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4 Items to Consider Before Buying a Bed & Breakfast

Posted On: 04/01/2019 / By:
Buying A Business

If you’ve ever dreamed of owning a guest home, you should consider the advantages of buying an existing inn. Aside from inheriting a revenue stream from already-booked guests, you’ll also have a better understanding of the business’ cash flow and operating costs. Plus, in many cases, you’ll have very little remodeling work ahead.

Last year, the B&B industry generated $3 billion within the U.S. alone, rising 5.4% since 2013. As travelers continue seeking unique and authentic experiences, now may be the perfect time to invest in a guesthouse accommodation. Here are four important considerations you need to make before buying a bed and breakfast.

What to Consider Before Buying a Bed and Breakfast

Before browsing bed and breakfasts listed for sale, you’ll want to consider the following four components to determine if hospitality is the right industry for you.

Setting Financial Expectations

Bed and breakfasts are just one small sector apart of the much larger, more competitive market of travel accommodations. Even in less populated regions, bed and breakfasts still must compete with other B&Bs, hotels, motels, hostels, homestays, campgrounds, and more. In addition to competing within a mass market, B&B owners also must deal with fluctuating peak seasons.

While many innkeepers believe offering cheap rates will earn them more business, charging too less is just as bad as aiming too high. In fact, the average daily rate of a room for B&B’s across the world is $150. If you gauge much lower than this, travelers may perceive your property is of a lesser value. You can predetermine your rates by considering what other similar accommodations charge in your specified area. Accommodations you may consider include:

  • The type of room and bed offered;
  • Private or shared bathrooms; and
  • Any special services or amenities.

Given these considerations, be sure to set realistic financial goals and expectations for your business. To determine the amount of revenue you’ll need to generate, consider the lifestyle you envision having.

front door of bed and breakfast

Understanding Your Ideal Bed & Breakfast

As with any business, you’ll want to decide on the specifics of your B&B- i.e., what factors make you unique? How do you envision your company and its operations? You’ll want to consider factors such as size, decor, seasonality, the type of guests you’re hoping to attract, and more.

This is where having clear financial expectations comes in handy. Be sure to have a sense of how much you’ll earn through your business to determine the investments you can afford to make. While making improvements is great, keep in mind the risk of getting in over your head with a hefty mortgage payment if what you’re ultimately offering isn’t profitable enough.

Narrowing Down Location

Determining the right location is imperative to not only your happiness but also your business’ success. Whether you’re looking for a metropolis or countryside option, you’ll need to consider your location thoroughly based on the vision you created above.

If you’re struggling to determine where you should call home (and work), you should consider what attractions, events, and activities an area offers. Think of the demographic who comes to town for that entertainment. Compare this person to your ideal guest. Are they similar?

For example, if you’re looking to target families with younger children, spring break destinations may not be the best match. On the other hand, if you’re looking to attract young adults, you probably wouldn’t find your ideal business in a rural area.

Working With a Business Broker

Buying a house or a business is difficult alone, but finding a property that will serve as both is a more complicated task. Luckily, there are plenty of business intermediaries who specialize in bed and breakfast sales. A trained professional will be able to offer guidance and assistance with everything from finding B&B sellers and setting financial expectations to drafting contracts and facilitating the transaction. While you can certainly face the buying process alone, dealing with a certified business broker often results in a smoother, stress-free sale.

The hospitality industry is calling! If you’re interested in buying a bed and breakfast, let the knowledgable team at Sunbelt Business Brokers assist you in the buying process. Begin your search for the perfect B&B business to purchase by locating your nearest Sunbelt office.


Brian Knoderer

Brian Knoderer is the President of Sunbelt Business Brokers. He has over 20 years of experience as a business owner and managing business transactions. As a seasoned intermediary, Brian has successfully represented companies in a broad range of industries helping business owners achieve their desired exit strategy or growth initiative.

Brian is also co-owner of Sunbelt Indiana and Managing Director of MMI Capital Partners, a franchisor focused investment banking firm.

Previously Brian was involved in several entrepreneurial ventures as well as having held corporate roles in Franchise Development for Prime Hospitality and Choice Hotels.

Brian is a graduate of Ball State University with a degree in Management Information Systems and earned his MBA from Butler University. He has received the Certified Merger & Acquisition Advisor (CM&AA) designation, holds both the Series 7 – General Security License and the Series 63 – Uniform Securities Licenses, and is a licensed Real Estate Broker. He has been affiliated with several organizations including the Entrepreneur Organization, a Member of the International Business Brokers Association, Venture Club, and a Board Member of The Entrepreneur Institute.

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