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Russ Rodgers, MBA, is our principal broker. Russ is a recognized authority in the Hospitality Industry. He has written several articles for various publications. Here are a few of his articles.

Russ had a regular monthly column in one of the Industrys leading magazines, The B&B and Country Inn Marketplace.

Here is his latest article:

The International Society of Travel & Tourism Educators
International Convention, Tampa, Florida, October 5-7, 2000.

New Market Segment Goes Unrecognized by Tourism and Hotel industry

Russell W. Rodgers
BA, Communications, Michigan State University
MBA, Management, Saint Leo University

Something very interesting is taking place to the Hospitality Industrys Hotel segment. A new trend is emerging that could be called the B&B phenomena. Guests are paying nightly rates from $115 to $250 to experience service at the "grassroots level." These guests want hot tubs, romantic sunsets, peace and quiet, and history with personal service provided by people who guests actually know by name.

Here are some of the skills necessary to run a Bed & Breakfast.

  1. Accounting and Finance Skills, including bookkeeping and taxation

  2. Communications Skills, including writing, public speaking and public relations.

  3. Marketing Skills; including advertising, marketing, personal selling, direct mail, e-commerce ( website design and maintenance) and publicity.

  4. Decorating Skills, including historical interpretation.

  5. Historical Skills, including research, interpretation and interaction with various government agencies.

These skills are almost the same for running a hotel as for a B&B. Many people who are entering the B&B business are coming to the industry with backgrounds that either dont contain these skills or with skills that are rusty . These " corporate escapees " have been working in one specific area for some time and have not had to use these diverse skills in quite awhile. For example. the aspiring innkeeper may have a job as a middle manager responsible for specific tasks. This job requires the corporate employee to produce results with specific and narrow objectives. Many aspiring innkeepers want to go to seminars to bring themselves up to. date with the necessary skills.

Some Junior Colleges are offering outreach programs for aspiring innkeepers through their Adult Learning Programs. These programs can be a wonderful way for aspiring innkeepers to bring themselves up to date. Seminars are also offered by various B&B Associations and by private companies.

Other education functions are carried out by associations such as the Professional Association of Innkeepers International, a national organization and by state associations such as The Florida B&B and Inn Association. These associations provide the Innkeeper with a vital link between business operations, government and education.

Since little research of any consequence has been completed for this new market segment, many questions go unanswered. One of the most deficient areas is a database of transactions leading to the value of Bed & Breakfasts. This problem leads to difficulties in valuation and in turn, causes serious problems when it comes times to get a mortgage to purchase a B&B.

Innkeepers, many of who have little or no business education often misunderstand valuation. They want to sell their B&B after about five years in the business (usually due to burnout) and want a price that can not be justified by the sales and profits the business has earned. This leads to heightened anxiety and eventually, disappointment. Many are shocked to find that a business appraisal costs $5000-$7000 compared to a residential appraisal that costs $500-$700.

These modem day hosts are better known as Innkeepers. Many of these so-called Innkeepers have come to the industry as "escapees" of the corporate culture. They want the dignity and challenge of running their own business without the boss looking over their shoulders. They have left behind careers in science, medicine and corporate life for the chance to make beds, fluff pillows and get up every morning at 6:00 a.m. to prepare breakfast.

The Bed & Breakfast market is one of the fastest growing segments of the Hotel Industry . The "trackers" of the industry such as PK Consulting and others are not following the growth of this market segment. The number of Bed & Breakfasts grow every year. It is estimated that there are over 20,000 B&Bs in the United States. More B&Bs come on line each week. The actual count is unknown because there is no separate SIC code for this industry. The industry boasts an ADR of $115 per night well above a majority of the mid-market segments. Ali Poorani, Ph.D., University of Delaware, Newark Campus, has done some of the only academic work that has been completed on this subject.

People who stay in B&Bs are doing so because they enjoy the "culture" that goes along with the time spent at the Inn. Many are the same people who stay in the classic B&Bs of the commercial travelers. The commercial B&B in America today is a "Box and a Bathroom" which usually costs the traveler between $49-$199 a night. Seasoned travelers know these B&Bs as Hilton Garden Inns, Days Inns, Knights Inns, and many more. Their emphasis is on speed of check in and check out along with a "free breakfast," offered to stay competitive. Real service is hard to come by.

Contrast this environment to the typical B&B where breakfast is offered as a highlight of the day. Guests are encouraged to enjoy their breakfasts. Breakfast is most likely served on fine china rather than throwaway plastic dishes. People actually talk to each other over a sumptuous breakfast instead of a group of people all staring at the latest news on CNN in the area set aside for breakfast at the commercial B&B. The commercial hotel guest actually looks forward to staying in a historic, tastefully decorated part of American History known as a B&B.

The Innkeeper/Owner of the B&B does everything from serve the breakfast to act as the tour guide for the guests days activities. Most guests are not concerned about the price of the room. They seem to be seeking an experience, a chance to rejuvenate from hectic schedules.

Little research exits in the academic community for this market segment. The big research companies such as Smith Travel Research, PK Consulting, Hotel Valuation Services, etc. do little work in this area. Yet there is a mass exodus taking place from the corporate boardroom to B&B living rooms both from a career standpoint and a guest standpoint. For example, women business travelers tend to seek out B&B accommodations if they are available in areas to which they travel frequently.
Research that has been completed by the Professional Association of Innkeepers indicates that 75% of B&B owners are college graduates. Many owners are enjoying the benefits of living and working in the same building. Other benefits that owners have mentioned include:

  1. Fulfillment of a life style. The typical innkeeper likes what they do!

  2. Financial benefits which include:

    1. Personal food paid for from the operating expenses of the business.

    2. Tax benefits such as depreciation on the business portion of the home.

    3. Many consider the business profitable if profits pay the mortgage.

    4. Profits that can be reinvested in the business or taken personally.

  3. Often, husband and wife are eager to work together with one accepting the business role and the other accepting the host or hostess role.

  4. Psychological benefits: Innkeepers seem to carry a great deal of respect from the community in which they reside.

Innkeepers are people who need to possess a number of skills to succeed. These skills include the same set of skills that a General Manager would need to manage a motel or hotel. Educated Innkeepers are as necessary to success in the B&B Industry as educated managers are to the Hotel Industry.

Please get in touch with us if you would like a free copy one of these magazines or articles.

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Russell W. Rodgers
Licensed Florida Real Estate Broker
2274 State Rd. 580
Sutie B
Clearwater, Florida 33760
Phone # (727)639-4398 * 24-Hrs *
Fax # (810)213-0244 * 24-Hrs *
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Russell W. Rodgers
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842 Kealahou St.
Honolulu, HI 96825
Phone # (808)744-1826 *24 Hrs*
Fax #: (810)213-0244 *24 Hrs.*

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