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Changing Times: B&B Income Diversity and Profit

October 15, 2005

by Kit Cassingham

Determining and developing a market niche is as important in the bed and breakfast industry as corporate branding is to "the big guys". The B&B market is more competitive today than ever before and a clearly defined niche is important so potential guests can anticipate the guest experience they'll have at different properties. Differentiation is important for a bed and breakfast inn's success.

Part of owning and operating a successful business is knowing what your primary intent is, or your business focus. When the merchants along the main street of Boulder, Colorado, decided to create a pedestrian mall, they first discussed what their purpose was in forming a pedestrian mall. Initially they thought the focus was to create a merchandising center, but with further conversation they realized that they really were creating a place that was safe for people of all walks of life to come together and interact. Boulder's Pearl Street Mall is one of the most successful pedestrian malls in the country because the merchants understood what they were creating, and have been faithful to that vision during its almost thirty years of existence. Similarly, a B&B inn's purpose might not simply be "a lodging property," but rather a place to provide a fun and safe time while at the inn.

Successful innkeepers know what their purpose is and stay faithful to that purpose as they experience the same kind of success as Boulder's Mall. That said, it's also wise to have more than one income stream, or income pillar, for your business. Determine what your primary income pillar is and then consider additional income pillars that support your primary pillar and broaden the income opportunities of your property.

What is the primary focus of a B&B? Business-wise, guestrooms generally are the focus, the primary purpose, for B&B innkeepers. But don't forget that safety and a memorable time is more important to a business's success. Guestrooms have a better profit margin than just about anything else you can do with a B&B, so it makes sense they would be the "raison d'etre".

What additional activities fit with the B&B concept? There are numerous options. The innkeeper's personality, location, and dreams will help guide which additional income pillars blend with a B&B. A gift shop, meeting/special event room, additional food service, spa and affiliate programs come to mind immediately as income pillars that can be incorporated into the B&B. The opportunities are only limited by imagination, zoning/licensing, and money.

A gift shop is a natural with a B&B because travelers often want to take a gift home to friends and family, and if their guest experience has been wonderful they want to take a memento of the inn home with them; a gift shop item fits the bill. I knew an innkeeper years ago who created a guestroom's worth of income from her gift shop, which occupied a corner of her inn's kitchen. She didn't have to change the beds or clean rooms for that income; she merely treated her guests well, giving them the experience they sought, and then let them buy myriad items with the inn's logo, location and contact information printed on them as their show of appreciation for their stay at her bed and breakfast. She considered her gift shop "easy money". Sell your everyday items in the gift shop. Guests may love your soap, hand lotion, coffee mugs and other items. Let them buy them! If you have special bed linens or pillows, even have those available. The profit on such items can be lucrative.

Meeting or special event space is another great use of bed and breakfast properties. The innkeeper can use the space for guests or rent it out to others. When outside groups rent the space, the attendees are given a chance to see the property and experience the atmosphere and hospitality of the inn. Their experience may lead them to return for a getaway of their own, increasing your lodging business. The rental fee is great enough to cover the use, utilities, and wear and tear, improving the inn's bottom line. As long as the meeting space business doesn't interfere with the lodging business, it's a good income pillar to add.

Breakfast is a given at a bed and breakfast. But what about lunch and dinner? Providing food in those situations can be wonderful income pillars. There are numerous simple ways delicious meals can be prepared for overnight guests. Picnic lunches or dinners can be as simple as a bagged meal to a basketed meal. Meal inclusions should be easy to keep on hand: bottled water/soda/juice/wine, cookies, fruit, and vegetables. For the "entree" portion, consider a sandwich, quiche, pot pie, cheese and sausage, or hard boiled eggs and caviar with french bread and cheese. Just be sure to avoid the use of Styrofoam and use either durable or compostable containers, depending on the meal, the price, and whether it's bagged or basketed.

Dinners served at the inn, either in the dining room or guest's room, can range from fresh pasta to gourmet pot pie to lasagna, served with a vegetable, dessert, and beverage. You could also hire a private chef to cook meals for guests, if that's your inn's style. When I talk about providing lunch and dinner, I'm not talking about running a restaurant with a full menu, only something small that's done by prior arrangement. This is a profit center when offered like this, so don't fall into the trap of thinking this is something that should be done for your guests at cost. It's not necessary to be as gouging as some room service menus are, but it's not a cheap option either. This is an additional service being provided for guests, so consider it a viable income pillar.

A spa experience is increasingly popular with travelers. Providing this service is more complex than many, so check with a spa consultant like Health Fitness Dynamics http://www.hfdspa.com/. A spa can be open to both guests and the general public. This expands guest options for how they spend their time and may be just the excuse they need to visit a specific location and property. By making the spa open to the general public, they are given a glimpse of the B&B experience for their own use or for referral to their out-of-town guests. Either way, income potential is strengthened and expanded.

Affiliate programs aren't new to the bed and breakfast industry, though they may be known by other names. Things done under this income pillar should be considered added value to guest services. I'm not suggesting this be a "nickel-and-diming" approach to business at all -- I hate that approach to hospitality. I see the services you offer as part of the B&B experience as being included in the room rate, and the services you add to augment the B&B experience as added value that you can profit from. What services augment the B&B experience? Taking care of rentals -- bike, skis, boat, skates, jeep -- for your guests is a good example. Giving referrals to guests for balloon rides, carriage or hay rides, restaurants, flowers or plays, is another possibility (and of course, making the reservation would be a plus). Making arrangements with companies you feel good about associating with to be paid a commission for your guests' business is the key to this income pillar. These services can be promoted through packaging and joint marketing campaigns as extras for guests to take advantage of and enjoy. Since affiliate programs are an extra service consider it an income pillar.

Be sure to check with regulatory agencies regarding your ideas for income pillars so that you stay legal with your business. Will the income pillar idea be allowed in the B&Bs zoning? Zoning impacts parking, signage, utilities, and safety. Does the inn's license allow that activity? Is it possible to get zoning and licensing expanded to allow for additional income sources beyond the typical bed and breakfast concept?

By having multiple income pillars, income potential is broadened, helping the innkeeper thrive in good and bad times. It's good business to have income diversity.




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