regulations for more information on this.
A key question is safety concerns, which is why you must have your bed and breakfast checked for fire and health code compliance. Ask for a kitchen inspection as well.
Depending on where you are, some inspections might provide documents to verify that your property and business follow the regulations.
As a tip, consult fellow bed and breakfast owners in the local community. They might have more experience and resources in taking care of their permits. Alternatively, contact your local government for details on the required documents.
Remember, having the right licenses can avoid any potential legal troubles down the line.
Step 4: Calculate your room rate
The next step is to determine how much to charge per night for a room.
For this, you should take a number of factors into consideration:
- Startup costs – make sure to include the price of the renovation, mortgage or rent, and other investments you’ve made to get your business up and running.
- Monthly expenses – typically, this will cover your operational costs, such as expenditure on food, laundry, electricity, internet, water, and employees.
- Taxes – there might be certain taxes each guest needs to pay, such as sales tax and excise tax. Usually, the tax is added to the total charges rather than incorporated in your room rate.
- Location – as a good rule of thumb, accommodations in strategic locations near the city center or main attractions will cost more than ones that are situated further afield.
- Average local rate – in general, you shouldn’t charge too might higher or lower than other bed and breakfasts in your area.
- Services – if you offer luxury features that other bed and breakfasts do not provide, consider raising your room rate.
Once you have details of each aspect, calculate and set your room rate.
Make rough estimates on when you’ll be able to get as a return on investments and make profits. Find a suitable pricing strategy that keeps your business running.
Many lodging businesses will charge less on weekdays or off-seasons and more on the weekends or peak months. Use this strategy to attract more visitors during periods when there is less tourist traffic.
Step 5: Hire extra help
Though a bed and breakfast is typically a small property, that doesn’t mean you need to handle everything on your own. If necessary, look into hiring support for tasks you can’t or don’t want to manage everything yourself.
This might include recruiting employees for daily operations, such as cleaning, cooking, and nightly housekeeping. Additionally, you might need a bookkeeper or a front desk assistant.
Keep contact information for important services, like local restaurants, plumbers, electricians, fire department, police, and car rentals.
All in all, don’t hesitate to hire more people as your business grows. As the owner, you should know your own capabilities and spend more on extra help than risk getting burned out.
Step 6: Promote your business
Similar to any other business, the key to attracting potential guests is how you promote your bed and breakfast.
These days, it’s essential to use online marketing strategies since most people start the search for their trips and holidays online.
There are three main channels you can use to promote your property: third-party platforms, a website, and social media.
Joining third-party platforms
It’s generally recommended to promote your property on more than one platform so that you’ll get maximum exposure.
Depending on the platform, you might have to pay a commission fee. For instance, Booking.com charges an average of 15%, and the rate might change based on the size and type of property.
Keep fees in mind when choosing third-party platforms to advertise your business.
Not only are these sites great for promotions, but most platforms also provide a review section.
You can use positive testimonials to build your social proof, and constructive feedback to improve your business.
Creating your own website
Using third-party platforms is not enough alone to increase your business’s visibility. To help you with that, you need a website.
Having a website is helpful for those who find your property through metasearch sites and search engines.
After adding or claiming your business on a search engine like Google, you can insert a link to your website so that users can find more information.
A website is also useful if you put up online ads. After a user clicks on an advertisement, they can be redirected to your landing page, where you can convince them to come and stay at your bed and breakfast.
Creating a website enables you to have more control over the content regarding your business. For example, you might consider including a testimonial section to display your best reviews.
Most people think that creating a website is difficult and expensive. On the contrary, there are many easy-to-use platforms to make a website these days, like the Zyro Website Builder.
With Zyro, all you need is to come up with a domain name to begin. We already have a bed and breakfast template so you can publish your website in no time.
Zyro is responsive and user-friendly so that anyone can view your website from any device – perfect for prospective guests on the go.
It’s also recommended to include a reservation form and payment gateways so your visitors can book a room directly from your website.
Sharing on social media
In addition to search engines, people use social media to find business recommendations. Social media accounts won’t just increase visibility but also allows engagement with customers.
Remember to include an attractive bio, address, contact information, and a website link in all your social media accounts. Don’t forget to post pictures of your property regularly to promote your business.
Use your accounts to update your followers on events or deals at your bed and breakfast. Your followers can send you a direct message as well if they have any questions about your property. Guests can also tag your account in their posts as a way to review your business.
Though social media is beneficial for marketing, the platforms don’t have as many features you’ll need as a website or a listing on a third-party site. Thus, social media works better as a tool for public relations.
What to consider before starting a bed and breakfast?
Now you know what it takes to open this business. But there are several factors you should consider first before opening your bed and breakfast.
If you decide to make a bed and breakfast in your own house, you’ll be basically welcoming strangers into your home every day.
Even if you don’t, you might have to live in the same building as your guests if you’re managing the business yourself.
That being said, you won’t have as much privacy as you used to. You should learn how to manage your private space and personal relationships while running a bed and breakfast.
Another important thing to consider is the time spent on your bed and breakfast.
When you manage the business yourself, your job is to be available for each guest at all times. Thus, be ready to skip on certain holidays or weekends since most people travel during those periods. You might also miss certain events of your friends or family.
If you’re opening your business with other people, you should divide the work hours and responsibilities among your group. Otherwise, consider hiring assistants to help you out after the bed and breakfast business has grown.
Obviously, starting and running a bed and breakfast costs a lot of money. From startup costs, monthly expenses, taxes, employee payments, to emergency fees, the investments can add up quickly.
Although you can live off income made from your property, you must work hard to promote and maintain your business.
It’s up to you to figure out how to manage your business and finances if you have no relevant background. If you want, initiate a partnership with someone who has the right experience.
Also, maximize your marketing strategy. The investments you spend on your property will be in vain if you don’t know how to get people to come and stay at your bed and breakfast.
Running a bed and breakfast is no easy feat.
It’s a dream that a lot of people want to make a reality, and few manage to. That said, if you’re willing to put in the effort to build a comfortable inn and make each guest feel at home, this might just be the job for you.
To start this business, you need to:
- Choose your location – scout and secure a property in an area you can work with. Make sure it’s permitted to open a bed and breakfast in that location.
- Set up your bed and breakfast – design your space and renovate your property. Then decide on the services, amenities, and rules of your bed and breakfast.
- Get the required permissions – check your local government to see what documents you need to legalize your business.
- Calculate your room rate – factor in your startup costs, monthly expenses, taxes, location, local average rate, and services to determine your pricing.
- Hire extra people – evaluate your own capabilities and employ extra help if you need to. Keep important contacts for emergencies.
- Promote your business – market your property through third-party platforms, your website, and social media accounts.