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Running a bed and breakfast is one of those dream careers that seduces people away from other professions, and understandably so. What's not to love about living in a unique or historic home, welcoming guests and serving delicious food? The lifestyle does offer benefits, but it's wise to consider the challenges and potential pitfalls before hanging up a vacancy sign, according to Jay Karen, president and CEO of the Professional Association of Innkeepers International.
The nonprofit membership organization advises newcomers to the field and studies the industry. According to its research, 17,000 bed and breakfasts across the United States generate an annual $3.4 billion in revenue. Most owners (79 percent) live on the premises, and rent out between four and 11 guest rooms.
B&Bs can be profitable undertakings, though not all owners are motivated by the bottom line, as Karen explained in an interview with CareerBuilder.
CareerBuilder: What are some reasons people start B&Bs?
Jay Karen: Some folks get into it for the lifestyle. You know, "I don't expect to make a lot of money on this. I love meeting new people and having travelers come through my doors, and I hope the room rate helps pay for my mortgage and all my bills."
On the other end of the spectrum you have folks who get into it as their second or last career before true retirement, and they hope to maximize the property as a business.
We've found most people that come into innkeeping have not been in the hospitality business in the past. They've had corporate jobs, they've been teachers, engineers, everything you can imagine. So they're learning.
CB: Do they typically buy properties or convert their existing homes?
JK: Most new innkeepers seek out properties to buy and turn into a B&B, or they'll buy an existing bed and breakfast. A few people will build one to spec. There are those who convert their homes, but I think in the '80s and '90s that was a lot more prevalent. To operate a profitable bed and breakfast these days you're generally going to have to have more than four or five rooms. And most people don't have houses with six, seven, eight, nine bedrooms all with private baths.
CB: How much startup cash is usually required?
JK: You'll probably need a commercial loan (not a residential loan) to buy a property and get started. Keep in mind that those usually have higher interest rates and a bigger down payment requirement. Our research shows that most B&Bs purchased over the past few years have been in the $900,000 to $1 million range. Some owners will need to put 20 or 30 percent down, but it depends also on the projected cash flow of the business based on the number of rooms and other factors. Every situation is going to be unique.
CB: How often are B&Bs successful in their first few years?
JK: The average innkeeper has been doing it for seven years. In general, it's easier to keep a smaller property going in tough times than a big one. But it seems to be a rare case that a B&B closes shop after the first year or two.
CB: What are some other factors to consider?
JK: Certainly zoning regulations, and also fire regulations and health and food service requirements. Find out whether or not you can have events like weddings, which are a big part of the business for many B&B owners. It's a good idea to take one of the aspiring innkeeper classes that take place all over the country. PAII has an aspiring innkeeper membership program.
Overall, remember to think of the guests first. That goes for your décor (not necessarily your family heirlooms) and the atmosphere, which is going to be nicer if you ease up on the restrictions and policies and rules that have plagued our industry in the past.
CB: What benefits do innkeepers report?
JK: It's a great outlet for foodies, who get to make great breakfasts and snacks. Meeting people from around the world is both fun and crazy at the same time, because you never know who you're going to meet ... At the end of the day, those who enjoy it most love hospitality. They love making people happy and bringing joy to their lives.
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