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Chinese Checkers, Starbucks and B & B’s: a winning strategy

Monday, March 28th, 2011

I like to play Chinese Checkers with my 6 year old grandson, Brody.  That’s the game where you move your marbles across the board and try to be the first one to get them into the spaces on the other side.  You can move a marble one hole at a time, or, you can set up strings of “jumps” to move one marble quite a distance.  My longest is 6 jumps.  But Brody seldom jumps.  He prefers to move his red marbles one at a time…keeping them altogether and only makes a single jump if the move still keeps his group of red marbles together.

When processing this strategy, I realize that it is not important for Brody to win.  He prefers to keep them all together…in one group…and not having a single marble stray from the group.  It’s really hard to lose to him…sometimes I have to jump backwards to lose ground to let him win.  But he loves to play.  He is focused less on winning (an outcome) …and more focused on the pleasure he receives by being methodical and orderly (his strategy).

Katie Couric recently interviewed Howard Schultz, CEO of Starbucks, to discuss the company’s new strategy of retail products in the grocery store.  When queried about the 50% drop in stock price this past year, Mr. Schultz made a statement that explained the failure… “We saw our growth as our strategy…not as an outcome” .  Rather than focusing on their core values of customer service and quality coffee products, they strived only for growth and expanded the company too quickly.  They have since closed over 600 of their less productive stores to get back to their values.

Both of the above stories of Chinese Checkers and Starbucks reveals an important lesson for us innkeepers.  We often focus on the growth of our bottom line (important…but it is an OUTCOME, not a strategy).  The strategy to achieve the desired outcome is to stay focused on those core values that are important to our guests.  Our guests seek the full experience of the stay.  It’s not just a room with a bed anymore.

If a guest is a history nut and asks for directions to the nearby battlefield…listen and think:  “What can I do to go BEYOND the question to make his experience more complete?”  Rather than just giving directions, do you have the National Park Service brochure and map to give him?  Did you buy the park’s Audio CD for your guests to take on an auto tour?  (He won’t buy one for a one-time visit…but YOU can use it dozens of times!).  Do you have a 10% discount coupon for their gift shop?  Can you loan him your digital camera to take a photo of his family at the park to use on your blog page or to print out a copy for their refrigerator door?

We can make our hospitality and concierge services a major part of the full experience by thinking BEYOND their immediate needs and anticipating those extras that make the experience complete and memorable.

As innkeepers, we are all good at this stuff.  We just need to make sure we stay focused on our hospitality strengths as a strategy to get to the outcome we all desire.    Scott

   

Posted in Building Relationships as a Marketing Tool, Financial Health of an Inn, Inn Operations, Inns and Innkeepers, Market Trends, Marketing, Uncategorized, Viability of an Inn | No Comments »

A Valuable Service for Lifestyle Inns

Saturday, November 20th, 2010

In the last couple of posts, I have speaking of Lifestyle Inns…those inns that are either too small or in a weaker location to be viable.  They are the Backbone of our Industry.  About 2/3 of the B&B’s in America are Lifestyle Inns

The Chocolate Turtle, Corrales, NM, a four guest room Lifestyle Inn

according to the PAII industry studies conducted over the last decade and more.  They are the personification of what the leisure traveling public imagines when they hear the term bed and breakfast.

Up until now, Lifestyle Inns, when considering their exit strategies, have had few options.  The most common avenues for selling a lifestyle inn is a FSBO (For Sale by Owner), which has its pros and cons depending on the skills and time availability for the owners, or to list with a local residential real estate agent who usually does not understand how to market a small lodging business, does not know how to value a lifestyle inn, and is not familiar with the intricacies of the unique lodging industry.  I had a local agent representing a buyer call to set up a tour of an inn for 9am on a Saturday morning…convenient for her buyer, but terribly out of the question for the innkeepers up to their ears with breakfast, check-outs, and turning the rooms for that evening’s check-ins.

Limestone Inn, State College, PA, a 5 guest room Lifestyle Inn

But The B&B Team® has recently announced their Lifestyle Inns Program™, an alternative for Lifestyle Inns that offers the professionalism of industry-experienced consultants and brokers to help with an inn owner’s exit strategy.  Bushnell & Bushnell Services, an affiliate member of The B&B Team® is proud to be working with a number of Lifestyle Inns across America.

So what’s in it for you?

  • You benefit from our deep cumulative experience as innkeepers, brokers, and consultants with our commitment to ethical practices
  • You get results-focused professionals…this is our livelihood, not a hobby.  We succeed by helping you achieve the results YOU want
  • You receive unvarnished, credible valuations…important for you since an overpriced inn will just sit and sit on the market and an underpriced inn leaves money on the settlement table…both undesirable outcomes.
  • Your inn is presented with a superior (we feel the best!) Buyer’s Offering Report to properly represent the quality of your inn
  • You receive our Commitment to Client Communications…you will actually hear from us to keep you informed of progress
  • You benefit from our leading industry presence
  • Your inn will be featured on the most informational websites in our industry.

Finally…an alternative of significant value for the Lifestyle Inns of America!  …especially in the current economy where results-focused professionalism is critical.     Scott

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Posted in Financial Health of an Inn, Inn Operations, Innkeeping Consulting, Inns and Innkeepers, PAII, Uncategorized, Viability of an Inn, Websites | No Comments »

The Operations of a Lifestyle Inn…Thinking Big when You are Small

Friday, October 22nd, 2010

In the last posting, we talked about the definition of a Lifestyle Inn, typically too small or located in a less-than-optimum location to be viable, but which comprise the Backbone of the B&B industry.   The smaller inn has some advantages and some disadvantages over their bigger brothers when it comes to the operations side of inn ownership.

Being smaller usually limits the amount of help the inn can afford.  3-5 rooms often means doing it all yourself.  6-8 rooms may allow for some part-time help with housekeeping and laundry or sitting the desk.  Such intense and time-consuming involvement by the owners in a 24/7 environment can take its toll.  Taking care of yourself to prevent burnout is a topic at nearly every convention.  I received a call yesterday from some lifestyle innkeepers in Kentucky who are nearing the end of their toleration rope.  Advice in this situation?

  • Find that “rhythm” of the inn…the daily routine that manages your time for you.  If housekeeping after breakfast and check-outs is done by 1 pm, take a nap, or sit and read, or enjoy a hobby until the check-ins start strolling in that evening.
  • Force yourself into days off.  It is an easy temptation to take your “day off” and catch up on emails, or paying the bills, or shopping.  Before you know it, the day is over and it’s time to get back to work!  Get off for the whole day…play golf, visit the museum you send your guests to, or catch a movie with friends.
  • Alternate time off. If you are a couple, plan time for one person covering the inn while the other takes some time off.

Answering the phone is not only interrupts your work, it is too important to ignore!  Having a message that promises you will return the call between certain hours not only has the likelihood of NOT losing the reservation, it allows you to exercise good time management in order to get things done.  Some phone services can be engaged who will answer for you and are professional allies in the battle against interruptions.  Dave Balderson, owner of  the 6 room Wayside Inn in Ellicott City, MD., is a strong believer, and user!, of such a service to allow for evenings off.  He’s a believer, and is now way past the average innkeeper turnover rate of 7 years.  Answering 24/7, even if it is not YOU, makes you look big in a small lifestyle world.

Smaller inns may not have the conference room space or facility for corporate retreats and meetings as do the larger inns.  But marketing to the smaller groups, the birders, quilters, scrap-bookers, local garden club, or the Red Hat Ladies offers these smaller groups a venue they cannot afford (or that the larger inns even want) elsewhere.  And it’s a great way to get the big-time exposure in the community of your presence as a lodging alternative for visitors.

The website of the small inn can level the playing field even against the Big Guys.  The Chocolate Turtle in Corrales, NM, a 4 guest room Lifestyle Inn owned by Dallas and Nancy Renner, won the Best Website competition in all of New Mexico…even beating out the Marriott and other mega-names in the lodging industry.  This is a primary contributor to their incredibly high occupancy rate.  A small inn’s website needs to “think big” in its style, its format, its functionality, its photography and its Search Engine Optimization effectiveness.  Gone are the days of having your website, designed by your high school daughter, with photos of the bed in each room (guests want to see MORE than just a bed), with backgrounds of mauve, harvest gold, and avocado.  Think Big, and up-to-date, with your website.

Lifestyle Inns, and there are about 15,000 of them in the US, have a predominant role in the lodging segment that we all enjoy.  Their success as a smaller inn can depend on them thinking like the big guys!      Scott

Posted in Financial Health of an Inn, Inn Operations, Inns and Innkeepers, Marketing, Uncategorized, Viability of an Inn, Websites | No Comments »

The Lifestyle Inn… the Backbone of the B&B Industry

Sunday, October 17th, 2010

According to the PAII Industry surveys over the last decade or more, about 2/3 of the inns surveyed have consistently had less than 8 rooms.  The 2006 survey indicates 7.66 is the average sized inn and the 2008 data, offering medians instead of averages, reported a median of 6.0 guest rooms and suites.  In the last few years, a definition has evolved in the consulting side of the industry that has identified these smaller properties as Lifestyle Inns.  The name came about as an alternative to Viability, the moniker for an inn that is large enough and located in such a strong marketing location, that it can provide enough Net Operating Income (NOI) to support the value of the Real Property assets…ergo, viable.

A Lifestyle Inn is one that, although not viable as a self-supporting business, offers the LIFESTYLE to the innkeepers… one of the personal rewards of inn-ownership.  Usually there is some other source of income to help sustain the small business (the 2006 survey indicates that 83% of owners of 1-4 guest room B&B’s RELY on outside income and it shows 61% for those inns with 5-8 rooms).  Perhaps a pension, perhaps one of the owners has a career outside of the inn, perhaps they have owned the inn long enough to not have a large, if any, mortgage, or perhaps the owners are blessed with other income producing assets to help pay the bills, including the mortgage, of the small inn, but they rely on some source of outside income.

I am not suggesting that there is anything wrong with being a Lifestyle Inn.  On the contrary, these smaller inns are the backbone of the B&B industry.  They have woven the very fabric of the definition of a B&B.  When the leisure traveler thinks of a B&B, they reflect on thoughts and memories of a beautifully maintained, perhaps historic property, creatively landscaped, romantic rooms and room features, and a breakfast that tantalizes the eyes AND the palate.  Lifestyle B&B’s have created the getaway release of which people dream and yearn.

Lifestyle Inns have created the very definition of a growing alternative for the American leisure travel industry.

More to follow soon about Lifestyle Inns.    Scott

Posted in Financial Health of an Inn, Innkeeping Consulting, PAII, Uncategorized, Viability of an Inn | 1 Comment »

Do You Know What the B&B Industry’s Competition is Doing?

Friday, June 11th, 2010

On a flight to visit an inn this past week, I was reading an article in the USA Today(June 1) containing some interesting information about the big guys…the hotels…with information that also applies to the B and B industry.  In his article “Hotels try to woo leisure travelers” Roger Yu relates some concepts of the changing travel marketplace and the evolution of the hotels (and WE should listen too!) to meet the change challenge.

First a few facts:  According to D.K. Shifflet & Associates, a travel and research consulting firm:

  • Leisure travel surpassed business travel for the hotel industry in 2004
  • That gap has widened and by 2009, 54% of hotel travel volume is now leisure travel.
  • Corporate travel has been slowly declining, and “it’s not going back” according to Shifflet.
  • The Gen X (late 20′s to early 40′s) travelers are replacing the Baby Boomers and are traveling with their young families.

The hotels are watching the changing demographics and evolving to meet the new market.  To entice the leisure traveler to their properties, focus is strengthening on FAMILY travel.  Marriott is:

  • Offering a Nickelodeon package to the kids with activity books and Nick bracelets

    This is Spongebob for those of you without kids around!

  • Toddler care packages are awaiting the arriving family with squirting bath toys, fitted crib sheets, baby shampoos and nightlights.
  • Spongebob backpacks with matching sheets and pillowcases are for sale in the gift shop.

The younger demographic is also demanding VALUE, a concept more wide-spread than just the Gen X-ers.  Homewood Suites by Hilton (typically a corporate traveler mecca has seen a 50% increase in its leisure travel this past year) is revising its free meals program, and Kimpton Hotels will give away free sangria drinks and Wii video games in the lobby this summer…something for the parents AND the kids.

So what does that have to do with US in the Bed and Breakfast Industry?

Everything, if you are ready to keep your business growing!

B and B owners often cater to only a certain slice of the traveling market.  They rely on the romance getaway, or traveling couple, typically Baby Boomers, to fill rooms.  But this AGE-SEGMENT of the traveling market is declining and we must target the NEXT generation as well…and they’re traveling with their kids. Some target the corporate traveler if the inn is fortunate enough to have several large businesses or a college within a mile or two.  But this segment is also in decline, and mid-week rooms are going to go empty.

Some ACTION Items for your Next Planning Meeting

  • Is your Inn ready for a Tune-Up? Do your rooms and bathrooms appeal to the NEW demographic of the traveling public?  Do you have Ipod docking stations, and have you replaced gramma’s old furniture with clean lines and Pottery Barn-type styling?  People want to visit museums, not stay in one.
  • Is your website ready for updating?  Anything 2 years or older is a dinosaur that won’t be found by the new search engine algorithms.  Do you have video of area attractions, or still relying on static photography of a bed?  The next generation is ultra techno-savvy and will find you in ways OTHER than your organic website, IF you embrace social media (May 7 posting) marketing and email marketing.
  • Are you still illegally restricting kids to age 12 or older?  Talk to those inns who willingly accept children and find out what they do to make the family experience memorable.
  • If all the inns in your area still restrict children, think of the ADVANTAGE you will have when they send all their family-travel referrals to you!
  • Targeting and marketing for mid-week bookings in addition to your current corporate travelers will prepare to replace those declining mid-week business guests with others…such as quilting groups, elder travel with grandkids, or scrapbookers.  I’ll bet there’s an inn in your area already capitalizing on this new trend.

The B&B Team is ready to help you with your Evolution Planning when you are finally disgusted with negative growth of your inn’s performance.  The traveling market is evolving, and we BEG each of the inns in this industry to evolve with it.  And it’s fun!  And more satisfying than watching Spongebob!

Scott

Posted in Financial Health of an Inn, Inn Operations, Innkeeping Consulting, Market Trends, Marketing, Websites | No Comments »

B&B E-Mail Marketing does NOT conflict with Social Media Marketing

Sunday, May 16th, 2010

In the previous posting, I mentioned how effective VIDEO marketing on your website can be.  It offers an advantage to be exploited in your Search Engine Optimization (SEO) efforts to attract bookings.  This technique, and the recent bombardments from all directions and talk about Social Media and its usefulness for marketing exposure, and the typical marketing channels…the B&B directories, rack cards, websites with professional photography, blogs with links to your website and others…WOW! How does an inn do all this stuff? How much will it cost an inn when pennies count?  And does it give a return on the investment made?

Top of Mind…Top of Market: I unshamefully (is that a word?) stole that line from a friend of mine, Ted Foti, who is a marketing consultant in the Baltimore area.  Worthy of this petty theft, the concept works for our B&B industry as well.  When someone asks “Where’s a good place to stay around here?”, the answer should be on the top of the mind of your guerrilla marketer…the gas station attendant, the restauranteur, the college admissions office, your past guests.  These are the ambassadors of YOUR inn.  The goals of your marketing exposure includes the frequency and quality of your message.

Although video is an advantage to your website and can be RSS linked to Social Media networks, email is STILL the preferred media the communcating world wants.  Arlene Satchell in her article “Social Networks’ Popularity Doesn’t Hurt E-Mail Marketing’s Success”, (RISmedia, May 15), states that according to Forrester Research, “90% of online Americans currently use e-mail as a mainstream communication channel”.  And the relatively inexpensive costs, when compared to the potential results, yields a return on the investment that cannot be ignored.  E-Mail is still the central hub for pushing communications to people.

Constant Contact, among others, offers a templated service to make email marketing a snap.  I currently use this service for both Newsletters and E-Mail “blasts”…short notices going out to targeted folks.  I categorize my database by groups (e.g. aspiring  innkeepers, current innkeepers), by state, and demographic groupings.  I can send a newsletter to all, or to a select few, depending on which groups I select.  Be sure to put links in your newsletters and emails BACK to your website to encourage traffic to your online booking features.  For a couple of bucks more, I can use their survey feature.  And so can you! Imagine the worthwhile feedback you can get from your past guests by sending out a thoughtful, well-positioned survey!

The cost is almost irrelevant and can fit any budget. It starts at about $15 per month for up to 500 addresses.  And there are features to help LOAD your email database into the Constant Contact database (a typical excuse I hear for not getting started).  You can send as many emails or newsletters as you want, although being prudent is always advisable.  Your messages are more memorable , and less likely to be “opted-out”, if they are not annoyingly too frequent.  Once a quarter is a good goal.  Perhaps sending a newsletter quarterly and an email (of specials and area attractions) quarterly on off months from your newsletter.

I am not a paid sponsor of Constant Contact!  I’m just a user.  There are other services as well in about the same price range such as YMLP (Your Mailing List Provider).  My point is the ease and low-cost that this alternative offers to your marketing plan’s completeness.

Social Media offers an alternative channel, for sure.  One more technique for staying on Top of Mind.

Your quality Website is important…probably THE MOST important.  But it is passive…guests have to find YOU.  E-mail marketing offers a proactive alternative to talking to your guests…to stay on Top of Mind.

Anybody out there currently using Constant Contact?  Like it?  Like other services?

Scott

Posted in Building Relationships as a Marketing Tool, Financial Health of an Inn, Inn Operations, Innkeeping Consulting, Internet Directories, Market Trends, Marketing, Tracking Devices, Uncategorized, Websites | 1 Comment »

We are a Visual Society…and Your B&B Can Exploit it!

Sunday, May 16th, 2010

Check out the statistics:

-  32% of all Internet activity is made up of Video
-  Consumers prefer video 6 to 1 over text
-  Facebook video viewers are up 2000% in the last year
-  It was discovered by Forrester Research that videos increase Search Engine Optimization on Google’s (and other search engine’s) algorithms by up to 53 times.
-  40% of Internet activity last year was on CONTENT…whereas only 20% was on search and commerce activities.

The numbers are convincing, but not surprising when you see the explosion of Social Media and technology in our industry.  These figures, presented by Stephen Schweickart, CEO of VScreen, were detailed by Stephanie Andre in an interview published in RISMedia’s April 28 Ezine.

SO WHAT DOES THIS HAVE TO DO WITH A B&B?  Everything!

Gone are the days when having a few photos on your website was all you needed.  The leaders in the inn industry recognize the power that video offers when grabbing the attention of the consumer.  Everybody has heard that you have 3 secondsto grab the attention of a web surfer once your SEO efforts brings him to your site.  If he subconsciously discovers he likes the look of the site, he gives you another 4 seconds to discover if your site can meet his needs by looking at the functionality and navigation. If you fail at either of these steps, he hits the BACK button and he’s lost.

Video, per Mr. Schweickart, extends that window of attention-span to 14 seconds.  People enjoy movies, they like the action.  We are a visual society and the days of stagnant photos of the bed in the guest room will not grab the attention of the potential booking anymore.

It’s time to update websites to meet these evolving interestsof the traveling market.  Check out the YouTube video made by Dallas and Nancy Renner of the Chocolate Turtle B&Bin Corrales, NM.  Not only do you get to see a bit of the inn and its colors, but the video takes you into the community to see the shops, the animals and the mountains, and you get to meet the innkeepers as well…always a part of the guest memories you want to create.  That’s a marketing advantage over the competition that throws water on the fiery argument that it’s the current recession that is causing business to be down.

Your breakfast presentations are fabulous.  Make your inn’s presentation on the internet fabulous too.

Here are a few ideas to consider as you work to improve your website:

  • Replace the stills of the guest bed with video of the guest rooms…panning around the room and out the windows to the scenic river below.
  • Pan across the deck or private patio with the colorful breakfast settings to the bird feeder with the orioles and bluebirds or to the water feature in the garden.
  • Film the scarecrow festival in October, the strawberry festival in June, the sleigh rides in January and the flower fairs in April in your region.  These are the places your guests are going to want to see to have the full experience.
  • Loan your digital camera to your guests heading out hiking or to the battlefield re-enactment, show them how to use the video feature, and put their live testimonial on your site and blog.
  • Link your blog with a feed to your Facebook account to have your videos shown to your fans around the world.

Grab them with your inn’s beauty, your creativity and your innovation.  You only have 3 seconds.    Scott

Posted in Financial Health of an Inn, Inn Operations, Inns and Innkeepers, Market Trends, Marketing, Websites | 2 Comments »

Another B&B Niche Market with a MOO-ving Target

Friday, April 9th, 2010

As the (dreaded) inspector for the Maryland Bed & Breakfast Association, I have the good fortune to visit the member inns all over the state.  Not only does this process support the mission of the Association, it allows me to

Curous B&B Visitors

Curous B&B Visitors

see the diverse array of inns in Maryland.  Urban inns in Baltimore, Chesapeake Bayside manors, small town inns surrounded by history, and, this past week a Farmstay…the Crow Farm B&B in Kennedyville.

On almost 400 acres of sprawling countryside peacefulness, Judy and Roy Crow raise Angus cattle and are in the process of planting a 4 acre vineyard in another venture that will produce future rewards.  But this is not just another working farm. Recently Judy and Roy opened their farm to guests, with 3 comfortable guest rooms with private baths, this inn has positioned itself for the AGRI-Tourism market.  With about 80 head of Angus cattle, and a motto to “stay original”, they also provide grass-fed (not stall force-fed) meat, sans hormonal growth injections, to the local restaurants and markets.

What a great niche for a farm only about an hour away from the mega-populations of Philly and Baltimore, where most families have never seen cattle other than on a piece of styrofoam wrapped in Saran-Wrap at the local Giant food store.

One of the keys to occupancy (and therefore, financial) success is for an inn to the BEST at what they do in comparison to other similar and nearby properties.  Finding the niche that fits YOUR inn…whether AGRI-Tourism like Crow Farm, or historical relevance and authenticity, or the finest event venue in the region, or Going Green, or soft-adventure home base… and to attract MORE than your fair share of the traveling or vacation market, it is important…NO CRITICAL… to find what your inn is BEST at, and then market it, market it, market it.

Welcome to the MBBA, Judy and Roy.  I believe you have positioned your farmstay in a way that will be rewarding for you…and Babe (the retreiver) and Curious (the calico).     Scott

Posted in Financial Health of an Inn, Going Green, Inn Operations, Inns and Innkeepers, Market Trends, Marketing | 1 Comment »

What Niche Market Does Your Bed & Breakfast Target?

Friday, March 19th, 2010

To stand out from all the rest, ANY product needs its unique selling feature that will lure the shopper to its website, and ultimately make the purchase.  Bed & Breakfast Inns are no different.  Your search engine optimization efforts will get your site high on the results page of the search, and then the attractiveness, navigation, and functionality of the site will keep the surfer from hitting the back button.

But what makes your inn stand out above the rest? Professional photography is certainly a strong asset, as is the ease of providing the info the surfer is looking for…in an attractive and eye-appealing manner.  But what will

Marilyn, Floyd, Sue and Scott being daring!

Marilyn, Floyd, Sue and Scott being daring!

grab them..and then keep them searching for more info?  Whatever it is that makes you special…that which makes you different from all the other inns…should be up front and central.

But that’s not how we found this particular B & B. I can’t even say we stumbled on it.  Actually we flew (kinda) into it!  Marilyn and I, along with cousins Sue and Floyd, had some time after the PAII convention in Austin this past week.  We hooked up our harnesses, helmets, and gloves, took a couple of minutes of training, and went Zip-Lining through the tree tops of Cypress Valley Canopy Tours.  I’ve never hung in a harness on a wire over a gorge before, but we had a blast…especially for old people not used to this soft adventure stuff!

And then there it was.  Suspended in the tree-tops at the end of the 4th zip, was one of the most unique bed and breakfasts I’ve ever

Mare near B&B

Mare near B&B

seen.  Not advertised…hidden in the back pages of their website…was

Large room with queen bed

Large room with queen bed

Lofthaven.  One room, with private (although hardly ensuite!) bath.  Marilyn and I were immediately distracted from our zip lining adventures.  You can only access the tree house from the zip line from this side.  Once you check in, there is a nearby parking space and walkway past the bathroom, with its solar powered hot water heater (everything about this adventure is eco-friendly) for the shower.  The room itself was very spacious…with queen bed, canopy which could double as mosquito netting although the room is fully enclosed with screened windows.  There is a walkway around the room with a “porch”, with a bench, looking out over the peaceful gorge

The solar powered hot water heater on the bath roof

The solar powered hot water heater on the bath roof

60 feet below.  No need for a sound machine to lull you to sleep here!  The babble of the brook below in the gorge, birds everywhere, and, absolutely no sounds of people, or cars, or neighbors.

The bathroom was complete with shower supplied by the roof top solar water heater, built in sink, commode and all the fine amenities of any

Marilyn on the walkway

Marilyn on the walkway

B&B.  It is a short walk across a rope bridge from the room…but no need to wear a robe!  There’s nobody out here!

When we finished zipping, the kind folks at the nature center gave us a golf cart ride out to the B&B to take these photos.  I tried to get a feel for occupancy performance.  But I only got anecdotal info from the fellow behind the counter.  Mostly filled on the weekends during the good weather season (March-November) and some bookings during the week.  I estimate annual occupancy at about 25%.  At $300 weekdays and $325 weekends, that puts annual revenue at about $30,000…not bad for an unadvertised little surprise in the woods!  And what guest memories that can bring them back time after time and brag about it with their friends.  You can’t buy PR like that.

Imagine what it could be if people knew they were here!  If they were in the B&B directories, had B&B keywords in the right places on their website, marketed to past guests and included guest photos in their newsletters and blogs.  If they would make this unique lodging adventure a dominant feature on their website, with pages of photos, TripAdvisor testimonials, Facebook links with friends and Twitter exposure.

People should NOT have to stumble into this kind of adventure by happenstance.  A lesson for all of us innkeepers.  Scott

Posted in Financial Health of an Inn, Going Green, Inn Operations, Inns and Innkeepers, Marketing, PAII, Uncategorized | 3 Comments »

Tax Time means Exit Strategy Time

Thursday, January 21st, 2010

I hate this time of year when the thought of doing taxes pops into my mind several times a day, especially with all the reminders that bombard me.  H & R Block commercials, 1099′s and statements arriving in the mail, commercials of the scams of companies that can reduce your tax burden with the IRS.  W-2′s showed up yesterday from my payroll service.  AAAACCHHH!

But it is time to also self-reflect on an innkeeper’s plans to exit the Bed & Breakfast scene and understand the TIMING of that exit.  I have been a proponent of the 5 Year Plan to exiting the business, and the first 3 years is to ensure your taxes are clean and clear.  When you are in the due diligence process, the buyer’s representatives and lender will want to see 3 years of taxes…and you will want them looking spiffy!

Marilyn and I were innkeepers and fully understand the emotional pull to reduce income taxes each year.  There is definitely the temptation to expense (instead of capitalize) that new roof or charge up some restaurant visits as inn Travel & Entertainment expenses.  But if you plan on selling your inn within the next 5 years, there are preparations to be taken NOW to ensure the selling price is what your property deserves.

It all boils down to increasing Net Operating Income.  The value of your business activity is based on how much NOI your inn’s performance delivers.  At the “rule-of-thumb” cap rate of 10%, a $10k increase in NOI can result in a $100,000 increase in sale value.  Sacrificing a few short-term tax bucks for the big benefit is well worth the effort!

Here are a few ideas to improve your NOI:

  • Remove personal expenses from inn expenses, such as supplies and food
  • Report all revenues, including cash sales
  • Only pay yourself what you need…but have something in there.  If there is no payroll included in the expense report, a lender will insert some, perhaps too much, and reduce NOI.
  • Consider whether you are overstaffed and can reduce unnecessary payroll labor and associated withholding expenses.
  • Keep depreciation, income taxes, rent you pay yourself and other legitimate expenses in your expense schedule to avoid a buyer’s lender from inserting too-high estimates.
  • Capitalize major renovations and equipment purchases rather than expense them.  Your accountant can help you with appropriate practices.
  • Of course, do NOT let your marketing practices falter.  Keep increasing Occupancy and ADR!

I hate this time of year too.  But thinking ahead and keeping your financial records in order will grease the skids when it is time to exit the business.    Scott

Comments?  Do you have other NOI increasing ideas?

Posted in Financial Health of an Inn, Inn Operations, Viability of an Inn | No Comments »

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