Working out potential revenue vs cost

[PieBasket]

We get the keys to our 3 room B&B in November. I'm trying to work out finances based on some occupancy guides I found online.
With 3 rooms at 115 per night - 20% booking.com we make 92 per room. This is 276 per night at full occupancy.
This is 100,740 annual at 100%. The mortgage is about 20,000 so we would need 20% occupancy to break even in terms of revenue (not factoring tax at the moment). This is 73 nights to break even. If we have 2 bookings a week that is our break even (with tolerance)?

Before you opened for business how did you calculate your revenue and operating costs etc?

 

[gillumhouse]

AVOID the OTAs - especially b.con as we call it. Have an EXCELLENT website with GREAT photos of property, rooms, FOOD! Get on Social Media and post often about your B & B, your area. The OTAs will be something you will regret - reading the posts of the innkeepers on BedPosts solidified my decision which had previously been based on "I AIN'T PAYINH COMMISSION - I have to work hard for my money. Create POLICIES, cancellation, check-in/check-out times, etc. look up what other B & Bs have for policies ad post them on your website and make sure they are given to EVERY reservation. Get an online reservation system/channel manager (I use ReservationKey and it works in the UK - with the OTAs if you decided to use them) and I suggest Stripe or Square (small fee taken only when a charge is made and the rest is in your bank account in a day or 2) - I have used Square for years and BedPosts uses Stripe) for taking credit cards - NOT a processor (their gees will eat you alive).

I am not the norm re calculations - we paid cash for this house (sold previous house in a State that was more expensive and bought an old 2-story that was in good shape) where prices were a LOT less. I actually set my rates by calling a B & B in a nearby city who had private bathrooms (I had, in 1996, shared) and set my rates $5 less than hers. I am still here and all the others in the area - unfortunately - have closed/retired. I increased rates by $5 - $10 every couple years - bigger beds (from double to queen raised and from 1 of the queens to king plus creating another bathroom) RAISED rates again.

When I opened - I KNEW NOTHING! We attended a State Association Conference and learned a lot of must have and do not do. This was in 1996 - before Internet!

 

[PieBasket]

AVOID the OTAs - especially b.con as we call it. Have an EXCELLENT website with GREAT photos of property, rooms, FOOD! Get on Social Media and post often about your B & B, your area. The OTAs will be something you will regret - reading the posts of the innkeepers on BedPosts solidified my decision which had previously been based on "I AIN'T PAYINH COMMISSION - I have to work hard for my money. Create POLICIES, cancellation, check-in/check-out times, etc. look up what other B & Bs have for policies ad post them on your website and make sure they are given to EVERY reservation. Get an online reservation system/channel manager (I use ReservationKey and it works in the UK - with the OTAs if you decided to use them) and I suggest Stripe or Square (small fee taken only when a charge is made and the rest is in your bank account in a day or 2) - I have used Square for years and BedPosts uses Stripe) for taking credit cards - NOT a processor (their gees will eat you alive).

I am not the norm re calculations - we paid cash for this house (sold previous house in a State that was more expensive and bought an old 2-story that was in good shape) where prices were a LOT less. I actually set my rates by calling a B & B in a nearby city who had private bathrooms (I had, in 1996, shared) and set my rates $5 less than hers. I am still here and all the others in the area - unfortunately - have closed/retired. I increased rates by $5 - $10 every couple years - bigger beds (from double to queen raised and from 1 of the queens to king plus creating another bathroom) RAISED rates again.

When I opened - I KNEW NOTHING! We attended a State Association Conference and learned a lot of must have and do not do. This was in 1996 - before Internet!

Surprised about the b.con (ha!) advice as the current owners said they get the majority of their custom through it. Had a look and they do have hundreds of reviews on there. However there is also a very strong TripAdvisor rating so perhaps this could be leveraged to eliminate that pesky 20% fee. Do you think it's worth having a B&B twitter and Instagram then?

I'll ensure the policies are very clear in both the confirmation emails and the website. T&Cs will be set up properly.

I'm looking into ReservationKey now. I hadn't considered needing to remove availability if I get a booking on another site. Although the consensus is to not use OTAs perhaps we will just as we get started. You're not locked into anything long term I don't think - if it picks up we can move to direct only.

I've heard of Stripe, I'll see if we can set this up. Would this be the method of payment for both on site and online? Having a card reader is a good idea for last minute walk-ins right?

We considered selling and paying cash but are renting our current place out instead. At the very least it will cover 90% of the mortgage for the B&B so we have this as a safety net so to speak.

The confusion I'm facing with pricing (which the current owners seem to have automatically built in) is depending on the days and dates you book the prices change - I assume based on demand.

Should I go on Airbnb and booking.con! and work out what people are paying and just do a spreadsheet and average it to work out ranges for different seasons etc.

Great to hear you entered without knowing anything and now are an expert in the field. Bet it took a lot of surprises and disasters to get to this point!

 

[PieBasket]

AVOID the OTAs - especially b.con as we call it. Have an EXCELLENT website with GREAT photos of property, rooms, FOOD! Get on Social Media and post often about your B & B, your area. The OTAs will be something you will regret - reading the posts of the innkeepers on BedPosts solidified my decision which had previously been based on "I AIN'T PAYINH COMMISSION - I have to work hard for my money. Create POLICIES, cancellation, check-in/check-out times, etc. look up what other B & Bs have for policies ad post them on your website and make sure they are given to EVERY reservation. Get an online reservation system/channel manager (I use ReservationKey and it works in the UK - with the OTAs if you decided to use them) and I suggest Stripe or Square (small fee taken only when a charge is made and the rest is in your bank account in a day or 2) - I have used Square for years and BedPosts uses Stripe) for taking credit cards - NOT a processor (their gees will eat you alive).

I am not the norm re calculations - we paid cash for this house (sold previous house in a State that was more expensive and bought an old 2-story that was in good shape) where prices were a LOT less. I actually set my rates by calling a B & B in a nearby city who had private bathrooms (I had, in 1996, shared) and set my rates $5 less than hers. I am still here and all the others in the area - unfortunately - have closed/retired. I increased rates by $5 - $10 every couple years - bigger beds (from double to queen raised and from 1 of the queens to king plus creating another bathroom) RAISED rates again.

When I opened - I KNEW NOTHING! We attended a State Association Conference and learned a lot of must have and do not do. This was in 1996 - before Internet!

Oh one other question I had.

Do you charge extra for breakfast when they book or is it included in every room booking. As in would I charge £100 for the room and then charge £10 separately for breakfast?

I checked online and it doesn't seem clear whether the room includes the breakfast and it has to be added as an additional extra.

I also thought it might be worth sending a confirmation email with breakfast tick list and what time they want it. Save waste and can plan ahead.

 

[gillumhouse]

Surprised about the b.con (ha!) advice as the current owners said they get the majority of their custom through it. Had a look and they do have hundreds of reviews on there. However there is also a very strong TripAdvisor rating so perhaps this could be leveraged to eliminate that pesky 20% fee. Do you think it's worth having a B&B twitter and Instagram then?

I'll ensure the policies are very clear in both the confirmation emails and the website. T&Cs will be set up properly.

I'm looking into ReservationKey now. I hadn't considered needing to remove availability if I get a booking on another site. Although the consensus is to not use OTAs perhaps we will just as we get started. You're not locked into anything long term I don't think - if it picks up we can move to direct only.

I've heard of Stripe, I'll see if we can set this up. Would this be the method of payment for both on site and online? Having a card reader is a good idea for last minute walk-ins right?

We considered selling and paying cash but are renting our current place out instead. At the very least it will cover 90% of the mortgage for the B&B so we have this as a safety net so to speak.

The confusion I'm facing with pricing (which the current owners seem to have automatically built in) is depending on the days and dates you book the prices change - I assume based on demand.

Should I go on Airbnb and booking.con! and work out what people are paying and just do a spreadsheet and average it to work out ranges for different seasons etc.

Great to hear you entered without knowing anything and now are an expert in the field. Bet it took a lot of surprises and disasters to get to this point!

I am no expert - I just lasted a while.

ReservationKey is easy to use - both for the innkeeper AND the guests. It CAN be set up with different rates at different times - I believe it is called Yiels Management. I do not use it. When Himself was alive, I was doing good to have the rates written down for him in case I was nor here when someone called. I am old and would not remember but yield management is good (I am also NOT in a high demand area). Stripe works on-site and online. I would assume it also has a lovely feature that Square has - I can send an invoice (first time Daddy wanted to pay for a room for daughter as anniversary present - sent invoice, he entered cc# and submit and I get email he paid followed by email next day that money is in account). I also use it for a Foundation I am on the Board of to collect for merchandise people want to buy from us.) the fee is slightly higher, but no chance for a chargeback because they entered the numbers!

I am a Bed & BREAKFAST - what they remember is my breakfasts (5 years later a guest asked when booking if I still offered my venison sausage). I know in the UK breakfast is optional - at extra in some places. It was started I think to combat things like extra commission to b.con or the cheap rates of that (what I consider a bastard - AIRbnb). Here, breakfast is complimentary (included in the rate). Many hotel & motel chains advertise FREE Breakfast - but it is nothing like OUR breakfasts. I know - from having been there - that B & Bs in the UK do Full English and the menu is whatever parts of a Full English. Here breakfasts are different - from inn to inn AND from day to day. IF I have a 2-night or more, breakfast will be something different each morning from muffins to entree. At my N & B they can choose their meat and coffee country so that might be the same but even that is usually different because they get to taste other things.

As long as you make it prominent - go with what suits you regarding including breakfast or as an extra.