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How to Start a Bed and Breakfast If you're thinking of turning your home into an inn, start here to learn about pricing, costs, employees and more.

A romantic room for two in a historic home, aglow with the patina of lovingly restored antiques, the luster of fine china, and the sparkle of silver. A fire crackles in the hearth and the rich scents of fresh coffee and homemade cinnamon rolls waft up from the kitchen. It's the picture most people conjure when they consider a stay at a bed and breakfast. And it's an accurate portrait.

But not the only one. Bed and breakfasts are lodging with a twist. They're typically found in historic homes, from Revolution-era townhouses to Queen Anne mansions to Craftsman bungalows. But B&Bs also occupy such nontraditional buildings as colonial taverns, Gay '90s schoolhouses, Roaring '20s banks, Victorian lighthouses and a panoply of other structures steeped in history and romance. And you'll also discover wonderful B&Bs in modern Manhattan high-rises, on working dairy farms and cattle ranches, and in many a new home perched beside a river, lake or the sea.

Best of Both Worlds
What exactly is a bed and breakfast? It's a sort of hybrid between a luxury hotel and a private home, embodying the best of both worlds. A B&B is generally a small establishment with four to 10 guest rooms instead of the 50 to 100 or more found at most hotels. The owners live on-site and interact with travelers as if they were invited guests rather than anonymous temporary room numbers. And guests are treated to lost of little deluxe touches like chocolates on their pillows, turn-down service, and baskets of bath and beauty products set out on Jacuzzi tubs.

And, of course, there's the "breakfast" in bed and breakfast, a sumptuous home-cooked repast that comes with the price of the room and is served each morning in a communal dining room or in the guest's own quarters. B&Bs also tend to feature frosty glasses of iced tea or lemonade on the porch on hot summer afternoons; cups of cocoa after sleigh rides on wintry afternoons; plates of cookies in the kitchen; and wine and cheese in the parlor on dusky evenings--all a part of the room rate.

No wonder bed and breakfasts are so popular.and becoming more so all the time. According to the Santa Barbara, California-based Professional Association of Innkeepers International (PAII), in 1980 there were a relative handful of B&Bs/country inns--1,000 properties that hosted 1 million guests. At the latest count, at the turn of the millennium, that figure had swelled to 28,000 properties hosting 50.5 million guests.

Average occupancy, or number of rooms filled on a daily basis, according to PAII, has skyrocketed along with the number of available properties, increasing from 45 to 50 percent in a recent four-year period. And room prices have also increased, going from $103 to $121 in the same four-year stretch.

The Profit Factor
Whether you want to start a B&B to escape the rat race, to supplement your income, to create a business out of a historic home that you love, or to indulge your love of being a host or hostess, you'll want to know the profit factor. What revenues can you expect as a bed and breakfast host?

The answer varies a great deal, depending on the number of guest rooms in your B&B, the seasonal (or not) nature of your locale, the length of time you're in operation, how creatively you promote your business, and how hard you want to work.

Keep in mind, however, that the bed and breakfast is not a high-income industry. "This is not a business you go into to make a lot of money," cautions Nancy Sandstrom, a former lecturer on B&B startups and now in her sixth year as an innkeeper. "You can make a profit, and many of your personal expenses are semi-covered. But it's a lifestyle decision. You'll make your real profit when you sell."

The more guest rooms you have, the more gross income you'll earn. Which makes sense--two rooms at $100 each is $200 per day, while 10 rooms at the same rate at full occupancy brings in $1,000 per day. Which is great. But it also follows that the more rooms you have, the more expenses and the more work you have as well.

Also, note that we've used the term "at full occupancy." No innkeeper expects year-round total occupancy unless a series of major conventions, the Olympic Games and a royal coronation are all occurring in town on each other's figurative heels.

However, it doesn't all have to be doom and gloom. Not all bed and breakfasts are seasonal ones. And even if yours is, there are things you can do to generate off-season traffic, like inventing reasons for guests to visit other than beachcombing or skiing. The seaside B&B might host a Victorian Christmas weekend to bring those summer people in during winter, for example, while the ski resort B&B might feature a "Murder Among the Pines" mystery weekend to attract tourists during summer.

Startup Cash

No matter what your profit potential is, you won't have any earning to count until your B&B is ready to take in guests. And getting up and running takes bread. While you can make do with the extra set of Little Mermaid sheets from your daughter's trundle bed for visiting family and friends, you'll need to buy brand-new bedding for your B&B guests, along with new mattresses, pillows, towels and more. And even if you run your operation from your existing home instead of buying a fixer, local laws may require you to install new kitchen equipment or fixtures, upgrade the pool to public standards, or add fire safety fixtures.

Just how much you spend will depend on your particular B&B. Obviously, the fewer guest rooms you have, the fewer mattresses, pillows, towels, and the like that you'll have to buy. Also, you'll spend far less updating your existing home with plenty of guest rooms than if you buy a dilapidated relic that was condemned 20 years earlier.

But while it's impossible to put a price tag on the property you'll transform into an inn, it's possible to ballpark renovation and furnishing costs. A good rule of thumb is $35,000 to $50,000 per guest room for larger properties and $20,000 to $40,000 for very small or low-cost operations, suggests Jerry Phillips, executive director of PAII.

Typical Markets
There's a lot more to transforming your dream of a B&B into reality than just choosing designer towels for the bathrooms. First comes replacing fantasy with the hardcore planning stage, and that includes researching the type of guests you can attract and planning how you'll woo them.

Take a look at the following typical target markets. If you can pull in two, or several, that's great. But you'll need to attract at least one--or get creative and come up with something else that will bring ample visitors.

  • Tourists. The quintessential vacationers, these are the people who are out for a good time. Visiting amusement parks, national parks and museums, beachcombing, boating, skiing, sightseeing and, of course, shopping are their modus operandi. If you're close to any sort of natural or man-made attraction that brings people in, you've got a great market. The tourist market can be extremely seasonal, depending on your location.
  • Business travelers. Whether traveling salespeople or company presidents, business trippers account for a lot of lodging stays. At most recent count, says the Travel Industry Association of America (TIAA), 212 million business trips were taken in a single year, and more and more business travelers are opting for the joys of the B&B over the impersonality of a hotel. If you'll be in an urban locale, business travelers could be a terrific market for you. But you don't have to be based in New York City or Chicago to attract the commercial trade. Many small towns and suburbs boast one or two large corporations that generate a lot of income--and a fair amount of business travel. As an added bonus, business travel, unlike the tourist trade, isn't seasonal.
  • Romance. Everyone loves a romantic getaway, and the B&B is its epitome. It's a sizable market--nearly 62 Americans, or 31 percent of all adults, splurged on a romantic weekend or longer in a recently surveyed year, says the TIA. The average traveler, it adds, revved up with two-and-a-half romantic trips during the same year.
  • College or university. If you're located in a college town, you've got a built-in market, at least during certain times of the year. Football games, homecomings and graduations, not to mention new student orientations and parents' weekends, conferences and other academic or public events can bring visitors in droves. And since many college towns are also small towns with little lodging competition, this market could be yours in which to shine. Keep in mind that your business will be seasonal unless you can augment it with another target market.
  • Locals' extra bedroom. You might think people who already live in your town wouldn't be interested in your B&B. But you can develop a tidy additional market by promoting yourself to locals as "your extra bedrooms." Somebody is always having a wedding, family reunion or other event for which they invite lots of out-of-town visitors, and then have nowhere to put them up. You can fill the gap.

Are You Zoned for a B&B?

Besides a fictitious business license, which legalizes your business name, you'll also need to apply for a number of other city or county licenses and permits. First up is a business license. The license fee is nominal and so is the paperwork. Where thing can get sticky is that, once you've applied for the business license, the city checks how you fit into its zoning and parking ordinances.

Which brings us to the all-important issue of zoning. Zoning ordinances vary tremendously from one locale to another, and are typically regulated by the city or county planning commission or planning board. Some municipalities, operating under the quirky assumption that boarding houses and tourist homes are still common, will consider a homestay (a tiny B&B that's used for supplemental income and usually doesn't advertise) or smaller B&B a residential business and let it go at that. Others feel that any bed and breakfast is a commercial enterprise that belongs in a business district. Still others, unfamiliar with the B&B concept, decide on a case-by-case basis.

What's Inside

Some municipalities include other issues besides location in their zoning ordinances. Some limit the number of days guests can stay per visit--typically seven or 14 days--as a means of insuring that hey remain short-term guests instead of long-term tenants. Some cities limit the number of guest rooms allowed in a residential neighborhood. Some prohibit cooking facilities in guest rooms, which means no kitchenettes allowed.

If your B&B is located in a business district, you'll probably pass with flying colors. But if your neighborhood isn't zoned for a bed and breakfast, you'll have to apply for a variance or a conditional use permit.

This generally means you appear before the planning commission as a star in your very own courtroom drama. You explain how your business will operate and why it won't change or harm the tenor of the neighborhood. If your town is B&B-oriented, with a number of bed and breakfasts already in operation, you shouldn't meet with much opposition. But if you'll be a pioneer, you may also need to explain how bed and breakfasts actually improve neighborhoods.

Riding shotgun with the question of zoning are parking and signage issues. Most cities stipulate that businesses allow adequate off-street parking for a set number of cars, typically one space for each guest room. They'll also want extras paces for your family vehicles. Depending on your specific location, you may be able to get around this by suggesting that guest can park in nearby public lots or in business parking lots or on the street after hours.

As for signage, you may not be allowed to post any sign at all if you're in a residential area. Which is fine if you'll go the homestay route and/or don't want any walk-in traffic. But if you're planning an inn0sized operation that will attract passersby, you'll have a hard time making your presence known.

Even in business districts, some municipalities can get sticky about signage. They may insist that your sign be placed a set distance back from the curb or be placed only directly on your building. For most B&Bs, which prefer discreet, low-key signage anyway, this isn't a problem. But it is a matter you should check into before you have a sign made.

What to Charge

Your room rates will depend on several factors:

  • The amenities you offer. You can provide luxury features like whirlpool tubs, fireplaces, king-size beds or private balconies, or more common features like a swimming pool.
  • Your location. A bed and breakfast tucked off the beaten track where tourists or business people don't often tread won't be able to charge as much as one in a popular tourist and/or business destination. Your location within your community can make a difference as well. In a beach town, for instance, a beachfront B&B can command higher rates than one that's a mile, or even two blocks, off the sea. An inn in the heart of a popular historic district can demand higher rates than one on the highway leading into town.
  • The going rates in your region. No matter how upscale your amenities or how desirable your location, your rates will have to be in line with other B&Bs and lodgings in your area. If you charge significantly more, you'll lose business and--perhaps surprisingly--if you charge significantly less, you'll also lose. (People will think there's something wrong with your inn and won't try you out.)

So where exactly do you start? Go back to your market research. Take a look at the rates charged by everybody in your town, from budget motels to luxury hotels to, of course, other bed and breakfasts. Then decide where you fit into the lodging hierarchy. If you're a simple homestay, offering a family atmosphere but not a lot of frills, you might want to price your rooms comparably with an upper-range motel or similar B&B. If, on the other hand, you've got luxury amenities and an elegant ambience, you might price your rooms to match those of luxury hotels or upscale bed and breakfasts.

Keep in mind that you probably won't charge the same room rates all year, or even all season. Most lodgings, from the humblest motel to the mightiest hotel, vary their prices with the season. This is especially true in very seasonal areas.

Room rates can also vary by the day of the week. Inns and hotels often offer midweek stays at discounted rates during slower seasons. This is smart--if your area is not highly traveled by vacationers at certain times of the year, the guests you do attract will tend to be weekend-getawayers. A three-night midweek stay for less than the price of a two-night weekend can encourage guests to call in sick, come on down, and fill in your week's calendar.

Hiring Employees

Just when you'll need assistance depends on your energy level, the size of your operation and your occupancy rate. But when exactly does the time come? "Probably your first day," advises Pat Hardy of the Professional Association of Innkeepers International. "No matter how many rooms you have, you need not be the room cleaner. As soon as you're the room cleaner and don't have time to do marketing and to spend with guests, you begin to see a slide and deal with burnout."

Everybody, Hardy says, needs to build some sort of relief into their business plan, whether it's an inn-sitter who takes over temporarily to give you a couple weeks off or a high-school student who comes in to clean on weekends. "Innkeeping is a job that should not be 24/7, or you can't be fresh."

Thirty to 40 percent of all innkeepers don't employ any sort of staff, Hardy explains. If you're a small operation, you may be able to work solo, but at five to six rooms, you must look at employing a staff.

While cleaning help is often the first task for which you turn for help, it's certainly not the only one. If you're a clean machine who enjoys the cardiovascular crunch of whizzing around with a vacuum, dust rage and sponge, but you hate number-crunching with a passion, you might find your employee dollars are better spent hiring a bookkeeper than a chambermaid. If you can command higher room revenues by sharing your expertise with your customers over a leisurely breakfast than rushing back and forth from the kitchen, then you might find it wise to hire a cook or kitchen helper.

Or go for a stellar multitasker who can pitch in and lend a hand with everything, as Bruce and Judy Albert in Seaside, Florida, have done. "The people who work for us are multi-talented, from washing dishes, serving breakfast, cleaning rooms, answering the phone and taking reservations to gardening and greeting and checking guests in and out," they explain. "They wear so many hats that it takes a special person."


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