Start Your Own Bed & Breakfast Business With These Tips
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The hospitality industry is enormous, with a global market share of just over $4.7 trillion. If you're looking to make a hospitable mark of your own on the world by serving guests from far and wide, then starting a bed and breakfast business could be a rewarding and profitable experience for you.
Of course, running a fabulous bed and breakfast is no simple task: It takes a lot of work to find the right property and establish a local presence. With that in mind, let's cover what you should know before starting your own bed and breakfast business.
What Makes a Good Bed & Breakfast Property?
You can't buy just any old property when looking for a bed and breakfast for sale. Your choice of real estate can make all the difference between a lucrative bed and breakfast business and a struggling operation.
Below is a quick checklist of things to look for when buying space for a bed and breakfast.
#1 – Location
Just like when buying any type of commercial property, location is the single most important feature when searching for a bed and breakfast for sale. The best bed and breakfast properties are located near popular tourist areas and have no shortage of nearby opportunities for recreation and entertainment.
When looking at properties, cross reference the location with nearby recreation spots. Ideally, you want a property within walking distance from a range of activities, like food, drinks, museums, clubs, theaters, sporting events, etc.
#2 – Seasonality
The tourism industry operates cyclically as destinations become more or less popular depending on the season.
For example, tourism season in California wine country is typically from June to October. The seasonality of the property and surrounding location matters because it determines when you can expect to see the most business.
#3 – Aesthetic
Guests choose bed and breakfasts over traditional hotels and resorts because they provide a unique, personal experience they can't get elsewhere. A bed and breakfast should feel like a home and include typical amenities that a home would have.
The property aesthetic should also match the kind of theme you want for your bed and breakfast business. For example, a farmhouse-style property would be a perfect fit for a rustic-themed bed and breakfast.
#4 – Privacy
A good bed and breakfast for sale should strike a healthy balance between convenience and privacy: Attractions and activities should never be but a short drive away, yet your business's location should elucidate a certain sense of isolation.
Bed and breakfasts are intimate experiences, and guests will likely prefer to stay at a property that can give them some privacy. For instance, a house on the same block as a busy flex industrial warehouse would not be a good candidate.
Financing a Bed and Breakfast
The best place to start looking for financing for a bed and breakfast is an SBA 7(a) loan. You can use a 7(a) loan to finance the purchase or construction of a property to use as a bed and breakfast.
The SBA offers up to $5 million in 7(a) commercial property loans for eligible small businesses. You will need to present a completed bed and breakfast business plan and financial projections to secure a loan.
If an SBA loan is not a viable option, you can look through traditional channels, like a bank or private lender. Another option is peer-to-peer (P2P) lending. P2P platforms for commercial real estate, like Yieldstreet, directly connect borrowers with lenders and allow for a wide range of flexible, private financing options.
Using a Commercial Real Estate Broker to Find Bed and Breakfast Property
If you've never bought any property in the hospitality industry before, you should consider working with a certified commercial real estate broker. Brokers can guide you through the process of finding, financing, and closing on commercial properties.
Inn brokers are real estate agents that specialize in hospitality properties, like hotels, motels, and rental properties. With the right inn broker by your side, you can find the best bed and breakfast property with strong financials and negotiate a favorable sales transaction.
How Do I Turn My House Into a Bed and Breakfast?
You can turn your house into a bed and breakfast by first registering your business and obtaining a certificate of occupancy so you can legally rent space to customers. From there, you can start choosing your decorations, amenities, theming, etc.
Starting a bed and breakfast business begins with creating an intimate and home-like experience for your guests. They should almost feel like they never left their home, and your business's decorations should radiate a personal, yet professional aura.
Regardless of your B&B's theme and decorations, all bed and breakfasts will need the right licenses. The exact licenses you need depend on the city and state in which you start and what kind of amenities you want to provide, but you'll probably at least need a business license and food service license.
For example, a California bed and breakfast that wants to provide alcohol would need to get a Type 80 license.
Can You Make a Living Running a B&B?
Yes, you absolutely can make a living running a bed and breakfast, but doing so is not without its trials and tribulations. Bed and breakfasts require a significant amount of management and upkeep between booking guests, preparing rooms, and managing finances.
Below are some of the most relevant operating costs you'll need to include in your bed and breakfast business plan:
- Mortgage and insurance;
- Taxes;
- Cleaning & maintenance fees;
- Food and other guest supplies;
- Staff wages (if applicable);
- Marketing & advertising; and
- Professional services (e.g., lawyers, accountants, etc.).
Given the seasonal nature of tourism, your bed and breakfast business plan needs to budget finances around potential periods of inactivity. Another difficulty is competing with other hospitality businesses, like hotels and Airbnb's services.
Running a bed and breakfast may not be as easy as renting an apartment, but it can be an incredibly rewarding experience. Some of the most popular bed and breakfasts in the nation have operated for decades and have become local cultural icons.
How Profitable Is a Bed and Breakfast?
According to data from the Bureau of Labor Statistics, the average lodging manager, which includes bed and breakfast owners, makes a mean annual salary of $73,230 as of 2022. The top 90th percentile of lodging managers makes an annual salary higher than $122,000. New York has the highest average mean salaries for lodging managers at $94,750.
The typical bed and breakfast owner can expect to charge about $130 to $180 per guest per night. Higher-end accommodations can go for upwards of $300 a night per guest. Average room rates depend heavily on the state and the specific location.
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