From “Ask Kit!”:
Q: I am considering opening a new B&B in Atlanta, Georgia. One of the concerns I have is that I have heard that a B&B is more successful in a “destination location.” Would you consider the city of Atlanta a destination location?
One critical aspect of my “place” decision is the targeted market. I am Jewish and live in a sizable Orthodox Jewish community. So, this will be my target market, and of course a kosher breakfast is a must to fit this niche. I’ll also be targeting Emory University and the CDC, both of which are five minutes from my desired location and both include huge populations for the area. However, I’m still concerned about the “destination location” aspect.
A: Having just been in Atlanta, and at a B&B, I can say I do think Atlanta is a destination city. It’s a fanstatic city with a wide variety of attractions. You not only have the tourist attractions but also the university and business travelers. That creates a stable, year-round business for you.
Location is indeed important, and targeting your market is important too. The remaining piece of your puzzle is your brand; what experience are you providing your guests and who will want that experience? With the market segment you are targeting you have to be sure to cater to their needs. The amenities and services you need to provide in the guestrooms include private baths, TV with DVD/VCR player, sound system, high speed internet, and at least queen size beds. If you can create a small meeting room, say for 15-20 people, you’ll also be developing another income stream which will help your longevity and success.
And with all that you are processing for this decision, I can’t urge you strongly enough to take at least one class and read the B&B books.
Good luck! Let us know what you decide.
Dear Kit and Others,
I’ve read several questions and replies on the subject of occupancy rate. I’ve also read on the Hospitality.net website that occupancy rates in the industry for the year 2005 are at 71% nearly reaching the high rate of 72% back in 2000. The responses I’ve read in the B&B arena conflict with this information by being much lower. Any thoughts on the correlation? Can B&B expected-occupancy rates be based on hospitality industry wide rates, or is there simply not a connection? I’m developing a business plan, and an occupancy rate of 48% will support the business with a small amount of net income. However, this will not support using the B&B as a main source of income. An occupancy rate of 60% would generate enough income to move forward with the business. I’d love your thoughts on this.
Thanks, Don Hudson
I am quite frankly amazed at the 71% rate of occupancy. That seems awfully high unless the numbers included rates of occupancy from hotels and motels. I was under the impression that the average rate of occupancy in the United States for bed and breakfast was about 40%.
To get a better idea about how you’re doing, check with your local bed and breakfast association. They may be able to hook you up with some local numbers.
My bed and breakfast is in rural south central Pennsylvania. We’re off the beaten track for tourists though this is beginning to change as the Amish in Lancaster move up here. (Farming land is now $40,000 an acre in Lancaster).
According to the Pennsylvania Lodging and Tourism Association, the average rate of occupancy for this area is about 30%.
My facility is currently at a 35% rate of occupancy, so I am quite pleased with our progress.
Inn at Elizabethville
I guess this forum software is buggier than I had realized. I never received notification that a question was asked on this topic. Sorry for a very delayed response.
Occupancy rates across the U.S. are rising, but you’ll never convince me that nationwide there is a 71% average. There are too many pockets of the U.S. with 15-35% occupancies to support a statement of 71% occupancy.
Colorado, for example, is just starting to pull out of its recession. At one point in the late ’90s, Denver had an average occupancy rate of 72%. Not today. And numbers vary all over the board.
That said, if you can determine what the occupancy rate is for the community where you are developing or buying your B&B, then anticipate having half that occupancy for your first year. And anticipate building it 5 points every year. Gone are the days, for most parts of the country where you can expect 10 point gains in occupancy every year for several years.
There are cases where management was so bad on the inn you are buying that you’ll find a pent up demand for your style of hospitality, but don’t bank on that. Enjoy the bonus if it comes. Better allow for pleasant surprises. Who needs to be anxious about not making the business plan projections?
Kit -Do you have any advice regarding how to estimate at what point rates of occupancy might start to level off? As much as I’d enjoy an 80 or 90% rate of occupancy during the height of our busy season, our average rate of occupancy for this summer was 50% compared to 28% last year. Our average rate for the current year is 35% compared to an average local rate of 30%.
Given the average local rate of occupancy coupled with the fact that we are off the beaten track for tourists, I am not sure if it’s reasonable to anticipate steady growth each year.
Since this inn was mismanaged by the previous owner, I believe we are still in the process of recovering/reviving this business. I’m pleased that after nearly two years, we’re doing better than the average rate of occupancy but I can’t help but wonder at what point we’ll “level off.”
Occupancy rates reflect so many things, I think generalizations are scary. Occupancy rates depend upon:
We are a seasonal B&B that opened a little over 2 years ago. These occupancy rates are adjusted for the days that we are open. In our first year we had 82% occupancy and this year we had 98% I attribute our success to being on a lake, having unique accommodations, and a website that shows up real well in search engines.