Unbundling, Innkeepers is it time to start thinking out of the box?

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I was recently talking to a friend of mine and was extolling the virtues of staying at B&Bs vs hotels, motels and Airbnb options, and he had an interesting question for me.

His question was do B&Bs ever offer the option of offering a guest to stay and pay for just the room, but not the breakfast. He is a frequent business traveler, and he said while he loves the environment of staying at a B&B, he generally is not a breakfast eater, and frequently just isn’t hungry in the morning, on top of which he says he doesn’t want to spend the time out that breakfast at a B&B would require, when a yogurt and piece of fruit would do, and he would rather (or needs to be) working on a report.

I was reminded of an interesting Skift article that came out last week: Will Unbundled Amenities be the Future for Budget Hotels? http://skift.com/2015/08/19/will-unbundled-amenities-be-the-future-for-budget-hotels/  And the leader into this article was The mid-range to low-end hotel sector hasn’t had an easy ride of things recently. With the popularity of vacation rental sites like Airbnb growing, hotels have decided they need fresh new ways to compete.” The article (and I recommend actually reading it in-depth as it’s got some interesting points of note) goes into several hotels that are “unbundling” their rates, offerings and amenities.

While I don’t put B&Bs into the budget hotel category, I do put many of them into the mid-range (and they are usually less expensive than said mid-range hotels) and with the ever looming and ongoing Airbnb threat (which sadly think is here to stay) B&Bs have to think up some alternatives to the traditional Bed and Breakfast model.

One of the major highlights of a stay in a B&B is of course always the Breakfast part, but in order to compete with the ever-changing world out there, Flash sales, Last Minute Booking Options, OTAs and Airbnb, B&Bs need to be realistic, offering options, like not having breakfast, it doesn’t mean everyone gets it, or doesn’t get it, but it could fall into the category of unbundling. Most Airbnbs do not offer food unless a “guest” wants to raid someone’s fridge, technically it’s a luxury.

There are other things that can be considered amenities that a B&Bs could consider unbundling as well, the biggest obviously being the breakfast, but things like housekeeping/room cleaning, bottled water, towels or just changing out the towels, amenity baskets, early/late check-ins. You could even go the route that hotels go if you really want to unbundle, AC (if available), TV (if available), WIFI even, parking, etc.

If you take your average room rate, most B&Bs average between $140 – $160 per night. By unbundling some of the regular options a B&B might offer they could potentially compete with the hotel/motel market, and Airbnb rentals without compromising their standards, or more importantly by losing money on the options because that’s what they are, options.

How much does your breakfast actually cost you? And then ask what would you charge a guest individually if they wanted to “add on” breakfast as a stand alone. $15-$20? Realistically your actual cost numbers should be between $7-8 a head, but you should have budgeted $10-12 which would include your labor, gas and shopping time and overhead like utilities. Build a realistic “retail” price that you would charge a guest for breakfast, like $15, but you don’t want to price too high because it would become an option that more would perhaps take out to lower the final price point.

A couple of key points from the end of the Skift article that bear consideration if a B&B would like to try this. I personally like the model Nomad Hotel’s uses, where guests are deducting amenities (i.e. especially ones they would normally get at a B&B) like breakfast and daily room cleaning. These two paragraphs (in segments) instead of having a base and adding on.

“The nature of Tune’s booking system feels somewhat miserly in the way guests have to pay for every amenity they want. And of course, their base rates can only go up, whereas Nomad’s can only go down. Budget-conscious travelers will undoubtedly find something rewarding in seeing their room rates drop every time an amenity is removed.”

And I think from a Bed and Breakfast’s perspective, people go to B&Bs “for” the breakfast as one of the best reasons, they have the option to take it away, but why do that as it would part of the normal booking amenity one would get anyway.

“Nomad Hotel’s booking system also exploits a human tendency that finds the fear of loss greater than the desire for gain—a consumer psychology phenomenon known as loss aversion. Applied to the idea of “subtracting” rather than “adding” amenities, customers would be less inclined to get rid of amenities that in theory, they already have.”

A B&B would have to put a price tag on each amenity prior to offering the deduction, your cost vs “retail cost. I am just going to put some numbers in for rough examples, they obviously will vary per B&B.

A suggested mock-up if a B&B was going to try this

Your regular room rate is $139

Minus Breakfast (and then a luscious description of breakfast – as a tease to not delete because who would? BUT they have the option.)  -$15.00

Minus Daily Housekeeping -$10.00

Minus the Amenities Basket -$7.00 (I know some B&Bs that this would be higher)

Minus WIFI -$5 (I think people would choose to keep, still cheaper than a hotel)

Minus Water bottles in room (2) -$3.00

All deductions would bring the room rate down to $99.00.

Minus the Housekeeping, amenities and water, down to $119, still very competitive and they get breakfast to boot!

Think about if you take away some of the things that are normally costing you money, daily housekeeping (labor, laundry costs, general overhead), amenities basket and the bottled waters (both found for free in almost every B&B I’ve ever stayed in, but hopefully built into your rooms cost), You are saving the money, they see a cost savings.

Most people will still take the Breakfast option and probably the WIFI, the key being you are giving them a choice, plus also than competing (or seeming to compete by giving them options) with both the traditional hotel/motel, plus at this point, and more importantly, the Airbnb competition (if there is some in the area).

I tend to think regular B&B goers will also keep the housekeeping as well, but the point here is the “illusion” of having saved a few dollars, water + amenities basket still brings the rate down by $10 and it’s your cost savings still as well at that point.

I would make a point of mentioning on this page, (with the options) about the fact that a B&B is fire inspected, has insurance, etc. etc., all of those are part of your “regular” lodging price, and it protects the guests, vs an Airbnb rental that offers none of that will still charge a similar rate.

While I love the traditional B&B model, I think it’s time that innkeepers need to start investigating ways that may be a little alternative to the regular business model in order to compete and long-term, stay competitive.

Just a snark of note, similar to PAII’s Better Way to Stay video, I’d love to see a B&B (more as a gag to a well-adjusted guest who can take a joke) have their room filled with things with tags on it (like the hotels do) Bottled Water “Cost free, in a hotel this would have been $5.00” etc.

About Chef Forfeng

Innkeeping Tip and Tricks: Please check out some marketing ideas for Inns and B&Bs, Blogging ideas, Facebook Tips and Social Media Tutorials https://chefforfeng.wordpress.com/marketing-for-lodging-resources/
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One Response to Unbundling, Innkeepers is it time to start thinking out of the box?

  1. Audrey Gray says:

    Hi there,
    I have offered the non breakfast rates years ago. It is for the ones who don’t do breakfast, or have a ton of allergies, so they asked, so I made it.. good point, and some decide to do the breakfast after they look at the rate. Some years people are on a budget and just how it is these days. Have to adjust to the times, or be left behind, I say . Good article as usual Chef Forfeng

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