Blogging Your Way to a Successful Bed and Breakfast

At a recent meeting of Innkeepers, we had a discussion of Blogs, and, particularly, why would an Innkeeper spend the time to create and keep up a good blog? The answer is kind of simple. Do you want to have a successful website or do you want to continue to struggle for visibility on the search engines?

One key to success with Google, Yahoo, and the other search engines is to continually have fresh content on your Inn’s website. Having a Blog on your website allows you to constantly change the content, and particularly the links to and from the site, with new and relevant material. Remember, that for Google and the other search engines, the more relevant the material is to your website, the better. Thus, writing about all of the things to do and see in your Inn’s area, about the great restaurants, about the special events happening around you, all contribute to higher visibility in the eyes of the search engines. They also contribute directly to heads in beds!

At the PAII Conference this March, we heard many really great presentations on Web 2.0 and, particularly, Consumer Generated Media like TripAdvisor. You can play games with TripAdvisor to try to bury bad reviews or create your own reviews, but this will eventually come back to haunt you. Most Inns urge their guests to write their own reviews on TripAdvisor. Better than this is to open a dialogue with your guests via your own Blog. You can clearly respond to TripAdvisor via a Managers Comment, but why not explain yourself in detail on your own Blog. Ask for and respond to your guests’ concerns directly. It is much more powerful for your own website to be the place that guest concerns and critiques can be dealt with openly and without defensiveness on your part.

Finally, remember that hospitality and service is still the basic component of our Bed and Breakfast Industry. Having a Blog creates a new, electronic media to provide this hospitality and service to your guests and prospective guests. What better place than your Blog to show the world what a terrific concierge you are? You know your area better than anyone, and need to be its best ambassador. Don’t wait for the guest to arrive to provide this service. Make it an active part of your web marketing by putting it all on the Blog. Your Inn’s success will depend on it.

Bed and Breakfast Expense/ Income Tracking

The only way to improve your Bed and Breakfast or Inn business is to effectively track where you are today and to make realistic goals for the future of your business. At the 2008 PAII Conference Howard Levitan of Quantum Hospitality Group will be discussing the best methods to track where your business is today and how to increase your profits using metrics and the PAII Industry Study. We hope to see you at the Conference! If you cannot attend, we have provided our slide show presentation:

Bed and Breakfast Expense/ Income Tracking

Marketing Bed and Breakfast With Food

We are pleased to again be speaking at the PAII Conference this year. In one of our presentations Howard Levitan of Quantum Hospitality Group will be discussing how to best market your Inn with food. We hope you will be able to attend the conference, however, if you cannot attend we wanted to be sure to share our slide show presentation with you. We hope to see you at the Conference!

Marketing Your Bed and Breakfast With Food

PAII 2008: "Crisis in the Mortgage Industry and How it affects your Inn"

The Buyer’s Side

Presentation by Howard J. Levitan

1. Are Buyers Ready to Buy? The simple answer is that the majority of the assets available to Buyers when they are seeking to buy their “ideal” Inn are tied up in the equity (?) of their principal residence. If they can’t sell the house at a price that is sufficient, then they aren’t really able to buy an Inn. There are too many horror stories of people buying Inns with bridge loans on their houses who are unable to sell them for love or money.

It seems that the national averages on home sales are broadcast by the media every day. What this data seems to be showing is that the average sales are down by about 30% in most markets. Yet prices are down only by about 10% at the same time. What the pundits seem to take from this is that it is very hard for people to lower the price of the home that they have lived in, taken care of, and improved over the years. It is simply too personal a thing. Home prices simply will not drop significantly unless and until people have their backs to the wall of foreclosure or bankruptcy.

Those people who understand the dynamic are either reducing their prices to the market and getting out at whatever level they can, or, if they are able to, are simply holding on for the market to turn. Buyers of houses on the other hand are bargaining hard and clearly they are winning. The long and short of it is that unless and until the general real estate market recovers, there are going to be less people out there buying Inns.

2. Are Sellers ready to Sell? Arden Dale writes in a compelling article published in the Wall Street Journal on January 8, 2008 that “Want to Sell a Business? You May Not Be Ready.” Ms. Dale goes on to state quite cogently that many small business owners are relying on the ultimate sale of their business for their own personal retirement funds. The author’s thesis is that many small business owners do not have proper financial records, detailed operational documentation, and may not have a very realistic idea about the price for their businesses. He goes on to point out that buyers are much more sophisticated than in the past and are insisting on receiving extensive due diligence materials before agreeing to any purchase. The author’s solution is to start getting the business ready to sell several years in advance, to keep proper books and records, and to improve the operating profitability as much as possible.

Are Inn Sellers any different than home sellers about pricing of their Inns? The simple answer may be that they are unrealistic in what they should expect from the sale of their Inns. The real estate market should not have a tremendous impact on the “value” of an Inn, because if the business is viable and self-sustaining, then the value should be driven by the cash flow of the business rather than by the sales price of the underlying real estate. However, in better times we saw that this was not true about Inns located in strong real estate markets. The sales prices of many Inns were driven up by the strong real estate values around them (particularly in California and other locations like Nantucket where the historic Inns were being converted back to homes or torn down to built fancier houses). So what is happening in weaker real estate markets? The answer is that without strong net cash flows, Inns with marginal businesses are languishing on the market, but asking prices are not coming down. Basically, the same thing is occurring as in the housing market; namely, that sellers are loath to reduce their prices to the market. It is just too personal!

3. What about the National Economy or Recession? Clearly, this is going to have an impact on Inn sales as Innkeepers across the country are going to be dealing with a weak tourism market. The “bears” around say that people will not spend as much disposable money for vacations and travel if they are having to pay much more for everything they buy. As most of what people have to purchase is being impacted by the weak dollar and corresponding high oil and gas prices, the squeeze is clearly being felt. Those more bullish say that people will take vacations anyway and that all that a poor economy means is that they will stay a bit closer to home and drive to their holiday spot. National Retail Sales figures do not seem to be going along with the bulls here. Retail sales are down significantly and are shifting again to the discount side. Watching WalMart, the number one retailer, you will see that its sales have grown recently, but in their food and lower cost clothing lines, rather than in the areas of higher fashion that they were trying to grow. The chain restaurants, particularly those which sell non-necessities (like Starbucks) have been particularly hit hard by this “recession.” It is only a matter of time for this to hit the tourism market.

For buyers, this does create somewhat of an opportunity, with the Federal Reserve pushing interest rates back to the really low levels of the past several years. However the real key is to make certain that there is sufficient cushion in the net cash flow of the Inn to weather the likely fall off in the hospitality business caused by an economic recession. So buyers need to be very careful that they look at the reality of the financial performance of an Inn opportunity, that they make absolutely certain that there is sufficient cash flow to get by if things go bad, and that they have good working capital at the outset. Making an emotional “lifestyle” decision is not a very good idea in the immediate future (or perhaps ever!). The best performing and operating Inns will likely still be very attractive at the right price with such low interest rates, but marginal operations simply will not sell at any price.

4. Is Now the Right Time to Buy? Here the answer is clearly a strong “maybe.” For those buyers that have liquidated their homes, they may be able to negotiate good deals for Inns at the right prices, and will clearly benefit from the lower interest rates. As will be shown in other parts of this presentation, they will have some difficulties in securing mortgage financing, as the banks retrench, however, buyers with strong credit and good sized deposits should still be able to secure financing where the cash flow provides good debt service coverage. Many banks will look very hard at the hospitality industry as to whether it is going to be severely impacted by a recession. If the answer is yes, then it will remain harder to get financing.

The bottom line for buyers in regards to timing is that it may not be possible to determine when the market turns. If buyers can find a really good opportunity now, at a good price, then they should go ahead and not look back to see if the market falls even more. Buyers need to remain ever vigilant and always cautious to make sure the Inn business is strong and will weather these difficult times.