Ever wonder what the differences are between a Bed & Breakfast, Inn, Boutique Hotel, Hotel, and Airbnb? The following definitions attempt to differentiate between the various types of lodging options available to today’s traveler. Keep in mind that in the current competitive lodging environment, the distinctions may not always hold true and that the different terms often reference a property’s size, service, and staffing rather than municipal or formal legal definitions.
Bed and Breakfast: Small-scale properties, five-to-ten guest rooms, emphasizing a high degree of personal touches that provide guests with an “at home” feeling. Guest rooms tend to be individually decorated and may not include some amenities such as minibars or in-room safes found in traditional hotel rooms. Usually owner-operated, with a common room or parlor where guests and operators can interact during the evening and breakfast hours. A continental or full, hot breakfast is served and is included in the room rate. No on-site restaurant. Licensed for commercial use. Typically, but not always, owner-operator lives on-site. The average bed and breakfast has eight guest rooms and derives 90% or more of its revenue from lodging.
Boutique Hotel: A small hotel which typically has between 10 and 100 rooms in unique settings with upscale accommodations and individualized unique selling points. It may or not offer all of the services typically found in a traditional hotel. The primary difference between a hotel and a boutique hotel is that no two boutique hotels are alike. Unlike traditional hotels that are usually chains. Because boutique hotels are smaller than traditional hotels, the focus of the boutique hotel is more intimate and reflective of its location. Operated by a general manager and staff. Typically limited food and beverage; no on-site restaurant.
Hotel: A commercial establishment providing lodging, meals and other guest services for travelers. According to the American Lodging & Hotel Association’s 2015 Trends Report, there were more than 53,000 hotel properties in the US. The average size was 92 rooms. Operated by a general manager and staff. Typically has on-site food outlets. Offers customary amenities including parking, room service, 24-hour front desk, in-room coffee maker, wake-up service, mini-bar, valet, meeting rooms, business center, etc.
Inn: Similar in definition to a bed and breakfast, inns are usually larger in scale, ten-to-twenty-five guest rooms, with spacious public areas and a dining facility that serves at least breakfast and dinner. Owner-operators are complemented by a small staff. Licensed for commercial use. Owner-operator may live on-site. The average inn derives 50% of its revenue from lodging and 50% from food & beverage and event sales.
Airbnb: A spare room or sometimes an entire apartment or home made available to guests for overnight stays. Typically, the dwelling is owner-occupied. Owner is not obligated to perform host duties. No, or limited, food service. Not zoned or licensed as a commercial facility. 100% of the revenue is derived from lodging. The peer-to-peer reservation service is known as Airbnb and has over 6,000,000 listings worldwide.
In sum, in today’s competitive lodging environment, frequently there are no definitive differences and the terms are often interchangeable. The various lodging terms used in a property’s name may reference a property’s size, service or staffing and are frequently driven by attempts to brand a property and market it to a particular guest segment.
Whether your business is a rustic retreat or a high-end bed and breakfast, this Business Plan Outline for Bed and Breakfasts, Inns, and other lodging businesses will help you write a business plan that will start you on the road to business success.
- Cover Letter: State the concept/objectives/conclusions of feasibility study/proposed plan of action. This is the request for review of the business plan and financing of the project.
- Market Analysis: Where will the project be located? Collect area economic data, past/present/future. What is the health of the market/destination?
- Business Description: Proposed or existing lodging property? How will the inn be differentiated from other lodgings in the area? Answer the question “Why would anyone stay with me?”
- Site/size Analysis: Describe the attributes of the location. Determine the size that fits your economic and lifestyle goals.
- Competitive Analysis: Refine #3 to focus on your competitors/determine the number of competitive rooms/rates/occupancies/contribution of market segments.
- Supply & Demand Analysis: Calculate area wide occupancy & average daily rate (ADR). Determine market segments & your objectives. Forecast future room requirements/market effect of adding new rooms. Estimate your inn’s occupancy & ADR by month for the 1st, 2nd, and 3rd years of operation.
- Pro-forma Operating Statement: Produce sample for stable 3rd year of operation.
- 1-5 Year Pro-forma: Show conservative, intermediate, and optimistic projections of your inn’s revenue and expenses.
- Pro-forma Cash Flow: Calculate the initial 24 months of operations (or until the inn breaks even) by month to reflect cash flow requirements.
- Marketing Plan: Develop marketing positioning, strategy, and tactics for pre-opening and start-up years. Determine a budget and include in cash flow requirements.
- Management Background: Include principals’ curriculum vitae.
- Loan Request: Single page/define project needs/total project cost/terms desired.
More employed Boomers will use all or most of their vacation time in 2018. Boomers feel it isn’t important to stay connected to work on vacation, compared to Milennials & GenXers.
Millennials GenX Boomers
34% 46% 61%
Source: AARP Travel Research: 2018 Travel Trends 11/2017
Boomers plan to spend an average of almost $6,000 on leisure travel in 2018 and 89% say this is the same amount or more than they spent in 2017.
Source: AARP Travel Research: 2018 Travel Trends 11/2017
According to 2018 Travel Trends, recently published by AARP Research, Baby Boomers (ages 51 -69) are more motivated to travel to relax and rejuvenate and get away from everyday life than in 2017. Fewer report having any barriers to travel in 2018 (20% report no barriers compared to 12% in 2017).
Relax/Rejuvinate Get away from everyday life
38% vs 49% 39% vs 47%
2017 2018 2017 2018
Source: AARP Travel Research: 2018 Travel Trends 11/2017
Key industry terms you should be familiar with when considering the purchase of a lodging property.
- Occupancy Rate. Number of room nights sold divided by total number of room nights available during the period being measured. Often expressed on an annual basis. 365 nights X number of rooms = availability. Number of nights sold / availability = occupancy rate.
- Average Daily Rate(commonly referred to as ADR). A statistical unit often used in the lodging industry. The number represents the average rental income per paid occupied room in a given time period. ADR along with the property’s occupancy are the foundations for the property’s financial performance.
- RevPar. Revenue per available room. (RevPAR) is a performance metric calculated by multiplying an inn’s average daily room rate (ADR) by its occupancy rate. It may also be calculated by dividing an inn’s total room revenue by the total number of available rooms in the period being measured.
- Yield. Refers to a variable pricing strategy, based on understanding, anticipating and influencing guest behavior in order to maximize revenue or profits from a fixed, time-limited resource (such as airline seats, cruise ship cabins or inn room reservations).
- Rack Rate. The standard room rate established by the innkeeper for a certain type of room. Usually the
undiscounted published room rate.
In spite of historical denials by company officials, in recent years Airbnb has started making an effort to placate local civic officials and soothe complaints. In March, the company settled a lawsuit it had filed against a tough San Francisco law by agreeing to help register hosts on behalf of the city. In Berlin, GR, the company has lobbied legislators to revise a law that makes it difficult for residents to rent out homes.
One of the company’s biggest concessions to date has been the voluntary curbing of its most prolific hosts, which according to the firm, represents a small slice of its revenue. Central Paris joins London and Amsterdam as the most recent example of a city where caps apply on the number of nights a year hosts can rent out dwellings. In London, where it has applied a citywide cap, the company says that so far their effort has pared listings. The number of rentals that go over the city’s 90-day-a-year limit has declined from 21% of rentals before the rule to 7% this year. The rentals still over the limit include apartments with special authorization and those that went over the limit before the cap was applied, according to Airbnb.
Despite the company’s newly imposed 120-night curbs on nightly rentals, Parisian government officials dismissed the move as insufficient saying they believe the company should pay more income tax in the country. In December a new law (which Airbnb lobbied against) will require Parisians renting out their primary residences through companies like Airbnb to register with the city and post registration numbers on listings. Owners that don’t register or go beyond the legal limit face hefty fines of up to $58,600. Source: Wall Street Journal. Section B: “Paris Authorities Give Airbnb Plan Chilly Reception” Wednesday, November 15, 2017
A sampling of recent articles and mentions of bed & breakfasts in popular lifestyle magazines around the country. It’s the sort of marketing a small businesses can’t possibly afford!
Andrew Harper Travel (1,200,000 readership) Inn at Newport Ranch, Fort Bragg, CA www.theinnatnewportranch.com
The Swag, Waynesville, NC www.theswag.com
Singlethread Farms, Heraldsburg, CA www.singlethreatfarms.com
Travel & Leisure (953,484 circulation) 86 Cannon, the Poinsette House, Charleston, SC www.86Cannon.com Wentworth House, Charleston, SC www.wentworthmansion.com
Veranda (473,645 circulation) 86 Cannon.com, Charleston, SC
Southern Living (15,211,000 readership) The James Lee House, Memphis, TN jamesleehouse.com
The Herlong Mansion, Micanopy, FL herlonginn.com
Our State (160,000+ circulation) The Sunset Inn, Sunset Beach, NC thesunsetinn.net
The Local Palate (circulation unavailable) The Anchorage 1770 Inn, Beaufort, SC anchorage1770.com
Travel & Leisure (969,266 circulation) Foxfire Mountain House, Woodstock, NY foxfiremountainhouse.com
Rivertown Lodge, Hudson, NY rivertownlodge.com, Le Vieux Logis, Tremolat, FR vieux-logis.com
Yankee (2,000,000 readership) Ocean House, Watch Hill, RI oceanhouseri.com
Inn@Stonington, Stonington Borough, CT innatstonington.com
Blue, The Inn on the Beach, Plum Island, Newberry, MA www.blueinn.com
Coastal Living(4,278,000 readership) Staffords Bay View Inn, Petosky, MI staffords.com/bay-view-inn
Cottonwood Inn B&B, Empire Beach, MI thecottonwoodinn.com
Brewery Gulch Inn, Mendocino, CA brewerygulchinn.com
Texas Monthly (2,100,000 readership) BlissWood B&B Ranch, Cat Springs, TX blisswood.net
Belle Oaks Inn, Gonzales, TX belleoaksinn.com
Dofflemyer Hotel, San Saba, TX dofflemyerhotel.com
The Inn at Chachalaca Bend, Los Fresnos, TX chachalaca.com
Rancho Pillow, Roundtop, TX ranchopillow.com
Charleston (140,000 readership) The Kehoe House, Savannah, GA kehoehouse.com
Cotton Sail Hotel, Savannah, GA thecottonsail.com
Midwest (950,000 circulation)
Sunset (4,536,000 readership) Willows-Witt Ranch, Ashland, OR willowwittranch.com
McGully House Inn, Jacksonville, OR countryhouseinnsjacksonville.com
300,000 travelers cast ballots in Conde Nast Traveler’s 30th annual Reader’s Choice Awards declaring a passion for the authentic, the personalized and the unexpected. (Sound like a typical inn experience?) In the “Top 10 Resorts Overall” category, 9-out-of-10 of the winners are small properties with fewer than 50 accommodations each. Congratulations to the winners!
Regionally, small hotels and inns placed first in New England – Hidden Pond, Kennebunkport, ME ▪ New York & the Mid-Atlantic – The Inn at Perry Cabin, St. Michaels MD ▪ South – The Lodge on Little Saint Simons Island, Saint Simons Island, GA ▪ Colorado – The Ranch at Emerald Valley, CO ▪ Northern California – Rosewood CordeValle, San Martin, CA ▪ Southern California – L’Horizon Resort & Spa, Palm Springs, CA
2016 marked the 8th year of continuous growth for the lodging industry in the U.S. It appears that despite the threat presented by airbnb and the short-term rental market, the hurricanes and wildfires that plagued much of the east coast and northern California respectively, 2017’s performance will top that of last year making 2017 the 9th year of continuous growth for the industry. The American Hotel and Lodging Association reports the following lodging industry results for 2015 – 2017 year-to-date. Source: Smith Travel Research, Pricewaterhouse, Coopers.
On a recent flight from New York City, seated between two “road warriors”, I was entertained by stories of leisure, adventure and relaxation while on the road for business travel. One seat-mate talked of her four-days in NYC─ one of which was for business and three were spent wandering the museums, shopping and seeing Andrew Lloyd Webber classics on Broadway. My other new acquaintance mentioned that he had devoted half of his recent trip to company headquarters in Denver to summiting Long’s Peak, thus completing seven of Colorado’s fifty-eight 14ers. Once unthinkable, these days, mixing business with pleasure (bleasure) appears to be the norm. According to a recent survey of Booking.com members, “49% of business travelers already extend their business trips to further enjoy the destination“. And a recent survey of Founder’s Card members showed that 81% of entrepreneurs participate in bleisure trips.
A recent study profiling the American bleisure traveler, conducted by Expedia Media Solutions and Luth Research, concluded that bleisure trips tend to blend 2-3 business nights with an equal or greater number of leisure days making bleisure trips much longer than typical business trips. Making the decision to extend a business trip into bleisure travel is most heavily influenced by three factors: an exciting destination, the costs to extend the trip and how close the trip is to the weekend. What makes for an exciting destination? Study respondents cited sightseeing opportunities and events, beaches, food/restaurants, weather and museums/art scene as the top five attractions when considering bleisure travel. The path to booking is a short one – typically 1 -4 weeks out.
Three key takeaways to attract bleisure travelers are: 1. Prioritize featuring attractions and events on your website and in marketing campaigns 2. With short path to purchase provide a clear call to action 3. Consider strategic OTA partnerships to capture bleisure traveler early during research phase of trip planning.
Airbandb spent at least $5 million lobbying state governments last year, up from an estimated $800,000 in 2015, according to data from the National Institute on Money in State Politics. Hotel Industry associations (including American Hotel & Lodging Association), hotel unions and corporations spent at least $2.8 million on state government lobbying last year, but not on just the short-term rental issue. Airbandb has also poured significant resources into lobbying cities that are considering new restrictions on short-term rentals. In Los Angles, Airbanb has spent nearly $1.9 million on lobbying compared with about $288,000 for a coalition of hotel industry groups, labor unions and other groups.
Airbnb’s growth has slowed over the last year as some major markets have addressed short-term rentals, and its big spending has had mixed results. In 2015, the company successfully lobbied against a voter initiative in San Francisco that would have restricted short-term rentals, outspending opponents 16 to 1. Read the full article in the Wall Street Journal, Section B: “Business News”, Monday, October 2, 2017.
A trio of renovated, one-of-a-kind retreats offers interiors, cuisine and activities distinct to each setting. The 11-room Suttle Lodge, located in central Oregon’s Deschutes National Forest, boasts timber-clad cabins, as well as snowshoeing and ski biking. The boathouse menu favors hearty vegetable chowders. www.thesuttlelodge.com
Scribner’s Catskill Lodge, built in upstate New York in 1966, this updated inn now features vintage-chic interiors, a lineup of nature hikes and cider tastings, Alpine-inspired dishes and panoramic views of the Catskill Mountains. www.scribnerslodge.com
Atop a 5,000-foot mountain and bounded by the Great Smoky Mountains National Park The Swag offers rustic-luxe accommodations, guided hikes led by authors and naturalists, evening sing-a-longs accompanied by a player piano and gourmet picnics featuring locally grown and sourced foods atop Gooseberry Knob. www.theswag.com
Donald Trump scored his 10-guest room B&B (rooms start at $270), in Virginia’s wine country south of Charlottesville, for pennies on the dollar. After first purchasing 217 acres surrounding Albermarle House, former home of John and Patricia Kluge, for less than $500,000 in January 2011, Trump purchases the 776-acre Kluge vineyard for $6.2 million, plus $1.7 million in equipment and inventory in May of the same year. In October 2012, Trump finally buys Albermarle House on 22 acres for $6.7 million dollars. Advantaged by recently relaxed local lodging bylaws, Trump opens Albermarle Estate as a bed and breakfast in May 2015. www.trumphotels.com
Expedia Inc. and Priceline Group Inc. have joined Airbandb Inc. by boosting their inventory of home rental options that can be booked similarly to a hotel or bed and breakfast with just a few clicks. According to data from travel industry research group, Phocus-wright, the U.S. home-rental market is about 20% the size of the hotel market based on revenue but it has been growing faster than hotels since 2015. Revenue in the home-rental market, homes or rooms rented out on a short-term basis – grew 11% in 2016 and is projected to grow 8% this year to more than$34 million. The U.S. hotel industry grew 5% last year to $151 billion and is projected to do the same this year. Airbandb remains the dominate online player with 15% of global room nights in private accommodations in 2016, compared with Expedia’s 12% and 9% for Priceline according to Susquehanna International Group. www.nclakecottage.com
Veteran hotelier and night-life impresario, Ian Schrager positions new hotel as industry’s answer to upstart Air BnB. Enter the Public, a full service, 300+/-room hotel that opened this summer on Manhattan’s Lower East Side, and it quickly becomes apparent that certain features are nowhere in sight. The lobby has no front desk staff, no reservationists, no concierge, no baggage attendant. Guests check in via a series of self-service tablets where they find their reservations, create their own room keys and proceed up an elevator to their rooms. Have a question? A small, roving band of jack-of-all-trades staffers known as “public advisors” is there to help.
These cost-cutting efficiencies are all part of an attempt by Schrager to fight back against Airbnb Inc. on behalf of the lodging industry. In Schrager’s view “Airbnb is a mortal threat to the U.S. hotel industry. The only way you can compete with a strong idea is by having another strong idea.” Mr. Schrager’s aim is to compete with Airbnb on nightly rates (starting at $150) and offer superior amenities like bars and other places for guests to gather and socialize. The full article appeared in the Wall Street Journal, Section B: “Business News”, Monday, September 18, 2017. www.publichotels.com.
A new generation of American Innkeepers has raised the bar on the classic B&B with chic lodgings centered on a cozy tavern. Check out three such recently opened inns.
WM Farmer & Sons. Hudson, NY W. Kirby Farmer and Kristan Keck’s 10-room boarding house in upstate New York features rooms wrapped in reclaimed wood and each is named after a relative. The cozy, coppery barroom features craft cocktails and seasonal culinary offerings inspired by local Hudson Valley farms. www.farmerandsons.com
Hotel Covell. Los Angeles, CA. There are 150 wines by the glass at Bar Covell at street level and just five rooms above. The design of each room is inspired by chapters in the life of the hotel’s fictional namesake. www.hotelcovell.com
Urban Cowboy. Nashville, TN. This Queen Anne Victorian Mansion in East Nashville houses eight opulent guest rooms. The Public House, a luxe cabin-like bar in the backyard, serves cocktail classics with a Nashville twist. www.urbancowboybandb.com.