I’ve just returned from a delightful vacation. We had the opportunity to stay in a Bed and Breakfast overlooking the ocean. Our hosts, husband and wife entrepreneurs, bought the lovely house in an ideal location, updated it and created an apartment in the basement, where they live during the tourist season. The husband commutes to his full time job in a different town on weekdays and works at the B&B on weekends. His wife runs the B&B, hires and trains the staff, cooks the marvelous breakfasts, handles invoicing and payments, and provides excellent customer service every day but one (when her husband takes over). Their business plan is to have the house paid off by the time they retire so that they can close the business and move from the basement to the rest of the house, full time.
One of the key components to their plan is that the B&B has to be at least 80% full from May through October, or six months a year. The rest of the year, they close the B&B because the tourists disappear. The average cost of a room is roughly $150 per night (remember the ocean views), and there are 6 rooms. If their rooms were full all the time for six months, revenue would be about $6,300 per week, $27,090 per month on average, and $162,540 per year (all in six months). At 80% capacity, their revenue is about $5,040 per week, $21,672 per month, and $130,032 per year. After expenses (maintenance, wages, food and beverage), they have enough to pay their mortgage on the house plus income for the innkeepers.
They have successfully been on plan since they opened, even through the recession years, when tourism dropped off. How do they accomplish this? Their advertising costs are very low. They don’t even have an independent website, but rather are on a shared B&B website for the area. They don’t blog, tweet, nor are they on LinkedIn or Facebook. In 2012? How is this possible?
First there is location, location, location. The B&B is in a tourist area and the view is magnificent. Nevertheless, there is plenty of competition in the area! Why, then, do people keep coming back and why do they spread the word so effectively to their friends?
It’s the little things. From the moment we walked in, we were treated to completely delightful customer service.
During our initial tour of the house, the innkeeper showed us where we might get bottled water, coffee, tea, freshly baked cookies and wine anytime of the day or night. The enclosed porch over the water provided comfortable furniture and a laptop with internet access, in case we didn’t bring our own. There were brochures, maps, and information on every possible entertainment, from golf courses to water sports. Additional information was provided by the innkeepers themselves, based upon our interests. They wanted us to have a wonderful vacation! When we were shown to our room, there was a basket of local foods, in case we were hungry. In addition, they provided us with a beautiful notebook and pen to keep notes from our visit. The room was lovely, though not lavish, and very comfortable. Breakfasts were fabulous!
How do they meet their business plan year after year? By making people like me want to return over and over again.
All the best!