Getting With The Program - Use Of The Web A little more than half (51%) of all respondents are "Early Surfers" -- those who have had a Home Page for more than two years. About a quarter (26%) have been on the Web now for 1-2 years. The balance (23%) of the B&B's have been on the Web for less than one year. One interesting point to highlight is that there has been a significant shift in how many Innkeepers are now getting their own domain name and using it as their Primary URL. This year 74% (vs 53% last year) of the Innkeepers reported that they have their own domain name; of those that don't 47% plan to get one within the next 12 months. This trend is being driven by the fact that Innkeepers are more aggressively cross-marketing their web sites in both print and other ways. To illustrate this, 92% (vs 83% and 58% in prior years) of Innkeepers now include their Web site address (URL) and e-mail address on their printed promotional material. In addition 26% are now providing their URL address as part of their messages on answering machines. Increasingly Innkeepers require a URL identity that is tied into their names - one that is easy to communicate and one that builds their brand identity (e.g. name recognition) and helps in URL recall. B&B Internet Profile:

Primary URL Used: 74% Own Domain Name 13% Regional site URL 13% Listing Service URL

Length of time of Web 23% Less than 1 year 26% 1 to 2 years 30% 2 to 3 years 21% 3 years or more

Innkeeper Marketing Activity 79% Increasing Internet Spending 83% Are paying to be on a listing service 92% List URL on promotional material 26% Provide URL on answering machines

Use Of Directory/Listing Services An important marketing tool many B&B owners use to attract guests and to create traffic for their sites is Directory/Listing Services. In previous years we used a general question about the use of listing services. Since many directories offer a free listing option, this year we asked details only about those directories/listing services that the Innkeepers pay to be on. Despite the expectation of much lower usage scores, surprisingly 83% of B&B's pay to be listed with at least one listing service. The majority of these are listed on more than one listing service - 49% pay to be listed on more than five listing services. Asked what their future plans are regarding paid-for listing services, 94% either plan to increase the number that they are listed on or maintain current levels. Clearly Innkeepers continue to view Directory/Listing Services as an important component of their Web presence along with their own Home Pages. Top 5 Directories that Innkeepers pay to be on - (Listed in alphabetic order - not ranking) 1st Traveler's Choice - www.virtualcities.com B&B Getaways - www.bbgetaways.com Bed & Breakfast Channel (Inns & Outs) - www.bbchannel.com Bed & Breakfast Inns Online - www.bbonline.com Lanier - www.travelguides.com Future attitudes towards utility of Directory/Listing Services:

What are your future plans regarding listing services/on-line guides that you have to pay something to be listed? 50% Will increase the number paid for (41%) 6% Decrease the number of listing services paid for 44% Neither more or less/but will be more selective about which pay for (53%) (percentages within the brackets are last years results)

How do your Web guests find you?
An area of significant interest relates to where Innkeepers think their Web visitors come from: do visitors find the B&B from conducting a search engine query, or are they found directly through listing services, links from regional pages or directly through their own Home Pages. Innkeepers have become more sophisticated in their ability to track traffic to their sites. Last year less than 30% of Innkeepers were able to provide detailed quantitative answers to this question. In the intervening year a significant number of Innkeepers have placed either Hit/Visitor Counters or log reporting software such as Webtrends or Extreme Tracker on their Home Pages to actively monitor and track link activity as a result this year 58% of Innkeepers were able to respond to this question. Directory/Listing Services, Search Engines and Regional Pages account for 78% of site traffic.

Monitoring URL Activity:

II. ADVERTISING EXPENDITURE LEVELS Expenditure shifts continue to occur as the Web captures a larger share and produces results. When asked how they are allocating their advertising dollars, Innkeepers indicated that they have committed a significantly greater portion of their advertising expenditures to this new medium - 48% vs 40% last year. Similarly, another indicator of the continuing and growing importance of the Web as part of Innkeepers' marketing strategy is that 79% (up from 76% last year) of the Innkeepers interviewed plan to increase the share of advertising expenditures that they spend on the Web. Twenty percent (20%) will hold their advertising expenditures to their current levels; less than 1% indicated that they would reduce spending levels. Attitudes towards paid advertising on the Internet:

Source of Guest Business There is no ambiguity amongst Innkeepers agreeing about the importance of the Web as an increasing source of new guests for the B&B's - 97%. Similarly nearly everyone agreed that the importance of the Web as a source of new business will continue to increase in the future - 96%. In order to quantify the importance of the Web, Innkeepers were asked to provide percentage of business coming from the various sources. ("Where does your business come from?") The results were even more eye-opening than last year. The ten sources of guests were: Tour Guides/Books, Word of Mouth, Advertising, Chamber of Commerce, B&B Associations, Other B&B referrals, Reservation Services, Travel Agencies, Telephone Directories and The Internet. Since we began these tracking studies the Web has moved from being subordinate to more traditional sources of guests (Word-of-Mouth, Travel Guides/Books and Print Media) to its current preeminent position. This year's growth has been explosive - The Internet now accounts for almost as many guests than the next three most important sources combined. This year overall 38% (vs 26% and 23% in prior years) of business comes from "The Internet". The biggest share losers are Print Media Advertising followed by Travel Guides/Books and Chamber of Commerce referrals. Ranking of top 5 Sources of Guests: Two questions: How B&B's ranked importance of differing sources of business? How much of your business comes from this source? Ranking Source Contribution 1 The Internet 38% (26%) 2 Word of Mouth 20% (21%) 3 Travel Guides/Books 10% (15%) 4 Print Media Advertising 9% (14%) 5 Visitors calling the Chamber of Commerce 6% ( 9%) (percentages within the brackets are last years results) What Is The Payback? Nearly 3 out of 4 Innkeepers (72%) will be making additional investments to update and revise their sites within the next year (updates and revisions exclude rates changes). The basic question most Innkeepers ask is - "Is there a payback for investing time or money on the Web - the Return on Investment (ROI) Question?" The first level investment for Innkeepers is to create their own Home Page. In looking at the data on spending levels, two problems emerged: 1) the range of dollar investment was not sufficiently wide enough to answer the ROI question entirely in financial terms and 2) spending levels alone do not appear to adequately explain the Occupancy Rates differences. In analyzing the results we searched for other factors that could explain the varying results we see when we compare Occupancy Rates. We identified several factors that we have collectively termed "Commitment To Use" (CTU) the Web as the key determinant for success. Innkeepers that ranked high on "CTU" have significantly higher occupancy rates. At its simplest "CTU" is a measure of the "commitment" to use this new medium. We looked at several bi-polar scales to help quantify "CTU". Bi-polar points are descriptions that are opposites from each other, e.g., Hot vs Cold. The following itemizes the survey's bipolar points: Use of professional assistance Bipolar Points: Contract out maintenance to a 3rd party professional vs. Use the services of a friend or family member View URL as a marketing tool Bipolar Points: Use your own Domain Name as your primary URL vs. Use one that is a templated section on an Association site View Web as opportunity Bipolar Points: Length of time on the Web: Early adoptor/surfer vs. Johnny-come-lately Perception that Web Guests have differing requirements Bipolar Points: Provide on-line tools such as on-line availability and offer web promotional pricing vs. Not Offering Use of Software Tools Bipolar Points: Use logging software to take action and active registering on Search Engines vs. Not Taking Action A definite pattern emerged. On all the bi-polar points Innkeepers who were on the more "committed" end of the scale had significantly higher occupancy rates on average than their counterparts who were on the opposite end of the scale. Innkeepers who were making investments in both time and seeking professional services, where appropriate, are seeing payback. Three Bipolar Measurements: Average Occupancy Rates - Overall = 47% Note: percentages below are Occupancy Rates Length of time on the Web 46% Less than 2 years 53% 2 years plus Primary URL 49% Use Own Domain Name 39% Use Association or Directory URL Who maintains Home Page 55% Contract out to professional 47% Family member or friend

Mining For Profits - Impact On Revenues And Operating Costs
Web experience is helping Innkeepers change the financial picture of running their B&B. Sixty three percent (63%) of Innkeepers have raised their room rates within the past 18 months and an additional 10% plan to within the next 12 months. Twenty one percent (21%) of the Innkeepers report that the Internet was a Very or Somewhat important factor influencing the decision to raise rates.

As previously noted, a growing number of Innkeepers are using less expensive e-mail in lieu of telephonic means to contact, talk to and confirm reservations with guests. A growing number of B&B's are using their Home Pages in lieu of sending out printed brochures and not mailing promotional material to inquiring potential guests. Only 23% of Innkeepers are still sending brochures to everyone who found them through the Internet. Thirty two percent (32%) of Innkeepers are sending additional marketing material to less than 25% of potential guests who found them through the Internet. This translate into approximately 23% fewer brochures mailed out.

Toll free phone and fax numbers which a significant number of Innkeepers have added over the past few years are still very popular. As a result these costs have increased over the past several years, but will diminish somewhat as e-mail becomes the first point of contact.

III - NEW EMERGING TRENDS
Digital communication tools are becoming increasingly popular with both Innkeepers and Guests.

New Communication Tools And Their Use In Marketing
Some of the trends warranting on-going scrutiny relate to developments and changes in how Innkeepers and Guests communicate once the Guest has discovered the Inn/B&B on the Web. Whereas the traditional means of contact (phone, mail and now fax) remain the predominate form of contact, the new digital tools - e-mail, e-mail forms and other inquiry (on-line availability) and booking (on-line reservations) tools - are increasingly be used.

This year Innkeepers were asked a series of perception questions about the Guest's choice of communications for 3 time periods: last year, this year and next year.

Based on additional research conducted separate from this study, we believe that the actual shift to digital contact will occur at a significantly faster pace next year. This was partially confirmed in this year's study. When we look at the same question and only use responses from Innkeepers who have a longer time with their own URL, they forecast that 36% of their guests will contact them by e-mail next year!

Regardless of which forecast is the correct one, the trend is clear especially when almost twice the number of Innkeepers are encouraging e-mail contact this year (66%) than did last year (38%). Similar to the growth we've seen in the adoption and use of answering machines, Innkeepers will need to start to develop new techniques and tools appropriate to this new type of guest contact methodology.

E-mail Contact
By definition virtually 100% of the Innkeepers responding to the survey have e-mail and 97% include it on their web site; 92% include their URL on their brochures and 26% on the voice answering message. The vast majority of Innkeepers check their e-mail daily (95%): 42% read e-mail at least 3 times a day, 27% at least twice a day and 22% once daily with 4% nearly every hour.

It is clear that the amount of time that Innkeepers spend answering e-mail is increasing.

Permission Marketing
One of new marketing subjects explored in this year's survey centered around the subject of digital marketing to guests that have previously stayed at the B&B - Permission Marketing. Whereas the phrase is not yet a familiar one, the concept is not foreign.

Repeat/returning guests continue to be an important source of new bookings for Innkeepers. Overall Innkeepers reported that returning guests account for 30% of their business. Not surprisingly the returning guest factor increases in direct proportion to the number of years that the Innkeeper has managed the property. For instance:

Very few Innkeepers are doing anything on their Web Sites to encourage guests who have previously stayed at the B&B to revisit the site. - 81% reported that they were not currently doing anything. Almost all sites are oriented to familiarize first time guests with the B&B.

A follow-up question probed as to plans to conduct "permission marketing" via e-mail within the next 12 months. Only a scant 7% of Innkeepers have plans in place to conduct these e-mail marketing programs. The only indication that Innkeepers are starting to look at the opportunities that a personalized e-mail marketing program could provide is that 41% of Innkeepers are currently maintaining a data base with e-mail addresses of guests and another 21% plan to start to maintain one in the next 12 months.

On-Line Availability and On-Line Reservations
Whereas 66% (vs 38% last year) of Innkeepers intend to encourage e-mail use in the next year because guests have clearly adopted this form of contact, other indicators illustrate that Innkeepers still have a deep ambivalence about the use of e-mail and in particular on-line reservations.

The survey asked a series of follow up questions relating to how Innkeepers will encourage digital contact: the inclusion of a formatted e-mail contact form on their Home Pages, their plans about offering either on-line availability or on-line reservations in the future was also explored along with any inhibiting factors. Offering reservations on-line received the highest negative rating for adoption. Innkeepers continue to report mixed feeling about these tools:

Formatted contact form:

Thirty four percent (34%) either currently have a formatted form for e-mail contact or plan to have one within the next 12 months.

On-line Availability

Thirty four percent (34%) report they currently have or plan to have "On-Line Room Availability" information on their sites; 67% have no plans.

On-line Reservations

Twenty-three percent (23%) claim to have or plan to have "On-Line Room Reservations"; 78% responded "No" they would not offer this on-line.

Probing further those Innkeepers not planning to add some of these tools responded to an open-ended question as to "Why not?" The responses centered on two negatives:

1) An overwhelming reason cited (41%) was that Innkeepers wanted to maintain direct telephone contact with potential Guests and they viewed this as a significant point of differentiation from other types of accommodations.

b) The next most cited reasons revolved around the logistics of updating this information Updating is perceived as being difficult and time consuming ("it is difficult" and "don't have the time to keep this information up-to-date").

CONCLUSIONS
The major conclusion is again the one made last year - Get with the program! It's not a choice anymore - being on the Internet has become a necessary defensive survival strategy.

Get on it - Work it - Invest in it. For a growing segment of travelers, if a B&B can't be found through the Internet - the B&B won't exist. The tracking survey results again clearly quantify that Innkeepers who are taking advantage of the opportunity are benefiting.

The good news: it levels the playing field:

The Web continues to help "level the playing field" for B&B's. The Web enables Innkeepers to cost effectively compete with other types of accommodation providers within the lodging industry (e.g., large luxury hotels) for these travelers. It allows even the smallest B&B properties to do what only the largest hotels could do prior to the Web - advertise to potential guests on a nationwide basis.

The bad news: it levels the playing field:

Innkeepers need to develop strategies and programs that help avoid becoming an accommodation commodity. Their issues continue to be: a) how to maintain the unique "B&B experience" during the initial contact period, b) how to continue to create personalized service and maintain the unique one-to-one guest relationship within this digital environment and c) how to keep up with the technological maturity and communication requirements of their guests.

What may have originally started off as a trendy, me-too movement to get a Web-site has now matured. It's more serious now. Investment spending levels have increased significantly both in dollar amount and percentage of advertising budgets.

Innkeeper attitudes are also shifting. If the Web is the key to success, then an Innkeeper's investment in time spent understanding and using the tools to attract and to track will have a return on the investment. Put another way not too long ago managing a B&B combined a combination of active guest management and passive advertising/marketing management. Tomorrow there is nothing passive about either the guest or the marketing to them.

The Guests are driving additional infrastructure changes:

Use of e-mail -

Trends continue to point to the expanding use of other digital tools to communicate: use of on-line forms and e-mail for first contact

On-line availability -

In spite of Innkeeper resistance all signs point to this being the most significant addition that Innkeeepers can add to their sites. As one Innkeeper put it: "The 2 most important things I've ever done to ensure my financial success has been to first get on the Web and secondly to add on-line room availability information onto my home page."

ONE LAST THOUGHT
The authors would like to conclude with an amusing trend that we have observed but which did not get quantified in this year's study. The effect is what we term The Law of Unintended Consequences. As a result of recommendations made by an Internet savvy Innkeeper, we note that there appears to have been a significant number of Inn and B&B name changes. In indexing names we have noted a movement to names beginning with either the letter "A" or numerals. For example Aunt Sophia's B&B is now Aaunt Sophia's B&B and The Victorian B&B is now the 1886 Victorian B&B. The rush towards the beginning of the alphabet to get higher placement on both the Search Engines and Directory/Listing Services is fast becoming a stampede. Maybe the real opportunity here is to become a printer and offer services to reprint business cards and stationary for Innkeepers who change their names.

We and our co-sponsors -- B&B Getaways (www.bbgetaways.com), BedandBreakfast.com (www.BedandBreakfast.com), PAII (www.paii.org) would like to thank the many Innkeepers who contributed their time and input. As in all good research, you often raise more new questions than you help answer, so these may form the basis of future research surveys that we may conduct and share with you. If you have additional questions you would want to include in future surveys, or if you want to participate on future surveys, please drop us a note by e-mail: DDMonWWW@aol.com or write us at: DDM, A Communications Agency, Inc., P.O. Box 1039, Kingston, NY 12402.

A word about the authors: Peter Schleim and Paula Saint-Amour are principals of DDM, A Communications Agency, Inc, who helps companies develop solutions for strategic marketing problems using the Internet. DDM also has created and maintains B&B Getaways™ an Internet Listing Site which has over 16,000 Bed & Breakfasts in the United States. DDM was assisted in conducting the survey by Tell-Us, Corp. an Internet marketing research surveying company located in Kingston, NY.

Nothing contained in the above article can be used or reprinted without the express prior permission of the authors.