Does anyone actually make money owning a B&B?

[JunieBJones (JBJ)]

Just wondering. Theoretical question - YES.
Five years later...
Other than hoping to have an historic home that appreciates where you make money when you sell (which you won't cuz then you get to pay all these taxes) - Does anyone after all expenses actually MAKE any money on owning and operating a B&B?
These are the things that are NEVER MENTIONED - not even thought of - at an aspiring seminar or conference!
Work yourself into the ground and pour every penny back into the business. Or option 2) let your place deteriorate and fall apart with no upkeep and maintenance.
Can you tell I just finished my last worksheet in excel and printed them off with a great sigh of relief to be able to file our 2008 tax return. THE OVERHEAD IS HIGH people. IT IS HIGH.
I am not being negative. I have a smile on my face as I type this. You have to know that about me. I am not a negatory person - just reality speaking here.

 

[happykeeper]

That's a very complicated question. If I were to pull out a few questions from this, I think I would be better able to answer.
Does your current income provide you with a lifestyle that allows you to do the things you like?
Is your disposable income similar to what you would have if you worked for someone else?
Do you have the ability to increase revenue through increased occupancy or increased capacity?

 

[JunieBJones (JBJ)]

There is always room for increase. In fact we could do weddings here non stop, but I have a family and business to manage, so we don't. The next owner will have a hay day with that!
KnK wrote: Is your disposable income similar to what you would have if you worked for someone else?
THAT IS AN EXCELLENT QUESTION! That is it in a nutshell. Disposable income, what's that!

If we didn't have DH's income with his TAX PAYMENTS then we would not be able to do what we do. With his income and the B&B income and the write-offs it leaves no disposable income. Sure in a reg home we would have maintenance and living costs as well, I get all of that. But if Dh didn't pay taxes in his pay packet we would not counter any of that from what we pay-out in business expenses. I am not even talking about myself as being an employee - that would be a whole new ball of wax. Or if we had any employees.
I would be happy to hear everyone's thoughts on this.

 

[EmptyNest]

Well I have to say YES to this one today. Talking to my friend..who just got another TOP 10 in the US Trip Advisor award for the 3rd year in a row..They ARE MAKING MONEY!!! Making a living after paying all the bills..and they have no other income....So it can happen

 

[JunieBJones (JBJ)]

Well I have to say YES to this one today. Talking to my friend..who just got another TOP 10 in the US Trip Advisor award for the 3rd year in a row..They ARE MAKING MONEY!!! Making a living after paying all the bills..and they have no other income....So it can happen.

Well I have to say YES to this one today. Talking to my friend..who just got another TOP 10 in the US Trip Advisor award for the 3rd year in a row..They ARE MAKING MONEY!!! Making a living after paying all the bills..and they have no other income....So it can happen

Tell him congrats! That is something to be proud of!

 

[Copperhead]

If those questions are not independantly asked and answered by any aspiring, they should. But most importantly are:
YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...We certainly did not get into this business to rake in the dough. But we are doing fine. We are able to do some of the things away from the B&B that we have always wanted to do. We are also fortunate not to have a huge mortgage like so many of my innkeeping friends. Before diving in, each aspiring really needs to be intouch with their inner desires of what they want out of life, this business is clearly not for everyone.

 

[YellowSocks]

If those questions are not independantly asked and answered by any aspiring, they should. But most importantly are:
YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...We certainly did not get into this business to rake in the dough. But we are doing fine. We are able to do some of the things away from the B&B that we have always wanted to do. We are also fortunate not to have a huge mortgage like so many of my innkeeping friends. Before diving in, each aspiring really needs to be intouch with their inner desires of what they want out of life, this business is clearly not for everyone..

YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...

AGREED!!!
Originally we started this simply as a way to live where we want and stay home and educate our kids. It appears as though we'll be making some money from it, but I don't know how long it will take to recoup the major dollars we invested. And that huge upfront expense cuts down a little on our maintenance costs as well.
Hopefully someday we will, but if not, oh well... we are doing what we want, where we want, and happy.
=)
Kk.

 

[muirford]

Yes, we have an income from the Inn even after paying all the expenses (including healthcare and taxes).
Yes, we do most of the things we like to do. Eat out, buy books, go on vacation every once in a while. We also don't do a lot of things we hate to do - work for corporate interests rather than our own, commute in traffic to a job, wear suits and ties and shoes that hurt my feet.
Our disposable income is quite a bit less than it used to be when we worked for someone else. But we had to do a lot of things we didn't like - see the list above - and we didn't get to live in this town, which is great, and we didn't get to spend as much time with each other, which so far we like pretty well.
We can increase our NET from the business in several ways - increased occupancy, increased rates, taking back some work that is currently outsourced (laundry, housekeeping). This business - at least our specific inn - isn't an all or nothing proposition, like having a corporate job. If we get fewer guests because of the economy, some of our expenses go down and we can take on more of the work ourselves. We also have hedged our bets this year and last year by DH doing some contract software work. That money goes into the bank for emergencies (like my mother-in-law's health care costs requiring some family contribution last year). He makes about six or seven times an hour what we pay for a housekeeper or handyman doing software work, so it makes sense to bring that income in when we can.
We do like our lifestyle but there is no doubt we are considering our exit plan - we planned to do this for 7 to 10 years and we started our 7th year last September. We don't want to burn out in this career, either.

 

[egoodell]

It's tough for us to answer right now as we are not running 100% until we have all five rooms.
But since we have the tour business and B&B together, yes we are both living the way we want as mentioned before and making some money.
Once we have all five rooms and both of us available for tours we will be making money.
This is because:
1 - we built our inn in stages, and were able to build ourselves mostly. No enormous mortgage, but a regular mortgage that a 5 member family is paying.
2 - we are in a tourist destination - Charlottesville, Va only 1.5 - 2 hours drive from DC
3 - every couple that we take wine touring is the same income as a room rental but only 4 hours of our time, and only cost is gas, cheese and insurance.
4. we have a university in town.
5. I learned to do my own web site = no bells and whistles but enough that people say they can use it easily.
Riki

 

[NW BB]

Does your current income provide you with a lifestyle that allows you to do the things you like? YES
Is your disposable income similar to what you would have if you worked for someone else? YES
Do you have the ability to increase revenue through increased occupancy or increased capacity? YES, but limited and we don't want to do special events. We'll leave that for the next owner.
First, I want to say that I know our situation is not typical of a 4 room B&B. We are one of the rare few that are able to not have an outside jobs, no pensions or retirement and the B&B is our sole income. Oh yeah, and we are in the middle of nowhere, but we do have the ocean close by.
When we first bought our inn in 2001 we were able to just pay the bills. We made a decision that we would not hire any staff and would do all the work ourselves except for the repairs and maintenance that needed to be done by professionals. We also knew that making that decision would mean that even now, with our increased occupancy, by the end of our busy season (summer is 98% occupancy) we are so exhausted we can barely get out of bed in the morning. But that's ok, because we are putting a lot of money away for retirement. We also gave ourselves a 10 year window for being innkeepers, mostly because I don't want to work this hard or this tied down forever. We are in the middle of our 5 year exit strategy.
I know it's not the same for everybody, but here are what I feel are the keys to our success:
Niche marketing/branding - figure out what the market wants/needs, keep to your niche. You can't be everything to everybody.
Marketing, marketing, marketing! Good, professional website& professional photos. I have been able to cross over from just the B&B crowd, to a major part of our business being 1st time B&B goers. Yes, it has some problems, but overall, once those newbies see that we offer the privacy of a hotel, but the ambiance & amenities of an upscale B&B we have them for life. And these people are much younger than the typical B&B demographics so we get them coming back for more years.
Offer them a great product at a fair price. Oregon room rates are low in comparison to the rest of the country.
ATTEND THE PAII CONFERENCE AND STATE ASSOCIATION CONFERENCES! We go every other year, but I've always come away with a few "gems" that I can impliment which have made a major difference. Some of the "gems" you've heard before, but for some reason haven't tried...going to a conference and hearing it again just might give you that little extra you need to try it. For me this year, it was hearing Jay Karen (PAII), when he was at our state conference. I don't know if you read the article in the Fall edition of IQ about room pricing & yield management, but my story is on page 28
http://issuu.com/ingridthorson/docs/iq_fall_08?mode=embed&documentId=081120193312-604455f7f3de4033a581816eb4e9c3ad
Now that I'm doing taxes, I have realized that after implementing all that I talked about above, we've had our best year on record....and it was a recession year.
I hope this post doesn't sound like I'm preaching! I'm passionate about this industry and my next goal is to help educate the aspiring innkeepers out there which is why I'm branching out to the aspiring innkeeper seminars.
Thank you JBJ for starting this thread. These are definitely the questions and answers that everyone needs to know before getting into this profession.

 

[Morticia]

I always hate this question because I love where I live, like what I do but I work like a dog and worry all the time and I won't see any cold, hard cash until we sell.
Thanks, JBJ, I'm pulling the covers up over my head now and sobbing myself to sleep.

 

[NW BB]

I always hate this question because I love where I live, like what I do but I work like a dog and worry all the time and I won't see any cold, hard cash until we sell.
Thanks, JBJ, I'm pulling the covers up over my head now and sobbing myself to sleep..

Bree,
You love where you live and like what you do!!! That's an amazing accomplishment. When we bought our place, we NEVER thought we'd be in the financial position we are in now. I know what you're going through. After we moved here, we told all our family and friends "we're working harder and making less money, but we're happier". It's not all about the money. Hang in there and keep appreciating where and how you live. It means so much.

 

[springlady]

I always hate this question because I love where I live, like what I do but I work like a dog and worry all the time and I won't see any cold, hard cash until we sell.
Thanks, JBJ, I'm pulling the covers up over my head now and sobbing myself to sleep..

Bree, I have been there! I spent 9 years worrying with my back against the door trying to keep the wolf outside! But it paid off. I didn't have a B&B but a Mom & Pop furniture/gift store, which I ran without Pop for 4 of those years. I spent many nights tossing and turning, wondering how long I could keep my head above water.
It paid off when I sold it BIG TIME. I'm still pinching myself. And since I was in a position to seller finance (and knew the buyers well enough to be comfortable seller financing) it will provide me with a nice income with interest for the next 15 years. Gotta love it!
So hang in there. Sell it, do a 1031 Asset Exchange for another piece of commercial real estate if you want to shelter your profit http://www.1031.org/about1031/faq.htm
But be warned - you might be like me. For the first three months post-retirement it was heaven. I slept, I cooked, I cleaned, I took little jaunts. I hybernated - no people, no phones, no problems, no worries, no schedule.
Then suddenly one day I woke BORED. There's only so many naps I can take, there's still nothing to watch on TV, and if I stay home too much longer someone's gonna ask me to babysit. Meanwhile the thought of a 9-5 job making money for someone else didn't appeal to me.
So here I go again but this time I'll have an income to give me a bit of a cushion.

 

[JunieBJones (JBJ)]

If those questions are not independantly asked and answered by any aspiring, they should. But most importantly are:
YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...We certainly did not get into this business to rake in the dough. But we are doing fine. We are able to do some of the things away from the B&B that we have always wanted to do. We are also fortunate not to have a huge mortgage like so many of my innkeeping friends. Before diving in, each aspiring really needs to be intouch with their inner desires of what they want out of life, this business is clearly not for everyone..

this business is clearly not for everyone.

nor is it forever

 

[JunieBJones (JBJ)]

If those questions are not independantly asked and answered by any aspiring, they should. But most importantly are:
YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...We certainly did not get into this business to rake in the dough. But we are doing fine. We are able to do some of the things away from the B&B that we have always wanted to do. We are also fortunate not to have a huge mortgage like so many of my innkeeping friends. Before diving in, each aspiring really needs to be intouch with their inner desires of what they want out of life, this business is clearly not for everyone..

YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...

AGREED!!!
Originally we started this simply as a way to live where we want and stay home and educate our kids. It appears as though we'll be making some money from it, but I don't know how long it will take to recoup the major dollars we invested. And that huge upfront expense cuts down a little on our maintenance costs as well.
Hopefully someday we will, but if not, oh well... we are doing what we want, where we want, and happy.
=)
Kk.
.

YOU doing what you WANT to do?
Are you living where you want to live, in the house you want to be in?
Are you happy or are you constantly looking at another lifestyle?
Those are the real questions...

AGREED!!!
Originally we started this simply as a way to live where we want and stay home and educate our kids. It appears as though we'll be making some money from it, but I don't know how long it will take to recoup the major dollars we invested. And that huge upfront expense cuts down a little on our maintenance costs as well.
Hopefully someday we will, but if not, oh well... we are doing what we want, where we want, and happy.
=)
Kk.

That is not what I asked.
I am not asking for the philosphical WHY we do this, I am asking if anyone ever makes any money doing this? I know the WHYS and blah blah blah - be your own boss etc.

 

[JunieBJones (JBJ)]

I always hate this question because I love where I live, like what I do but I work like a dog and worry all the time and I won't see any cold, hard cash until we sell.
Thanks, JBJ, I'm pulling the covers up over my head now and sobbing myself to sleep..

Bree,
You love where you live and like what you do!!! That's an amazing accomplishment. When we bought our place, we NEVER thought we'd be in the financial position we are in now. I know what you're going through. After we moved here, we told all our family and friends "we're working harder and making less money, but we're happier". It's not all about the money. Hang in there and keep appreciating where and how you live. It means so much.
.

Bree,
You love where you live and like what you do!!! That's an amazing accomplishment. When we bought our place, we NEVER thought we'd be in the financial position we are in now. I know what you're going through. After we moved here, we told all our family and friends "we're working harder and making less money, but we're happier". It's not all about the money. Hang in there and keep appreciating where and how you live. It means so much.

To paraphrase what you tell your friends and family I tell our friends and family "We jumped out of the pot and into the fire" to which of course, no one understands.
Someone asked me the other day "Do you regret buying an inn?" and I think my jaw dropped - cuz if you know me I do not have regrets. I don't. Whatever I am doing now is a stage that moves me forward onto the next stage of my life. I look at everything that way. I glean from all experiences. I do not have ANY regrets. Or should I say the famous quote:
"When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, I used everything you gave me."--Erma Bombeck
Wait, that was not it...but i liked that one...hang on...let me find it - you all know it:
"If I had only known, I would have been a locksmith." Albert Einstein
Wait, that wasn't it either, hang on...I am getting there! I FOUND IT!


Of all sad words of tongue or pen, the saddest are these: "It might have been!" -- John Greenleaf Whittier

 

[Samster]

Not yet. If my dh didn't have another job, we couldn't make it. There are times that I think that if we'd stuck with the original plan we'd be better off. More rooms has meant a whole lot more overhead for us,. A LOT! And we've invested a lot of capital into the properties. Like many new businesses, it takes a year or better to see black ink. We definitely didn't make money this year.

 

[greyswan]

We are still working on building our business so we haven't made any profits yet. We are breaking even mostly.

 

[happykeeper]

Great Stuff!
I loved reading the article about pricing. We have seen a huge jump in revenue after raising our rates to where we honestly thought we should be and still be considered a good value. We do very little discounting.
The secret to this has been thinking collaboratively about other properties and understanding all the niches. As I have said before, we pass up a lot of walk-ins because they want a bargain. They always leave happy because we have found someone in their price range.
I can see where we could do a lot more to help online planners understand what a value we are at twice the price of other properties.

 

[gillumhouse]

Do I make moneyfrom my inn? No, have shwn a profit of a couple hundred dollars a couple of years - BUT I only have 3 rooms. In the early years, if I had had a mortgage I never would have made it. We got our first loan in 2003 to put siding on the house and then I got MY honking loan payment to create a bathroom. Partly because I do so much marketing - which helps increase my revenue stream - we barely break even. We do not go out very often, as much as any reason because we really do not want to and partly because SH does not travel well any more.
I have very little disposable income but it does meet MY needs. Support us? Probably not - DH has too much med problems.
To answer the question of do I have as much disposable income as I did when I worked for corporate America - yes, I actually do. The cost of living was so high there and the requirements (costs of clothes, transportation for the commute, car expenses and insurance, lunch money) and the number of kids I had then.... I had less then than I do now. The only reason we had what we did was that I worked full-time AND part-time and then after art school, trying to be an artist, and going back to printing school (he had been caught in a company move) DH went back to work full-time until the last lay-off shortly before we moved. THAT was what enabled me to get the savings that we moved here with and the sale of our house there paid fort his house and a lot of the upgrades. A heart attack, aortic aneurysm, and 6-way by-pass is what did us in financially here.
I pretty much break even with B & B. Have not done my tax data yet so I do not know about last year - it was my best year ever for revenue.