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Business Trends for 2009

November 25, 2008

by Kit Cassingham

A hotel and bed and breakfast may not be the same business model, but there are enough similarities that trends can be applied from one to the other. The U.S. may have entered a recession with hotel room supplies up and demand down and to hold on you need to pay attention now.

Want to know what you're in for during the next 6-18 months? When the statisticians who look at lodging trends all the time say they don't know what to expect you know we are in for some interesting times. And I hope this use of interesting isn't like the old Chinese curse.

Here's what I'm making of what I heard during a recent presentation by Randy Smith of STR Global on hotel trends after the processing information for the bed and breakfast industry.


  • Independent properties are still profitable. B&Bs sure quality for being independent.

  • The demand is down for hotel rooms, and the supply of hotels is up and climbing. The hotel industry is in for a difficult six to eight months. I don't know if that's true for B&Bs or not, but it's a good trend to pay attention to.

  • Room and occupancy rates, and demand are down.

  • Weekday demand is rising while weekend demand is declining. That can have a big impact on you if you rely on weekend business

  • Economy hotels and mid-range hotels with dining rooms are seeing a drop in demand. That may apply to the bed and breakfast industry as well, though the jury is still about that.

  • Occupancy rates are down across the board, though luxury hotels are down the most, as of October 2008.

  • The number of hotels with a decrease in occupancy and room rates is up dramatically in the third quarter of 2008, compared to the same time 2007, and the number of hotels seeing an increase in both room and occupancy rates is down dramatically for the same time period.

  • Urban and small metro area hotels are seeing a rise in demand, which is a big change since 9/11. Resort's have seen a decrease in room and occupancy rates, and demand since 2005; that trend is continuing more noticeably.

  • The GDP (gross domestic product: one measure of national income and output and is a good indicator of the standard of living and how much money are willing to spend) is the lowest it's been in 17 years and represents the largest pullback since 1980. Consumer spending is the biggest component of the GDP so this is the biggest indicator of why demand is down and may stay that way for awhile.

  • Though room rates may rise slightly, at least temporarily, occupancy rates will probably drop below 60 percent and stay there for the next few years.

So what does all of this mean to you as B&B innkeepers -- active and aspiring? Now more than ever you need to seriously consider buying an existing B&B rather than starting from scratch, if you are an aspiring innkeeper. If you are an active innkeeper, you are better off holding your prices at their current rate to help you weather the uncertain financial times we are facing.

Focus on the value you are providing, not the room rate. Customer service is value and is your best marketing tool and great customer service is the advantage B&Bs have over hotels. Add value to what you already have and hold tight.

Consider having more than rooms to sell as a way of increasing your income potential. Multiple income streams is a wise business style I've proposed for years, and now see it as even more important. This is a great time to co-market with other businesses to create packages to make it easier for your guests to spend money with you and to improve their good time so they'll come back and tell others about you.

If you've been paying attention to my messages in the past you have a clearly defined market niche. How can you expand that notion without making it fuzzy or diluted? Figuring that out can be one secret to your success in the coming months and years. And it's good business.

The environment, with its environmental issues in the hospitality industry, can't be ignored now. Conserving resources is another aspect of solid business practices, so pay attention to what you "throw away" and save money. ECOnomicallySound.com is a resource you can use to help you improve your conservation measures, and EnvironmentallyFriendlyHotels.com is a resource for you to use to promote your green inn.

We seem to have entered some unusual times. Translate that to being more diligent about doing your homework, offering great customer service, having a solid market niche and conducting solid business practices. We're in for some interesting years.




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