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Wow! What do I do with all these numbers?
A step-by-step guide to using the 2002 Study
By
Hugh Daniels

The eighth PAII Study of Bed-and-Breakfast & Country Inns Operations, Marketing and Finances or "The Study" is before you. The Study provides great information to individual innkeepers about their industry and their own individual operation, but it helps to know what to do with all these numbers.

Glossary and Chart of Accounts

This first section of the Study will help you decide where your inn fits with respect to location, region, and operations. While your own chart of accounts may not exactly fit the standard presented, you will be able to combine and separate your own accounts, which will enable comparisons later in the Study. Having your own chart of accounts closely resemble the one presented will make it easier for you to participate in future studies. The initial pages profile the respondents so that you can see how many inns from your region participated by size, average rate and the number of years in business. Remember that this is a snapshot of the industry that changes from year to year. Some statistics refer to "Same Inns," which compare the same properties between this Study and the last Study.

Food and Amenities

This is a great couple of pages for comparing your operation with others and to get ideas for items that you may wish to add or delete from your inn's offerings.

Labor: Owners

We all work very hard to make it look to our guests like we don't work hard at all. The next set of information reports that all of those weeks that feel like 80 hours are 80 hours, and the average owner values that labor at about $17.00 an hour. Compare yourself to other owners and also look at the tasks involved. Additionally, compare yourself in each of the categories presented (i.e. Years in Business, Number of Rooms) and look at the changes for the Same Inn respondents.

Labor: Employees

As you grow and/or try to reduce your hours of work, employees become a necessity. The next set of pages gives you staffing levels, average number of hours and ranges of pay for both hourly and salaried employees. How does your staff productivity look in comparison to your peers? In the employee benefit section you can see how competitive your benefits package is for staff. You will also see that our industry is now offering a lot more in the way of benefits than it has in the past.

Marketing and Advertising

Where do your guests come from? You should, of course, be asking every single guest "how they found you." By tracking the source of your clientele, you know where to spend your money on marketing and advertising. In the Marketing section of the Study, you can see where the majority of the guests are coming from in our industry and how your inn stacks up against your peers. You shouldn't be surprised that the Internet is now the number one source of business. However, you should also look at this list as a source of other ideas for marketing and advertising or areas that you may wish to spend less time and money on.

Meetings and Weddings

Because a number of inns deal in meetings and weddings, we have expanded this section of the Study, particularly in the area of weddings. If you are interested in the wedding market or are trying to decide whether to stay in the wedding market, these numbers will help you compare your operation and make an educated decision.

Room Rates

Innkeepers sometimes have difficulty in setting rates. We want to be fair and we really love our guests, but we don't want to undervalue what we provide to the traveling public. In this section, you can compare your rates to others and, in particular, by Feature. (Remember these are averages and ranges.) Additionally, in setting your rates you also need to consider your local competition, which includes the hotels and motels down the road. In addition to using the Study, make sure you do some local and regional research on other lodging opportunities that are trying to lure the same guest. To compute Average Daily Rates (ADR), take the total room revenue you have for the year and divide it by the number of rooms rented. This is a common tool used in the lodging industry, and it is often scrutinized by bankers and lenders, so you should know your own ADR.

Finances

The nuts and bolts of the Study are in this Section which has lots of numbers and percentages for you to compare. Here are some things to remember as you put your inn up against the Study. First, this is not an average of all inns in all categories across the country. It is a reasonable sample. Just because your inn doesn't fit these numbers, doesn't make it an unsuccessful inn. Compare your financials to each of the categories (location, region, size and years in business) to get a better comparison. Second, be aware that this is net operating income before your mortgage, depreciation, amortization, owner draw or distributions, capital expenditures and taxes. A large net operating income can be eaten up by these additional costs of doing business. That is why budget and cash flow analysis is also important in reviewing your financial health. One of the great attributes of the financial pages of the Study is the opportunity to look at the individual line items and compare your operation from a percentage as well as from a dollar vantage point. It's a chance to see if you are in line or should investigate the variances, plus or minus. It never hurts to regularly evaluate your expenditures and look for new opportunities to cut expenses, while still providing a great experience at managing your inn.

Capital Investments

An update of Capital Investments in new inns, conversions and the number of inns that did expansions round out the Study. These figures can vary widely due to the number of inns participating in these questions and many additional variables.

Part two of the Study covers the same types of statistics for Country Inns or those properties that have a restaurant-type operation on site. In addition to the rooms information you would see in the bed and breakfast section, you will find revenue, expenses and employee information on the food and beverage side of the business.

The Study is full of great information that will help you be a professional and successful innkeeper. Take a few moments and spend some time with it. Ask yourself some questions and compare your inn to the industry. Finally, keep good records and don't forget to participate in the next Industry Study of Bed-and-Breakfast and Country Inns Operations, Marketing and Finances. The more participating inns we have, the better the product.

Hugh Daniels has been innkeeping for twenty years in Park City, Utah. He also is the managing partner in Ask Hugh Consulting, a small business consulting firm that focuses on financial planning, operations, budgeting, cash flow and human resources with inn clients around the U.S. www.askhugh.com

Published in the 2000 and 2002 PAII Study of Bed-and-Breakfast & Country Inns Operations, Marketing and Finances


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