Small Business
Getting started: B&B biz
May 14, 2001: 8:45 a.m. ET

Sophisticated travelers are willing to pay more for more amenities
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NEW YORK (CNNfn) - If opening a bed and breakfast, in a remote wooded spot away from the hustle of the city, seems like a relaxed, old-fashioned way to earn a living, it's probably been a while since your last visit to a B&B.

These days, there's more to running a B&B than simply opening up a few rooms in your home for travelers and feeding them a hearty meal in the morning. B&B visitors still like the intimacy of a small environment but want more in the way of amenities.

"The endeavor has become a lot more professional," said Peter Schleim, who runs the Web site Bed & Breakfast Getaways. "It's not so much of a mom and pop business anymore."

Communal bathrooms are out

For a glimpse into the brave new world of bed and breakfasts locations, take a look at Tucker House, one of the newer additions in the San Juan Islands, Wash., town of Friday Harbor.

Alan Paschal and Charlyn Warner purchased a pair of Victorian homes and the adjacent cottages about 18 months ago and immediately set about graphicrenovating them into a sort of B&B campus. Among the first things that had to be changed was adding bathrooms to the individual guest rooms.

New rule No. 1 about owning a bed and breakfast: communal bathrooms are out. The bathrooms at Tucker House are large, decorated in Italian porcelain tiles and outfitted with brand new fixtures. B&B guests these days not only want a private bathroom, but they want one that's nicer than the one they have at home, said Paschal.

Competition is driving the changes taking place inside the walls of bed and breakfasts operations all over the country. The number of B&Bs has grown rapidly, to about 16,000, in the past several years. In tiny Friday Harbor the number of B&Bs has grown from six to about 50 in just 10 years.

To attract customers, B&B owners everywhere are under pressure to add televisions, telephones, and other amenities their guests used to forgo in favor of country charm and an intimate environment.

"The expectations about what they will find at a B&B has been escalating," said Paschal, who also runs the States Inn Bed and Breakfast in Friday Harbor.

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At Tucker House, the pair also added telephones, televisions, VCRs, and Jacuzzis to most of the rooms. There is also an outdoor Jacuzzi in the gardens surrounding the houses and cottages and Paschal will soon add a gazebo. Paschal also upped the level of service at Tucker House and now delivers breakfast to his guests' rooms.

The States Inn has 10 rooms, 2 fewer than Tucker House, and has no phones or televisions.

In short, the B&B experience is becoming more similar in ways to staying in a hotel. Paschal, for one, thinks the changes he and other B&B owners are making will make the accommodations more attractive to a wider range of travelers.

One thing most B&B guests and owners are not willing to sacrifice, though, is the social environment that makes the experience different from staying in a hotel or motel. So, while they may not want to share a bathroom, communal spaces like gardens and porches are still in vogue. Oh yeah, and the breakfast had better be darn good.

Money and marketing savvy

Creating a new sort of B&B, one with a professional staff like in a hotel and with upgraded amenities, takes a significant investment. Whereas in the old days people simply let people stay in the extra rooms of their house and, for little or no investment, they were in business.

graphicGetting the 12-room Tucker House Bed and Breakfast ready for visitors took 10 months and approximately $900,000. Given the level of investment, it has become increasingly important for B&B owners to do what they can to attract new visitors.

Schleim said the savviest B&B owners are investing thousands in nice-looking websites and learning about marketing over the Internet. According to a recent survey conducted by B&B Getaways, the Internet has become the single most important vehicle for small inn and bed and breakfasts to attract customers.

New guests, in 49 percent of the cases, found the bed and breakfast through the Internet in the 2000 survey. Word of mouth was still a fairly strong marketing tool, with 18 percent of bookings. Print advertising and travel guides accounted for a paltry 6 percent of bookings.

"A lot more people who are running B&Bs are coming out of the corporate world," said Schleim, "and a lot of them are savvy about Internet marketing."

Fun and profit

The good news is it is still possible, in spite of the growing competition, to make money in this business. One factor working in the favor of B&B owners is that customers are willing to pay more for a nice room and a good experience these days, said Schleim.

One-third of the B&Bs in the nation charge more than $125 per room per night, according to B&B Getaways. As B&Bs move farther away from the traditional model of opening a room in the house to guests and more toward being small hotels, they have begun to charge more.

"It can be very financially rewarding," said Paschal. Paschal said he expects annualized returns on Tucker House in the range of 15 percent.

But he believes it is easier to be profitable if you have a property that is slightly larger than the average 6-room bed and breakfast. The more rooms there are, the lower the per-room cost of getting started.

In spite of the long hours and the sometimes physically demanding business of running a bed and breakfast, Paschal said the job can also be a lot of fun. Sure, the cooking and the cleaning can get tiresome, but the reward is in the people he meets.

"I've made friends from all over the world," he said. graphic