How to Start a Bed and Breakfast Business: A Complete Tutorial

Do you dream of owning a bed and breakfast? You’re not the only one.

In response to increasing demand, you too could convert your private home into an inn. After all, bed and breakfast establishments make it possible to make money from home and meet new people from all walks of life.

Don’t be fooled, though – 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.

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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 business travelers and holiday-makers.

Due to lower prices of plane tickets and traditional holiday accommodation getting more expensive, bed and breakfasts are becoming a more popular choice among travelers and within the hospitality industry as a whole.

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 successful 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 payments. Bonus points if you’re also a big fan of cooking breakfast. 

Be warned, though, upkeep and maintenance of a bed and breakfast business 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.

It’s a business venture you can get started with, even if you have no relevant background as you’ll be able to learn along the way.

As a bed and breakfast owner, you can offer a more personal service when hosting guests since you won’t have hundreds of visitors to manage. This way, you can ensure that all new guests get the best hospitality possible and your prices can reflect that.

You’re likely to not make a profitable income right after your grand opening. But with the right marketing strategy, you can eventually expect to make a decent income from your bed and breakfast business.

Though the salary between bed and breakfast owners varies, based on the average income of hospitality small business owners, you can expect to make about $60,000 a year.

Regardless, opening your own bed and breakfast is easier than building a hotel with luxury amenities. Since it’s smaller in scale, management is cheaper and easier. You don’t need to spend as much on employee salaries, maintenance costs, and other expenses.

6 steps to build a bed and breakfast business

Ready to attract guests and become the next big thing in the bed and breakfast industry? Go from hospitality novice to an established bed and breakfast pro with our step-by-step guide. 

Step 1: Choose your location

Whether you want to use your home or purchase (or lease out) another property, the first thing to do is to scout your location.

Popular tourist spot or hidden getaway?

Research the local community, tourism industry, and main attractions. If it’s an in-demand area, there will probably be more guests visiting and you’ll be able to build a successful 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”. It could be just the thing to entice guests looking for a quiet getaway vacation rental.

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.

It’s worth keeping in mind that an older property can increase the total ongoing expenses to your new business – things like your overall heating bills could be higher due to insufficient insulation.

Modern or luxury inns could be a great option as well if you want to provide guests with a modern stay.

Determine the seasonality of your location

Next, determine if the location is a year-round or seasonal destination. This will help in deciding how many rooms you’ll need to have a profitable occupancy rate, the average cash flow you can expect, your lodging options, rates, and availability later on.

Inquire whether it’s permitted to open a bed and breakfast in the area, and the kind of business licenses you’ll potentially need. It’s important to research this aspect to avoid any legal issues in the future.

Understand the basics of zoning laws 

As a general rule of thumb, it’s better to pick a location that is zoned for bed and breakfast businesses than choose a strictly residential area. Seek professional advice from an attorney should you need it to navigate the local laws and business structure needed for your new business. 

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 your target market 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 property and draft a business plan 

At this point, you should have drafted a bed and breakfast business plan, opened a business bank account, and started thinking about a theme or style for your property. 

Understand the local regulations

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. While it’s perfectly possible to get started with five rooms, it might not align with what you had in mind initially. 

Map out what renovations and modifications are needed

Once you’ve secured your property and have the right permits, you can design the overall aesthetic of your business – from paint colors and wallpaper to furniture, decorations, and the type of personal interaction you want to have with your guests.

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 up-to-date to modern standards and function properly – don’t risk it with poor kitchen equipment if you’re marketing yourself as the brunch destination.

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 before you start taking direct bookings.

Settle on supplies and amenities

For room supplies, don’t skimp out: it’s worth investing in brand new bedding, bed frames, mattresses, towels, and toiletries. It’s preferable that you buy ones that are allergy-friendly to make sure most guests can stay at your vacation rental comfortably. 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.

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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.

Understand your local licenses, insurance, and permits

The documents you should acquire will vary by state, region, and country. In general, you should get a business license and general liability insurance for your bed and breakfast.

You might also have to request a compliance form or a conditional use permit to ensure that your vacation rental lot follows the zoning ordinance. But this depends on how your state or country views your business venture.

If your bed and breakfast is quite small, some countries might consider it a residential business. This means you might not be allowed to put up signage by your house to target customers walking on the streets and guide invited guests to the right place.

In other cases, like most bed and breakfast businesses, your business should be considered a commercial business, meaning there is another set of rules and regulations to comply with.

Most likely you will also need a certificate of occupancy to verify that your property is suitable for accommodation and taking reservations.

Be aware of your tax obligations

Remember to register your bed and breakfast for business tax. In the US, you must pay income tax, self-employment tax, estimated taxes, and excise tax in most cases.

If you hire staff, you must also file employment taxes. It’s worth visiting the IRS website for more information relevant to your state and city. 

Charging your guests for sales tax will also be necessary, depending on your location. It’s worth checking your country’s regulations for more information and other helpful tips on navigating your local legislation.

Health and safety above all

A key question you should be addressing is safety concerns: most importantly, you must have your bed and breakfast checked for fire and health code compliance. Depending on where you are, some inspections might provide documents to verify that your property and business follow the regulations.

Consider consulting fellow bed and breakfast owners in the local community. They might have more experience and resources regarding how they personally take care of their permits. Alternatively, contact your local government for more details on the required documents.

Remember, having the right licenses help you avoid potential legal troubles down the line.

Step 4: Calculate your room rates

The next step is to determine how much to charge per night for a room for your guests’ stay.

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. Remember to only include expenses made under a business account  – your personal expenses during the set-up process of your business shouldn’t influence your rates. 
• 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, city tax, and excise tax. Usually, the tax is added to the total charges rather than incorporated in your overall 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, or extra services like housekeeping or snacks, consider raising your rates to include these.

Once you have details of each aspect, calculate and set your room rate.

Make rough estimates on when you’ll be able to break even and start making a profit. Understanding the basics of business concepts like return on investment will help you see the bigger picture of your business finances and the overall profitability of your business. 

By understanding how much you need to make in order to cover your costs helps you find a suitable pricing strategy that keeps your business running.

For example, many lodging businesses will charge less on weekdays or off-seasons and more on the weekends or peak months. That’s because they know from experience that their room occupancy rate will be higher during peak season and they can make the best profit during weekends and holiday seasons. 

Use this strategy to attract more visitors during periods when there is less tourist traffic and avoid high fluctuations in your monthly revenue.

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 employees for tasks you can’t or don’t want to manage yourself.

This might include recruiting employees for daily operations, such as cleaning rooms, cooking, and nightly housekeeping. Additionally, you might need a bookkeeper or a front desk assistant, or someone to help you market your business online.

Keep contact information for important services, like local restaurants, plumbers, electricians, fire department, police, and car rentals at hand in your office or at the front desk, for your guests’ convenience.

It’s important to understand that you shouldn’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. Otherwise, you’ll just risk the reputation of your business.

Step 6: Promote your business to tourists and business travelers alike

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

You can list your property on platforms that focus on marketing bed and breakfasts like BnBFinder.com or consider signing up to popular websites like Airbnb and Booking.com.

It’s generally recommended to promote your property on more than one platform so that you’ll get maximum exposure.

Editor’s note 📝 – 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 section where guests can leave reviews after their stay.

You can use positive testimonials to build your social proof, and constructive feedback to improve your business.

Creating your own website

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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.

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 allow engagement with customers.

Tip – 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. If possible, use your business name in your account handle for maximum exposure. 

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.

Step 7. Scale your business

Once you’ve hit the ground running and start finding your feet in your new day-to-day, it’s time to think ahead. 

In order to keep your business profitable and growing from one year to the next, it’s important to build a strong brand that has a trustworthy reputation. 

Optimize for search 

Regardless of whether you’re using a third-party platform to accept bookings, or you do this yourself through your own website, it’s important to make sure your listings are fully optimized for maximum visibility: 

• Pay attention to the keywords you’re using in your listings and headings
• Pick high-quality pictures that showcase your property in the best light possible 
• Take the time to write attractive and persuasive descriptions of the different rooms available 

Remember that while you want to portray your bed and breakfast as the best venue in town, it’s not wise to oversell your business.

A good rule of thumb is to not make promises you can’t keep – if you don’t have staff around to help you cook dinner for a house full of guests, don’t offer the option for guests to book additional meals. 

Feedback for the win

It’s wise to set up an automated email sequence and gather guest reviews whenever possible. This way, you’ll be able to feel the pulse of your customers and can address potential problems quickly. 

Plus, you can use positive feedback in your marketing efforts as social proof of your business. 

How to start a bed and breakfast: Main things to consider

Now you know what it takes to open your very own bed and breakfast business. But it’s not all sunshine and rainbows – there are several factors you should consider first before opening your bed and breakfast business.

Privacy

When you’re initially thinking about how to start a bed and breakfast, it may seem like a real money saver to operate your business from your home.

But keep in mind that if you decide to run 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.

Time

Another important thing to consider is the time spent on your bed and breakfast business.

When you manage the business yourself, your job is to be available for each guest at all times. That means that you need to be willing 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.

Whatever your situation might be, remember that running a business means that you need to dedicate time to get things up and running, especially at the start. 

Money

Many “how to start a bed and breakfast” guides gloss over finances, even if they shouldn’t.

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 keep working 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. Thankfully, many digital marketing campaigns are cheap or free to get started with. 

Competition 

Like it or not, the hospitality industry is as competitive as it is lucrative. Chances are that you will be faced with fierce competition from other small local businesses, as well as from big multinational hotel chains. 

That’s why it’s important to take the time to study your direct and indirect competitors in your area and understand who you’re trying to attract to your new bed and breakfast. 

Think about what sets you apart from the rest: do you offer themed rooms that are hard to come by in your area? Or maybe you offer other additional services for your guests that others don’t? 

To beat the competition, it’s also worth identifying who your ideal customer is. After all, you don’t have to attract all of the tourists traveling to your town on holidays – you only need to fill your empty rooms. 

Create your bed and breakfast business plan today

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 locally 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.

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