The Innkeeping Blog

With Maybelle Beasley, executive director of the Bed and Breakfast Association of Mississippi, just before I judged the Innkeeper Cook-Off.

I just love coming to Mississippi and Louisiana to visit with the innkeepers in these two states.  Fortunately for my travel schedule, they host a combined annual conference, and this week it was in Natchez, Mississippi.  Thank you to Peter Sharp (President of BBAM and innkeeper at the Fairview Inn in Jackson, MS) for having me as the opening speaker and for allowing me to judge the Innkeeper Cook-Off.  What a blast!  It wasn’t easy tasting 10 dishes.

I was thrilled to present some of the most important and interesting findings of our newly released 2009-2010 Industry Study of Innkeeping Operations and Finance.  We’ll have a press release soon with some highlights, and innkeepers who contributed data to the study should already have their free copies by way of email.

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If you were preoccupied by getting ready for check-in the afternoon of August 28th, you probably missed the piece on NPR’s “All Things Considered” about two innkeepers in Saratoga Springs, NY. The story was part of a series on the trials and tribulations of small business owners. Click here to listen to the 5 minute story. NPR reporter, Jim Zarroli, contacted PAII, to see if we might have stats on the industry that support or refute the difficulties the innkeepers in this story were encountering. I immediately thought about the impact a positive or negative story might have on the innkeeping industry. As well, I wondered about who is looking out for the entire industry (meaning all stakeholders in the innkeeping world) with regard to public relations and telling our story.

I spoke with Zarroli for a few minutes and offered access to PAII’s Industry Study of Operations and Finance. The bit of information he chose to mention in the story was the fact that 58% of innkeepers surveyed indicated they rely on outside income (in addition to innkeeping) to run their households. That fact was used to support the story, which highlighted the profitability challenges of running an inn. In this day and age, it seems that national media coverage of any kind is a good thing, but of course we know that’s not true. Fortunately, the story was about one inn in one city, not about inns in general. And we all know that innkeeping business results vary based on all kinds of criteria and practices. An intelligent person would not think all inns are exactly like this particular inn, but you can see where listeners (and potential innkeepers?) might make a hasty generalization about innkeeping.

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Years ago, I watched a colleague give a presentation about why it was important for an association’s membership to have a financial benchmarking study. He said, “Think of it like major league baseball. If your win-loss record is 75-67, you wouldn’t know of that’s good or bad, unless you knew how the other teams in your division were doing.” That made good sense. If you look at your inn’s financial performance in isolation, you can make your own judgment about the results. You can determine if you spent more or less on various items than intended, if you earned what you had hoped, etc. But by looking at the numbers in a context of hundreds of other inns, you can glean a good bit more about your own operations.

By doing a comparative analysis using PAII’s recently released “Industry Study on Operations and Finance, 2007-2008,” you can see if your revenue and expenses are above or below inns of similar size. For example, you can look at your net income compared to like inns. If you happen to notice that your marketing spending is the one line item that is a good bit lower than average, and your net income is commensurately lower, you could draw a correlation. Might your financial results improve if you invest a little more in marketing? The study won’t tell you for sure, but you will be a more knowledgeable innkeeper, who can in-turn make well-informed decisions about the management of your business. No one should operate an inn – or any other business for that matter – without good information. The study is chock-full of data about guest amenities, average daily rate, revenue per available room, food and beverage, human resources and much more.

On a macro level, this kind of study impacts your business in a positive way. Insurance companies and lending institutions base their decisions on risk factors associated with a business. If an industry or business does not have good data, these service providers tend to think of that industry or business as risky. The result is usually higher interest rates or premiums. With good, solid information, an entire industry can be seen as a solid investment or risk. PAII has the ability to present the innkeeping industry in a very positive light with the good information in the Industry Study. Think of the macro effect next time you are asked to participate in these kinds of research projects, because they come around to help you in the end in ways you might not have realized.

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