Location, Location, Location

It’s the number one rule when buying a house but what does it mean when buying a b&b? It is much more than property value, taxes and how good are the schools. What is the draw? Why do people go to that area? Is it a pass-through town where most guests will be one-nighters or is there a reason people want to come and stay for 2 or more nights? Or is it close enough to another town that is the real draw? You can fall in love with a property but if there is no tangible reason for people to come, it will be very hard to make it a viable business. Your b&b will have to become the draw, and that can be very long and hard road.

After looking up and down the east coast, we found our first b&b in Jamestown, RI. Most people have never heard of it, but they have heard of Newport. Newport was a fantastic market with countless reasons to visit (mansions, museums, restaurants, music festivals, beaches, water sports, destination weddings). Jamestown is a 10-minute drive across the bay. We could not afford Newport, so Jamestown was a great solution. We could take advantage of all the reasons people go to Newport but would have to position ourselves so guests would choose us over Newport.

Newport has a long “high” season (May through October) when you can charge your highest rates and you make most of your money. There are “shoulder” seasons at each end when you lower your rates and have to do more marketing to attract guests. Slow season was January and February when many people would shut down for renovations or take vacation.

So how exactly do you position yourself so people choose you over a property right in the hub of activity? Newport is a great market – but its biggest drawback is price. Rooms go anywhere from $175 to $1,500. Yes, that’s $1,500 per night! Most properties are in the $200 to $300 range. We had to price ourselves below that at a rate where guests would feel that it was worth staying outside Newport. You need to consider gas, and whether or not there are tolls and parking fees. And you have to give a “value” to the time someone will need to spend getting back and forth from your b&b to the places they want to visit.

For Jamestown, our rates were $135 to $165/night in high season. We constantly monitored what other properties, including hotels and motels, were charging. We did our research so we knew who offered more amenities and charged higher rates or who offered less, but still charged more. You have to have confidence that you are priced accordingly and competitively and you have to stand by your price. That doesn’t mean you can’t discount (that’s a whole other topic we’ll get into another time), but some potential guests will question your prices. You will have to explain, and sometimes defend, why your prices are “fair” (again, a whole other topic).