Are there too many limitations on Bed and Breakfasts?
Every Innkeeper has asked themselves, why should I be licensed if so many of my competitors are not? Why should I be a law-abiding business in what has turned to be an unruly marketplace? To be a licensed Bed and Breakfast business, you have to pay fees, be inspected by the health department and the local fire department, take state mandatory safety classes, have business insurance, pay sales tax, pay personal property taxes on every item in the inn, have a public hearing in your town each year, have a merchant account, maintain and advertise a website, have monthly charges for booking engines and have contracts with third-party vendors. In contrast, those properties that do not have a license and list rooms on websites like, Airbnb, Coach surfer, VRBO, HomeAway, have few of these constraints. Many towns have proven that they cannot enforce local ordinances, in 2015, The Maine State Legislature Health and Human Services voted 12-0 against the passing of LD 436 that would have put some State restriction on short-term rentals. Even the Governor of Maine is against regulating short-term rentals and has gone as far as to say that he would eliminate all lodging requirements for existing lodgings. So why should current lodging businesses keep their license when it is so very obvious that lodging laws are selectively enforced? I thought long and hard about this and think I can actually justify it.
- You are already on the radar of your town. You can scream and shout about how unfair the system is, but you are already in that system. You did not write it, but at some point, you did sign up for it. When you bought your business, the ordinances were in place. The Town cannot enforce laws on properties they do not know about. Figuring out who is breaking the laws is a very time-consuming process. Airbnb listings do not have addresses and sometimes do not have any photos. A tattle tale society has evolved in towns because neighbors have to report suspicious activity in their neighborhoods. If you were to change to an unlicensed property in Camden Maine, the town ordinance would allow you have 2 guest rooms (3 guests) in your owner-occupied house. To sell more than 2 rooms on Airbnb could be a challenge without someone in the Town noticing. If you are going to rent the entire house instead of the room rentals, then you can legally only rent the entire house for 7 days and not nightly. If renting your house weekly brings in the same amount of money as it does nightly, then you might actually want to consider losing the license. One Bed and Breakfast in Camden Maine has gone this route already. Instead of complaining about the process, try to work together with other lodgings to change the ordinances or work to have an ordinance put in place that allows you to compete better in this changing business climate.
- You have a great network and buying power. The Lodging industry has many associations that you can join. There are smaller associations like the Maine Innkeepers Association and larger ones like PAII, AH&LA, AIHP. These associations have established relationships with industry vendors and you can get great deals on everything from merchant accounts to bed sheets. There are also great member forums and Facebook pages. The Facebook page, Bed and Breakfast Owners & Innkeepers has over 1,300 members from all over the world.
- There are limitations with Airbnb. Airbnb was created to help people gain a little extra income to make ends meet. Since it was initially created as a sharing economy platform, there are some big business limitations. The biggest issue Airbnb has that limits practical business use is their booking systems. In 2015, Airbnb finally connected to a Channel Manager. Airbnb does not connect to all Channel Managers, but it does connect to MyAllocator. The connection to My Allocator is not perfect yet. Airbnb does not have a constant sync with booking engines and updates every hour. You could potentially have a double booking. Another limitation is that you cannot upsell extra amenities on Airbnb. You can sell a room night and that is it. Payment for that room night is only sent to you after the person has stayed, so there are no summer deposits to help you get through the tough winter months.
There is no doubt that there is a lot of financial opportunity in Airbnb. It is a very viable business structure if you do it right. You must go into the Airbnb business structure with a clear financial and practical plan. There are sites like Airdnd to help you pick the right location and destination. Airbnb is unlike being in the Bed and Breakfast business because it is more hands-off, less hospitality. If you are interested in the person to person contact, Bed and Breakfast is for you. Make sure to talk to people in both business structures, Airbnb and Bed and Breakfast before you decide which one is for you. You can even take the best of both worlds and create your own balance. If you would like to talk more about the pros and cons of your situation and lodging, give me call or email. I would love to talk to you!