Reality Check - Occupancy Rates Help Please

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Weaver's picture
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I am still crunching numbers, I have looked at several industry studies, local industry reports and so on, however I want to hear from real people.  I am just not happy with the financials - they actually look too good. 

For those of you that started from scratch, every B n B started somewhere, what were your average occupancy rates in the first two to three years.  Even if you took over an underdeveloped existing business that information would be helpful.  I am having a hard time with some of the expected numbers and think they might be a bit skewed to the high end.  I don't want to over or under estimate the room occupancy.

I know there is no crystal ball (mine is cracked from over use), my magic wand is in the shop-can't get parts.  So...I am left with real world experiences, YOURS.  We all know I am not NORMAL, nothing is going to be typical or simple, but some real world occupancy % for the first few years would go a long way towards keeping the guys in the white coats from taking me away. 

I am not looking for specifics but for some general numbers and averages for the first few years.  Numbers I can trust and attach some human aspect to, as opposed to a collection of numbers compiled from anonymous sources.

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There's no magic bullet answer here for start up occupancy.

It depends....

Location, location, location and lodging need...specifically, an interest in B&B lodging.  And how your reviews and name get out there.

Estimate very low and be pleasantly surprised (and prepared!!) if your occupancy numbers exceed your expectations.

JB is right that most owners will not share their occupancy numbers because it's tied too closely to their income.  Most people don't reveal what they make annually in a corporate job, right?  

Good luck! 

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Breakfast Diva's picture
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I have filled out the PAII survey numerous times. I think they do get a good cross section of participants. The survey is anonymous, I don't see why someone should fib on the numbers. Now, I see all the time inns for sale that 'stretch' their numbers. Caught them at it too. So often they will say they have a high occupancy, on the listings where it states annual occupancy rate and they fill in what they have for 3 or 4 months during peak season.  It's pretty foolish though....the same site usually asks for average room rate and when you do the math, the room rates and occupancy rates are way off from each other. Doh!!!

Weaver's picture
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Breakfast Diva wrote:

I have filled out the PAII survey numerous times. I think they do get a good cross section of participants. The survey is anonymous, I don't see why someone should fib on the numbers. Now, I see all the time inns for sale that 'stretch' their numbers. Caught them at it too. So often they will say they have a high occupancy, on the listings where it states annual occupancy rate and they fill in what they have for 3 or 4 months during peak season.  It's pretty foolish though....the same site usually asks for average room rate and when you do the math, the room rates and occupancy rates are way off from each other. Doh!!!

When I first started looking, I spent hours scratching my head thinking I must have missed something somewhere somehow.  NOPE they lied!!! Doh is right, 30 years in sales, marketing, and accounting didn't get me counting on my toes, and useing an abacus. 

When you look at the tax returns the numbers become much clearer.  I walked from a great property because the numbers didn't jive.  I figured if they were BSing on those numbers so much that I could figure it out without seeing the financials what the H*** else were they BSing on.  If it walks like a duck.....gotta be a duck!  I am not into ducks that want full price for a property that needs more work than it is worth for 4 months of OK occupancy and 8 months of boredome.  They didn't have enough rooms to have the 4 months carry the 8.

 

Joey Camb's picture
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Another thing to watch is what caught my godmother on one of the properties she bought - maths was never her strong suit either however I would have twigged the money was too good -

What happened was the PO has either one or two holiday rental flats and was running the revenue through the bed and breakfast books as bookings to prop up the numbers - when she sold she was going to rent one full time and live in the other so she didn't care what their books looked like.

Therefore with the BB there was no chance of making the amount of money that the books showed!

Also this is something we got caught with and our neighbours as well! if the place comes furnished and you are paying for that make sure the mattresses are sound have a really good lie on them - we just saw the beds made up and being a bit british left it at that - got in found all the mattresses were pretty much down to the wire which with 12 bedrooms makes a lot of money to shell out all in one go and therefore we would have haggled that off the price - moral of the tail? test everything anf bounce on everything!

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Weaver's picture
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Let's try this a different way...I don't trust the reports.  I think they are in fact total BS.  I don't even want real numbers, just a reality check.  Several of you know what I am trying to do and the general area. 

If we use K's gracious numbers knowing what we know she was at 6.5% in Podunk. Assuming all three rooms available for all 365 days.

Alrighty then....is 5-8% for the first full year in season a conservative but reasonable assumption?

 

 

 

Madeleine's picture
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Weaver wrote:

Alrighty then....is 5-8% for the first full year in season a conservative but reasonable assumption?

 

 

Do you think there is demand in the area for lodging? For the lodging you are offering?

I'd go as high as 10-20% for the first year. IF, IF, IF you market your buns off and there is demand. K had nothing in her town to start with. I'm assuming there's something already where you are that draws tourists.

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Weaver's picture
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Madeleine wrote:

Weaver wrote:

Alrighty then....is 5-8% for the first full year in season a conservative but reasonable assumption?

 

 

Do you think there is demand in the area for lodging? For the lodging you are offering?

I'd go as high as 10-20% for the first year. IF, IF, IF you market your buns off and there is demand. K had nothing in her town to start with. I'm assuming there's something already where you are that draws tourists.

There is and there are several large festivals that draw from a large area as well.  I was leaning toward 10% as a first year, I just don't want to over estimate and be trying to catch up, I would rather exceed expectations than kill myself trying to get that extra 1-2% Occ rate just to meet my predictions. 

I will not be sleeping, I will be marketing 24/7 for the first two years I am sure.

 

 

gillumhouse's picture
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The horse traffic will help you a lot. If I remember correctly, you will have 3 Interstates within a reasonable distance - 10 to 15 miles or how far are they. I can tell you from distance how you will do with the horse travel trade. I am VERY limited on rooms AND on stalls.

The ladies coming in tonight - the farm sighed and said OK - have 4 horses so it is the field for them as there are only 3 stalls. We have had a pro polo player transporting 14 polo ponies from Canada to SC once. Definitely the field. I have also been called by transporters with 7 to 10 VERY EXPENSIVE horses that I had to say no way because they needed stalls for each. I am in the Canada to the Carolinas and Florida route and the East coast to      Ken tucky Hor se Pa rk corridor. From me they need something in the Carolinas if going to Florida (I-77 corridor).

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gillumhouse wrote:

The horse traffic will help you a lot. If I remember correctly, you will have 3 Interstates within a reasonable distance - 10 to 15 miles or how far are they. I can tell you from distance how you will do with the horse travel trade. I am VERY limited on rooms AND on stalls.

The ladies coming in tonight - the farm sighed and said OK - have 4 horses so it is the field for them as there are only 3 stalls. We have had a pro polo player transporting 14 polo ponies from Canada to SC once. Definitely the field. I have also been called by transporters with 7 to 10 VERY EXPENSIVE horses that I had to say no way because they needed stalls for each. I am in the Canada to the Carolinas and Florida route and the East coast to      Ken tucky Hor se Pa rk corridor. From me they need something in the Carolinas if going to Florida (I-77 corridor).

Less than 3 miles on really nice roads to I 77 and 4 - 5 miles to 40.  I am on to a second property and the other is now as a back up.  This one is with better facilities, stables already there and I won't have to move buildings to make it right. 

More money but ready to roll in less than 5 days from close, basically the time it will take to order feed, sheets, and stock the fridge.  6 class A stalls now, and room for another 6 just need stall fronts and feeders, hang the waterers and I am ready to stable anything from a $1M racehorse to a champion jumper.

Super sercure with CC tv in the barn.  Fenced and cross fenced, roads to barn are paved not gravel, ample trailer parking and turn around.  Much like the first place I showed you but more my style and only about 1 mile from that site.  The second place with the log cabin, is not nearly as feasible as I had hoped the estimates came back on interior roads, new wells and getting electric to the new sites makes this other property a steal at twice the price. 

I will be 5 hrs south on I-77 from you.

 

 

Innkeep's picture
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I'm one of those PAII members who does not fill out the survey.  Partly it's because my numbers are crap, also because I don't really figure all those numbers out because I'm semi-dyslexic when it comes to arithmetic.  I have my quick books in its original box but haven't loaded it onto the computer--so I guess that means I'm number phobic as well as dyslexic, so I'm tired at the end of each month after I've figured out and paid the room and sales taxes.

But B&B going is not a high priority in my city or state (fewer B&B's in the state association than there are in Asheville NC), I tried blogging and facebooking for a year and got discouraged instead of more guests.  I really hate to see my endeavor classed as a "hobby" because every year I've done better, and the revenue from the B&B pays for the insurance and utilities and advertising, I update my website, I've tried a variety of advertising strategies...and am located on one of the major roads in town. I still meet locals who have no idea that there's a B&B here.

Many Innmates have little or no local business whereas a significant percentage of my guests actually have a local connection either through business guests or family members visiting locals, or through the university. 

I'm listed on the accommodations page of the university's website, have rack cards given to all freshmen parents who show up for orientation along with gift certificates given out at a drawing for the parents.  Have tried ads on the campus newspaper's website, end up seeing parents for the first time on graduation weekend when everything else is full in town, then they say I wish we'd have known about your place 4 years ago, it's so much nicer than (whatever motel).

Sorry I've gotten a little off the topic, but it looks to me like you're going to have a specialty type of property, and I think predicting occupancy will literally be like throwing dice. 

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Let me know when you are a go. I will find out what horse publications you should consider. You are set up PERFECT for the north/south AND the east/west traffic! E-mail me - I have lost you in the ocean of contacts.

Joey Camb's picture
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I think 10% is a reasonable figure to work with but I would be super cracking on with facebook and twitter so you have a strong forum to announce your opening to when you get there.

gillumhouse's picture
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It isn't that I do not want to share occupancy - it is that they are not helpful. My best ever was 45% ONE MONTH!! My average annual is between 16 and 18% - NOW. My start-up % is not helpful because it was:

  • pre-Internet usage
  • in Podunk
  • and before I got with the stables

My occupancy soared (compared with what it had been) with the Inn-to-inn trail package and then tapered off within a couple years. Also since I opened, there are now 3 hotels just at the exit I bring people in from, not counting the other hotels/motels that have been built between exit 99 and exit 159 (I am exit 124) and then 6+ miles in on a "Scenic winding road that follows a meandering creek" - my description - or what locals call a horrible road.

I have one Interstate and have been working for 16 years to create "a tourist destination" in the minds of Joe Public. All my other roads are 2-lane twists. Occupancy depends on location, facility, draw of attractions/see/do..... Also on marketing and what we do once they get here.

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 I have a feeling you won't be getting many answers on this here, that is a best kept secret. PAII does the reports on it and a few others, which it sounds like you have already looked into.  

I said this exact same thing two days ago, someone inquiring about our inn for sale, and I said to my-dear-sweet-husband who is out moving yards and yards of mulch in 85 degree hot temps (yesterday and today):

"You know when aspirings begin their search to buy an inn they always think we rake in all this dough, I know a few innkeepers on this forum QUITE WELL and have no idea what their occupancy rate is" so it is not something easily revealed.

Just letting you know.

I notice looking up as I type this I am correct, not a peep out of anyone. haha sorry Weaves, it be what it be...On my grave there will be a bulleted list and two of them will be:

  • She never revealed her secret pork sausage recipe, that guests raved about 
  • She never revealed her occupancy rate (start up or otherwise)

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Joey Bloggs wrote:

She never revealed her secret pork sausage recipe, that guests raved about 

I may have told this one before, but will repeat. A friend of mine owned a restaurant here in the 1990s, well known for serving the best carrot cake in the area. The restaurant hired a woman who is famous here as making the highest, best meringue in the county. My friend got to know the pie lady well and shared her secret carrot cake recipe with her.

A few years later my friend lost her carrot cake recipe and asked the pie lady to write it down for her from the pie lady's copy. Pie lady refused, saying she never shares her recipes. Her recipes! And she never did.

My friend died a few years ago without ever getting to make HER carrot cake again. And when the pie lady dies, the recipe will die with her.

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Arkansawyer wrote:

Joey Bloggs wrote:

She never revealed her secret pork sausage recipe, that guests raved about 

I may have told this one before, but will repeat. A friend of mine owned a restaurant here in the 1990s, well known for serving the best carrot cake in the area. The restaurant hired a woman who is famous here as making the highest, best meringue in the county. My friend got to know the pie lady well and shared her secret carrot cake recipe with her.

A few years later my friend lost her carrot cake recipe and asked the pie lady to write it down for her from the pie lady's copy. Pie lady refused, saying she never shares her recipes. Her recipes! And she never did.

My friend died a few years ago without ever getting to make HER carrot cake again. And when the pie lady dies, the recipe will die with her.

Thanks for the depressing story...

Mine was a joke, although not that far from reality...it seems.

I saw a meringue such as the one you speak of, and in fact it is half way between my B&B and Grey Swan Inn in Blackstone VA.  Never before and never since have I seen such a meringue...perhaps your pie lady talks in her sleep and her recipe was secretly transcribed and brought to Virginia?  

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Joey Bloggs wrote:

 I have a feeling you won't be getting many answers on this here, that is a best kept secret. PAII does the reports on it and a few others, which it sounds like you have already looked into.  

I said this exact same thing two days ago, someone inquiring about our inn for sale, and I said to my-dear-sweet-husband who is out moving yards and yards of mulch in 85 degree hot temps (yesterday and today):

"You know when aspirings begin their search to buy an inn they always think we rake in all this dough, I know a few innkeepers on this forum QUITE WELL and have no idea what their occupancy rate is" so it is not something easily revealed.

Just letting you know.

I notice looking up as I type this I am correct, not a peep out of anyone. haha sorry Weaves, it be what it be...On my grave there will be a bulleted list and two of them will be:

  • She never revealed her secret pork sausage recipe, that guests raved about 
  • She never revealed her occupancy rate

And if you don't sell soon that grave stone will be sooner rather than later.

Hey I gotta ask, you don't get what you don't ask for.

I don't like the look of the PAII numbers they just seem too easy!  So I will take the "stats" and halve them.  May be my best bet.  It is funny everyone shares so much but the one thing that tells so much. 

So I would not be too far off base to plan for say 10% the first year with increments of say 5 - 10% per year thereafter until the magic number what ever it might be.  Assuming I follow the golden rules of marketing and never sleep, blog, shake the trees, tweet, become best friends with the new tourism chair, and all the other things that go along with this insanity.  

G-d help me for what I am about to do can only be classified as insane!  thank goodness my oldest DD will be able to analyse my condition, not that it will help much but putting a label on it often makes it less scary.  But then again, doing this without a DH or SO is about as insane as one can get. 

If you see some odd woman on your front porch babbling things like thread count, china vs stoneware, PITAs everywhere there are PITAs.... do me the favor of shooting me now! Because I will surely be beyond help at that point.

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What does PAII say? Is that a country-wide average or do they have it by sectors? Keep this in mind about PAII- they get their info from people who fill out their surveys. Would YOU fill out a survey if you knew your numbers were crap?

What I would want to know before using their numbers: How many inns got the survey? How many returned the survey? As far as occupancy goes specifically- are ALL of the individual numbers based on 365 days or someone's 'season'? If I only based my numbers on the days I'm open, I'd have really good occ numbers. But, I base it on 365 days because I COULD be open all year, I just choose not to be.

 

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At least you have the sense to question the stats if they seem too good to be true!

plus it depends on all sorts of things ie I have to shut my top floor as we are having the roof done 2 and a 1/2 weeks which means I will be very wary of letting rooms on the top floor due to noise which means I have effectively 50% of my rooms out of action. which will damage my stats. Next year I will loose 3 rooms for about 2-3 weeks while doing the make over with room 5's bedroom into 2 bathrooms which will mean I can't let 3 rooms for that time which again will eat into my stats but I will come out with more let-able rooms which will hopefully make more revenue.

Then you have people like my neighbour Tony who seems to go on holiday every 5 minutes and has a wife with a well paid job.

Or on the other hand you have people like my neighbour colin who is trying to sell so they never shut for a holiday and do all the chamber maiding themselves to make the books look better - knife cuts both ways.

 

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Weaver wrote:

Joey Bloggs wrote:

 I have a feeling you won't be getting many answers on this here, that is a best kept secret. PAII does the reports on it and a few others, which it sounds like you have already looked into.  

I said this exact same thing two days ago, someone inquiring about our inn for sale, and I said to my-dear-sweet-husband who is out moving yards and yards of mulch in 85 degree hot temps (yesterday and today):

"You know when aspirings begin their search to buy an inn they always think we rake in all this dough, I know a few innkeepers on this forum QUITE WELL and have no idea what their occupancy rate is" so it is not something easily revealed.

Just letting you know.

I notice looking up as I type this I am correct, not a peep out of anyone. haha sorry Weaves, it be what it be...On my grave there will be a bulleted list and two of them will be:

  • She never revealed her secret pork sausage recipe, that guests raved about 
  • She never revealed her occupancy rate

And if you don't sell soon that grave stone will be sooner rather than later.

Hey I gotta ask, you don't get what you don't ask for.

I don't like the look of the PAII numbers they just seem too easy!  So I will take the "stats" and halve them.  May be my best bet.  It is funny everyone shares so much but the one thing that tells so much. 

So I would not be too far off base to plan for say 10% the first year with increments of say 5 - 10% per year thereafter until the magic number what ever it might be.  Assuming I follow the golden rules of marketing and never sleep, blog, shake the trees, tweet, become best friends with the new tourism chair, and all the other things that go along with this insanity.  

G-d help me for what I am about to do can only be classified as insane!  thank goodness my oldest DD will be able to analyse my condition, not that it will help much but putting a label on it often makes it less scary.  But then again, doing this without a DH or SO is about as insane as one can get. 

If you see some odd woman on your front porch babbling things like thread count, china vs stoneware, PITAs everywhere there are PITAs.... do me the favor of shooting me now! Because I will surely be beyond help at that point.

Nope, that is our bread and butter.

I have never seen anyone here ever share any occupancy rates, and in fact I think some are totally full of it (ie B.S.). Just remember grasshopper, people can lie and do. Don't be fooled. What? Innkeepers lie? Sure, they do. Those reports, like you say, might see a bit of fluff.  

Let's see I can name three of us who had the prev owners fudge the numbers on the business to us...yep, don't trust 'em as far as you can throw 'em.  We always warn people of that, esp those of us who were duped, and are only NOW bringing our numbers up with tons of marketing!

Breakfast Diva's picture
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Maddy is right on about the city occ rate. I think a startup in a rural location will have a much less occ rate.

One thing you might want to do is to get the public information on rates for the area. Sometimes it's difficult to get them, but if there is a DMO or chamber they sometimes can help. You can also get the public information for lodging taxs and figure it out from there.

The industry studies state that the average (or median, I don't remember which one) rate for ALL b&bs is 35%. And that's not in the start up year.

If I were you, I would plan on an occ rate pretty low, then be happily surprised if it's higher. You are very savvy and if anybody can do it, YOU can!

gillumhouse's picture
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If your are still talking the area we discussed earlier, you DO have a chance of getting the horse trade from several directions - I will give you the web sites and places to list when you are ready for them. Since I do not have a stable, I have to depend on the farm giving me an OK - came home from church to someone leaving a message asking for rooms and stabling for tonight. I will not know if I can take them until the farmer gets out of church. So although I can take them, if the stable says no, it is no.

As a start-up in Podunk in our first year we were excited to get 6 room nights a month. This was in 1996 at the very beginning of Internet use. The percent occupancy varies by the number of rooms - so IF I ever reached 50% with 3 rooms that still would be horrible for Maddie or JB with their number of rooms.

Madeleine's picture
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We took over an existing biz so I can't help on the start up numbers. I will say that Cambs is in a 'city' that is known for being convention heaven. So, where she may run 70-80% occ or better year round, if you don't have that draw I think even the 45% is blue sky. (I say it's known as convention heaven because a novel I was just reading, written by an American, mentioned the conventions in Cambs's city.)

Hotels do MUCH higher occupancy than we do because they have the resources to host big events.

However, you could tap a pent up market and be turning away guests from day one. This is one of those things that there are so many variables for it's almost impossible to even hazard a guess what your location might see for numbers. If you think the numbers are too good to be true, then plan to make half. If you are still above water, life is good.

Coming into an existing biz we assumed we'd lose some repeat guests and planned on taking a 35% hit. We did. We made it up the next year.

Joey Camb's picture
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Wasnt a Bill Bryson book by any chance? lol We have several cities here which are convention mecca - Birmingham is the best its basically a liscence to print money as they also have several large concert arenas and host a lot of sporting events - they had the darts world cup ( you wouldn't think it would be a big draw) and they had 10,000 people every day to see it over a 2 week period.

Mind you the accommodation providers there can be ruthless! had some really nice people who came to us for a specific fair every year and then about a month later went to a similar show there - (baby equipment) said they were an hour late for check in, she made them say a specific time and when they got there she had sold their rooms! felt that was wayyy harsh. These were really nice people who used to bring me flowers and joke about taking me out to afternoon tea! from then on they were maniacs about checking their bookings everywhere just in case!

Madeleine's picture
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No, not Bill Bryson (English- The Mother Tongue?) it was Martha Grimes.

Joey Camb's picture
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For a new start up I wouldn't be expecting more than 45% but it does depend on a lot of things - ie

(1) my area is a busy conference, business and tourist town so higher than average

(2) location ie I bought here for the location which is pretty much the best in town so therefore beat other similar properties

(3) - how much marketing there is to do, is being done etc

(4) is it a seasonal area?

(5) draws - local attractions and proximity to them as well as do they open all year round?

(6) draws within the business ie what brings them specifically to you?

 

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