Does your area have as many B&Bs as it did 10 years ago?

[agoodman]

In MANY cases you cannot get a residential mortgage on a B&B esp on an existing one (I am saying MOST) so don't shoot me down so I can tell you as someone with a 200K morgage (and I happen to have a residential mortgage but only got it after my initial commercial) morgage payments on 300K are more than 1500/mos
And as someone who had to declare bankruptcy to 'save the inn" yes it is certainly harder than it was 5 years ago, despite having a 60% repeat rate. Expenses are up, rates are static.
Same number of hotels (1) and B&B's (2) as there was 4 years ago, one "non descrptive" closed about 5 years ago but I would not have wanted any of their business.

 

[Copperhead]

When we opened 12 years ago, there were 24 B&B's in my county, 3 in my immediate city area. Today I am the lone survivor in my area, and the county is down to 15. Of these, 5 are new(er) than mine! Of the original 24, 2-4 were closed due to a natural disaster. It is intersting that each of the 5 newer ones, each is more than a B&B
One is a Retreat set up, mainly for groups and events, 3 are farms of different types, and one is a restaurant that suplements with a couple of guest rooms.
We have seen a growing number of vacation rentals popping up around here that offer nightly accommodations as well as weekly & longer terms. What I find a problem with, with this trend is that they are not regulated here. There are no guidelines, no inspections, and no sales taxes collected on these. This market is easlily takeing business away from B&B's and some hotels. I also wonder if these individuals have the proper insurance to cover having paying guests in the rental.

 

[Joey Camb]

Where I am we have lost a few and gained a few. There was a trend about 6 or 7 years ago converting B&B's into flats which were then sold off at a lot more money than the original building would have cost. However where I am is a conference town and without bedrooms were are jiggered the council actually grew a brain and made it impossible for B&B's with more than 12 rooms to e converted into anything else without special permission granted on a case by case basis which dramatically reduced the problem. Also the demand in Harrogate is so higo beople come here to do B&B. However there is to be a new 127 bed hotel built so we will see how that affects things.

 

[Country Girl]

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes. One of those opened 4 years ago, the others within the past year.

 

[Arks]

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes. One of those opened 4 years ago, the others within the past year..

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes.

Sounds like it's a matter of a market that's initially underserved, then it goes through a period of searching for an upper limit as to how many B&Bs the area will support. When you get too many, a few will close until it reaches the ideal level.
Reality rarely follows such a neat pattern, of course.

 

[HighMountainLodge]

As our brokers (http://www.innmatchmakers.com) were at pains to explain to us, there are only a few business models in the B&B world. The two most important I'll mention here:
Investment grade: well-managed businesses whose selling price is supported by their gross revenues. I.e., you can pay your bills from the revenue of the operation, including the mortgage.
Lifestyle inns: price is determined by the value of the real estate and not as a multiple of their revenue. This is the sort of property people buy and supplement their debt service by renting out rooms.
InnMatchmakers have a few other categories, but these are the most salient, and they're really helpful in evaluating the potential of a property (at least, they were for us).
At the very least, they helped us figure out that, a 4-room B&B, no matter it's location, was never going to have finances that would "pencil" at $1.5M, no matter how many chocolates there were on the pillow at the end of the day.

 

[EmptyNest]

As our brokers (http://www.innmatchmakers.com) were at pains to explain to us, there are only a few business models in the B&B world. The two most important I'll mention here:
Investment grade: well-managed businesses whose selling price is supported by their gross revenues. I.e., you can pay your bills from the revenue of the operation, including the mortgage.
Lifestyle inns: price is determined by the value of the real estate and not as a multiple of their revenue. This is the sort of property people buy and supplement their debt service by renting out rooms.
InnMatchmakers have a few other categories, but these are the most salient, and they're really helpful in evaluating the potential of a property (at least, they were for us).
At the very least, they helped us figure out that, a 4-room B&B, no matter it's location, was never going to have finances that would "pencil" at $1.5M, no matter how many chocolates there were on the pillow at the end of the day..

Agree and I have been saying that for years! The B & B Team goes along with these same ideas as well.

 

[Country Girl]

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes. One of those opened 4 years ago, the others within the past year..

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes.

Sounds like it's a matter of a market that's initially underserved, then it goes through a period of searching for an upper limit as to how many B&Bs the area will support. When you get too many, a few will close until it reaches the ideal level.
Reality rarely follows such a neat pattern, of course.
.

I was the only one in my town and the surrounding area for 12 years. Now there are 2 others in my town and 2 more within 10 minutes.

Sounds like it's a matter of a market that's initially underserved, then it goes through a period of searching for an upper limit as to how many B&Bs the area will support. When you get too many, a few will close until it reaches the ideal level.
Reality rarely follows such a neat pattern, of course.

I saw the need for a B&B in my town 14 years ago so I opened mine. Our business really took off. That surprised a lot of people and a few decided to jump on the bandwagon too. I think there are too many now. Every day I hear about another person thinking of turning their home into a B&B. Now a lot of realtors list homes for sale as "B&B potential". I cringe. The town will set a limit though if there are too many.

 

[Joey Camb]

I think people often go into this biz with a very unrealistic expectation of occupancy. If you go into it needing say 95% occupancy to break even then I guarantee you will go bust. If your break even point is 40% I think in most places you are in with a fair chance. (factoring in price of property, deposit, costs and so on) I have met people who think 100% occupancy is achievable and that they can vet guests they want to stay and only have "nice ones" it is a joke. Trouble is people think B&B is an easy business model when in fact all the admin side is complicated and requires constant maintenance. For example I have increased our commission level on one web site to see if that affects our booking levels so I have to monitor it closely and so on. Also if you are planning eventually to sell you can't tell me having hard facts and figures about the success of your business wouldn't make it a much more attractive prospect.

 

[JBloggs]

As our brokers (http://www.innmatchmakers.com) were at pains to explain to us, there are only a few business models in the B&B world. The two most important I'll mention here:
Investment grade: well-managed businesses whose selling price is supported by their gross revenues. I.e., you can pay your bills from the revenue of the operation, including the mortgage.
Lifestyle inns: price is determined by the value of the real estate and not as a multiple of their revenue. This is the sort of property people buy and supplement their debt service by renting out rooms.
InnMatchmakers have a few other categories, but these are the most salient, and they're really helpful in evaluating the potential of a property (at least, they were for us).
At the very least, they helped us figure out that, a 4-room B&B, no matter it's location, was never going to have finances that would "pencil" at $1.5M, no matter how many chocolates there were on the pillow at the end of the day..

As our brokers (http://www.innmatchmakers.com) were at pains to explain to us, there are only a few business models in the B&B world. The two most important I'll mention here:
Investment grade: well-managed businesses whose selling price is supported by their gross revenues. I.e., you can pay your bills from the revenue of the operation, including the mortgage.
Lifestyle inns: price is determined by the value of the real estate and not as a multiple of their revenue. This is the sort of property people buy and supplement their debt service by renting out rooms.
InnMatchmakers have a few other categories, but these are the most salient, and they're really helpful in evaluating the potential of a property (at least, they were for us).
At the very least, they helped us figure out that, a 4-room B&B, no matter it's location, was never going to have finances that would "pencil" at $1.5M, no matter how many chocolates there were on the pillow at the end of the day.

Thanks for this info, nutshell is how I like to read and learn, that was nutshell. Appreciate it!

 

[altlogin]

Ok, sorry to confuse everyone.
I don't know where the 66 rooms came from. All of our members have at least 4-5 rooms.
Our 22 members had about 130 beds, some places had 10 rooms (like ours). There were a total of about 380 beds here on San Juan Island island. Today there are probably 300 beds, and under 80 in our association NOT including vacation rentals that have really increased (genXers with families...) The loss is the smaller B&Bs. Our Inn hits 93% occupancy in August, but year around we are more like 32%.
The for sale website that sorts by ":lifestyle,feasible," etc. does the best job of reseetting expectations. And I hope everyone understands ADR - I calculate ours every month.
Thanks to everyone for the input.
Richard