Sandy Soule

Does a rising tide lift all boats?
Don't bet your business on it, unless your B&B's afloat!

Occupancy Rates
According to the 2002 PAII Industry Study, occupancy rates slipped by four percent from 2000 to 2002 (comparisons made with the same inns), and now stand at 38 percent, an average for all U.S. B&Bs. Despite the drop in demand, the average daily rate (ADR) paid by B&B/country inn guests increased during this period to $136.70. The net result was a 2.8% growth in total revenues for the B&B/country inn segment compared to declines in the hotel sector.

What does this mean to you? First of all, compare the averages to the situation of your own B&B, making allowances for your specific location, experience, and requirements. Some B&B owners have two or three guest rooms, no extra help, little or no mortgage expense, and outside interests and income. For those innkeepers, an occupancy rate of 25 percent might be ideal. In other situations, where staffing and mortgage expenses are high, and the inn is the owners' primary income source, the industry average spells disaster. Additional key factors include whether the inn is a start-up operation or a well-established one; whether there's ongoing reinvestment in amenities, capital improvements, and marketing; plus such outside factors as the local and national economy, political issues, and/or natural disasters. Balance the detailed information in the PAII Study with an honest self-assessment to decide where you fit in.

When opportunity knocks, will you answer the door? Although current predictions call for a strengthening economic climate, don't expect a return to the rates and occupancy figures of the year 2000. Strong competition, fueled by the transparency of the Internet and the variety of options available to the traveler, make it likely that this tide won't be floating all boats. If you want to increase occupancy, it's essential to:

1. Fine-tune your marketing strategies
2. Re-evaluate the price-value ratios of your products/services
3. Update your operating procedures.

FINE-TUNE YOUR MARKETING STRATEGIES

Who are your guests? The PAII Study estimates that "leisure travelers" encompass 50 percent of occupancy, "special occasion" visits 24 percent, and "business travelers," eight percent; weddings, family visits, meetings, and groups comprised the rest. Apply this model to your B&B's occupancy, and see if it correlates. Focus on the special interest groups to increase your market share.

• Business travelers: Let's say you estimate the percentage of your business guests at five percent. Evaluate what you can realistically do to increase this number. Remember that most business travelers are an innkeeper's dream: they are low-maintenance, they are return guests, and they visit midweek when your occupancy rates may be the lowest. Focus on their needs for an uncluttered guest room with a usable desk, good lighting, telephone, Internet access, credit card acceptance, flexible breakfasts, and policies on check-in/out and cancellation comparable to area motels. Remember, not every room in your inn has to be ideal for this market segment-start with one or two. Once you've made the modest investment required to make your still charming inn guest room ready for business travelers, spread the word via your website, as well as directly to local factories and businesses, hospitals, colleges, and government offices.
• Special occasion guests: Couples celebrating engagements, honeymoons, and anniversaries make up 23 percent of guests, according to the PAII Study. To attract them, you must have at least one reasonably spacious room/suite that has its own double whirlpool tub, fireplace (gas or electric is OK), and TV/DVD/stereo combination. Although the capital investment is significant, special occasion rooms can be rented at premium rates, and can effectively be marketed to local residents looking for a special occasion getaway.
• Don't forget the C-Word: Families account for ten percent of guests, according to the PAII Study, yet nothing upsets innkeepers more quickly than the idea of hosting children. Despite nightmarish visions of unsupervised kids running amok amid the antimacassars, you can welcome this rapidly growing segment of the market without alienating those special occasion guests who left the kids home with grandma. Unless your entire inn is family-friendly, consider setting up a separate room/suite/cottage/carriage house, preferably with a private entrance. Decorate attractively with sturdy, non-antique furnishings, select tile or wood floors with area rugs instead of wall-to-wall carpeting; use easy-to-wash bed linens and window treatments; and provide a mini-frig and microwave for heating/cooling snacks. Serve breakfast in the room, and be sure to include a selection of individually packaged kid-style cereals. You may find that the same room works well for hosting guests with pets.
• Ready, set, market: When a reporter calls asking for photos of your inn to run in an article, don't respond, "sorry, we don't have any, please take them off our website." The low-resolution photos used on your website don't look good in print; maintain high-resolution versions of the same shots, so you can email them at a moment's notice-quicker and cheaper than FedEx, and you don't even have to remember where you saved the extra prints.
• No inn is an island, entire of itself:" Remember that most guests select destinations first, accommodations second. Make sure that all your marketing materials stress the myriad reasons travelers should visit your area, and work cooperatively with other B&Bs and members of your local tourist office to promote travel to your area.

Ten Commandments of Internet Marketing: According to the PAII Study, guest tracking statistics point definitively to the Internet as the leading source of guests, increasing from 22% in 1998, to 42% in 2000, to 45% in 2002. For B&Bs in business for three years or less, the figure rises to 52%. Many individual innkeepers report figures closer to 80 and even 90 percent. See how you do on this checklist:

1. Own one or more Internet domain names.
2. Using a professional designer, tweak your inn's website monthly, and update it quarterly (both text and photos).
3. Make sure that all your Internet marketing includes great photos of your guest rooms, common areas, exterior, and grounds, and change them seasonally and for niche markets.
4. Maintain up-to-date listings on the major Internet B↦B inn directories, and in state and local CVBs/tourist offices; be sure to take advantage of all special promotions these sites offer.
5. Post room availability (or offer real-time bookings) on your website.
6. Stay current on search engine optimization and pay-per-click, or pay a professional to do it for you.
7. Use an email address that incorporates your domain name (i.e. stay@myinn.com , not Aloysius@quixoticmktg.com).
8. Check email a minimum of four times daily, and respond, using a complete signature file on all emails.
9. Collect email addresses from your guests and website visitors; several companies specialize in assisting innkeepers with email distribution and storage.
10. Network with other innkeepers via local gatherings, online discussion groups, and at innkeepers' conferences to learn what works for them.

RE-EVALUATE THE PRICE-VALUE RATIOS OF YOUR PRODUCTS & SERVICES

Are your guests "voting with their feet?" Although steadily declining in importance as the Internet takes precedence, the PAII Industry Study shows guest repeats and referrals still accounting for 20 percent of reservations. Since acquiring new guests costs a lot more than retaining the old ones, think about two things:

• Are you giving satisfied guests reasons to return and to refer their friends?
• Are you addressing the issues of dissatisfied guests?

Repeats & Referrals: If you've ever been an innkeeper and/or a guest at an inn with lots of repeat guests in residence, you know how delightful the atmosphere can be. The returnees are so positive and welcoming that they help new guests feel right at home. Make sure that you thank these returning guests both in word and deed for the compliment they are paying to your inn. Treat them like the special customers they are, with treats (mugs, teeshirts, etc.) and room upgrades. Test incentive programs so that they will spread the word to their friends. Even a small increase in your R&R occupancy can positively affect your bottom line.

If your percentage of repeats and referrals is below par, take a good hard look at how your inn stacks up against the competition, both in terms of price and value. Start with a little Internet surfing, comparing the rates charged by other lodgings both in your area and in competitive destinations. For example, if your B&B is in a New England ski town, compare what you offer with in-town inns, lodges, and motels as well as in other ski towns in states throughout New England. Then, after your fingers have done the clicking, get out of the house, and overnight at some of these properties in competitive destinations. If you haven't done this in several years, you are out of touch with:

• What if feels like to be a guest
• What other properties are providing
• What the market wants (as opposed to your own personal tastes)

UPDATE YOUR OPERATING PROCEDURES

Becoming and staying profitable is a challenge in this competitive marketplace, so stay focused on increasing revenue and decreasing costs while maintaining quality. Although easy to say--and hard to achieve-there is one key area where costs can be reduced while reservations are increased, and that is through computer use of :

• property management software
• online availability calendars
• real-time confirmed online reservations

Property/guest management software offers guest inquiry and guest contact management, mail merge capabilities, reservation scheduling and booking, occupancy and availability management, guest billing, revenue reporting, marketing, room occupancy analysis, and often integrates into your finance/accounting software and call accounting software, plus many more functions.

Online availability calendars are offered by many different companies, either as independent companies or integrated with an overall software package. Most common is a link from the inn's website or an Internet B&B directory to a calendar page which indicates which rooms are available and which have been reserved. Many innkeepers miss the forest for the trees when it comes to these affordable, easy-to-use calendars. They worry about possible problems, instead of looking at the increased reservations that will result when rooms are available, and the decrease in time-consuming phone calls when they are not. If you have any doubts about adding an availability calendar, ask a few innkeepers that use them and see what they say.

Real-time confirmed online reservations will soon be essential on almost every B&B website. Innkeepers who chose not to offer this feature must accept the fact that this will soon cost them reservations, as more and more travelers will book only at properties where they can make a confirmed online reservation. According to a recent article in Forbes magazine : "Online hotel bookings are the second largest segment of online travel (after air travel) and are forecast to almost triple from $6.3 billion (9% of all hotel bookings) in 2002 to $17.5 billion (20% of all hotel bookings) in 2005.

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