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A Feasibility study: The Conversion of the Krenzer
house into a bed and breakfast
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A FEASIBILITY STUDY:
THE CONVERSION OF THE KRENZER HOUSE INTO A BED AND BREAKFAST
Aproject submitted to the
FacultyoftheSchoolofFood, Hotel,andTravel Mangement at
Rochester InstituteofTechnology in partialfullfillmentoftherequirements
forthe degreeof MasterofScience
FORMK ROCHESTER INSTITUTE OF TECHNOLOGY
School of Food, Hotel and Travel Management Department
M.S. Hospitality-Tourism Management
Statement Grantin2 or Denyin2 Pennission to Reproduce ThesislProject
The author of a thesis or project should complete one of the following statements and include this statement as the page following the title page.
Title of thesis/project: _----'F'""e""'a....s.l...· b"".l".."l""i...t::Ly...S"""t""'u~dy::L....•~K=.:re5O.!n~z.:lOe....r-'H~o~yiOi!s~e-'a...s"-"'a~ _
Bed & Breakfast
I, Eric Sherrard , hereby (grant,~ permission to the
Wallace Memorial library of R.I.T., to reproduce the document titled above in
whole or part. Any reproductionwillnot be for commercial use or profit.
I, -', prefer to be contacted each time a
request for reproduction is made. I can be reached at the following address:
FORM I ROCHES1ER INSTITUlE OF 1ECHNOLOGY
School of Food, Hotel and Travel Management Department of Graduate Studies
M.S. Hospitality-Tourism Management Presentation of ThesislProject Findin&s
Name: Eric Sherrard Date: 6/29/94SS#: _
Committee Chairperson's Signature
Title of Research:A Feasibili ty Study: The Conversion of The Krenzer House
Into A Bed And Breakfast
Specific Recommendations: (Use other sideifnecessary.)
Thesis Committee: (1) Dr. Francis M. Domoy (Chairperson)
(2) Dr. Richard F. Marecki
Faculty Advisor: Dr. Francis M. DolllOY
Date~ Department Chairperson's Signature
Note: This form will not be signedby the Department Chairperson until allcorrections, as suggested inthe specific recommendations (above) are completed.
The Krenzer House isanoldfarm house located at3000 East River Road in Rochester, New York. Thefeasibilityoftheconversion ofthe Krenzer House intoabedand breakfast is the focusofthis project.
Thisreport consistsoffourmajor sections. The first focusesonthecosts
associated withtheconversion. Thesecond area examinesthe marketingthat
is neededtodevelopthebed and breakfast. The third focus researchesthe
licensesand codes needed. While the final area developsan operational plan.
I would like to thank Louis Gagliano and Amynah Virani for helping me develop the idea for this project.
Thank you also to Scott Osborne and Stacy McKenzie for helping me put the final pieces together.
I would also like to thank the faculty at the School of Food, Hotel, and Travel Management fot their help and guidance on not only this project, but through my entire Master's degree studies.
Most importantly, I would like to thank my family for their
continued support and encouragement when times got difficult.
TABLE OF CONTENTS
Abstract i i
Acknowledgements i i i
List of Tables vi
Problem Statement 2
Purpose Statement 2
Definition of Terms 3
Long Range Consequences 5
Literature Review 6
Licensing 1 4
Methodology 1 7
Renovational Costs 17
Projected Income 22
Projected Expenses 36
Licensing and Permits 45
Operational Plan 48
Summary, Conclusions, and Recommendations 51
LIST OF FIGURES
1 . Market Research of Sample Competition 12
2. Renovational Costs of the Krenzer House 21
3. Forecasting-Monthly Breakdown 24-27
4. Forecasting Summary 28
5. Hotels within 5 miles of RIT 33
6. Long Term Forecast of Occupancy and Income 35
7. Operating Expenses of the Krenzer House 37
8. Break Even Analysis 39
The Krenzer House, an oldfarm house locatedat3000EastRiver Road
in Rochester, New Yorkwas purchased byRIT in 1989 from Fredand Marie
Krenzer. Thehouse hadbeen inthe Krenzerfamilysince 1861. Currently, the houseserves as astudy housefor graduate studentsin the School ofFood,
Hotel, andTravel Management, and isalso used as a classroom meetingfacility
To saythat the house is beautiful isan understatement! Asyou enter
throughthefront door fromafullporchthatoverlookstheGenesee River, you
cannothelp butnoticetheoak hardwood floors throughout the house. A
fireplacewith an accompanying baywindowin the living room and an adjacent
sunroom arevery impressiveaswell. The stairway leadingto thesecondfloor is also finished in the beautiful hardwood.
Thesecondfloorconsists offour verycomfortablysized bedrooms. The bedroom atthe end ofthe hall iswherethe farmworkers lived, and is separated
bytwo sets ofdoors. Coming down the back stairwell, you arrive in the kitchen
with additional stairsthatgodown to the basement. Theremains of an old cider
chest, fruitcellar, andthe farm workersbathroomare still intact. Then, as you
walkoutthe back door, youlook right intoa good sized apple orchardthatjust
Currently, RIT does not haveany unique or specialized housingfacilities for importantgueststhatvisitthecampusforshortperiods oftime.
RIT isconstantlylooking fornew learning models to help enhance
theeducation ofitsstudents. Within the School ofFood, Hotel, and
Travel Management, thefood managementdepartment has a studentrun
restaurant. Henry's restaurant provides a handson learning
environmentforafull servicerestaurant. Thetravel school accomodates itsstudents withafullfunctioning computer lab. SABREcomputer
systems can be found in mosttravelagenciestoday. Therefore, students
learningthe SABRE system arewellequippedto function in thetravel
industry. Thehotel department, however, doesnotcurrentlyhave a
educationaltool or modeltoeducate itsstudents.
Thepurpose ofthisstudyis to analyzethefeasibilityoftheKrenzer
The School ofFood, Hotel, andTravel Management needs
somethingtangible to bringitsstudents closertogether andtoattract
students and thisis a golden opportunity. The developmentofa bed and breakfast mayattract studentsthatmayhave gonetoanother university
to learn from their lodgingfacility. In addition, the project wouldbring
profitto theprogram through meansofdirect income from theproperty.
Furthermore, itwould providetremendous hands-on experience for the students who runthebed andbreakfastand create its
environment. Thecurrent imageof RITwill alsobeenhanced. The
school would nolonger be simplyencompassed in an all-brick settingon
topofthe hill. Theuniversitywould now extendto alandmarksitealong theGenesee River. Theservice RITwould provideto dignitaries,
parents, alumni, corporateVIP's, and otherimportantvisitors would also be greatly upgraded.
DEFINITIONS OF TERMS
School of Food, Hotel, and Travel Mgm't. AprogramwithinRIT
thateducates in Hotel/Resort Management, Food Preparationand Management, Travel Management, and Nutrition and Dietetics. Education occursat both undergraduateand graduate levels.
Landmark Bed and Breakfast- A house that has been
preserveits historical heritage. The houseserves as hosttoovernight guests and provides diningaccomodations.
-3-Landmark Bed and Breakfast- A house that has beenrestored to
preserve its historical heritage. The houseserves as host toovernight
guests and provides dining accomodations.
-Somethingthatcan be feltbytouch.
Business Feasibility Study- Areport produced
by identifying market opportunities and predictions of profitability based on research.
Thisstudywill gather informationonhow tocoordinatethe
developmentofabed andbreakfast fora universityprogram. Itwill
identifywhat stepsand measures needtobecarriedoutfor theplanto
work. Itwill needthesupportofthe UniversityBoard to be developed.
The studywillfocusononlyone property inone specific area.
This studywill onlyexamineone propertyand itspotential for
developmentintoa bedand breakfast. Onlyonefeasibility studywill be
performed in this report, and presentedto thefacultyofTheSchool of
Food, Hotel, andTravel Management.
The independent variable is thepotential ofthe property. The
dependentvariable in thisstudyis thefeasibilityoftheproject. The
LONG RANGE CONSEQUENCES
Should the information from thisfeasibilitystudy be used inthe
developmentofthe Krenzer House as abed and breakfast, theguideline
may beemployed inother institutions or bedand breakfast
Asthisfeasibility studyattemptsto identifythe market opportunities and
profitbreakdown ofthe potential ofthebedand breakfast, fourdistinctareas are
examined. Thecosts section examineshowand whenprofitwill occur. The
marketing sectionwill lookinto howand if the business isableto sell itself.
The legalities and codes section note whatlaws needtobe adheredto in
orderfor the businesstostart and run. Theoperations breakdown examines
how the house will berun and maintained.
Startinga Bedand Breakfastwill require three typesof initial investment.
1. Capital equipment andfixtures
2. Initial startupexpenses
A bed and breakfastisa businessinvestment, and likeall business
investments it is important to look realisticallyatthesituation. Thesection on
Investment Requirements and Financial Analysis in Bed & Breakfast Lodging
Operations: A BusinessPlanning Guidefor NYState (1989). describes how to
determine initial investment requirements, how to developa cash flow analysis,
income statement, balance sheet, and provides guidelineson how toevaluate a
Bed and Breakfast decision. Thecashflow projection isone ofthemost
1. Identifiesthe amountofworking capital needed
2. When it willbeneeded
3. Wherecash comesfrom
4. Wherethecash goes
Oncea cashflowanalysis and capital equipment andfixtures list is
developed, a projected income statement and balancesheetcan be built. To
evalutethe bed& breakfast decision, theguidethen introduces the Hubbards formulaand break evenanalysisformula. The Hubbards formula identifies :
initial investment requirements, operational costsfor a projectedlevel ofactivity,
and projected revenue. A BusinessPlanning Guidefor NY State (1989) The breakeven pointis theamount ofsales atwhich expense costs
equal total revenues. Profitequals zeroatthe break even point. Determining
whena propertymakes a profitis the purposeoffiguring the breakeven point.
InHow to PurchaseandOperateA Bed & BreakfastorCountryInn (1993), Oates and Bredfeldt alsodiscuss the importance ofunderstanding the financial needs ofa bed & breakfast. Theyreviewthe financial statement,
sources offinancing, purchaseexpenses and startupcosts, a regulatory checklist, and some startupadvantages anddisadvantages. Some
disadvantages mentionedare noprior recognition, notrack record, long, long startup time, codes andlicensing, financial complexity, and payback. Some of theadvantages are: do ityourownway,widerange ofchoice, timeframe
flexibility, and tax benefits.
-7-Determining what needstobe included within the bed & breakfast (living
room, diningroom, bedrooms, bathrooms,. . . ) was reviewedin Martha Murphy's book OwnandOperateYourOwn Bed & Breakfast (1994).
Renovationalcosts should thenbe figuredtoassure thequalityof rooms
meeting Murphy's requirementsfor rooms andfurnishings are set.
Monica and Richard Taylor'sbook Startand Runa Profitable Bed &
Breakfast (1992)also provides guidance in the functional realm ofstarting a
bed&breakfast. Their bookadditionally provides information by discussing
renovationsthatneedto beaddressed. Theyaresimilar with otherbed &
breakfast authors in reviewingfinancial records andfinancial planning. They
do, however, also providehelpful insight into"forecasting yourbusiness
Forecastingentailsseveral specific eventsthatare usedtoproject
1. average booking daysavailable
Ater thefirstyear, theforecastingbeginsto look intopatternsthatoccur, aswell
as advanced and actual bookingsof guests.
Onceforecasting is complete, projectionscan befiguredonthe
occupancy ratefortheyear. Thiswill enablethe breakevenanalysisto be
calculated and when an investmentwillturntoa profit.
Once costs have beenfigured, marketing/advertising parametersneed to
bedeveloped. The Bedand Breakfast Business Planning Guideof NYState
(1989), discusses three factors that needto beaddressed in determining
1. Categorize existingorpotential customers
2. Evaluate potential customergroups and choose
3. Developa marketing strategythataddressesthe
Accordingto the guide, provided isalistofthemost effectiveadvertising forms.
bed and breakfast guidebooks
Some other noted ideasinclude:
-sendingphotosof yourguests atyourb& b
-special promotional packages
Importantlynoted in theguide is "Thecostsof implementingamarketing
planshould be reflectedin yourroom price sothatadequetefundsare
available toreach yourmarketing objectives."
The marketingplandevelopedfor Henry's restaurant atRIT in Rochester,
New York by Grieco, Menna, Pornchanok, and Virani (June, 1994) usesan
internal and external analysis in determininga marketingplanfor their
customers. Theexternal analysislooksat understandingthe environment,
percentageofcustomersin differentcategories, competitors(primaryand
secondary), and identifyingthe business opportunities andthreats. The internal
analysisexamines the restaurant's strengths andweaknesses, the location, the
pricing and service strategies, andthe promotional strategiesthatcould be
-10-Monica and RichardTayloralsodiscuss marketing and advertising in
Startand Runa Profitable Bed& Breakfast (1992). Theydiscuss the
importanceof market research and whatit willtellyou. Surveynearby
competitors andtheirmarkets, andwhat makes customers cometotheir
properties(benchmark). Next, developthebed andbreakfastand itsmarketing
andadvertising around these themes. Figure 1 isa copyofmarketing research
on a sample competitor.
HnTKFNAMF. -nWW fr-/^ r/oo<>e. DATE VISITED
,4-5."-// 11* ?-> Poor Fair Good Pocir Fair Coca EXTERIOR Signage >Q
Q Q BATHROOM Fixtures G X
Parking q ja Q Lighting D G 71*
Housecondition Q Q EC Decoradon u G Landscaping Q "L Q Cleanliness r-* (-. s-Trash&garbage Q Q "K Towels Q G
1Ext.guest areas Q }& Q Ventilation Q G
Neighborhood Q Q * Privacy e-i G TS
CHECKIN Welcome Q K Q Convenience rj G d
Baggage a. q Q BREAKFAST Welcome tf Q G Tariffpayment Q Q al Timeslot Q G > Checkinroutine Q X Q Presentation a Q
Touroffacilities *S]f Q Q Food variety n n S*
Houserules Q O j Foodquality G G s
Adviceoffered * 2- Q Cleanliness a G '3 Hostattitude Q & a Hosthygiene G G 3
BEDROOM Layout Q Q tf Hostattitude G M G
Cleanliness Q Q * CHECK OUT Routine Q G ^L
Decoration Q Q s: Timeslot G
Q-Comfortablechairs Q Q M Baggage X Q a
Clothesstorage Q ^ Q Hostattitude Q X Q Bedcomfort
X Traveladvice is Q Q
Readingmaterial Q HOSPITALITY RAT1NC
V Q a
Writingspace Q O
Lighting Q Q *
Privacy Q Q
Security Q Q Roomrefreshments
-COMMENTS: rr . ,
ViJ-HCjudl M loco.k kcu<> no </c*.
1final adult? o-f-AsttL
XffMa\-h txdroor* oUcor annd ^e-cuni-w
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12-InOatesand Bredfeld's How to Purchaseand Operatea Bedand
Breakfast (1993). theyprovide a listthattheysuggest shouldbe usedfor
developing a marketing plan.
Developing a Marketing Plan
Who Are You
Whoshouldcome To TheInn
DevelopProfiles Of The Customers
Constant Devotion To Themes
In Startand Run aProfitable Bed & Breakfast (1992), Monicaand
Richard Taylor lista set ofbylawsconcerning bed & breakfast's thatreflect
some or all ofthefollowing limitations.
dwelling is residential
morethanone meal perdayis served
stay is limited
- The number ofguest rooms is limited
- Must beowneroperated
Anybuilding changes mustbereversibleto the
original residential use.
-14-The Taylor'salso discussfire, building, and health inspection codes that
needtobeadhered toin orderfora bed & breakfast tobe developed.
Afire inspectionwill concentrateonthefollowingcriteria:
theoccupants can escape. The building materials used in thefloors, walls, and
ceilings needto havea specificratingoffire resistance. Typically, the localfire
code would requirethese materials tohave afire resistancerating of
three-quarters of anhour.
Egress- refersto the numberandtypeofescape routes available tooccupants
during afire. Thefirecodes inyourareawillspecifythenumberof stairways
and exitdoorsrequired inyour home. Ina b &bthe interiorstairwayis usually
Detection- specifies thenumber, location, andtypesoffireand smoke
detectorsneeded in the b& b toadequetelywarn customers.
number, locations, andtypesoffireextinguishers
needed tomeetyour local fire code. Typicallycodedcallforfive pound multi
purposedry chemical extinguishers on all levelsand at all exits.
A building inspection concentrates onthephysical integrityofa houseand its
general stateof repair. Safetyconcerns includeanythingthatcould present a
hazard to the guests. Examples include, loose floor boardsor unsafeelectrical
-15-wiring. The inspectorwill also reviewany regulations about signagefor
Health Inspectionsare concernedwiththefollowing.
-What istheavailabilityandqualityofwater, light, and heat?
specifications coverthehealth andsafetyofguestbathrooms.
- Linen requirementsdeal
with theavailabilityofprivate towels and
washclothes and the minumum number of bed linenchanges.
Properstorage mustbeconsidered, aswellas preparation and
Within thefeasibilitystudy, four distinctareasofresearch were
developed. These concentrations included: costs, marketing, legalities, and
Costswerebroken downintoareasof renovations, projected
income and projected expenses. A break even analysis and
projected profit pointwerethen determined. It is important tonotethat
within eachsection, costs and incomewere calculated veryconservatively.
Renovational costs werefirstestablished. A general guidelinefor
renovationswas examined in Monicaand Richard Taylor's book Startand Run
a Profitable Bed& Breakfast.(1 992).Thisguidelineconsists of :
17-Checktheceilings and wallsfor cracks, peeling
paint, andfaded wallpaper
thecurrent conditionof electrical
wiring, switches, and outlets
installing high efficiency light fixtures
Install adequete room ventilationand room
The nextstepin determiningrenovationalcosts wastotalkwith RIT
builing assessors ScottLawson and Kevin Buck. Installing new bathrooms,
creating anapartment in thebasement, and convertingthegarage intoa master
bedroom were discussed in partofthe renovational plans.
Thecosts of renovationsfor thisproject researchedthefollowing areas
Rooms and Bathrooms
Parlor/Living Room 5,000
Dining Room 5,000
4 Bedrooms 20,000
4 Bathrooms 25,000
Washer/Dryer, Furniture, Electronics, Kitchen equip.
Estimates throughDavies (pg. 57-62), and confirmed with
Clare Lanzatella (Mt. Vernon Manor).
Floors, Walls, and Door 10,000
Carpeting, Stairway 5,000
Currently, wiringexists throughout thehouse. Expenseswill
occurin assuringthatproperwiringexists and costsincurred
from any re-wiring that needstooccur.
Estimatedcost entails rebuildingfront porch andarchway.
Rooms & Bathrooms $100,000
Porch / Front Entrance 20,000
Total Renovational Cost 310,000
Several steps were performedto projectthe annual income ofthe
The projectedoccupancy rate wasfigured throughforecasting the
occupancyof thebed & breakfast everydayoftheyear. Forecastingwasdone,
in part, throughimplementingTaylorandTaylor's ideas inStartand Runa
ProfitableBed & Breakfast. (1992)The firstyearforecastingtips included:
the bookingdays available
toyourbed & breakfast
-Adjust theestimatesto allowforvarious
The RITcalenderofevents wasthemainsource usedtoproject
occupacyat certaintimesoftheyear. Theforecastingwas broken downby
months andtheneverydaywithineach monthwasforecasted. (Figure3) After
forcastingwasdone, DaveCrumb, anadvisor onthis project and priorGeneral
Managerof MarriottHotels, and BillGunther, whospecializes inforecastingat
the Radisson Plaza in Downtown Rochester, reviewedtheforecasting
procedure and calculated numbers. Additional suggestionsthey mentioned
-22-When are high and lowoccupancy levels andwhy
Whatwill be donefor lowoccupancy levels
Will B&Bclose during lowoccupancy periods.
Occupancypercentageswill be loweratfirstbecause of
Figure 3 liststheforecastingand is followedbyasummary(Figure4)
andsuggestions oftheforecasting results.
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1st YEAR FORECASTING SUMMARY
at $90/ Night
Analysis of Monthly Forecasting
-A very high expectancymonth where students arelooking
at RIT forenrollment and newstudents are arriving. Executive
leadersclassesthroughouttheUniversityalso occurduring the
Dayweekendisa big holidayforvacationers.
Therest ofthemonthis expected tohaveaverageoccupancyas the
autumnatmospheredevelopsthroughout the houseandits
surroundingswillkeep a steady flowof visitors.
themes. DuringParentsWeekend, rates willincreaseandthehouse
willbe at maximum occupancy.
have high occupancytowards theend of
thequarteras parents cometoRochester topickup students. A
Thanksgiving themethroughoutthemonth willhope toattract
visitors. BetweenThanksgiving andthereturn of students forwinter
term, thehousewillbe closedfor break.
December- Christmas decorationsthroughoutthehousewillhope to
attractsteadycustomers. Withparents picking up theirchildren for
Christmasbreak,occupancyisexpected tobe high. Between
ChristmasandNew Yearsthe housewillbe closed.
occupancyis expected becauseofthe winter
weather and it is themiddle ofthe term. Winterweekend packages
-Occupancywillbe slow untilValentine's Weekend.
willbe usedtoincreaseoccupancy. Theend of
the term forclasseswhich occurs attheend ofthemonthwill also
attract parents andisexpectedtobeahigher occupancyperiod.
-The return of studentsfor spring termwill attract parents.
The rest ofthe month, however,willbe a slower period. "Getaway Weekends"
-Occupancyis still expectedto bealittle slowerdue to thefact
it is themiddle ofthequarter andspring isnotyet afactor. Possible
suggestions includebusinessspecialsthroughout theweek.
Occupancycouldpickup forspringspecials towardstheend ofthe
-Duringgraduation period, rateswillincreaseas demand isat its highest. Weekendpackages are suggested forgraduation
weekend forincreased revenue and guaranteed occupancy. Parents
picking up underclassmenduring theweek priorexpectsto be high
occupanacyaswell. TheRochesterspringfestivals thatoccur after
graduationwill bringhigh occupancyas well.
-As occupancy is lower, the housecouldwork with the
Admissionsdepartment tobring prospective students lookingat RIT
tostayatthe house. Thehousecould also re-introduce business
specialsduring theweek, and markettosummerfestivalsthat occur
luly- The house
maycontinuetowork withAdmissionson bringing
student recruits tothehouseandpromoting businessspecials
throughout theweekfor surrounding companies. Possible "Beatthe
weekend packages may increase occupancyaswell.
The rate the bed and breakfastwould charge per night was
also projected tofigureannual income. First, therate ofadouble
bedroomforeach hotelwithin a 5 mile radius ofRITwasdetermined
in ordertoestimate thecostof a room forthebedand breakfast.
A$75 rate was theaverage ratedetermined forthese hotels,
which wouldbetheKrenzer House'sprimarycompetitors,dueto
theirlocation nearRIT. Figure 5 lists the hotels, their rates, and
number ofrooms accordingtoAAA.
Because oftheunique features ofthe house, as wellas afull
Americanbreakfast inthe morning, a $90 rate wasdetermined as
therate tochargeper night at theKrenzer House. This rateis
comparablewith thesurroundinghotels, but isalittle higherthan
averagedueto theextra featuresitprovides.
Hotels Within 5 Mile Radius of RIT
Hotel Rate Rooms
Econolodge 49.95 102
Holidome 95.00 250
Howard Johnson 60.00 96
Marketplace Inn 65.00 145
Marriott Thruway 140.00 307
Microtel 40.95 99
Radisson Inn 69.00 171
Red Roof Inn 58.99 108
Residence Inn 1 1 0.00 112
Super 8 52.88 121
Theprojected number ofrooms expectedtobeoccupied was
thenmultiplied bytheroom rate of$90 pernight toget aprojected
annualincome. The formula looksasfollows:
number ofexpected roomsannual x $90 night = projected
Afterdeterminingfirstyear projectedoccupancy (67%) each
followingyear was projected todeterminealong termforecastand
breakeven point forthebedandbreakfast. These numbers were
determined throughdiscussingestimated percentageincreaseswith
DaveCrumb,an advisorto this project,andClareLanzatella,who
owns and operatesMt. Vernon Manor Bed andBreakfast. They
determined the futureestimates through theexperiences theyhave
hadin both forecasting and thebed andbreakfast industry. Figure 7
liststhefutureoutlookfor occupancyandincomeuntilthe bedand
breakfast is expected to breakeven.
Long Term Forerraqt
Year Rooms Occupied % Occupancy
6 1450/1825 79 130,500
7 1450/1825 79 130,500
71 1 1 7,000
79 1 30,500
79 1 30,500
Annualoperatingexpenses forthis project were figured usinga
First, a generalexpense guide sheet forsmall businesseswas used
fromaconsultingguidebookdeveloped byDr. RichardMarecki toset
up the format for theexpense report. Specificexpense costs were
thenresearchedfromboth theNYState Business Planning Guide
(1989) andOatesandBredfeldt'spublication How toPurchase and
OperateaBed & BreakfastorCountryInn (1993). Actualexpense
costs tooperatethe bed& breakfastwere then guaged after
discussing costswithClaire LanzatellaofMt. Vernon Manor Bed &
Breakfast inRochester, NYand thefigures used in thebedand
breakfastguidebooks. The expense report (Figure 7) liststhe
projected annualoperatingexpensesforthe KrenzerHouse.
-36-a o o o to o D o o cj o
o o oo oo O o o o o o o < O D O o o o o o o o o o O o o CM g o n a n z jj < u D Z < jj jL D 1 a o o o O o oo
o o o ro O o o o o O O O o o o cj o o o m O o o in o o o o o o o o o o o o o o o p-cn U-o o o CO o a oo
o o o o o o o o o O D O o o o o o oo
o o o o o o o o o o o o o PO o o o 1 6 o g 1 s. | ra E o 1 s a o a c e o o *J-o s j ri a UJ a 1 X c c c o c T O o c C a a 1 C n o c c E g a 3 I I t X < Q C 1 1 1 I 3 . 5 i I u c t a i 1 s 1 ? -I 1c s aI
-37-The breakeven analysiswas then developed using all three
costfactors( renovations, income,andexpenses). The projected
annual expenses were subtracted fromthe projected annualincome. Theannualprofitwas then subtractedfromtherenovationalcosts of
Theformulaused looks asfollows:
annual income expenses = annual profit
renovational costs annual profit = newrenovationalcosts
Profit from the bedand breakfastwas then established when the
renovationalcosts were paid offfrom theannual profits over a set
-38-0 0 0 0 0 ro O O O OT CM iO i 0 1 0 1 ^ 1 M 0 0 0 O O O O ^1-0 ;0 0 : OO :(NJ O :0 : O iro O O : LO : CM !* !O ; 0 !LO : CO 0 0 m 00 00 0 0 LO LO 0 0 0 r*. CO O O O PO O O LO LO iO !O :LO !LO jCO 0 0 LO LO OO O O LO LO :O : O IO ; * :m = 0 0 : O : PO ! O IO : LO jLO 1 0 : O ! "^ 1^ r-00 LU O C3 Z fe < 1-t LL O a. 0. a: < LU >-fe 1-LL O cc tx a: < LU >-0 z CM h-LL O cn a. < LU >-a oe CO U. 0 a: a. a: < UJ >- F-H U_ 0 cn a. a: < LU >-X I-LO LL O a: D_ < LU >-X 1-LO |_ Li. O a: D_ OC < LU >- 1-in CO >-< z < z UJ > LU < LU OC CO 06 .?? LL. CD LLl 0 LU H m LU O 1-m LU Q s LU z 1-m LU 0 r-CO LU Q
After a review ofthe literature on this subject, and speaking
withadvisors Clyde Vollmers andDaveCrumb, themarketingplan
fortheconversionoftheKrezer House into abed&breakfast
consistsofthreephases: internal analysis, external analysis,
andan action plan.
The internalandexternalanalysis guidelineswere developed
through theexample of amarketing plandevised for Henry's
restaurant inRochester,New YorkbyGrieco, Menna,Pornchanok,
andVirani (1994). Theaction plan was thendevelopedthroughthe
helpof advisors onthisproject. Theaction plan stateshowthe
marketingwill bedone in staight and simpleterms. After the
internal and externalfactorshave beenassessed, and all
marketing/advertising featuresare examined, theaction planis the
suggestion for howtogo aboutadvertising in themost effective way.
Advisors tothisplan wereDr FrancisDomoy, Mr. DaveCrumb, and
Dr. Clyde Vollmers.
Considerationsexamined in thismarketing segment consisted
ofthe budgetaryaspects, whowillbe doing the advertising, what
exactlywillbe advertised,and who the advertising will be done to.
-40-MARKETING PI AN
-Shuttle Bus Accessible
2. Customer Analysis
- Corporate VIP's
3. Competitor Analysis
distance to RIT
NearbyB & B's
elegance (history) distance from RIT
duration of business not runbystudents
It isvitaltoacknowledgethestrengths and uniqueness ofthe
Krenzer Housecould have uponthe RITcommunity.
Learning Environment: caneasilychange and adaptto unmet
Minimal laborcost: operations and advertisingdone bystudents
setting: historyofhouseand Henrietta farmlands
- On the Genesee River
-neighboring apple and pear orchard
- Red barn
Sizeoftherooms: relativelysmall comparedtosome otherb &b's
EastRiver Road: cars separatehousefrom the river, and create
ofbed andbreakfasttrainingstudents mayhave
beginninga new quarter/oryear, students are not as
3. Pricing Strategies
Pricingwill be donebythestudent managers whenthestudents begin to
runthe bed and breakfast. Under currentapplication, andforfutureoutlook, the
average rateforadouble bedroom wascalculated. For this study, the average
rate of$90forroomswas used. Theexplanationfor this ratecanbe found in
chapter3ofthereport. Pricingwillvaryatthis propertyas some months havea
higherforecasted occupancythanother months. Pricingwill remain high during
highexpected occupancy, butwill remain on acompetitive basiswithin the
One advantageofthe bedand breakfastis its operationthroughThe
School of Food, Hotel, and Travel Management. The housegivesthesalesand
marketing classes a golden opportunityforsales experience with aproperty.
The bedand breakfastalso has a projectedfirstyear budgetof$5,000for
advertisingto ourtargetmarkets. Theadvertisingwill have to beoverseenby
the directorofthepropertyasthereis no planfor a sales and marketing
This is how theadvertising will work:
1. The bed &breakfastwill have approximately5,000color brochures
made up and sent out over a periodoftime toourtargetmarkets.
Thiswill be our original marketing.
2. Callswill also be madeto local businesseswho mayusethe bed
and breakfast for meetingpurposes.
3. Advertisingwillstressthe convenience of meetingright on RIT's
campus in arelaxed settingwithout havingtoworry about extratime
oftravel or finding a placetoeatfor breakfast for thevisitingguests
to RIT. Breakfastwillbeavailable at nocostto the RIT
representatives whobringtheirgroupswhoarevisiting RIT to the
-44-Licensins and Permits
Theareas ofoccupancy permits, health permits, fire
safety permits, and handicap accessibility were studied in this
MonicaandRichard Taylor'sbookStartandRun aProfitable
Bed & Breakfast (1992) providedvaluable insightas faras fire
safetyregulations andhow toobtain a health permit,and was used
astheguideforthis project. Occupancypermits andhandicap
accessibilitywasthendiscussed with abuilding inspectorfromthe
townofHenriettaand alsothroughdiscussionswith ahandicap
qualifications representative ofNYStatewho is locatedinAlbany.
The discussions pertainedto thePublic LawofNew Yorksection
101-336, title HI "Public Accomodations and Services Operated By
Private Entities". The handicapinformation inthis sectionofthe law
was discussed in detailasit directlyaffects the possibledevelopment
oftheKrenzorHouse intoabed& breakfast.
Inorderforthe bedand breakfastto open, itmust obtain
occupancypermits. Thesepermitsare grantedfromthecountyand
state,andrequireinspection. The countryand stateinspection is
usuallycombined. Safetyand general appearanceofthe property
arethe mainfocus ofthebuilding inspection. Whenadvertisingis
done properlyandthehouseappears safeforguests, thebusiness
Thepropertymustalsopasshealth inspectioncodes. Themain
focuswith this inspection isthesanitaryconditions ofthekitchen
andbathrooms. Cleanlinessand overall good sanitation must existin
orderforthepropertytoobtainits health permit.
Fire Safety License
Asstated in the literaturereview, a fire inspectionwill
concentrate on: containment, egress, detection,and suppression. The
Krenzer Housewill havea fire resistance rating ofthree-quarters of
anhour. This isthestandard requirementof containmentforabed
and breakfast. TheKrenzerHousealsohas fourexits andtwo
stairwaysin case of afire. The numberof exits required forabed
and breakfast in New York is two,while the number of stairways
(interiororexterior) is twoas well. Therefore, thehouse has
efficient means of egressalready in place.
In regard todetection, thestate ofNew Yorkrequires a
hardwired fire alarm system. The alarms that run on batteries are
not sufficient. Thealarm mustbe set through thewiring system and
also have locationsthroughouteachfloorofthehouse.
-46-Before theKrenzer Housewereto open,a hardwired firealarm
systemwouldbe installed. Although the local firecode doesnot
requirefireextinguishers within a bedand breakfastproperty, the
Krenzer Housewillhave themat both levelsofthehouseand at all
exits. Forsafety precautions, extinguisherswill bechecked regularly
Additionally, the firecode states thatreflective numbers must
beput onthedoorsof each room 1 footoffthefloor. Thestairways
mustalsobeproperlyindicated 1 footoffthefloortoallowfiremen
whoarecrawling on the ground toknowwhere theyare. Thiswill
be installedwithin theKrenzer House to ensure properfire safety
AlthoughtheKrenzer Housedoesnot meet state requirements
forapropertyto behandicapaccessible, theforecastedplanslookto
have one roomthat ishandicapaccessible. Staterequirements say
thatproperties thathaveatleast5 rooms and morethan 15
employees must haveat least 25%handicapaccessibility. The first
floor thatwillbe builtat thebackofthehousewillbehandicap
Inorderto maintain service, theseelements of operation needto be
Thearea of reservationswill betheresponsibilityof thehouse manager
and students. Partofthecourse requirementswill bethereservations
department. Because ofthelownumber of rooms, adetailed reservation
system is not needed. The reservation system should include beingableto
enter whatdayand whatmonth of arrival. Also, howmanyrooms are needed
for a particular dayand how manyarealreadyoccupied. Anyspecial requests
a guest may havewill also beincluded.
The cleaningofthe housewill be the responsibilityofthemanager and
the students. Part ofthe requirements of thecoursein runninga bedand
breakfast include housekeeping, andeverystudent in thecourse will
Maintenance and repairs doneon thehouse willbe done by RIT
maintenance and thesecosts arefiguredwithin the institutionalcosts section of
the expense report.
Classeswill beorganized andtaught bythe House Manager.
Students will learn:
Businessaspects ofthe lodgingfacility
-Operational aspects( reservations, cooking, housekeeping, ...)
House Manager- willserve as adjunctfacultystatus, liveatthe house,
and is projected a $25,000 annual salary.
GraduateAssistant- $5,000 assistantship
Student Manager- Upperclassman
who has prior experience working in
-49-Whilestudents areaway (holidays / summer), the housewill be
maintained bythemanager /and or graduate student ifguests are in house.
The manager will resideatthe house (basementas apartment). Heorshewill
beatthehouse for emergencies, liabilities, or problemsthatarise. A manager
willalways beon propertyif guests are atthehouse.
SUMMARY. CONCLUSIONS. AND RECOMMENDATIONS
ThefeasibilityoftheKrenzer House to be convertedinto abed
and breakfastwas brokendown into four distinctareasforthis
project. Thecosts section wasfirst studied extensively. After
figuringrenovational andoperatingexpenses, andforecastingthe
potentialincome, itwasdeterminedthat thebreakeven point would
occur nearthe6 1/2 yearpoint. Profitwouldthen beginto grow by
the seventh yearthehouseis in operation.
Additionally, it is important toremember thatincome toRIT
would notonlycome fromthedirectincome fromtheproperty. The
developmentofthe houseasabedand breakfastwould also enhance
theimageoftheschooland increasestudent enrollment.
How the housewouldbemarketed was also examined in detail.
Afterinternallyandexternally analyzingthe house'scompetitors,
qualities,andpotential, anaction planwasdeveloped. The
recommendationsoftheactionplan zero inon the target markets,
andhowtobestattract gueststo the property. Sending brochures,
calling corporateaccounts,andencouragingincentives to thoseRIT
employeeswho bring theirgueststo the house is the final
recommendations ofhowtomarketthehouse in bestestimation.
-51-Licenseandoperating codes werealso important to researchif
the housewastobe developed intoabed andbreakfast. How to
beimplemented ifandwhen the conversionofthehouseoccurs.
Anoperational plan was also developed. After it was
determinedwhatservices needed tobe provided inorderforthe bed
and breakfastto properlyoperate, the management structurewas
developed. The threeareasofmanagement (manager,graduate
assistant, andstudent) giveastrong backboneto ensuretheoverall
goals andobjectivesofthebusinesswillbe maintained. The
operational planalso projectsthat theeducationofthestudents(in
regardtolearning cost, managerial,and operationalaspectsof a
lodgingfacility) will occur.
Thisprojectconcludesthat theconversionoftheKrenzer House
intoa bedandbreakfastisafeasibletask. The study indicatesthat
theoperational, licensing, andmarketing aspects are allvery
attainable. The studyalso showsthat thedevelopmentofthis
projectwouldbeamoneymaker. Not onlywould thepropertymake
aprofit in sevenyears, buttheimageand enrollment ofRITwould alsobeenhanced.
It is therefore recommended that RTT instillan overseer ofthe
renovations thatneedto take place and extendtheschool to the
banksofthe Geneseewitha bedand breakfastcalled "The Krenzer House".
American Automobile Association. (1995). Tour Book: New York.
Bed and BreakfastLodging Operations: A Business Planning Guide
for New York State. Publ. by NYState Small Business
DevelopmentCenter. Jefferson CommunityCollege. Watertown,
New York. December 1989.
Davies, MaryE. So You Want to bean Inkeeper. Chronicle Books,
San Francisco. 1990.
Garrison, Davidson and Davidson. Financial Forecasting and Planning.
Quorum Books, New York. 1988.
Grieco, Menna, Pornchanok, Virani. (June, 1994) Strategic Marketing
for Henry's Restaurant.
Kravitt, Gregory. Creating a Winning Business Plan. Probus Publ. Co.
Marecki, Richard F.,Ph.D. (Dec. 1991) Consulting Guide for Travel
Murphy, Martha W. How to Own andOperate Your Own Bedand
Breakfast. HenryHoltandCo., New York. 1994.
Notarius, Barbaraand Gail Brewer. Open Your Own Bedand
Breakfast. Second Ed. JohnWileyandSons Inc. 1992.
Oatesand Bredfeldt. (1993) Howto Purchase andOperatea Bed and
53-Public Law 101-336. July 26, 1990. Title III: Public Accomodations
and ServiceOperated by Private Entities.
Schaeffer, Nancy. (July 1, 1988) The Bed and BreakfastIndustryof
New York State.
Stankus, Jan. How to Open and Operatea Bedand Breakfast Home.
ed. Globe Pequet. Old Saybrook,Ct. 1986.
Taylor, M. and Richard Taylor. Startand Run a Profitable Bedand Breakfast. Self Council Press. Vancouver, B.C. 1993.