Will You Make Money Running a Bed & Breakfast ?

It is probably not realistic to expect to earn your entire living from the operation of a small (4 rooms) bed and breakfast. However, if you are looking for a way to supplement a retirement income, or just add to your present income; a bed and breakfast in your home can provide you with a number of other financial benefits.

The Internal Revenue Service allows bed and breakfast operators to deduct some costs of maintaining the portion of your home which is used exclusively and regularly for the business. Business expenses may also be deducted as a percentage of the house you use directly for the bed and breakfast business. Since IRS rules are always changing it is best to seek out professional advice on tax matters.

The two things you must consider are the number of rooms you have available and the number of nights those rooms will be filled. Let's take this example:

1. You have 4 bedrooms available for guests at a rate of $60.00 a night.

2. IF each room is filled every night that would be considered 4 room nights per day X $60 = an income of $240 for one night.

3. IF every room is booked every night of the week: 4 rooms x 7 nights = 28 room nights in a week. 28 x $60 = an income of $1,680 for a week.

4. There are 28 room nights in a week x 4 weeks = 112 room nights in a month. IF every room is booked every night of the month that would be 112 x $60 = $6,720 a month.

5. There are 112 room nights in a month x 12 months =1,344 room nights available a year. IF every room is booked every night of the year, 1,344 x $60 = an income of $80,640 a year.

Ask any innkeeper or hotel manager and they will tell you, the chances of being booked every night of the year are pretty slim. The same will be true of your bed and breakfast no matter where you are located or what you do.

So, what would be a success for your bed and breakfast? Many people would think that filling rooms 100 nights out of the year would be good, while for others it would be a disaster. According to a survey of bed and breakfast operations, the average number of room nights booked is 362. And, that is after several years of operation. If you figure that number at the average rate of $60 a night, that is an income of almost $20,000. Again, before any of your expenses are paid.

Realistically, you should not expect too much from your first year of business unless you are located in a very popular tourist area, or in an area of high demand with little accomodations available. This is not a "get-rich-quick" scheme. If you want to make more money in the hospitality business, running a full-service inn would be another alternative.

It takes much hard work and effort to run a bed and breakfast. Think of it as a way to supplement your income and the chance to meet many new and interesting people. That way, you won't be disappointed.

How much will you charge for a room at your bed and breakfast? There are no set rules for determining the rate. There are some general suggestions you might want to follow. It does surprise many people today to find out  many bed and breakfasts are not necessarily cheaper than a hotel or motel. This used to be the case several years ago, but no longer. Guests who stay at a bed and breakfast are looking for something special and are usually willing to pay for it. Remember, you don't want to charge too much or too little.

The rate should be a function of your indirect and direct costs plus an amount for your profit. A little bit or research is in order to see what others are charging their guests. Also consider these points in trying to determine your rates:

• The type of room available.
• The type and size of bed in the room.
• If there is a private or shared bath
• Special services or amenities provided
• The average rate charged by local hotels.

The typical bed and breakfast guest stays only a short time. One survey conducted  indicated about sixty percent of guests stay only one night at a B & B, twenty-five percent stay two nights and about eight percent stay 3 nights. The length of stay will depend on the reason the guest is visiting in your area. If it's a business trip or if you live in an area with many tourist attractions, a guest may stay longer in your bed and breakfast. If the guest is just stopping on the way to another location, the stay will be shorter.

Use this form to project your estimated gross income from your bed and breakfast operation. (100 nights is being used as an average.You may adjust that figure.)