Bed and breakfast: average revenue, profit and margins

This article was written by our expert who is surveying the industry and constantly updating the business plan for a bed and breakfast.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the bed and breakfast market.

What is the current average annual revenue for a bed and breakfast in a mid-range location?

A bed and breakfast in a mid-range location typically generates between $90,000 and $150,000 in annual revenue as of October 2025.

This range reflects properties with 3 to 6 guest rooms operating in areas that balance accessibility with reasonable competition. Revenue depends heavily on the property's ability to maintain steady bookings throughout the year, with peak seasons providing the bulk of income for most bed and breakfast establishments.

Location quality plays a decisive role in determining where your property falls within this revenue range. Bed and breakfasts near popular attractions or in areas with year-round appeal tend to cluster toward the higher end, while those in less trafficked areas may struggle to exceed $100,000 annually.

Property size and room count directly impact revenue potential, as a 6-room bed and breakfast naturally generates more income than a 3-room property at similar occupancy rates. Marketing effectiveness and online reputation also significantly influence booking frequency and average daily rates, which ultimately determine your total revenue.

You'll find detailed market insights in our bed and breakfast business plan, updated every quarter.

What is the typical occupancy rate across different seasons and how does it affect revenue?

Bed and breakfast occupancy rates fluctuate between 45-55% during off-seasons and 65-85% during peak periods, creating significant revenue variations throughout the year.

Off-season months typically span late fall through early spring in most regions, excluding holiday periods. During these slower months, bed and breakfast owners often see occupancy drop to 45-55%, which means nearly half of their rooms remain empty on any given night, severely constraining monthly revenue.

Peak season occupancy jumps to 65-85%, usually during summer months, major holidays, and local festival periods. This dramatic increase can double or even triple monthly revenue compared to off-season performance, making these periods critical for annual profitability.

The revenue impact is direct and substantial—a bed and breakfast with 5 rooms at $150 per night generates approximately $10,125 per month at 45% occupancy but $28,688 at 85% occupancy. This $18,563 monthly difference explains why many bed and breakfast operators focus intensely on maximizing peak-season bookings while developing strategies to boost off-season occupancy through special packages, corporate partnerships, or targeted marketing campaigns.

What is the average daily rate per room in urban, rural, and tourist-heavy areas?

Average daily rates for bed and breakfast rooms vary significantly by location type, ranging from $90-$130 in rural areas to $160-$250 in tourist-heavy destinations.

Urban bed and breakfasts typically command rates between $140 and $200 per room due to proximity to business districts, cultural attractions, and transportation hubs. These properties often attract both leisure travelers seeking walkable city experiences and business guests looking for more personal accommodations than standard hotels offer.

What are the average fixed costs, including mortgage or rent, insurance, licenses, and utilities?

Fixed costs for bed and breakfast operations typically total between $24,000 and $60,000 annually, representing the baseline expenses that exist regardless of occupancy levels.

Mortgage or rent payments constitute the largest fixed expense, ranging from $1,200 to $3,500 monthly depending on property size, location, and whether the owner purchased or leases the building. Urban and tourist-destination properties command higher housing costs, while rural bed and breakfasts often benefit from lower real estate expenses that partially offset their lower room rates.

Insurance costs run $150 to $400 monthly, covering property damage, liability protection, and business interruption coverage. Bed and breakfast insurance premiums exceed standard homeowner policies due to commercial use and increased liability exposure from hosting paying guests.

Licensing and permit fees vary by jurisdiction but typically range from $800 to $2,500 annually, including business licenses, health department permits, food service permits, and local tourism board fees. Utilities including electricity, water, gas, internet, and phone service cost $350 to $850 monthly, with heating and cooling representing the largest variable within this category depending on climate and property size.

This is one of the strategies explained in our bed and breakfast business plan.

What are the typical variable costs per guest, such as food, cleaning supplies, and amenities?

Variable costs per guest at a bed and breakfast range from $9 to $25 daily, increasing proportionally with occupancy levels.

Food costs represent the largest variable expense at $6 to $15 per guest per day, depending on breakfast menu quality and portion sizes. Bed and breakfasts offering simple continental breakfasts with pastries, coffee, and fruit fall toward the lower end, while properties serving elaborate hot breakfasts with eggs, meats, fresh-baked items, and specialty beverages reach the higher range.

Cleaning supplies cost $1.50 to $4 per guest daily, covering laundry detergent, disinfectants, paper products, and room cleaning materials. High-turnover periods during peak season intensify these costs as linens require washing after every guest departure and rooms need thorough cleaning between stays.

Guest amenities including toiletries, soaps, shampoos, conditioners, and small extras like bottled water or snacks add $1.50 to $6 per guest per day. Properties positioning themselves as premium experiences invest more in high-quality amenities and special touches, while budget-focused bed and breakfasts minimize these costs by offering basic necessities only.

What percentage of revenue is usually spent on staff wages and benefits?

Staff wages and benefits typically consume 18% to 35% of gross revenue at bed and breakfast establishments, with significant variation based on ownership structure and property size.

Owner-operated bed and breakfasts with minimal staff keep labor costs at the lower end of this range, often between 18% and 25% of revenue. These properties typically employ one or two part-time housekeepers or breakfast assistants while the owners handle most guest interactions, cooking, and administrative tasks themselves.

Larger bed and breakfast properties or those where owners take a less hands-on role face labor costs reaching 30% to 35% of revenue. These establishments require full-time or multiple part-time employees to manage daily operations, including front desk coverage, breakfast preparation, housekeeping, and maintenance tasks.

Benefits such as health insurance, paid time off, and payroll taxes add approximately 20% to 30% on top of base wages, pushing total labor costs higher. Properties in states with higher minimum wages or those offering competitive benefits to attract quality staff naturally see labor costs at the upper end of the range, making efficient scheduling and cross-training essential for controlling this major expense category.

What is the average net profit margin for bed and breakfasts in the past two years?

Net profit margins for bed and breakfast operations averaged 9% to 18% industry-wide over the past two years, with well-managed properties achieving margins up to 22%.

The lower end of this range reflects properties struggling with high fixed costs, below-average occupancy rates, or inefficient operations. Bed and breakfasts earning 9-12% net margins often face challenges like excessive platform fees, high labor costs, or insufficient direct bookings, leaving minimal profit after covering all expenses.

Mid-range performers earning 13-17% margins typically maintain solid occupancy rates, control costs effectively, and generate a healthy mix of direct and platform bookings. These bed and breakfast operators balance quality guest experiences with operational efficiency, avoiding unnecessary expenditures while investing strategically in property maintenance and marketing.

Top-performing bed and breakfasts reaching 18-22% net margins excel at maximizing occupancy during peak periods, commanding premium rates, and cultivating direct repeat business that eliminates booking platform commissions. These properties often benefit from owner-operator models that reduce labor costs, strong online reputations that support higher pricing, and locations in high-demand tourist areas that sustain year-round bookings.

It's a key part of what we outline in the bed and breakfast business plan.

How does profitability differ between owner-operated establishments and those with hired managers?

Owner-operated bed and breakfasts consistently outperform managed properties, achieving net profit margins of 11-22% compared to 7-13% for manager-operated establishments.

The profitability gap stems primarily from labor cost differences, as owner-operated properties eliminate management salaries that typically consume 8-15% of revenue. Owners living on-site also provide round-the-clock attention to guest needs, property maintenance, and cost control without requiring shift-based staffing that drives up labor expenses at managed properties.

Owner-operators exercise direct oversight of purchasing decisions, vendor relationships, and operational efficiency, often securing better pricing on supplies and identifying cost-saving opportunities that hired managers might overlook. This hands-on control typically reduces variable costs by 2-4% of revenue compared to managed properties where accountability for expenses is less immediate.

Managed bed and breakfasts do offer advantages including professional marketing expertise, systematic operations, and owner freedom from daily responsibilities. However, these benefits come at a significant profitability cost, with management fees, higher labor costs, and less agile decision-making compressing net margins substantially compared to owner-operated models.

What are the typical marketing and booking platform costs as a share of revenue?

Marketing and booking platform costs typically represent 8% to 18% of bed and breakfast revenue, depending heavily on the property's ability to generate direct bookings.

Third-party booking platforms like Airbnb, Booking.com, and Vrbo charge commissions ranging from 10% to 20% per reservation, making platform-dependent properties face the highest marketing costs. Bed and breakfasts that generate 70-80% of their bookings through these platforms often see total marketing costs at 15-18% of revenue, significantly eroding profitability.

What is the break-even occupancy rate for most bed and breakfasts?

Most bed and breakfast properties break even at occupancy rates between 38% and 52%, with the exact threshold determined by fixed versus variable cost structure.

Properties with high fixed costs relative to their room rates—such as urban bed and breakfasts with expensive mortgages or rural properties with high utility bills—require occupancy rates closer to 52% to cover all expenses. These establishments need nearly every other night booked just to avoid operating at a loss, leaving limited margin for error in slower months.

Bed and breakfasts with lower fixed costs and higher average daily rates can break even at 38-42% occupancy, providing more financial cushion during off-season periods. Properties that own their buildings outright, operate in areas with moderate utility costs, and command premium room rates enjoy the luxury of profitability even during slower periods.

Understanding your specific break-even occupancy rate is critical for pricing strategy, marketing investment, and seasonal planning. A bed and breakfast that knows it needs 45% occupancy to break even can make informed decisions about discount pricing during slow periods, when to accept lower rates to fill rooms, and how aggressively to market during off-season months to maintain minimum viable occupancy levels.

How do renovation, maintenance, and furniture replacement expenses usually impact margins annually?

Renovation, maintenance, and furniture replacement costs typically consume 2% to 6% of gross revenue annually, though major upgrade projects can temporarily spike this percentage significantly higher.

Routine maintenance including painting, minor repairs, HVAC servicing, and landscaping usually falls in the 2-3% range for well-maintained properties. Bed and breakfast owners who address issues promptly and conduct preventive maintenance avoid the larger expenses that come from deferred maintenance, such as major plumbing failures, roof leaks, or heating system replacements.

Furniture and bedding replacement follows a predictable cycle, with mattresses requiring replacement every 7-10 years, linens every 2-3 years, and common area furniture every 5-8 years. These scheduled replacements typically add 1-2% annually to operating costs, though smart bed and breakfast operators budget for these expenses during high-revenue years to avoid financial strain during replacement periods.

Major renovations like bathroom updates, kitchen remodels, or room redesigns can consume 10-20% of revenue in a given year but should be viewed as capital investments that enable higher rates and improved occupancy. Properties that neglect necessary updates see declining occupancy rates and negative reviews, ultimately costing more in lost revenue than the renovation would have required, making strategic reinvestment essential for long-term profitability.

What revenue or profit benchmarks do successful bed and breakfasts achieve compared to struggling ones?

Highly successful bed and breakfast properties consistently maintain occupancy above 65%, achieve net profit margins exceeding 18%, and generate substantial direct bookings, while struggling establishments fall below 45% occupancy and earn profit margins under 8%.

Top-performing bed and breakfasts distinguish themselves through superior guest experience that drives repeat bookings and five-star reviews, enabling premium pricing and strong word-of-mouth marketing. These properties typically generate 40-60% of bookings directly through their own websites or returning guests, dramatically reducing booking platform commissions and improving net margins.

• Successful bed and breakfasts maintain average occupancy rates of 65-75% annually, with peak season occupancy reaching 85-95% and off-season occupancy rarely dropping below 45%
• Top performers achieve average daily rates 15-25% higher than market averages for their location due to exceptional guest experiences, unique property features, and strong online reputations
• High-achieving properties generate 40-60% of their bookings directly, eliminating 10-18% commission fees on those reservations and adding directly to net profit margins
• Successful owners invest 4-6% of revenue in strategic marketing that builds direct booking channels rather than relying primarily on platform visibility
• Well-run bed and breakfasts control variable costs to 25-30% of revenue through efficient breakfast operations, smart purchasing, and streamlined housekeeping processes

Struggling bed and breakfast properties typically suffer from inconsistent quality, poor online reviews, weak marketing, and dependence on discounted rates to fill rooms. These establishments see occupancy rates of 35-45%, forcing them to accept lower-profit platform bookings, discount heavily during slow periods, and operate with minimal margins that leave no buffer for unexpected expenses or slow months.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. IBISWorld - Bed & Breakfast Hotels Industry Report
2. STR Global - Hotel Performance Data
3. Hospitality Net - Industry Analysis
4. Bed and Breakfast Association
5. AirDNA - Short-term Rental Market Data
6. Professional Association of Innkeepers International
7. U.S. Small Business Administration - Market Research
8. American Hotel & Lodging Association