Articles & Industry Studies

A Primer for Aspiring Innkeepers
Bed and Breakfast
David Caples
March/April 1995

When Bob (the innkeeper) Newhart awoke in the last episode of his famous TV show, he found the Stratford Inn, its funky staff and the curious guests to be nothing but a dream! Lucky for him, as it turned out, and maybe a caution to other would-be innkeepers.

Innkeeping of small bed-and-breakfasts and country inns has reshaped itself significantly over the last 30 years of growth in the United States. Guests, who in the early days accepted the idiosyncrasies of small inns as and adventure, now expect more gracious or upscale accommodations and value for the dollar. To meet these demands, innkeepers have had to sharpen their management, leadership and marketing tools.

Augmenting the above, the B&B industry has blossomed and is having an interesting tail-wagging effect on the lodging marketplace. Early innkeeper pioneers of the ‘60s and ‘70s had a wide-open field with plenty of demand and little supply. In 1980, it is estimated that there were between 5,000 and 6,000 inns domestically. The U.S. Travel Data Center, in a study published in 1991, projects that the industry has grown geometrically to more than 20,000 properties. Within its own ranks, the choices of guests are so varied that the start-up and operation of an inn cannot be taken lightly.

The quiet pressure from the rest of the lodging industry also is interesting. Industry giants such as Marriot (Courtyard) are visibly downsizing the number of rooms at their properties, suite (inn-style) facilities have swept the industry with success, chain operations now regularly offer a complimentary breakfast, and resorts now have a "bed-and-breakfast" package in their marketing arsenal. This is no longer a hobby or second investment opportunity...this is a hardball, entrepreneurial business.

The new innkeeper in the business is going to require an "unfair advantage" to compete successfully. A career change to innkeeping carries a double indemnity in that it not only involves a change, but also demands a sizable investment of personal savings. To gain this advantage, there are several steps that prospective innkeepers can take.

1. Ask yourself "why?"

Do you want to escape the corporate hassle, stress and pressure of deadlines? Be the boss and let someone else do the hands-on? Improve your financial condition? Create an opportunity for you and your spouse to work together?

Well, innkeeping may not be the panacea. The personal commitment is beyond what most individuals expect. It’s a hand-on, roll-up-your-sleeves, physically demanding job that often doesn’t provide minimum wage for the owner in profits. And there’s stress in "them thar cute little inns" that will put a marriage or a professional deal maker’s psyche to the test. Remember, there’s no personnel department, no marketing department, purchasing agent or bookkeeper --except you!

What to do: Visit and stay in inns. Talk to innkeepers. See if you can arrange a short apprenticeship to see what it is like. Ask other couples who work together for advice about how to divide job responsibility.

2. Why would anyone want to stay with me?

The inn of our dreams (and Bob Newhart's also) is often perfect in our minds. But putting it on paper and eventually opening the door can be a different animal altogether. What you like, and what may keep a guest interested for more than one evening, can be very distant relatives.

The success of the product you create will be 70 percent you and your staff and 30 percent facility. That’s what the big guys are starting to learn.

What to do: Try to answer the question. if you feel as if you are stretching the answer, start over again. Review competitive properties in current bed-and-breakfast guides, Sunday travel-section ads in newspapers, and your own travel experiences. How do your ideas stack up?

3. Will this endeavor meet my financial goals?

Behind many a small inn's success story is a second income stream. (Don't quit your day job.) Many existing inns were purchased for prices above their ability to service the debt. Some start-ups (especially when renovations are required) drain the new innkeepers'; resources to the point that there are no operating funds to market the inn once it is open.

What to do: Initiate considerable research on the geographical area, your site and the building for your potential inn. This, along with a competitive review, supply-and demand analysis and pro-forma projections are basic steps in creating a business plan for your investment.

Members of SCORE (Service Corps of Retired Executives), working with the Small Business Administration, industry consultants or a recognized B&B seminar can assist with the preparation of a plan.

To support a couple, a minimum-size inn needs 10 rooms. Plan on having equity resources of 25 percent of the project cost and operating capital to cover negative cash flow that my exist during start up.

If you are purchasing an existing (operating) inn, due diligence should be exercised to confirm revenue, expense and occupancy data provided by the seller. Assistance should be secured to properly evaluate the inn based upon the income it generates. The asking price for some inns the author has reviewed has no justification. They wait, hoping you will be the next future innkeeper to buy with his heart instead of his calculator.

David Caples is an innkeeper, lodging-industry consultant, real-estate broker and creator of the seminar and apprentice program "How to Acquire and Start Up a Bed & Breakfast." A graduate of the master's program at Cornell Hotel School, Mr. Caples has managed a Sheraton Inn and Conference Center, a five-room B&B, created a resort-management company and currently operates the 25-room Elizabeth Pointe Lodge on Amelia Island, FL. He may be reached at (904) 321-2720.