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

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

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

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!

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

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

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

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

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

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?

On my visit to the other side of the Chesapeake (I live on the Eastern Shore), I visited Butterfly Fields, a remote inn, serene and away from the noise of the highway. Dan and Lynda Ells have built (literally…by hand) their inn around their hobbies and interests. With their commitment to a life of self-sufficiency, the inn is energy efficient, with incredible insulation and solar features (Dan’s expertise). Lynda is a massage therapist and, together, they have built and operate “Goose at the Door Pottery”, a shop where they hand throw gifts and keepsakes for use and sale in the inn.

Guests are invited to the workshop (which, literally, has chickens, ducks, geese, and turkeys just outside the door!) to enjoy the crafts, perhaps take a class at the wheel, and have a story and a keepsake to take back home with them. What a great addition to the total guest experience!

And what a great way to put your non-innkeeping skills to good use at the inn. Scott

Managing Your Business with Less

So…this has been a challenging year for us.  Sales have been down.  ADR is down.  Cash flow is negative  We still have guests to take care of and a large Victorian Mansion to restore and an acre of gardens to care for…how are we going to make it?

We needed to take a serious look at every penny we spend and see how we can make changes without changing our level of service to our guests.  Here are some things we are doing to make it through in this soft economy,

Employees: We’ve had to cut back our help and increase own own workload.

• This is a great way to keep in shape, but it does take more of your time and energy.
• Use this time, if you are cleaning rooms yourself for the first time in awhile to really look at what your guest rooms might need in the way of deep cleaning or sprucing up!

Utilities and Fixed Costs: You can’t do much about some of these.

• We searched around and found a phone company that saved us $100 a month!
• We’ve switched our light bulbs out to Compact Fluorescent and have seen our utilities stay even or go down!
• Turn lights off when the inn is not occupied.
• Be sure to turn lights on at night to give the inn that “lived in” look.  Make certain that all lights that are “always” on are energy savers, ie. compact fluorescent or LED.
• Turn down water heaters during slower periods.
• If you do your own laundry, try to wash more linens in lower temperatures.
• All new purchases of equipment should carry an energy star rating
• We also manage our heating and cooling very closely, especially when guests are not in the Inn.

Gardening Service: We kept them on for part of the year, but then we told our service that we hoped to have them back in the spring.  More of our time, less of our money, and we already owned a riding mower and other gardening equipment.  Cheaper than a tanning salon!

Menus for Breakfast: You can prepare gourmet breakfasts while watching your pennies!

• Read the weekly food ads to see what is on sale and plan your menus around those seasonal items or store specials to help control your costs.
• Look for in-store deals so that you can stock up on super sales!
• Check out the local farmers market for deals on produce.

Marketing: Analyze your marketing efforts and be certain that your marketing investment is working for you.  One thing you cannot cut is marketing, but be certain that you are getting the best “bang for your buck”.

Maintenance: Now is the time to do some inexpensive maintenance to your guest rooms.

• Make small repairs and keep things in good order, instead of replacing them.  Repair that leaky faucet rather than replace it.
• Paint is an inexpensive way to spruce things up.
• Big hotels are doing some remodels, and upgrades.  We need to keep up our Inns’ appearance and make sure our guests are having a great experience!

I’m sure you have ideas about what you can do to make it through these challenging times.  Things will turn around and we all can make it if we are careful and don’t forget to keep Marketing!

Alice Erlandsen,  The Oliver Inn

• “…unlike other travel sites, we won’t charge you a penalty.  There are NO Expedia change or cancel fees on hotels, cruises, cars, and virtually all flights and packages.”     [BUT:]
• “Please bear in mind that while we [Expedia] won’t charge change or cancel fees, some suppliers [e.g. hotels] may impose non-refundable rate plans or fees that Expedia is required to pass along.  Such fees are highest when cancellations occur within 48 hours of your scheduled travel dates.”

Even though the hotels still have their cancellation fees, they have, historically, been quite liberal with their policies.  Usually a call before 6 pm on the day of arrival is sufficient to avoid a charge.

BUT THAT IS NOT THE IMPORTANT POINT HERE!

The expectation is being set in the consumer’s mind by Expedia that change and cancellation fees are flexible and do not have to be tolerated by the traveler.  Their caveat is on their website, but the commercials reflect NO fees for changes or cancellations…and that is what the travel market hears.

We innkeepers have been using cancellation policies and fees since the beginning of time.  We use such language as “we are a small property and changes and cancellations affect our business greatly”.   True…but the potential guest doesn’t care about you.  Here are some actual quotes from inn websites here in the Mid-Atlantic area…my comments are in BLUE:

• “Written notice of cancellation seven or more days prior to arrival, a $25 service fee will be charged.  No shows or cancellations within seven days will result in a full night charge or a 50% charge of a stay which is 3 days or longer”.  Written notice? Who does that?  and what if the inn can re-book the room?  Double dipping?
• “A 50% deposit, or the cost of one night, whichever is higher, is required to confirm your reservation.  Deposits for stays of 5 or more days are non-refundable“.  If a guest booked for 5 days, then changes plans, this guest could be penalized $600!  Why would I book there?  Any cancellation will cost the guest at least a  full night fee.  Ouch!
  
• “If you cancel less than 21 days in advance of reserved date, deposit [50%] minus $25 fee if room rebooked.  If not rebooked, you are 100% responsible”.  21 days?  WOW!  No wonder people are waiting till the last minute to book…nobody can plan that far our with certainty…and 100% responsibility is too high a cost (and scarey!) for long term planners.

SO WHAT’S AN INNKEEPER TO DO?

It’s time to reconsider what YOUR policies are doing to you.  I GUARANTEE YOU ARE MISSING RESERVATIONS WITH STRICT POLICIES that penalize guests.  If they see these kinds of statements on-line (and they are almost ALWAYS on-line),  they will click into a different direction.  You won’t even know you missed them.  Here are some thoughts for consideration:

• Do you even have to have a cancellation policy at all? Inns with strong corporate travel know that they cannot have penalties at all, except, maybe, for a no-show.  When a corporate traveler cancels at the last minute (their plans OFTEN change on short notice), these inns, holding back their disappointment at the lost sale, say with a smile in their voice “Sure, Dan…we’ll see you next time!”.  The goodwill reaps repeat rewards in the long run.  So why damage your leisure travel relationships with punishing policies?  Don’t you want them back someday too?
• Are you using your cancellation policy as a profit center? The “if we can rebook the room” caveat is a hoax.  If you can’t rebook the room, it’s NOT because of the guest’s cancellation.  It is because of travel demand in your area.  And, if you intend to NOT relinquish the hoax,  I hope that you make more of an effort to rebook the room than to sit by the phone to wait for it to ring.  You will lose that guest as a repeater…is it worth it?
• Is there a competitive advantage to being the ONLY inn in your association or region that does not have a strict cancellation policy? Guests shop around and will stop searching when they hit a site that meets their needs.
• Is your cancellation date WAY TOO LONG?  Is 21 days too much?  (maybe NOT for a special event such as a college graduation or a wedding booking?).  Can you be selective on WHICH events or weekends are critical to have a strict cancellation policy and identify the rest of the year with a punishment-free policy?
• If a guest cancels, is the $25 or $50 “service fee” really that important to you?  Is it really worth putting a sour taste in your guest’s mouth about your inn?  Do you really need behavior deterants?  Are they really worth it?
• If you are thinking out of the box enough to relax your policies…promote it!  Put it on your website…in your next newsletter…in your next email blast to past guests…on the directories on-line.  Let people KNOW you are guest friendly! Expedia is.

The expectation is out there.  Expedia is reinforcing the mindset that change and cancel fees are for the convenience of the lodging facility…not the guest.  This is NOT the kind of economy that will tolerate financial punishments for every-day travel decisions.  We innkeepers know the importance of relationship-building and the value repeat guests bring us.  Don’t send the mixed message of financially punishing guests with a hospitable smile on your face.

Scott