Market Research on B&Bs?

[kilt_on_a_bike]

I've noticed a few postings from people who are interested in setting up a B&B business, but are uncertain about the viability of the business case. Obviously there are key business assumptions such as location, B&B rates, average occupancy which need to be taken into account. I've seen lots of advice given on the website (figures in one thread suggest anything between 20% and 100% occupancy!).

Does anyone know if there are any useful market data published and available showing the geographical variation of B&B rates and average occupancy across different regions, and if so how I can get my hands on it?

If such market information is not already published, does anyone think that there would be a demand for this kind of info if it could be compiled and made available (a kind of updated database on average B&B rates and occupancies for B&Bs in different regions)?

Scotty

[Lachouette]

Our regional tourist committee (Limousin) publishes a newletter, which we receive either because we're registered with G de F, or the Chambre de Commerce, and this gives trends in tourism for our area.  We received several during the summer season but have had nothihng for a few months.  I guess it'll all restart once the season starts and they send their questionnaires out again.

Jan

[mascamps.com]

The problem is that it's all so dependant on location ie averages aren't really much use.

For instance, there are us plus two other apparently competing auberges within a radius of 3km or so. We are right on the main road, one is in a village just 2km off the same road (but with all kinds of signs pointing to them) and the third is a few hundred metres off the same road in the village next to us (also with loads of signs). The other two have had years and years of experience whereas we've just under a year at it.

On the face of it, I'd certainly have put money on the other two having more people than us but in practice, we had more reservations than the other two put together for the whole summer.

The best figures you'll find aren't on B&Bs per se but on hotels. In practice, a large B&B isn't a whole lot different from a small hotel so, in the absence of good quality info on B&Bs, you'd probably not go far wrong taking the hotel figures. Anyway, as a rough guide, 60% occupancy is what most hotels end up with (that's after their business settles down) although 80% is possible. For a startup, I'd say you're looking at 20-40% for the first year normally but if you were taking over an existing business your occupancy wouldn't be very different from theirs initially (beware that it might drop though if their existing clients really, really liked the people you bought it off).

One thing I have noticed happening a lot is that people drop all the websites and whatnot that the previous owners had setup. That's a sure way to drop your occupancy in the first year. One large B&B/gite complex down the road from us had a website for many years, listed on search engines, etc. As soon as the new people took over, this website disappeared and I can't find the new website at all (I assume that they have one given the scale of the place).

The basic problem with B&Bs at the small end of the scale is that if they've, say, 2 rooms then one cancellation means a 50% drop in occupancy and you've also got the hassle of overlapping bookings that mean 100% occupancy is difficult to achieve (unlike gites where it's a week at a time and always with the same start day). In practice, the average B&B actually only has 2 rooms but then the average B&B isn't used to provide a living. GdF was originally formed to beef up the income of farmers, hence the very low average size of their properties; I suspect that the english-owned properties have a much larger average size as they are being setup/bought as a main source of income.

Re the statistics, you also have the problem of pricing. The prices in GdF and Chez Nous are almost the same except that GdF uses a euro symbol and Chez Nous uses a pound sign ie the Chez Nous prices are around 40% higher. We know of several gite owners who simply won't bother with "the French" (ie GdF) because of this. I haven't compared the B&B prices but I suspect that the same ratio applies (although we do get a lot of French customers so I guess they can be persuaded to pay a bit more). This obviously has a big impact on income as 40% occupancy on Chez Nous prices would bring in the same income as 60% occupancy on GdF prices.

 

Arnold

 

[kilt_on_a_bike]

Hi Arnold

Thanks for your very detailed reply.

Obviously there is a correlation between pricing and occupancy, and between location and pricing & occupancy. That's the whole reason for asking the question in the first place - ie whether there is any market research available, in enough detail, which shows the regional variations of pricing & occupancy.

From what I have seen so far, it seems that no such information is available at a national level (local market info may be available from the local Chamber of Commerce etc). And from your response, I guess your view is that a national compilation (even if it could be compiled) would not be terribly useful, mainly because the "micro-location" and marketing are so critical to the success of each business?

The answer then seems to be : Target your region/area first, then do detailed and focussed market research at a local level to find the relationships between micro-location, marketing, quality, price and occupancy.

Cheers

Scotty

[mascamps.com]

Scotty,

I think a regional compilation wouldn't be useless per se in that there are some differences that are obvious right now eg the Cote d'Azur prices are definitely higher than Languedoc-Roussillon (although I imagine that at the border between the two there must be some blurring in the differences). That kind of information would be useful as a starter for someone to give them, say, an idea if it's worth paying that bit more for a Cote d'Azur property vs a Languedoc-Roussillon one.

Within a region the micro-location is vital. We have a friend about 40 minutes west of us who gets little more for a house-size gite than our charges for an apartment-sized one. In effect, you'd need to allow for things like the distance from the main road, facilities of the place (a pool bumps up both the price and occupancy rate), type of area (beach/country/village) and, of course, the level of marketing etc. Overall, I suspect that those kind of differences are about as significant as jacking up your property and moving it to the Cote d'Azur.

One thing in the middle ground is proximity to an airport served by discount airlines. Some places won't even list you unless you can say you're within about 40 minutes of such an airport. Yes, I know that there are ferries and indeed being near a port is useful too (though that limits your choice to northern France, of course). In practice, most of France isn't near a port (well, "near" is probably a couple of hours driving time) so the airports are more significant for most of us.

The marketing angle is very difficult to judge. Locally a lot of gite people use frenchconnections which served them very well until last year when they got hardly any bookings at all. Does that mean that it's a waste of money? Personally, I don't think so but only because last year was dreadful down here in terms of occupancy as a consequence of the overlly hot summer the year before. This year, several I know have not renewed their advert yet those that kept going are almost full already.

To my mind, you need somewhere that isn't overlly far from a town and has a reasonable number of places of interest within an hour or so driving time. Make sure that it's a place that other people would like and can get to. Some really beautiful locations are just too isolated.

I think the best plan is to be very pessimistic at the start. If it looks affordable with 30% occupancy over 10 weeks, it's a runner. In a reasonable location, with a reasonable property, you should be able to get to 40-60% occupancy over 10 weeks within a year or two. To make the figures better, add in table d'hote but on a pessimistic basis: don't assume that more than, say, 25% of people will eat with you. The food angle is the reason why we ended up going down the B&B route rather than with a gite: the figures just didn't add up without the food.

 

Arnold

 

[Miki]

Re the statistics, you also have the problem of pricing. The prices in GdF and Chez Nous are almost the same except that GdF uses a euro symbol and Chez Nous uses a pound sign ie the Chez Nous prices are around 40% higher. We know of several gite owners who simply won't bother with "the French" (ie GdF) because of this. I haven't compared the B&B prices but I suspect that the same ratio applies (although we do get a lot of French customers so I guess they can be persuaded to pay a bit more). This obviously has a big impact on income as 40% occupancy on Chez Nous prices would bring in the same income as 60% occupancy on GdF prices.

For someone who had gites and B&B with Chez Nous for many years, leading up to the day we moved up here and opened as solely B&B back in 1999, I speak from my experience only of course but, having said that, others we speak to confirm the same as us and that is, B&B advertising in Chez Nous was not a satisfactory way to spend advertising revenues. We stopped  advertising with them since opening here and spent the revenue saved on placing adverts with specialist B&B sites.

CN is expensive and people are generally looking in CN for gites to rent. Having said that, there are one or two excellent places that specialise in B&B and local activities, inc cooking classes etc who have been in the CN book for several years having gained a niche market. Perhaps some people are happy with CN and do OK with their B&B's ?

As far as I am concerned, with a Bed and Breakfast enterprise one should always look to place ones advertising within B&B sites and brochures. So having said that, G de Fr will get you far, far more bookings in the guide books than an advert in CN, the only problem would be the persons ability to converse somewhat in French but once that criteria is OK, then regardless of cost and as far as B&B in CN and British prices, we are around the same price, after the exchange rate is made.

There are some rather expensive places in the G de Fr national book, it is not all 1 or 2 bedrooms but I agree there are many but it has have moved on now and most farms that were going to do renovations for chambres d'hôtes have done so, leaving normal French (and some other nationalities) to enter the huge market place. Some French will always pay for quality and something out of the ordinary but many will not pay some of the prices in British B&B's for what is sometimes a pretty basic set up brought on by the urgent need to earn a living, rather than first thinking of offering a decent service, then seeing if one can make a living from it. I know some on here that have B&B's and have to say they have lovey places, so although what I stated I have seen to be true, it is not a generalisation of all British B&B's.

Arnold I suspect you are not with G de Fr ?  Your prices are not too high and are actually quite average, they are both lower and dearer than some for around here and I wondered how you thought that you had gained due to charging a higher than normal French tariff, when it looks to me to be just an average pricing ?

It is pretty common knowledge and has been for donkey's years that CN and other brochures and web sites advertising gîte hire, prices are far higher than G de Fr and in some cases worthy of higher rents but in some cases, if people had any sense they would book through G de Fr and save a packet on a like for like basis. With B&B though, I see the prices as pretty much in line with each other to be honest, again on a like for like basis that is.

My criteria for where a B&B should be, has always been to ensure it is where people are going to be, not where you want to be, it is all very well being in a wonderful location (save that for retirement !) where occasionally some one wants to stay away from the crowds etc but making a living from those places is damned hard and we have always believed in being where the folks are to make a successful business. Maybe not always true but it is a general rule that we have followed.

 

 

[mascamps.com]

Miki,

So far, we're not impressed with Chez Nous as far as bookings go. We sort-of felt that we should be in it but, unless income from them picks up significantly, we'll not be running with them again next year.

My problem is that I've not really come across a lot of B&B sites or brochures. We're in greatbedandbreakfast.com which seemed, at the time, to be perfect yet has resulted in perhaps a dozen enquiries yet no bookings. I'd welcome pointers for other sites & brochures!

I'm a fluent French speaker but we can't go into GdF due to the size and layout of our place. If we could have done, we probably would have joined it to hit the French market. I never could understand why (apart from the ability to read French) people would book in CN vs relatively similar places in GdF although I suppose the brochure distribution network for GdF isn't as great outside France as CN.

I'm in full agreement with you re the location. I think a lot of those places that fold in a year or two are those that people bought for themselves and not with a view to attracting guests. Still, in good years it probably doesn't make a lot of difference as nearly everyone is full. The problem is the average to poor years (and I gather that last year was dreadful) the slightly out of the way places can get nobody at all. We've one friend who has a place maybe 30 mins drive off the main road and ended up with nobody last year. He's in a lovely village but then there are lovely villages a lot less than 30 mins off the road.

 

Arnold

 

[Miki]

Arnold,

There are not many, if any brochures that do it as just a brochure. For instance, the G de Fr book goes out in the UK as the AA guide to B&B in France and also is translated in to other languages as well.

Bed and Breakfast UK goes out as a Thomas Cook guide.

These cost money of course but......

Being in France, really does mean aiming at the French, you could try Clévacances and B&B France but none to my mind come even close to G de Fr in terms of enquiries and reservations.