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How to Start a Bed and Breakfast or Hotel Business

What could be better than creating the perfect location and ambiance for people to enjoy their vacation? A bed and breakfast or hotel business is a great way to provide a desirable destination for travelers and a sustainable income for yourself. We all want to broaden our horizons — and as travel keeps becoming easier, your hotel could be perfectly positioned to take advantage.

There’s a lot of thinking that goes into creating a boutique hotel or B&B business. You need to decide the type of B&B experience you want to create, make the day-to-day running as efficient as possible and market yourself to the right vacationers.

The question is, just where do you start? Here at Incfile, we know the answer, and we’ve shared it with more than 100,000 people who we've helped to form their businesses. Since 2004, we’ve supported hospitality entrepreneurs just like you, and we’re proud to have been a part of the bed and breakfast business revolution.

To get you off on the right foot, here’s our simple guide to starting up a successful bed and breakfast business. From highlighting important facts to validating your ideas, and from choosing the right structure to your options for managing and running your business, you’ll find the answers you need.

set up a bed and breakfast business

Read on for some insight into creating your own bed and breakfast business and becoming an entrepreneur. In this guide we will cover:

  • Facts and figures about the success of bed and breakfast businesses
  • How to find out if a boutique hotel business is right for you
  • Ideas for opening a hotel business
  • How to validate your bed and breakfast business idea
  • Business plans for hotel and B&B companies
  • How to choose whether your hospitality business should be an LLC or corporation
  • Setting up your hotel business, including location, equipment, employees, taxes, finances, licenses and more
  • Where to find bed and breakfast business groups, forums and support
  • Useful online tools for hospitality business owners

Why You Should Start a New Bed and Breakfast

You might be wondering just how popular bed and breakfasts are. Is it a growing sector, and can you make money running a boutique hotel? The statistics might surprise you.

17K

Number of B&Bs, boutique hotels and inns in the U.S.

5%

Growth of the industry every year

$3B

Revenue of the industry per year as a whole

bed and breakfast business
  • The average daily rate for a room is around $150
  • Most B&Bs have between four and eleven rooms, with six being the average
  • The most popular locations for bed and breakfasts (in descending order) are small villages, rural locations and urban vacation spots
  • Almost three-quarters of boutique hotel owners are couples, and 80 percent of all B&B owners live on the premises of their lodging

As you can see, there are plenty of opportunities to start up your own bed and breakfast business. We’ll help you be part of that success.

Is a B&B Business Right for You?

Although it can be exciting to open your own bed and breakfast, there will be significant demands on you as a small business owner. Here are some of the things you can expect.

The Concerns of Female Founders — Moms and Women Entrepreneurs

A Day in the Life of a Bed and Breakfast Business Owner

Here are some of the typical tasks you’ll be performing for your bed and breakfast business on a daily basis:

  • Answering the phone, giving room rates and availability
  • Greeting guests and showing them to their rooms
  • Cleaning rooms, changing linens and similar day-to-day maintenance
  • Taking payment for stays at your B&B
  • Answering questions about local attractions, tours, restaurants and similar
  • Cooking meals for breakfasts and possibly other times
  • Buying supplies including cleaning materials and food

Skills Needed by a Hotel Entrepreneur

The following skills will be very useful in your role as a bed and breakfast small business owner:

  • Ability to quickly and efficiently complete chores to an excellent standard
  • Good interpersonal skills for dealing with vacationers
  • Reasonable financial management and administration skills to run your boutique hotel business
  • Some skill with cooking and day-to-day hotel management
  • Strong understanding of the various supplies you’ll need

What Your B&B Customers Are Looking For

The needs of your vacationers will change depending on where you’re located, the type of experience you offer, their expectations and several other factors. For example, guests might want a combination of the following:

  • An inexpensive room that’s just a place to sleep
  • A B&B with spectacular views of the surrounding area
  • Beautiful decorations, furniture and amenities
  • A fantastic location within easy walking distance of great food and tourist attractions

Ultimately, your guests want a combination of comfort, interest and value for money. The balance between these will vary widely depending on the type of vacationer you’re trying to attract.

What Type of Bed and Breakfast Business Should You Start?

If you want to start a successful bed and breakfast business, it’s important to know what your options are. Here are some of the more popular business ideas:

Strong research abilities

Boutique Hotel for Tourists

This is the “standard” B&B experience providing accommodation for vacationers. They will want easy access to attractions, a nice place to relax and good knowledge of the surrounding area. This type of B&B allows you to cast the widest net when you’re looking for guests, and it will really help if you build relationships with local tourist organizations.

Good math skills

Easy Accommodations for Business Travelers

If you’re in a popular city, you can make a good living providing accommodations for business people. They’ll be looking for good transportation access, a place to work in their room, excellent internet connectivity and a way to relax after a long day working.

Excellent forecasting abilities

Romantic Getaway

Couples love escaping from the rat race for a romantic weekend away. You can provide beautiful rooms located near high-end restaurants and offer extras like champagne in the room or special baths designed for two.

Great flexibility

College or University Town Rooms

If you’re in a location near a large academic and student body, you can market toward that demographic and their families. If people are coming in to visit family members or check out schools, they probably only need fairly basic, low-cost accommodations that are relatively close to the major colleges and universities.

Excellent forecasting abilities

Niche Boutique Hotel

If there’s enough of a market in your city, you can even go a little more niche. For example, your B&B might specialize in providing a particular type of food like gluten-free or vegetarian. You might be perfect for a specific type of guest like seniors or young people. Whatever area you decide to focus on, do the market research to ensure there’s enough demand.

Great flexibility

Airbnb

Airbnb is another great way to make a living as a boutique hotel, especially if you only have one or two rooms available.

Validating Your Bed and Breakfast Business Idea

These are all great starting points, but you will need to build on them to make the business your own. You have unique skills and insight that you can use to create a bed and breakfast business that will really stand out.

Getting started in a bed and breakfast business can take a lot of time, effort and money. It’s important to validate your idea and test the marketplace before committing too much.

  • Identify your B&B business’ unique selling points (USPs): You’ll need to find the areas that really set you apart. What is it that your boutique hotel does well that you can use as a USP? Do you offer superlative service, amazing food, a great location or something else that helps you stand out?
  • Look at who your competitors are in the space: Every B&B is going to have competition. That’s not a problem, so long as you can be distinctive. Remember, guests are coming to you for an experience they can’t get elsewhere, so finding out what your competitors are good at and differentiating yourself is essential.
  • Understand your market: It’s vital to understand exactly who your potential guests are likely to be. Spend some time researching your desired market, where they hang out and how you’re going to reach them. This will be essential to your marketing, communications, sales and outreach.
  • Talk to guests: Speak with potential guests to understand what they want from your boutique hotel, and validate this by asking if they would commit to spending real money on them.
  • Get involved with business communities and discussion groups: One of the great things about the bed and breakfast industry is that there are plenty of great communities and discussion groups. Get involved in them and learn the ins and outs of your chosen market before committing.
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The thing to learn here is that it’s okay to say “no” to your first, second or third bed and breakfast business ideas. Few hospitality entrepreneurs get it right the first time. In fact, getting it wrong is often a badge of honor! Still, you don’t want to waste too much time, energy or money on the wrong initiatives, so ask and answer these questions honestly to find the right way forward.

Your Bed and Breakfast Business Needs a Plan

A strong business plan is vital for a successful B&B. The startup costs can be high (possibly in excess of $100,000), so it’s important to nail down all of your facts, figures, strategy and other areas.

You need to define how you’re going to run your bed and breakfast business, market yourself, get sales, make a profit and grow. This can only come about through creating a watertight business plan. It will help you get your thinking in order and show your commitment to your boutique hotel.

You will also need to look at financial projections for your bed and breakfast business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others?

If you can, try to plan your revenue for the next month, three months, year and two years. It’s vital to take into account the cost of setting up a bed and breakfast business in the first place, also factoring in utilities, staffing and other costs.

Business plans do vary slightly, but they should all cover the following areas:

Here’s what you can expect in an average day
  • 1 An executive summary with the most important points from your business plan
  • 2 Your goals and what you hope to achieve with your bed and breakfast business
  • 3 A description of your B&B operations, background information and context
  • 4 A market analysis and likely demand
  • 5 An overview of how your boutique hotel business is structured
  • 6 Your business model
  • 7 How you will market and sell your offerings
  • 8 Financial projections, revenue and profitability
  • 9 Appendice

We’ve got the perfect guide to writing your business plan.

Choose the Right Business Structure and Register Your Bed and Breakfast

There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:

Choose the Right Business Structure and Register Your Amazon Business

Sole Proprietorship

This is the "default" business structure and is what your bed and breakfast business will be if you decide not to create a more formal structure. We don't recommend this type of business as it doesn't give you the legal protections you need.

Limited Liability

Partnership

This is a type of business that is formed when two or more people work together without creating a more formal business entity. Like a sole proprietorship, it may not give you all the protections your bed and breakfast business may need.

Series LLC

Limited Liability Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to set up and maintain. It protects your personal finances and assets and is a great way to start your bed and breakfast business.

S Corporation

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organizations, like a bed and breakfast business.

C Corporation

C Corporation

These are the largest and most complex types of businesses and are typically far more than the average hospitality entrepreneur or bed and breakfast business owner will need.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure for your bed and breakfast business.

In most cases, our recommendation for your bed and breakfast business would be to create an LLC. We’ve got a complete guide to everything you need to do. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

Setting up Your Boutique Hotel and Business Operations

Once you've legally created your bed and breakfast business, you’ll need to get some other things in place.

bed and breakfast business

Location of your Bed and Breakfast or Hotel

This is, by far, the most important choice you’ll make. You will need to secure a property large enough to give you all the B&B rooms you need to reliably generate revenue based on expected occupancy. Of course, you can choose to live in the property as well, which will reduce your expenses and ensure you’re on hand when needed. Choose a location that’s suited to the type of guests you want to attract. Look at other competitors in your immediate area, as you don’t want to be on each other’s doorsteps.

Furnishings and Equipment for Your Bed and Breakfast

You will need extensive equipment, furniture, fixtures and fittings for your B&B. This will include:

For each room:

  • Bed and comfortable mattress
  • En-suite bathroom with a shower and/or a good tub
  • Television
  • Internet access
  • Furniture including chairs and a desk or table
  • Luxury bed linens and robes
  • High-quality carpets and window treatments

For common areas:

  • Television, music and other media
  • Magazines and board games
  • Information on tourist attractions, destinations and restaurants
  • Hot and cold beverages
  • Telephone
  • Fresh fruit and flowers
  • Finger foods and snacks

For the kitchen and dining area::

  • Stove and cooking equipment to allow for preparation of multiple breakfasts
  • Enough refrigeration and storage space for all cooking ingredients
  • Cutlery and dinnerware for everyone
  • Tables, chairs, tablecloths and place settings
bed and breakfast business
bed and breakfast business

Marketing Your Bed and Breakfast or Hotel

Marketing will be a huge part of your bed and breakfast business. Naturally, you will need an awesome website, but you'll also need to get branding, newsletters, digital ads, social media accounts and other channels in place. You should also focus on review websites like TripAdvisor or Yelp. See if you can get into partnerships with travel agents and similar businesses, and market your B&B through travel portals and aggregators.

Software and Processes

The right software and processes will make running your bed and breakfast business much easier. See our list of the best apps and software at the end of this guide.

bed and breakfast business
bed and breakfast business

Employees

To begin with, you might want to do everything in your B&B yourself. Later on, you could look into hiring people for tasks like cleaning or cooking.

Finances and Taxes

You will need a separate business bank account for your bed and breakfast business. You might also want to consider a business credit card. Additionally, you will also need to keep careful bookkeeping records and file business and personal taxes. Here at Incfile we can even help you file your taxes.

bed and breakfast business
Our Start a Business Checklist will get your business going in the best possible way.

Conclusion

The B&B or boutique hotel industry is the perfect choice if you love hospitality and want to provide an amazing experience for your guests. We hope this guide has inspired you to find the right idea for the type of hospitality you want to provide. Good luck!