Do you want to know how much money bread & breakfast owners make yearly? If YES, here are 7 factors that determine the income & profit margin of bread & breakfast businesses.
Before you can actually put a figure to the amount a bed and breakfast owner is expected to make daily, weekly, monthly or yearly, you should clearly define the services that bed and breakfasts offer. A typical bed and breakfast is a small lodging accommodation that offers overnight accommodation and breakfast to guests that lodge there.
Aside from breakfast, they usually do not offer other meals (whether dinner or lunch). Normally, people that run bed and breakfasts make use of their private homes or family homes. The average bed and breakfast has 6 rooms, but generally, bed and breakfasts operate 4 to 11 rooms within a facility.
According to a recent survey conducted in the United States on bed and breakfast operations, the average number of room nights booked is 362 (that’s a per-inn total, not 362 nights per room), and that’s after several years of operation. If you figure 362 room nights at the average rate of $60 a night, that’s a gross income of about $20,000.
It is important to point that there is no one mold-fits-all when it comes to how much a bed and breakfast owner is expected to make. There are some factors that we are going to look into before giving an estimate of how much an average bed and breakfast will make yearly.
7 Factors That Determine How Much Money Bed and Breakfast Owners Make Yearly
1. The Size of the Bed and Breakfast Business
One cannot conveniently state the amount a bed and breakfast is expected to make yearly if you do not know the size of the bed and breakfast especially as it relates to the number of rooms they have available. In the United States, bed and breakfasts can be found in all states, in major cities and remote rural areas.
There are no defined structures for Bed and Breakfasts, they are known to occupy everything ranging from modest cottages to luxurious mansions, and in restored structures from schools to wagons to churches. This goes to show that bigger bed and breakfasts operating from a luxurious mansion is expected to earn far more than a bed and breakfast that is operating from a wagon in a campsite.
2. The Location the Bed and Breakfast Facility
The location a bed and breakfast facility is a major factor that will determine the amount the owner is expected to earn monthly. If a bed and breakfast is located in a highbrow area and in an area that is safe and welcomes visitors and tourist, they are likely to have people occupy their rooms regularly.
One thing is certain, it is easier to find several bed and breakfasts in a neighborhood around a busy travel route; which is why most bed and breakfast lodge owners ensure that they put facilities in places that will not only guarantee the safety and relaxation for their guests, but also create an ambience that will give them room to socialize.
3. The Type of Services that is Available in the Bed and Breakfast Lodge
Another important factor that will determine how much a bed and breakfast is expected to make yearly is the type of room and other complimentary services offered by the lodge. In recent time, you can easily find facilities with wireless internet access, free parking, spa services or nightly wine and cheese hours.
4. The Management Style of the Bed and Breakfast
Another key factor that will determine the amount a bed and breakfast owner is expected to make yearly is the management style of the owner. Trust me, the results you will get when you are a good manager will definitely be different from an owner with poor management skills.
The idea is that a good bed and breakfast owner will not just retain their old customers, they will also keep getting new customers lodging in their rooms.
5. The Length of Stay in the Bed and Breakfast Lodge
A very important fact that will determine the amount a bed and breakfast owner is expected to make is the average length of stay in the lodge. Ideally, the average bed and breakfast guest stays for a short period of time. One survey indicated about 60 percent of guests stay one night, 25 percent stay two nights and about eight percent stay three nights.
The length of stay depends on the reason the guest is visiting. If it is a business trip or if you live in an area with many tourist attractions, a guest may stay longer. If the guest is stopping on the way to another location, the stay will be shorter.
6. The Advertising and Marketing Strategies Adopted by the Bed and Breakfast
Another key factor that will determine the amount a bed and breakfast lodge can make yearly is the advertising and marketing strategies adopted by the owner. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more.
But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a bed and breakfast owner that is engaging in aggressive advertising and marketing to make same amount yearly with an owner that is passive with advertising and marketing.
7. The Number of Years the Bed and Breakfast is in Existence
Another key factor that will determine the amount a bed and breakfast lodge owner is expected to make on a yearly basis is the number of years the bed and breakfast is in existence. In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is well – managed.
For example, in your first fiscal year (FY1) you might make eight five thousand dollars (85,000), in your second fiscal year (FY2) you might make one hundred and twenty thousand dollars ($120,000) and in your third fiscal year (FY3) you might make one hundred and fifty thousand dollars ($150,000).
Now the question to ask is
How Much Can You Make if You Operate Your Own Bed and Breakfast Lodge?
For the purpose of getting the figures right, we will assume that you operate a bed and breakfast lodge with five rooms available at $75 a night.
If every room is filled, that’s $3,750 per night.
For the Period of one week, 5 rooms x 7 nights = 35 room nights. 35 x $75 = $2,625.
There are 35 room nights in a week x 4 weeks = 140 room nights in a month. If every room is booked every night, that’s 140 x $75 = $10,500.
There are 365 nights per year X 5 rooms = 1,825 room nights. If every room is booked every night, that’s 1,825 x $75 = a maximum annual gross income of $136,875.
It is important to state that;
$136,875 is the potential gross income based on 5 rooms being filled every night over the entire year.
The average bed and breakfast lodge operates at just barely over 50 percent occupancy rate. In essence, the amount generated by an average bed and breakfast lodge will be half of $136,875 which is $68,437.5
Gross income is income before expenses and taxes. Those need to be subtracted before arriving at your net income (profit).
Average Profit Margin for a Bed and Breakfast
This business is very profitable because you can operate the business with your family members thereby cutting operational cost to the barest minimum.
So also, the fact that you are making use of your apartment means that you won’t be spending a huge amount acquiring or renting a property to be used for the business except you just want to expand the business beyond the house you are currently living.
In essence, the profit margin a bed and breakfast ledge owner will make will range from 70 percent if all things are equal, and they don’t have any overhead that they have to carter for since family members will be manning the various job positions.