Ontario Bed & Breakfast Industry Survey 2014 Summary of Results March 2015 Hospitality Lives Here
Ontario Bed & Breakfast Industry Survey 2014 Executive Summary This Ontario B&B industry survey was completed in December 2014 as a joint initiative between the Federation of Ontario Bed & Breakfast Accommodation (FOBBA) and BBCanada.com. The purpose of the survey was to better understand the profile of B&Bs operating in Ontario, their unique features, guest experiences, marketing practices and the key issues they face. A link to the 38 question survey was sent to approximately 2,000 Ontario-based B&Bs as registered in the BBCanada.com database. Results were compiled by The Resource Management Consulting Group. There were 409 responses from across the province (20%), with respondents in all RTOs. Key findings are summarized below. B&B Profile 2/3 have operated for less than 10 years Operate as a spousal partnership in 70% of the cases 90% have 4 or fewer rooms 50% are located in the countryside, 90% outside of a larger community 90% of operators live on the premises 70% have less than $30,000 in revenue, 25% have less than $10,000 in revenue 25% are planning on retiring from the business within the next 2-3 years Guest Experience Guests come in all ages, but the 40 60 range most prevalent High proportion (20%+) of returning guests Prefer B&Bs over other types of accommodations; more personalized / friendly Location, setting and absence of other accommodation in the destination also cited as factors in selecting a B&B Highlights of guest experiences included breakfast, guest conversations, features of the setting or house and amenities B&B stay is generally tied to something else in the area whether it be a recreational pursuit, family event or theatre festival (among others) 2
Ontario Bed & Breakfast Industry Survey 2014 Executive Summary Marketing 75% use some form of online booking service Print advertising is less important but still used for rack cards and in targeted publications (e.g. local directories of event promotions) 72% have their own website Approximately 50% use social media (Facebook or Twitter), but many are looking for more training Only 30% package their B&Bs with other local tourism products or promotions 75% felt that the most valuable form of marketing was online (listings, booking services, websites, social media, etc.) Issues A variety of issues were raised including: Increasing regulation (e.g. municipal, fire, zoning, taxes) Accessibility legislation Regulatory reaction to AirBnB Increasing costs (taxes, booking fees) Technology changes & social media Changing guest expectations 3
Q1 How many years have you been operating your current B&B business? Answered: 406 Skipped: 3 Approximately 2/3rds of respondents have been operating for 10 years or less. Only 8% have operated for more than 20 years. 4
Q2 How many bedrooms in total are rented at your B&B? Answered: 405 Skipped: 4 Approximately 2/3rd s of B&Bs operate with 2 or 3 bedrooms and 90% operate with 4 rooms or fewer. Room limits are reflected in many of the municipal bylaws in Ontario. Those with more bedrooms either operate where no bylaws exist or they conform with regulations applicable to hotels and inns. This result is a very different profile to the standard B&B in the US which may offer 10 15 rooms. This response does raise the question as to what should be allowed in Ontario. Do current bylaws prevent the emergence of larger B&Bs or inns? Should standardized municipal bylaws be pursued? 5
Q3 Which of the following best describes the setting of your B&B? Answered: 403 Skipped: 6 It may be surprising that half of B&Bs are located in the countryside, outside of a community. Fewer than 10% are located in large communities. The reason for this result comes through in the responses to later questions about why people stay at B&Bs. Guests value the rural setting as a getaway/vacation destination, and other accommodation options (hotels/ motels) may not be readily available. 6
Q4 In which RTO is your B&B located? Answered: 409 Skipped: 0 Several years ago, the province was divided into 13* tourism regions, with a Regional Tourism Organization (RTO) created for each one. Responses were received from all 13 RTOs. The analysis shows respondents are principally clustered in a few of the RTOs located outside major urban centres. 19% of respondents did not know which RTO they belonged to. However, because they were asked to identify their regional municipality, we were able to associate all respondents with their correct RTO. * Region 13 (Northern Ontario) is divided into 3 separate subregions, a, b and c. 7
Q5 Is your B&B open year round? If not, please indicate months of operation. Answered: 406 Skipped: 3 About 85% of B&Bs responding operate year-round. 10% operate only during the peak summer months and early fall. The remainder (5%) are closed in the winter months. Although most B&Bs remain open yearround, they are also likely to have a peak season, which could be winter. The results indicate that B&B rooms are available year-round, and that there is likely some capacity to fill. From a marketing or packaging perspective, this represents an opportunity. 8
Q6 What percentage of your guests fall into the following age ranges? Answered: 382 Skipped: 27 While B&Bs see guests of all ages, respondents reported the following ranges: Age Bracket % of Guests in the Bracket % of Responses Under 30 0 20% 91% 30s 0 20% 75% 40s 10 30% 71% 50s 20 40% 60% 60s 0 30% 58% Over 70 0 20% 86% The typical Bed & Breakfast visitor is 40 60 years old, travels for a variety of reasons and is specifically looking for a B&B experience. There was a high level of agreement that the under 30s and over 70s were not a large part of the market. The 50-something demographic appears to be the single highest frequency visitor. 9
Q7 What percentage of your guests are repeat visitors? Answered: 369 Skipped: 37 Responses to this question were quite varied. Approximately 1/3rd of respondents said their percentage of repeat visitors was higher than 30% reflecting the quality and nature of experience that the guest received. The mean average for repeat visitors among survey respondents is 28%. The median average is 20%. % Repeat Visitors % of Respondents 0 10% 34% 10 30% 34% 30 50% 20% 50 70% 5% over 70% 7% 10
Q8 Please provide an estimate of what percentage of your guests come from the following within Ontario and outside of Ontario Answered: 390 Skipped: 19 Not surprisingly, over 55% of respondents indicated that more than half their guests were from Ontario. Guests from the rest of Canada make up 10 30% of guests for 61% of B&Bs. Guests from outside Canada range from 0 20% for 65% of respondents (USA), and 75% (Europe). Another ways to say this: 75% report that guests from Europe make up 20% or less of their business 65% report that guests from the USA make up 20% or less of their business 87% report that guests from the rest of Canada make up 30% or less of their business 11
Q9 From which of the following international countries do you host the most guests? Answered: 383 Skipped: 26 Virtually all B&Bs have hosted international guests. The most frequently mentioned locations were the US, UK and Europe. Many other countries were also mentioned in the other category. What are you doing to attract international guests? 12
Q10 Which of the following reasons do guests most often give when asked why they stay at a B&B rather than a hotel/motel? Answered: 386 Skipped: 23 Questions 10 and 11 explored the whole B&B experience. Why do guest stay at B&Bs and what makes the experience memorable? Multiple answers were possible with More personalized/ friendly coming out on top. The most common other themes found in the reasons for staying at a B&B other than at a hotel or motel were: Location (close to family, rural setting, lake setting, theatre festivals, wineries, etc.). Something in the area is attracting the guest. B&Bs need to align their marketing around the reason guests visit the area. Meeting other guests, breakfast conversations. Another example of the atmosphere found at a B&B. Cleanliness. Standards are essential for the B&B industry and can easily be harmed by poor operators. Trip Advisor ratings. Guests do research; they come with an expectation based on your public profile, whether Trip Advisor, FOBBA rating or you website. Limited alternate accommodation in the area. This is one of the reasons that B&Bs flourish outside urban centres. Things to do. Similar to location, people are attracted to your area for a reason. This fact should influence your marketing decisions. The cost of a room does not appear to be a significant consideration in the decision to stay at a B&B over a hotel. Other factors are more important. We cannot conclude from this whether guests perceive B&B rooms as more or less expensive than hotels. 13
Q11 Which key feature of your B&B makes it a memorable experience for your guests? Answered: 377 Skipped: 29 This question about the B&B experience was very open-ended with no suggested responses. Many of the answers provide in #10 also appeared in the responses to #11. However, focussing on the experience, the most common responses included: Location/ setting Personalized, friendly hosts, overall experience Amenities (architectural / historic features, pool, spa, hiking trails, lakefront, etc) Breakfast and conversations Guests are clearly looking for something memorable and have high expectations around quality, friendliness and unique features. The importance of the breakfast cannot be understated. The image of the B&B industry depends on all operators adhering to these high expectations. Operators should also partner with others in their area to deliver the unique experiences important to so many guests. 14
Q12 Which of the following on-line booking services did you use this year? Answered: 381 Skipped: 28 The responses show that 75% of B&Bs use some form of online booking services. Somewhat surprisingly, 25% report using no online booking system at all. Many guests today prefer to book online, but may follow it up with a phone conversation to plan their visit. Without any form of on-line booking, potential guests may go elsewhere. BBCanada.com has the highest reported use of a booking service. An equal percentage use a system customized to their website, Booking.com, or Other (25%). One quarter of respondents consider Trip Adviser to be a booking system, even though it is technically not, while 13% make use of AirBnB. Results show that respondents use more than one booking system. On average, hosts use two booking services for their property. 15
Q13 Which of the following methods of print advertising did you use this year? Answered: 377 Skipped: 32 Although 61% of respondents produce a hard copy brochure or rack card, the trend away from print advertising is evident in the responses. B&Bs report using print advertising developed by local tourism or B&B associations. The objective is to associate your B&B with something connected to the reason guests are visiting your area. Numerous examples of media were reported including: Visitor guides/ maps Local event brochures (festivals, bike tours, guidebooks, etc) Chambers of Commerce tourism publications Local or regional magazines Print advertising opportunities for B&Bs are seemingly endless, but they can be expensive and may not result in new guests. Limited, targeted print advertising seems to be the favoured approach. One out of 5 respondents (21%) use no print advertising whatsoever. 16
Q14 Do you have specific dedicated website for your B&B? Answered: 378 Skipped: 31 72% of respondents have a website; 28% do not. Your website is your opportunity to tell your story and market yourself to guests. Without this opportunity, your web presence is limited to online listings or booking services (where the absence of a link to your own website may cost you potential guests). The issue for small businesses is balancing the cost and technological challenges of a website with the benefits it provides. 17
Q15 What form of social media do you currently use to promote your B&B? Answered: 373 Skipped: 36 Social media is used by approximately half of the respondents. The primary platform is Facebook with lesser usage of Twitter. Many B&B operators are intrigued by the prospects of social media as it does connect to potential guests and the costs are quite low (mainly time). The survey indicated a high level of interest among respondents in learning more about social media. 18
Q16 Which groups do you work with from a marketing perspective? Answered: 375 Skipped: 34 As expected many of the respondents work with local B&B associations and tourism groups to market their B&Bs. Surprisingly, almost 22% indicate that they work with no one. The other comments highlighted a number of specialized groups that really focus on the experience that B&B guests are seeking. These include biking & hiking groups, ski clubs, golf courses, wineries, theatre festival, music festivals, etc. RTOs appear not to be a major factor in B&B marketing, with only 20% reporting a relationship with their RTO. 19
Q17 Of the following local tourism offerings, which one(s) do you package (combined rate or discount) with your B&B? Answered: 370 Skipped: 39 This question focussed on how many B&B try to package their accommodation with other events or tourism offerings available in their area. Almost 70% package with no one. This is one of the single most surprising answers provided in the survey. Packaging is an opportunity to associate the B&B with one of the reasons the guest is visiting the destination and therefore represents true experiential marketing. Better still, costs may be minimal. Opportunities exist here for the B&B industry. In addition to the suggested answers, other packaging partners included wine tours, spa/ massage, sports operators (golf, skiing, yoga, tours) and cultural organizations (theatres, museums, art galleries). 20
Q18 Of all the different ways to promote and advertise, please comment on which one(s) generates the most business for your B&B? Answered: 362 Skipped: 44 This was an open-ended question seeking the one form of advertising that generates the most business for the B&B. The overwhelming answer (75%) was online advertising and marketing. Many different forms were mentioned including websites, listing/booking sites, Google and Trip Advisor. Very few mentioned social media but this may because B&B operators are still experimenting with it, and may not understand it. 20% answered word of mouth. This is the old-fashioned version of Trip Advisor, but it generates results that multiply. A positive guest experience and asking guests to refer your B&B to friends delivers results. 21
Q19 Approximately, how much do you spend yearly on marketing? Answered: 378 Skipped: 31 As small businesses, B&Bs have limited marketing budgets. Approximately 2/3rds spend less than $1,000 annually. To control costs, marketing has to be creative and targeted to the right audience. Many forms of marketing (e.g. packaging a promotion with local tour operator) can be very inexpensive. Perhaps noteworthy is that 37% spend less than $500, which can easily be used up with a single membership and a small hosted website. It is not clear from the question or from responses what people consider to be marketing. For example, are respondents including commission fees paid to booking services such as booking.com? This question merits further investigation. 22
Q20 Which of the following organizations inspect and rate your B&B? Answered: 382 Skipped: 27 Responses to previous questions clearly demonstrate that guests are looking for a high quality B&B experience and aren t afraid to talk about it on Trip Advisor or social media. While inspection does not necessarily guarantee high quality, it offers an assurance of it. Fewer than half of responding B&Bs report they are inspected or rated. Almost 23% of respondents misperceive Trip Adviser as an inspection and rating agency. Others cite inspections by AirBnB, BBCanada, Booking.com, Expedia as well as their local municipalities. There appears to be a tremendous gap in perception about what constitutes a rating/inspection and what is a booking engine, marketing website or referral system. A concern for the industry is that a lack of standards, ratings and inspections may put at risk the perception and reputation of the industry, or lead to the type of government regulation on short-term accommodation now being seen throughout parts of North America. 23
Q21 From your perspective, what is the most important issue facing the B&B industry today and into the future? Answered: 350 Skipped: 59 This question was meant to solicit views about issues relevant to the B&B industry. Answers were varied, but included the following: Government oversight, regulation (e.g. fire, health, short-term accommodation) Increasing guest expectations Poor hosts / bad experiences Aging population Rising costs (online booking fees, insurance, taxes, credit card fees) Effective marketing Air BnB Technology changes / social media While some of these comments reflect changing times, others are issues that could be addressed by an industry association such as FOBBA. In particular, the industry needs to make itself heard when impacted by regulations or threatened by low operating standards. 24
Q22 How concerned are you about keeping up with the regulations affecting your B&B? Answered: 343 Skipped: 66 The areas of higher regulatory concern included fire code issues and property tax assessment. At the last FOBBA conference, a representative from the Ontario Fire Marshall s office provide an overview of the regulations and explained why it may appear the rules are being applied unevenly across the province. In many cases, fire code and municipal bylaw issues may conflict and take time to resolve. With respect to property tax assessment, some B&Bs have reported assessments being made on the value of the B&B as a business instead of as a residential dwelling. Municipal bylaws vary across the province and some areas are taking action in response to problems created by short-term accommodation. This could threaten B&Bs. A dramatic example in the US were the actions taken in New York and Los Angeles that shut down or limit B&B operations in response to concerns about Air BnB. FOBBA continues to discuss local licensing, inspection and zoning issues with Ontario municipalities. Of least concern to respondents are small drinking water systems (which affect only well owners and is an issue that has largely been resolved since O.Reg 170/03), and HST. 25
Q23 Please indicate your interest level in the following educational topics to help improve your B&B. Answered: 342 Skipped: 67 Internet related-marketing was the top topic listed for further education. A close second was Social Media. A social media session was offered at the last FOBBA conference and more are planned. Other business related topics, such as tax matters, record keeping, HST and insurance are also of interest. Not surprisingly, of least interest as educational opportunities are How to Operate a B&B, and Housekeeping, probably because most B&B owners could give their own courses on these topics. 26
Q24 How interested would you be in an online seminar (webinar) on any of the education topics listed above? Answered: 347 Skipped: 62 Web-based learning via webinars is becoming increasingly popular, minimizing costs and travel time. Just over 30% of respondents were very interested in this form of learning, while 75% were very or somewhat interested. 24% were not at all interested. 27
Q25 Are you a current member of the Federation of Ontario Bed & Breakfast Accommodation (FOBBA)? Answered: 350 Skipped: 59 FOBBA currently has about 100 full members and would like to increase membership in order to better represent the industry. FOBBA members adhere to a set of operating standards and are both inspected and rated. This year, in 2015, FOBBA is updating its strategic plan to clarify its role and focus on matters most relevant to B&B operators. The answers provide to this question provide some insight into what operators may want from an association. The reasons for not joining are varied. Some are concerned about costs, even though annual membership is just $150. Others appear to be looking for a direct financial benefit. Belong to an Association that is a FOBBA member FOBBA is an industry association, not a booking service, although we are partnering with Ontario stakeholders on new marketing initiatives. FOBBA s principal role has been to represent the industry and uphold standards. Indicate reason for not renewing 28
Q26 Have you attended FOBBA conferences and were they useful? Answered: 347 Skipped: 62 While a minority of respondents have attended a FOBBA conference, those who did have found it useful. Annual conferences have been the primary means for B&B operators to share experiences/ issues, and participate in education sessions. Useful Not useful Conferences coincide with FOBBA s Annual General Meeting 29
Q27 28 In which of the following areas could FOBBA add value to your business or assist you as the operator? Answered: 301 Skipped: 108 FOBBA is a professional B&B industry association and does not compete with organizations (such as BBCanada.com) which directly market B&B accommodation. FOBBA does have an indirect marketing role through its inspection and ratings systems which are designed to promote member education and protect or inform the public, and through it s industry partners such as Resorts of Ontario. The answers to questions 27 & 28 provide some insight into what respondents feel FOBBA should be doing as an industry association. These will be considered as part of FOBBA s strategic planning update. The lack of staff resources to date has limited the scope of FOBBA s activities in past. Additional resources are being investigated and an announcement will be made not later than the beginning of April, 2015. 30
Q29 31 What best describes you as a B&B operator? Answered: 337 Skipped: 72 Almost 70% of Bed & Breakfasts are run as a spousal partnership. Women are the primary operator in 65% of cases. (29% of principal operators are men.) Almost 30% are single operators. The average ages of B&B operators are in the 45 64 range. 2/3rds of primary female operators are between 55 and 64 years of age. Ages and genders of secondary operators correspond to this data. (eg. 30% of secondary male operators are between 55 and 64 years of age.) 31
Q32 As the operator of the B&B, do you live in the B&B? Answered: 338 Skipped: 71 Over 90% of B&B operators live at the B&B premises. This is a requirement of FOBBA membership and is also part of many municipal bylaws. Operators who life offsite are more common in the USA where B&Bs tend to be larger business operations, more akin to country inns. 32
Q33 Thinking about the next 2 years, do you expect your B&B business to: Answered: 341 Skipped: 68 Almost 60% of B&B operators expect their business to increase over the next few years. Only 3% expect a decline. This response is clearly optimistic about the future, and may or may not align with the tourism industry overall. The belief, however, is supported by the number of people within and reaching the predominant B&B visitor demographic. Sustained visitor growth will require investment, online marketing, creative local partnerships and experiential marketing. 33
Q34 Thinking about the future (2-3 years), do you currently have plans to cease operating the B&B? Answered: 335 Skipped: 74 Approximately 25% of B&B operators are thinking about retirement. B&B closures have recently reduced the number of long-term FOBBA members. Nevertheless, there are many new operators with approximately 2,000 B&Bs operating in Ontario. 34
Q35 Which of the following ranges best describes your annual gross B&B revenue? Answered: 316 Skipped: 93 The range in revenues provides a clear picture of the size of B&B operations in Ontario. They are very small, home-based businesses with 70% operating below the $30,000 threshold for registering to collect HST. The Mean Average gross income of respondents is between $20,000 and $25,000 per year. The Median gross annual income of respondents is between $15,000 and $20,000 per year. This coincides with the generally small number of rooms in most properties, and reported seasonality. This suggests B&Bs are not principal sources of income; rather they are ancillary to other income sources, whether from retirement or other, and are often a lifestyle choice. The nature B&Bs as small businesses is both a strength and a challenge. Its strength is delivering the personalized experience sought by so many guests. It also opens up a variety of interesting homes to tourists in locations where larger commercial accommodations may not be available. Weaknesses or challenges come from the limited budgets to market or expand the business. Maintaining standards and properties may also be a challenge for some in the face of rising operating costs. Isolation is also a risk. Small B&Bs should seek support from their peers through local B&B associations and FOBBA. 35
Q36 Are you registered to collect HST? Answered: 332 Skipped: 77 Just under half of respondents are registered to collect HST. This somewhat aligns with the revenue response in the prior question. Even B&Bs operating below the $30,000 revenue threshold may choose to register in order to recover input tax credits on their purchases, and it appears some have chosen to do so. 36
Q37 Do you have an Ontario business license? Answered: 330 Skipped: 79 Approximately 23% of B&Bs operate without an Ontario business licence. The on-line registration process is simple and the one-time (every 5 years) cost is low. A Master Business License is required by the province of Ontario unless a B&B is incorporated, or operates in the owners personal name. Learn more at www.fobba.com/index.cfm?page=memberstart 37
Q38 Do you have commercial liability insurance? Answered: 332 Skipped: 77 Over 90% of B&Bs carry commercial liability insurance. While no one likes to pay insurance premiums, it is too risky to operate a business offering services to the public without insurance. FOBBA has arranged a specialized B&B insurance package for B&Bs through Halpenney Insurance Brokers that operators without insurance may wish to investigate. 38