Twitter for Bed and Breakfasts 3.0

Here is the third installment of my exploration of the world of Twitter (the “Twitterverse”). My Twitter ID is @InnConsultant. Follow me if you like what I am saying.

In Part I and Part II, I discussed how I first got into Social Media, and how I got hooked on it. I found it a really good way to get good returns marketing small businesses like Bed and Breakfast Inns. It truly compliments all of the time and effort that you put into having a really good blog, by providing effective advertising for all of your new blog posts. Here are my thoughts after a few months on Twitter.

First, as I stated in earlier posts, there is a real etiquette to Twitter. People will stop following you if your tweets are just ho hum! This is an information sharing concept, so if all you are doing is trying to sell, sell, sell, they will turn you off. What people want to know is who you are and what you really think about things. In other words, why are you “interesting” enough to follow? At the present time, I am amazed to find that I have over 230 really diverse people who follow me, and I am following more than that. I am not really trying to drum up followers now, they seem to just find me. Most of them are interested in travel and hospitality, which of course is what I am all about. So I seem to be getting people to follow me that share my interests. And that is the whole purpose of this effort.

So, I don’t try to sell anything to anyone. I am also very careful about my on-line reputation, so I don’t rant and rave (even when I feel like doing so!). I comment frequently about other people’s tweets, either retweeting (“RT”) or replying (“@” ____). Sometimes, I send someone a private message (“DM”) where what I have to say is either personal or not something of interest to the world of followers. What I try to do is to share information about things that I am interested in and provoke thoughtful conversations about those things. What I am really doing is trying to show people who I am and why they should listen to what I am saying. I am learning about other people who I follow and who both share my interests and are interesting people. One thing is for sure. I have come to really admire some of the people that I have “met” on Twitter, without really ever seeing or hearing them. What an amazing thing!

Another interesting thing is the local nature of Twitter. Following people in your community or state is a good way to build up a reputation or persona on Twitter. This translates into a whole new world of networking, especially in the on-line community of people who are practicing Social Media on a daily basis as part of their jobs. I have found a whole group of people twittering away in and around Portland, Maine, who are great sharers of information about social media and how it works best.

Now the business part of the equation. People who are interested in who you are also are interested in what you do. Your followers want to know what differentiates what you do from what others do, and why that makes you interesting? So if you have the best Bed and Breakfast Inn in the World, Country, State or even just your local city or town, you can show people (like your guests or prospective guests) why they should come to stay at your Inn as opposed to going elsewhere. Now how do you do this?

Like all marketing advice, the main idea of differentiation is to tell who you are clearly and convincingly, and what makes you different than all of the others. The tough part in Twitter is that you only have 140 characters to provoke an image to the readers (i.e. the World). While this requires some thought, not all images need big and long trains of words. A quick pop about those amazing thick and tangy, fresh Maine blueberry pancakes you served at breakfast may be enough to tweet a great image to your followers. If you have fantastic restaurants and wine nearby, tell people about the great meal you had there (i.e. what you had not just that it was good). Tell them about all of the festivals and doings in your local area, so that they get a feel about why they should come. Convey a thought image in just a few words. This is quite different that just announcing a reduction in price to try to get people to come. What is happening is that you are describing what your Inn is all about, and why they should come to see you as the Innkeeper. You are really invoking a feeling in the reader. If they get the sense that you are a good and interesting person, then that is most of the battle right there.

So, give it a try. We keep hearing about all of the success stories of Inns on Twitter. If you don’t believe me yet, try following @HoptonHouseBnB. Karen Thorne, from Shropshire, UK, is probably the most Social Media savvy Innkeeper I have ever seen (or is that “heard”). Look at what she does on Twitter, and you will find a perfect role model for your Tweets. What are you waiting for?

Twitter for Bed and Breakfasts 2.0

Here is Part II of my exploration of the world of Twitter. I have been tweeting now for about two weeks, and have about 120 people actually following what I am saying on this incredible social media. It amazes me how fast this has grown for me from a peek at a new marketing channel to a full blown way to spread the word about what we do at Quantum Hospitality. More important, I have found so many really interesting people in the Twitterverse to follow. They are writing short notes (140 characters only) about anything and everything of interest to them. Here are my continuing observations about this exploding device.

In last weeks blog article, I described in general how Twitter works, but the simplicity of sending out very short messages belies the fact that a tremendous amount of information is being spiraled around the Internet in this fashion. By using one of many free services to shorten URLs, Tweeters are including references to blog articles and other websites within their Tweets. Once received, each person, if the information is deemed worthy, can then “Retweet” this information to his or her list of followers with a comment. It is this Retweet phenomenon which is the essence of viral marketing. It keeps the message circulating, growing and growing the number of people who ultimately see it. Just think of the possibilities. Imagine your Special Package description gets Tweeted to your friends (presumably your guests) who then spread the word to all their friends, who then send it to all of their friends, and so on. . . . This is the essence of the concept of Repeats and Referral, the two most important kinds of guests and prospective guests a Bed and Breakfast can have. In essence, the marketing potential of Twitter is endless.

Now, does it work? First, there is an etiquette happening as well. If all that you talk about on Twitter is your business, your Twitter followers (i.e. your “friends”) will likely stop listening to what you say. This is a social media after all! They want to know you as a person as well as a business. Here is where all your Innkeeper hospitality comes into play. You can spend a good deal of time on Twitter talking about what is going on at the Inn. It can be as simple as a description of that fabulous breakfast that you just fed to your guests, a description of one of your best guest rooms, or a short note about what is happening in your neck of the woods this weekend. Pictures work great on Twitter, with a Flicr account and a shortened URL, you can include great photos in your Tweets. Again the marketing potential is limitless. The key is to convey the wonderful ambiance of your Inn in 140 characters. That is the Zen of it all.

So the overall answer to the question “does it work?” is a resounding yes! What amazes me is that there are so many bed and breakfasts out there, but only a relative few have caught on to Twitter. This is a missed opportunity. Right now, it appears that the overwhelming number of people on the Twitter channel are people who are into social media as a business. The bloggers and web developers are all there. Also, you will find every form of self help and technical gurus there, as well as some really smart people who just want to learn about the anything and everything of it all. These people are basically your guests or prospective guests.

So what is the first step after signing up for Twitter? You need to get a following that wants to hear your messages. What better way than to put out the word to your guest list that you are now on Twitter. Put the Twitter link on your website, and send an email notice to your guest list with your Twitter ID. Ask them to follow you. Make sure you have the link in all your marketing pieces and newsletters. Set a goal to get a good number of your guest list into following you on Twitter.

Once you have guests following you on Twitter, you can then have a look at who they are following and who is following them. You can elect to follow anyone who is interesting to you (i.e. a potential guest). If you follow someone, they get an email from Twitter advising them that you are now following them. Usually, they will look you up on Twitter, and if it interests them, they can elect to follow you back. This is the social networking feature of Twitter, and it allows you to expand your friends and make new ones. Many, many Tweople have thousands and thousands of followers on Twitter. It is word of mouth at its highest level.

So my advice is “what are you waiting for?” Get going and Twitter on. . . .

Recession Reality for Bed and Breakfast Inns.

1. The Numbers Don’t Lie? Once again we are faced with an incredible array of numbers coming out of respected professionals who are trying to figure out the impact of the National recession. The problem is that the numbers can be made to say anything, but a careful review will show that no matter whose numbers are used, the picture is not rosy. Take for example the Gross Domestic Product (“GDP”). The Government released figures in January showing a decline in GDP for 2008 of 3.1 %, the worst in over a decade, clearly signaling the fact that the recession was worse than most economists had predicted. On February 27th, after the markets closed, the Government revised the GDP loss to a whopping 6.2 %. Stocks world-wide are tumbling on that piece of bad news, in fear of a longer recovery period. The downward spiral seems to continue with the report that even revered investor Warren Buffet lost $11.5 billion in the net worth of his Berkshire-Hathaway Corporation.

2. What is the impact on the Inn Business. First, it is hard to get numbers for the Bed and Breakfast Inn business separately. Smith Travel Research (“STR”) is the most respected source of historical numbers for the Hospitality Business, but does not collect data from small properties (under 50 rooms). One data release from STR shows that New England seemed to be holding its own relative to the US National data. For example, December, 2008 results for New England included a drop in occupancy rate of -2.1%, while Average Daily Rate (“ADR”) decreased by -3.6%. This resulted in a huge decrease in Revenue Per Available Room (“REVPAR”) of -5.7%. The National figures during the same December period showed larger decreases in Occupancy of -6.8%, in ADR of -3.2%, and a REVPAR decrease of -6.6%.

For the Year 2008 as a whole the figures are also instructive. New England showed a decrease in occupancy of -2.8%, but an increase in ADR of 1.9%, resulting in a miniscule decrease in REVPAR of -0.9%. The National figures for 2008 were far worse, with a decrease in occupancy of -4.2%, but an increase in ADR of +2.4%, resulting in a decrease of -1.9% in REVPAR.

The numbers from STR show that, until about September, 2008 was a growth year with higher occupancies that dropped precipitously in the 4th Quarter. Rates were still climbing in December, as the Hospitality Business seemed to lag in discounting. Overall, 2008 would be a down year, but only in comparison to the strong growth in the prior three years.

3. New England is not the same. One interesting thing that jumps out of the results shown by STR is that the New England States are not homogeneous. In fact, it was clear in both the December and National results for 2008 that Northern New England (Maine, New Hampshire, and Vermont) fared much better individually than the Nation or their Southern New England counterparts. For example, for 2008 as a whole, Vermont showed an increase in occupancy of +1.9%, an increase in ADR of 4.8% along with a REVPAR increase of +6.8%. While the results in Maine and New Hampshire were more consistent, they were slightly worse than New England as a whole. The bottom line was that overall, 2008 was a non-growth year, with a really cloudy picture for 2009.

4. The Real Data comes from Sales Tax Revenues. Another well respected source of industry research comes from Atlanta-based PKF Hospitality Research (“PKF”). Utilizing results of sales tax collections in Maine, PKF reported that September lodging sales in that state dropped by -12% from 2007, and continued to drop by -2.6% in October on a year-to-year basis. While Maine finished the year 2008 slightly ahead of 2007 (+0.7% growth in revenue), this came after 6% annual growth in the preceding three year period. PKF is projecting as a whole a -7.8% decline in REVPAR for Maine in 2009, which would make it one of the steepest declines in recorded history since the 1930’s. PKF also predicts that Maine will not fare as worse as others, because of its relative low cost and its rural location which fosters escape from the big cities. Presumably this would apply to all of Northern New England with similar characteristics prevalent throughout the region.

5. Summary: Batten Down the Hatches! No one likes to consistently hear bad news, but there is little about the economy that seems to be saying that things are going to get better soon. Predictions for a recovery in late 2009 and early 2010 are all that we have to go on, but most economists are hedging on those dates. Similar to the broad-based declines in 4th Quarter, 2008, retail spending, the American consumer seems to have switched to a survival mode, and this does not bode well for discretionary spending at least until there is some better news on the horizon. We have advised our consulting clients of the following:

a. Budget for a decrease in revenue of about 10% for 2009, adjusting expenses as much as possible to that revenue;

b. Increase spending in Marketing, particularly electronic marketing to capture market share;

c. Neither increase or decrease overall rack room rates. Develop packages with adventure travel features which show good overall value. Up-sell rooms whenever possible, and include value-added options with all room rates. Partner with local businesses and cross-market as much as you can.

d. Hold discretionary spending to a minimum and build cash wherever possible in the event that this recession lasts longer than expected. Do not defer necessary repairs and maintenance, but this is not the year to spend money on capital improvements.

e. Remember why you came into the Hospitality Business. It is all about the guests and not the Innkeepers!

f. This too shall pass. Look to the future, because the past is gone forever.

Bed & Breakfast Inns vs. Hotels: We Win, Hands Down!

We spent some time over the Holidays with our family outside of Boston. Rather than displace some of my nephews, we tried the closest hotel. This was a large chain hotel on a major route west of Boston with a huge shopping center across the street. While there were several small (3 room) bed and breakfasts nearby, we thought we should see what the hotel industry was up to. What a mistake!

First of all, we should say that the room itself was newly redecorated, fairly large and well furnished. The bed was a new pillow-top king-size, and the furnishings were standard up-scale hotel furniture. There was a very large, new flat-screen TV with Hi-Def capabilities. There was also free wi-fi and good desk space with plenty of lights and a.c. outlets. It contained the typical business set up with desk and swivel office chair in addition to two other upholstered seats. The heat was the ubiquitous through the wall air conditioning/heat unit, but with a more modern temperature control on one of the walls. The bathroom was standard size, but upgraded with a stone countertop, tile floor, and bowed shower curtain rod, giving the appearance and feel of a larger bathtub. In short, this was a fairly up-scale hotel room, the same to be found in most cities of the Country. What it lacked in charm, it made up with functionality; or so we thought.

We were using reward points left over from the corporate world for one of the two nights of our stay. This is where the trouble started. We had paid for our second night as a deposit, with the first to be paid for by the reward. The cost of the room was quoted as $99 plus tax. When we checked in, however, the desk clerk advised us that we would need to check-out and then check-in again on the next day. They said that they could not guarantee that we would be able to stay in the room, as room assignments for check-ins are made each morning. We advised them that they needed to figure it out, but we were not moving rooms. The next day we did, in fact have to check-out and then check-in again, but somehow they managed to keep us in the room. We then went to breakfast in the dining room. This was a holiday, so they were not serving a buffet. We were seated, and then waited about a half-hour for a server to bring the menus and coffee. Overall, the breakfast was sub-par and the service very poor. When we finally checked out, the desk clerk told us that since we stayed in the same room, which apparently was a higher level than the rate quoted us, we had to pay an additional $50, despite the fact that our written confirmation was clear. We, of course, refused to pay, and the desk clerk said she would discuss it with the manager. After we left, they just charged the difference to our card anyway. We are still waiting for the credit that they promised, but the credit card company will reverse the charge if the hotel does not do so.

The long and short is that in the battle between hotels and bed and breakfast inns, we win, hands down! It is not about luxury rooms, amenities, or discounted rates. It remains true that personal service, quaintness, and charm will win out every time. It is not just about the room. While our room was perfectly adequate, and in fact, in some respects a clear upgrade, it was sterile, lacking any “charm” or individuality. This room could have been found anywhere in the United States. Close your eyes, and you may not know where you are for a minute. One of the things about old house syndrome at bed and breakfast inns, particularly those in older, historical buildings, is that the sounds of the Inn at night, the groans of the boiler or creaks and pops of the radiators, can impact your sleep, at least on the first night. Well try those hotel thru-wall heaters which make a huge noise as they cycle on and off all night. I’ll take charm every time.

The most important thing that we have to offer in our small part of the Hospitality Industry is the personal service that our innkeepers give to their guests on a daily basis. This is what clearly sets us apart from the much larger hotel business, and the one thing that will help us survive the tough times to come. The more the economy gets worse, the more respite, peace and good old fashioned hospitality will be needed to provide our guests with a retreat to recharge their batteries. Do not ever underestimate what we have to offer the traveling public. It is something that hotels can never supply, no matter how many concierges they have. The hotels of the world will compete by price to stay alive. The bed and breakfast industry has a magic wand and can better compete with hospitality, charm, and personal service. For all times, this is what differentiates us from the hotel business, and what will continue to make us successful in the years to come. What we need now is to spread the world that we are open for business as usual, and that means “Hospitality” with a capital “H.”

Lease Option Folly for Bed & Breakfasts

During these difficult times of recession and the credit crisis, we have been thinking more about the use of Lease Options as a method of transferring Inns and Bed and Breakfasts. There clearly are some advantages for both Sellers and Buyers of Inns by allowing a faster closing period without the necessity of finding hard to secure financing. The universe of potential buyers is greater because the down payment (option price) and the closing costs are lower. Yet, I remain troubled about this method for both Sellers and Buyers. Here are the details.

First let’s describe the concept. The Lease Option is an alternative route to Innkeeping. It has been used over the years when financing gets tight or when the Inn in question is underperforming and cannot achieve normal financing. The way it works is that the Seller/Lessor leases the Inn property and business to the Buyer/Lessee for a five year term, keeping in place the existing financing on the Inn. The Buyer/Lessee pays an option price for the option which is less than a normal deposit for a purchase. The Lease is triple net, and the Lessee pays for all taxes, insurance, and maintenance costs. The rent is set at an amount sufficient for the Seller/Lessor to pay its mortgage on the Inn. In some cases the rent is lower at the beginning to enhance the ability of the Buyer/Lessee to improve the Inn’s business and make the Inn more capable of being financed in the future. In most cases a portion of the rent is also set aside as a credit against the ultimate option price, thus allowing the Buyer/Lessee to build up more “equity” in the Inn over the lease term. The Seller/Lessor retains title to the Inn and all tax incidences, including depreciation. Finally, the Option Price set by the Lease is received by the Seller/Lessee, but is not taxable until either the option is exercised or it expires by time or default.

From the Seller’s standpoint, they are able to get out of the active operation of the Inn and retain the tax benefits of ownership. They receive sufficient sums to continue to pay down their mortgage, and all operating costs are paid by the Buyer/Lessee. The Seller receives sufficient funds at the outset of the option to perhaps put a sufficient deposit on a new house or set aside funds for retirement without immediate tax consequences, but will not have a large payout to say buy a new business. One key point for the Sellers is that they still own the property, and thus, in the event of a default, can get back the Inn business faster than if they had to foreclose a mortgage. Overall, for a Seller that does not have immediate needs for the whole sales price, this looks on its face like a viable alternative, particularly where an outright sale is not possible.

From the buyer’s point of view, again, this looks attractive on its face for those Buyers who want to get into Innkeeping immediately, but lack the resources to make an outright purchase. It is clearly a cheaper route, with less of a down payment, and much lower closing costs (no appraisal or bank fees or transfer taxes). It gives the Buyer five years to develop and improve the business of the Inn, at the same time building up the equity under the lease and, hopefully, improving the overall value of the Inn while the option price remains fixed. However, for both Buyers and Sellers alike, this scheme is both illusory and full of risk.

Here is the main reason why this method is folly for both buying and selling Inns. The cash-strapped buyer is likely buying an underperforming Inn which usually requires an additional capital infusion of working capital in order to improve the business. Sweat equity is fine in a start-up situation, but does not necessarily work where real hospitality experience is needed to turn around a poorly performing Inn. Most of the Inns which are using lease options are full service Inns which are even more sensitive to needing qualified restaurant experience to improve the dining room parts of the Inn’s business. A new Innkeeper, even one with some restaurant or hospitality experience still has a huge learning curve just to run an Inn, let alone improve the restaurant business. The facts are clear that 50% of new restaurants in the United States fail after 3 years, with a whopping 90% failure rate after 5 years. This makes a lease option of a full service inn even more daunting when the new Innkeepers lack hands on restaurant experience.

Another issue follows directly from the fact that the costs are lower because no financial institution is involved. Without a bank being utilized for financing, there also is no third-party looking at the historical cash flow and tax returns of the Inn business, no independent appraisal of the Inn, and, in some cases, no real due diligence of such things as the structural integrity of the building and systems of the Inn. The simplicity of the transaction belies the fact that protections for the buyer are sometimes overlooked. For example, since no title insurance is needed for a bank, often this basic protection in a sale is not present in a lease option deal. If a title problem is found later in the process, perhaps when the option is being exercised, the buyer may be at risk after it has paid the option price and all of the lease payments. Thus, in reality, almost all of the normal sale due diligence needs to be done for lease options as well, making the cost saving factors perhaps irrelevant. Finally, in our experience, with this relatively unusual form of Inn transfer, Buyers do not always receive the legal protections that they need. For example, since the lease is subordinate to the Owner’s original mortgage, at closing of the lease, the Buyer/Lessee needs to receive a Non-Disturbance Agreement from the Seller/Lessors’s bank in order to protect the lease and the option from a foreclosure which may occur due to other issues of the Seller/Lessor with that bank. This simple legal protection may not always be included in such a deal.

Let’s not forget about the Sellers as well. If the deal fails, they get the pleasure of taking back their Inn, perhaps a long time after they had stopped being Innkeepers. The failure of the option is a hard thing to keep private from the buying public, and the result may be that they have to take back an Inn at a time when it is worse off from a business standpoint. Also, if the markets are as tight as they are today, the seller may really have lost a part of the value of the Inn, and be unable to sell it after such a failure.

What we have really seen in practice in the last five lease option deals in the New England area is the ultimate inability of the Buyers to turn around the operations, and the failure to either continue to make the lease payments or to achieve financing of the option. In those cases, each Buyer lost their option payments and ultimately lost the Inn. In some of the cases the causes were due to unforeseen maintenance issues arising after the lease commenced which stripped the Inns of needed working capital. In others, the new Innkeepers had transition difficulties and basically had little inability to run complex Inn operations including restaurants. In other cases, the importance of increasing web-based internet marketing eluded the new Innkeepers, making profit margins even more difficult to achieve. In some cases, the new Innkeepers just realized after a few years that the Innkeeping life was not to their liking, and they were willing to just walk away with nothing since they had no basic personal liability like what they would have for a mortgage in a purchase scenario. The likelihood, in most cases, is that the failure was a combination of all of the above, plus the post 9/11 weakening of the hospitality market that did them in. While all of these things can affect new Innkeepers who purchased Inns the normal way through financed sales, the fact that the financial institution utilized some independent review of the transaction seems to have had a moderating impact on the risk of failure. Most Buyers when facing the failure of their business will fight hard, and perhaps use other resources (such as a part of retirement funds) to make the Inn successful. In practice, we just do not seem to see that willingness to sacrifice all in a lease option situation.

With today’s tight financing and really slow real estate markets, there will be a lot of pressure on Inn Sellers to utilize lease options to achieve their goals. Likewise, Buyers may be convinced to go forward using these methods where they cannot put down sufficient deposits to achieve normal financing or where such financing is totally unavailable due to the performance of the Inn or the credit crisis. In either case, for the reasons stated above, we feel that using this method is both folly and very risky for both sides. It is highly unlikely that we will be recommending its continued use in our consulting practice.

Are you Ready to be an Innkeeper?

Timing is everything. The following questions are meant to make you think about the realities of becoming an Innkeeper and the implications of this lifestyle change for you and your family. Innkeeping is a rewarding profession when it is done at the right time. Here are some things to consider:

• Does your partner share the same interest in Innkeeping?
• How will th is affect your family?
• Social life with friends and family is usually on weekends and holidays. These are the busiest times for an Innkeeper. Will this be an issue for you?
• Are you ready for a lifestyle change?
• Do you have the financial resources to purchase an Inn?
• Are you aware of the time commitment it takes to be an Innkeeper?
• Are you ready to leave the safety net of a weekly pay check?

These questions make for a good conversation with you partner. Keep an open mind and hear what your partner is really saying. If you are both in agreement, go forward and have fun!

Characteristics of a Successful Innkeeper

We are frequently asked, “What are the characteristics of a successful Innkeeper?” This is an important question to ask. It takes the right kind of person to be a successful Innkeeper. The following are six personal traits a successful Innkeeper should possess.

1. Ability to Serve Others
2. Multi-tasking as everything always happens at once
3. Ability to make it all look easy!
4. A Sense of Humor because if you can't laugh, you will cry!
5. Commitment to being an Innkeeper, not just a whim
6. Organized, organized, organized...

So do you have what it takes to be a successful Innkeeper? If not, just sit back and enjoy visiting Inns instead! We would rather that you find this out BEFORE you purchase a Bed and Breakfast. Remember, it is much easier to "buy a Bed & Breakfast" versus "selling a Bed & Breakfast".

Owning a Bed & Breakfast...Is it in Your Future?

Many people decide to become an Innkeeper before they really understand what innkeeping is really about. Innkeeping is a satisfying career. However, if this major decision is not approached honestly, your dream of becoming an Innkeeper can easily become a nightmare! We consider the following the basic five questions a Future Innkeeper should be asking themselves BEFORE they make the commitment to purchase an Inn. These questions cover the who, what, when, where, and how of Innkeeping. We will explore the following questions during the next four week period. Be sure not to miss out!

• Who makes the best Innkeeper?
• What is the typical day at an Inn?
• When is the best time to purchase an Inn?
• Where is the best location?
• How do you go forward with an Inn once it is identified?

If you would like to join our e-mail list, we can send these all to you today, otherwise...stay tuned!

Thanksgiving at the Inn

Thanksgiving is perhaps the best Holiday at a Country Inn. It is the one time that the Innkeepers get to really share their Holiday time with the guests and neighbors and to show their thanks for both a bountiful season and the joys of Innkeeping. I know that we looked forward to this Holiday every year at our Inn.

It is a great time to share an amazing, traditional Thanksgiving meal with the community. Often we welcomed both lodging and dinner guests to the Inn whose families were far away. This gave us all a chance to celebrate a great Holiday as a kind of substitute family. The spirit of Thanksgiving permeated the air as the fantastic smells from the kitchen provided a welcoming touch to the Fall decorations at the Inn. A moment to stop to give thanks for all that has been given to us, and then a traditional meal served family style with seconds passed until no one could ever want more. Good cheer, great food, good music, and the laughter around the dining room was reward enough for this very special day. For those guests staying over at the Inn, we always brought out the leftovers that night for home-style sandwiches and pie. This was always a very special treat for our guests.

In this year of changing times, we give thanks to what we have, and renew our energies for the work to come.

Happy Thanksgiving to all!

Operating a Bed & Breakfast - Complacency Spells Trouble!

The most recent news from the Hospitality Industry is not good for Innkeepers. Hotel REIT giant, LaSalle Properties announced it was cutting 20% from its hotel staffing (mostly run by large hotel management companies) and has rescinded its 2008 guidance to the stock market. LaSalle reported that its Revpar (revenue per available room) decreased by 11.4 % in October; a huge drop! While the Innkeeping Business does not use Revpar as a measurement, it is fundamentally the same as saying that average daily rate and occupancy combined dropped by that amount. LaSalle is an important bell- weather for Inns because it is comprised of mostly luxury and higher-priced hotel properties. For the full story, please see: LaSalle Orders 20% Cut in Hotel Staffing - WSJ.com.

We hear anecdotally that many Inns and Bed and Breakfasts across the Country have had good years in 2008, at least until the end of October. Now is not the time for Innkeepers to rest on their laurels. A sea change is coming, in the form of a recession, the likes of which we have not seen in our lifetimes. This is also not the time to just burrow in fear of what is to come. As we have said many times before, when there is a downturn, those Inns at the top of their game can improve market share as against the competition. A bigger piece of a smaller pie may save the day after all.

So this is the time to be countercyclical and increase your spending on marketing, especially electronic marketing through your website, blog, and by email. Create attractive packages rather than discount, and spend all of that extra time you have due to declining occupancies to come up with creative and imaginative ways to get your repeat and referral guests to the Inn. Most of all, just lowering the price will not work, and may make things worse in the long run (see previous article on Discounting).

Most of all, have heart. The biggest reason that they come back to the Inn is because your have created a refuge and a respite from all of the problems the guests face at home and in the real world. Remember that this is exactly what the guests need in these troubled times, and they will pay you for this experience.

Is It a Front Desk or Sales Position?

When a call reaches the front desk of an Inn, many times it is just thought of as a telephone call and a potential guest for the Inn. In reality, the front desk is a full powered sales position. This is nothing to shy away from. The sooner that this is acknowledged and embraced, the results will show in the bottom line.

Prior to owning and operating our own Inn on the coast of Maine, my background was mainly sales and marketing. There is a basic formula for sales, and here is the secret recipe:

1. Qualify the caller – This is basically asking open questions such as who, what, why, when, and how. What is bringing you to the area? Who will be traveling in your party? Do you have any special needs? When are you planning to join us? Is this a special occasion? Why are you coming to the area? How did you hear about us? Are you familiar with our Inn/area? You don’t need to ask the questions as they are briefly stated above, but you need to get to know your potential customer before you can start presenting accommodations to them.

2. Present based upon their needs - Once you have learned about your potential customers’ needs, you can them present to them a room to them that meets their needs. Are they coming for a funeral and they would like a quiet room? Are they on their honeymoon and want the best room you have? Are they visiting colleges with their son/daughter and need twin beds? Do they have trouble with stairs and potentially need a first floor room?

3. Pre-Close – After presenting the room to them, do a pre-close: Would you like us to reserve the room for you? If they say yes, proceed forward. If they said no, then proceed to the next step.

4. Handle the Objection – If they say no, you have to identify the objection. You discover that the rate you quoted is too high. You discovered that they can’t climb the stairs. You discovered that they don’t like Jacuzzis. What ever the objection is identify it and move to the next step.

5. Close – We do have another room at different rate (state rate), would that work for you? We have a lovely first floor room with a deck, should we do that room instead? I completely understand the noise from the jets. We have a suite with a soaking tub, would that be best for you? If you receive another objection, return to step four and keep backing up until you can get a close.

It’s been many years since I’ve been out of the corporate world, but the “steps to successful sales” has been implanted into my brain, and I just have never forgotten them. I hope that this helpful in making your Front Desk into a successful Sales Department!

Inn Start-Up, Is It For You?

It seems that we are always asked by people considering innkeeping, why not do a start- up? We always express our concern that it is much easier and more cost effective to purchase an up and running business, but that does not suppress the desire by many people to start an inn from the ground up. We are not saying that it can't happen, but one really has to be sufficiently funded and have the ability to succeed even in the difficult situations. Recently we were hired to consult with a nice couple from Europe who were purchasing an inn which was essentially a start-up business. We thought we would share some of the details with you.

The inn which they were purchasing was essentially a start-up. We say this for many reasons. First, it had a first generation website, which means it was totally useless. Nothing that spending $20,000 for a state- of-the-art website couldn't change. The inn wasn't computerized, and therefore had no mailing list which could be utilized. Next, the dining room had not been in operation for many years and it needed to be updated and opened accordingly, with no history of a successful dining business. No marketing had been done to the inn for MANY years, as the owners were going through a divorce and did the minimum amount of work to keep the inn open. So in reality, this inn was a start-up.

Renovations for the inn were projected to be $1,500,000. This was about 50% of the purchase price of $2,900,000. When substantial renovations are being done to a property, the Americans with Disabilities Act (ADA) gets involved. When renovations on a start-up property occur, they demand that 20% of the renovations be dedicated to the needs of handicapped individuals. This includes access to the inn, rooms that can accommodate handicapped people, public bathrooms built to handicapped standards, and oh yes, if you have more than one floor, the ADA requests an elevator be installed! The most amazing thing about their renovation was that the monies were basically geared to the first floor only of the inn, and only one guest room out of nineteen was being redone. This is something to keep in mind.

During renovation of the first floor, many surprises came into play. Old buildings may look fine on the outside of the walls, but just wait until they are opened! Also remember that this inn was inspected by a structural engineer, but he couldn't see within the walls either! Not one, but two steel beams were needed because the main support beams of the inn were damaged. The front of the inn faces the elements of the ocean and this caused the complete rotting of the front of the inn, which needed to be replaced. Windows were removed to upgrade to new windows. In the process, it was found that past construction was done incorrectly, and supports above the windows were non-existent. I could go on and on, but I think you are getting the picture.
Now, let's talk about contractors and deadlines. This inn happens to be located in a very seasonal part of the world. Most cash flow is earned Memorial Day Weekend through Columbus Day Weekend. Projections were made and the contractor promised release of the building by mid-May. It was clear by the first of May that the deadlines would not be met. So to fix this, the contractor started working a six day work week. Isn't that great! Now the new owner has to pay time and one-half to get the work done! Not quite in the budget! Needless to say, they couldn't open for Memorial Day Weekend. The rooms did get released so that the Inn could open the week after, but some business still was lost. I hope that you noticed that I haven't mentioned the dining room. It is currently estimated to be released by the contractor by June 15th, but I wouldn't place any bets yet!

If you want to do a start-up, please do so. However, we want you to be successful!! Please go in with your eyes wide open, pockets deeply lined with money, and be ready to work with delays!

Words of Innkeeping Wisdom

We are always looking for Innkeeping advice from Innkeepers to feature in our newsletter for Future Innkeepers. Do you have a piece of advice you wish you had known BEFORE you were an Innkeeper? Please share it with us.

We have received some great advice since the inception of our Future Innkeeper Newsletter:

“Plan from day one to have some personal time. The days speed by and before you know it it's been weeks of long days and you haven't even taken a walk. If an activity was important to you before you bought the Inn, keep it a priority after purchase, be it exercise, church or just sitting down and reading. Everyone tells you that you'll be busy, but until you experience it you really have no idea how busy you will be." Sarah & Erik Lindblom, Captain Jefferds Inn, Kennebunkport, Maine

"Many years ago, not long after we opened our own Bed & Breakfast, we learned not to call a guest about having left an item when they departed their stay. It didn't take us long to realize that occasionally we would have a couple stay with us who were married, but not to each other. Today when an item is left behind, we hold it in a lost and found "safe place" awaiting their call to let us know they would like the item returned and where to send it." Bonnie & Joe Masslofsky, The Parsonage Inn, St. Michaels, Maryland

“…now that we're here we have strategically set out to change as many light bulbs to the energy efficient coil style as possible. Oh, stop cringing, we still use the pretty ones where it counts, but when they are destined to be left on 24/7 and covered by a shade, we found that our average suite has 15-17 bulbs, and that each bulb is supposed to save around $50, not to mention they last much longer and have virtually ended our having to drop everything when a bulb goes out to go and change it…” Pam Matthews, Montgomery Inn Bed & Breakfast, Versailles, Kentucky

"Find a place that you love so much that every time you come towards the Inn or when you enter the Inn you say to yourself what a GREAT place this is and how grateful you are to be where you are!" Frank & Julie Hanes, Inn at Manchester, Manchester, Vermont

And one of our personal favorites..."Own a couple of good plungers, know where they are located, and try to avoid carrying one through a public space without masking it in something (a garbage bag works, and it catches drips from hitting the floor post-plunge)." Nancy & Bill White, Sudbury Inn, Bethel, Maine

Do you have some Innkeeping advice that a Future Innkeeper should not proceed without? Please comment on this post or email your advice to kim@oatesbredfeldt.com. We look forward to hearing from you!

E-Mail Address Are Important!

Recently we attended a national conference and happened to gather a sizable number of business cards from innkeepers requesting additional information from us. We are always happy to respond and answer questions and to forward additional information. We came back from the conference and started to work on fulfilling the requests. We sat down, separated the requests into piles for similar requests, and then came to a screeching halt! Much to our surprise over 50% of the business cards contained no e-mail addresses! The innkeepers were diligent about furnishing their website addresses, but no e-mail addresses. So off we went to track down the website address and dig through the websites to find their e-mail addresses. Even then, some of the websites didn’t actually list their e-mail address.

So our question today is: do people know how important it is to put an e-mail address on their business cards? By the look of this independent survey, I would say no. In the world of ever changing technology, an e-mail address is as important as a telephone number. So, if you don’t have an e-mail address on your business card, fix it! A guest may just want to drop you an e-mail to say that they had a lovely time at your innor they may have left something that they would like to have forwarded to them. Other situations could include wanting to purchase gift certificates, asking to send a brochure to a friend, asking to share a special recipe, and more! Guests aren’t the only receiver of your business cards. This could include business acquaintances (like us), vendors, local trade people, and more. It is much easier for people to keep a business card versus a brochure.

In closing, we encourage everyone to step back and evaluate your business cards…e-mail addresses are important!

Even a Bed & Breakfast Needs Food Safety Training

It is taken for granted that restaurants have to worry about food service safety, but it doesn’t stop there! Anyone serving any type or quantity of food to the general public should be concerned as well.

It never occurred to me when I owned a bed and breakfast the harm that could be done by simple procedures, such as breaking eggs into a bowl and leaving them on the counter or defrosting frozen food. However, harmful bacteria doesn’t need much time in a warm environment to grow and therefore potentially making your guest sick. Better yet, the proper sanitation of countertops and hands is equally important. We strongly encourage anyone serving food to enroll in a food service safety class, such as ServSafe. This is a nationally recognized organization which is known by all health inspectors nationally. When the health inspector is at your door and things are not going well, you will gain their respect and a few extra points for taking a food service safety class and becoming better informed. So don’t wait! Be proactive and you’ll be surprised by the information you will learn and better understand the goals of health inspectors.

Call or e-mail us and we will assist you in finding a food safety class near you. Just call 207-563-2772 or mailto:rlevitan@oatesbredfeldt.com

Contract Pricing

When it comes to decorating Innkeepers have a variety of tastes and variations of themes. Whether it is antiques, reproductions or new furniture, it has to be of high quality. There is a way to purchase high quality furniture at lower pricing. It is called "contract pricing". Simply identify a manufacturer of furniture that you like and proceed to their website for information on how to contact them via telephone. When contacting the company, ask to speak with the department that handles contract pricing. When you have arrived at the correct department, advise them that you are an Innkeeper and ask them if they provide contract pricing for Inns. This usually results in purchasing furniture directly from the company at significant savings. This worked for us when we were Innkeepers. The manufacturer we worked with was Hickory Chair. We managed to purchase a $4,800 bedframe at a cost of $1,600. Happy shopping!