Bed and breakfast business – StartupSmart
Running a bed and breakfast might seem like a fairly simple and pain-free start-up, but there are several hurdles to success in the sector.
The B&B industry is becoming increasingly professional, with a series of regulatory requirements. StartupSmart spoke to Bed & Breakfast Farmstay Accommodation Australia the country’s peak organisation for the bed and breakfast industry, to see what’s involved.
What is it and who is it suited to?
A B&B differs from a hotel because of its basic approach. The service provided to guests is typically a bed to sleep in and a full breakfast before they check out.
You are effectively opening your home to strangers and blurring the edges between your business and your home life. It’s important that you’re content with this before you proceed.
To a certain extent, it’s a creative profession – you have to enjoy cooking and making your accommodation as pleasant and welcoming as possible. It’s also something of a lifestyle business, a job that many people will undertake with their partners or perhaps later in life.
In addition to being a people person, you need to ask yourself if you’re a committed housekeeper. In a survey conducted by AAA Tourism, 30% of respondents selected cleanliness as the most important factor in choosing accommodation.
Rules and regulations
B&B operators need to comply with a multitude of laws and licensing requirements including planning, food safety, liquor licensing, insurance, safety, employment, hire of locums, and anti-discrimination.
Your first move should be to make an appointment with your local council. They’re responsible for businesses complying with state laws and council by-laws in areas such as planning permits, business registration, food safety, electrical safety, fire safety and signage.
Businesses that do not comply with these laws can incur fines, and breaches may also jeopardise any insurance claim.
According to the BBFAA, you should carry insurance suitable to the conduct of your business, and consider other professional insurances such as loss of income, etc. B&B insurance is a specialised field and not all insurance underwriters will provide it.
The BBFAA can provide a list of brokers upon request. It is recommended that you obtain three quotes and discuss your individual requirements before purchasing your policy.
Research
The BBFAA publishes a guide for new operators, which contains information about the tourism industry including mandatory licensing information, setting tariffs, writing a marketing plan, and wording a cancellation policy.
Currently, the guide is only available in Victoria and South Australia but the other states and territories are developing their own guides.
If you wish to research occupancy levels in your locality, your regional or local tourism organisation – or accredited Visitor Information Centre – may be able to assist.
You can also talk to other B&B owners in the area and find out what kind of occupancy levels they have. If others are struggling, that should be a clear indication to look elsewhere.
The location of your business will be a very important factor in your marketing considerations. City or suburban businesses typically attract international travellers, businesspeople, and people attending an event in the area.
Venues in more remote, scenic areas are popular for weekend getaways and special occasions, while farm stays generally attract longer stays.
You also need to decide whether you will operate the business out of your own home or whether you require a separate venue.
Refer to the BBFAA Self Assessment Report listings to gain an understanding of the type of rooms and furnishings essential for the comfort of guests.
The type of B&B should also fit the location. You need to decide whether you want to provide a luxury retreat or simply a place to sleep and eat breakfast.
Costs and earnings
The amount of money you spend on setting up your B&B is dependent on what condition the property is in and how much work is required before it can be opened for business.
As a rule of thumb, you will need to install a good quality fire alarm system and may need to make changes to the kitchen/s to comply with food hygiene requirements.
You may also need to factor in the cost of any new furniture, TVs, coffee-making facilities, internet access, etc.
With regard to your marketing strategy, having a presence online is advisable in addition to basic signage at the venue itself. Depending on the nature of your business, you might also consider advertising in directories and magazines.
If you’re buying a property, your costs will be significantly higher. If you’re taking out a mortgage, you need to be realistic about your potential earnings.
What you earn depends on a number of factors including your location, the rates you charge, how many staff you employ (if any), the scope of your marketing strategy, and whether you have any significant overheads.
An average day
Fofie Lau runs Magnolia House B&B in Hunters Hill, NSW, a home-based B&B with two guest bedrooms.
Lau looks to offer a personalised service, even buying guests their favourite fruit on request.
“When a customer arrives, I show them to their room before asking what they would like for breakfast and at what time,” Lau says.
“The next morning, I have the cold part of their breakfast waiting for them and only cook the hot part once they have arrived so that it’s fresh.”
“Cleaning is done on a daily basis and usually takes around three hours. If guests are staying for more than one night, I wait until they’ve gone out before I start cleaning.”
“I spend about an hour and a half doing paperwork each week. This includes making sure I have up-to-date timetables for buses, ferries, etc.”
Lau says the biggest drawbacks of the industry are waiting for customers, and the isolation that comes with running a business around the clock.
“There’s not that much physical work involved but it can be very boring – you often have to sit and wait for customers to arrive or leave, which can restrict you a bit with your own outings,” she says.
Useful contacts
Bed & Breakfast Farmstay and Accommodation Australia
1300 664 707
Australian Government Small Business Support Line
1800 777 275
Tourism Australia
02 9360 1111
Australian Tourism Accreditation Program
http://www.atap.net.au/cb_pages/contactus.php
Food Standards Australia
02 6271 2222