Some people preferred to buy an existing bed & breakfast so they could open immediately, others wanted to design their own from scratch.
What’s the best way to go? I’ll discuss the pros & cons.
Welcome to another edition of Hospitality Property School.
I am your instructor, Gerry MacPherson.
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Whether it is better to buy an existing bed & breakfast or start new is a question I’m often asked. “What are the pros and cons of buying an established B&B versus setting one up from scratch?”
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In this episode, I’ll cover the pros and cons of both.
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Your first consideration has to come down to your personal situation:
- Which will be more expensive?
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- What is your time frame?
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- Can you afford to wait to start making an income?
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- Do you want your own personal take on your property?
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- Are you alright taking some risks?
You budget
If you are going to buy an existing bed & breakfast
An advantage of buying an existing establishment is that, normally, everything you need to run the business is included in the price. So, your upfront starting price to run your BnB is known.
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Some items to consider before signing the dotted line would include:
- The condition of all the windows
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- The plumbing
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- The age of the beds
These are examples of unexpected extra costs that could slow down your opening. Study the books of the seller to make sure the business was profitable.
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If you’re going to start it new
You’ll need to know if the property you would like to use is up to code with the structure, plumbing as well as the budget for decorating, furniture, websites, marketing, etc.
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If you are going to use an architect, designer, mortgage broker etc., make sure you choose one with hospitality property experience.
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Do lots of research about the area and other establishments similar to the type you would like to operate.
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How fast do you want to start making an income?
If you are going to buy an existing bed & breakfast
If you want a ready-made business, buying an existing business has the advantage of being up and running quicker. (Make sure you are aware of any and future bookings made by the old owners. You don’t want to be caught off guard).
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If you’re going to start it new
When you’re setting up from scratch you need to take into consideration the time it will take to set up the bed & breakfast, plus how long it will take to build the business.
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A brand new bed & breakfast can take up to 3 years from opening to operating as an established B&B. If you market your business aggressively or, are in a particularly popular tourist area, you may establish yourself more quickly.
Your reputation
If you are going to buy an existing bed & breakfast
If you are buying a property with a star rating, it’s important to note that in many countries the star rating is associated with the owner, not the business. If you want to remain rated you will have to reapply and get assessed.
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If you are not interested in being assessed by a star system, you could instead rely on the old business website and if they are good, past reviews.
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If the reviews are poor, you may want to get these reviews removed and start your review history over. (It is possible to get old reviews removed if you can show the OTAs proof in a change of ownership).
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If you’re going to start it new
If you are starting as a new bed & breakfast or are starting from zero reviews, it’s important that you quickly build up a good number of reviews.
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This is covered in the “Guide to Owning and Operating a Hospitality Property – Successfully” book and course.
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Repeat clientele
If you are going to buy an existing bed & breakfast
One advantage of buying an existing bed & breakfast is that they might have a good repeat clientele business, which you may continue to benefit from. In most cases, many of these guests return because they’ve built up a good relationship with the previous owner. It is going to be up to you to win them over so they continue to come back.
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If you’re starting from scratch
Then you are starting from scratch and have to offer an amazing customer experience so they’ll want to come back.
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This is also covered in the “Guide to Owning and Operating a Hospitality Property – Successfully” book and course.
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Your style
If you are going to buy an existing bed & breakfast
It’s far more difficult to find something that exactly meets your requirements if you’re buying an existing B&B and you may find if you do find the perfect property, that it comes at a premium.
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If you’re going to start it new
If you’re setting up a bed & breakfast from scratch, you can create exactly what you want in terms of style, quality etc.
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If you are a member of the Hospitality Property School Group, as a bonus, I will share 10 questions you should ask yourself before becoming a bed & breakfast owner.
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In conclusion
Choosing whether to buy an existing bed & breakfast or start it new should come down to a logical, well-thought-out process weighing all the pros and cons. But it many times comes down to gut feel and the heart. No matter how you choose to begin your life as an innkeeper, make sure to go in with an open mind and the willingness to flow with the inevitable ups and downs you will encounter.
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Are you thinking of opening your own bed & breakfast?
Let me know in the comments.
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We cover more on organizational structure in “The Guide to Owning & Operating a Hospitality Property – Successfully” book & course. You find more information at KeystoneHPD.com
You will have access to this episode for as long as you would like but if you would like to see all the bonuses you would have access to as a member of the Hospitality Property School Group, check out the short video in this episode post-show notes.
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In the next episode, I will talk about Starting a Vacation Rental Business.
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That’s it for today’s episode,
Until next time, have a fun day.
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If you haven’t done so yet, make sure up sign up for the INNsider Tips, say hi on social and join one of our groups. And make sure you get your free copy of the “How to Improve Your Hospitality Properties Success”.
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You can find all the links in the show notes.
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⇒ TO READ OR LISTEN TO THIS EPISODE ON KEYSTONE HOSPITALITY PROPERTY DEVELOPMENT:
https://keystonehpd.com/is-it-better-to-buy-an-existing-bed-breakfast-or-start-it-new-295
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