Bed and Breakfast Business Overview

A bed and breakfast provides travelers with overnight accommodations and a morning meal in a home-like setting. These establishments offer guests a blend of lodging, personalized hospitality, and a luxurious “home away from home” experience, setting them apart from standard hotels. Owners typically live on the property and manage daily operations, creating connections with their guests while providing local insights about the area.

The morning meal, a defining feature of any B&B, ranges from continental offerings to gourmet multi-course breakfasts. Many establishments pride themselves on using local ingredients and preparing homemade specialties, creating a dining experience that becomes part of the stay.

B&Bs differentiate themselves from traditional hotels through their personalized service and unique atmosphere. Each property has its own personality, often reflecting local culture, history, or the owner’s style. Many B&Bs occupy historic buildings, restored mansions, or charming country homes, adding to their appeal for travelers seeking an authentic experience.

Industry Summary

Bed and breakfasts operate under NAICS code 72119, which encompasses Bed & Breakfast & Hostel Accommodations. These businesses create unique hospitality experiences within the broader lodging sector.

B&B Industry Size & Growth: The bed and breakfast industry generates $3.0 billion in annual revenue. Over the past five years, the industry has shown steady growth, with an annual increase of 4.5%. The industry is projected to grow by 2.7% annually, reaching $3.5 billion by 2029. This growth stems from increased domestic travel and consumer interest in personalized lodging experiences. (IBISWorld)

Number of B&Bs: Currently, 4,420 bed and breakfast establishments operate across the country. The industry remains highly fragmented, with no single company controlling more than 5% of the market. This creates opportunities for independent operators to establish successful properties in various locations. Most properties are independently owned and operated, with very few franchise operations in this sector. (IBISWorld)

B&B Average Profit Margin: Profit margins for bed and breakfast operations typically range between 10% and 12%. These margins reflect efficient management of operating costs and successful pricing strategies. Properties that maintain high occupancy rates while controlling labor and maintenance expenses achieve the highest profitability. (IRS)

States with Most B&Bs: California, New York, and Massachusetts lead the nation in the number of bed and breakfast establishments. These states benefit from strong tourism sectors and diverse attractions that draw visitors year-round. The Northeast region shows a particularly high concentration of B&Bs, reflecting the area’s historic architecture and established tourism industry. (U.S. Census Bureau)

How Much Does It Cost To Start a Bed & Breakfast?

Starting a bed and breakfast typically requires an investment between $200,000 and $1.5 million. This wide range reflects variations in property size, location, and condition. The cost depends on whether you purchase an existing B&B, renovate a property, or build from the ground up.

Several significant expenses contribute to the startup costs of a bed and breakfast.

Property acquisition represents the largest investment, ranging from $150,000 to over $1 million, depending on size, location, and market conditions. Renovation costs for converting a residential property into a B&B can range from $20,000 to $300,000, including updating bathrooms, adding fire safety systems, and modifying spaces to meet commercial building codes.

Furnishings and equipment form another substantial expense, typically ranging from $25,000 to $75,000. This includes bedroom furniture, linens, kitchen appliances, and dining room furnishings needed to create a comfortable, welcoming atmosphere for guests.

Insurance coverage specific to hospitality businesses averages between $5,000 and $10,000 annually. This includes property insurance, liability coverage, and workers’ compensation if employing staff.

Licensing and permits can cost between $2,000 and $5,000, varying by location. These expenses cover health department certifications, business licenses, food handling permits, and other required documentation to operate legally.

Resources: 

American Bed and Breakfast Association
Association of Independent Hospitality Professionals
Professional Association of Innkeepers International