Identify customer need segments in your area.
Using the internet and other sources, research the types of hotel and bed-and-breakfast accommodations available in your area. You will likely find that they provide an array of different combinations of levels of service, amenities, location desirability, and pricing. For instance, you might find some expensive, high-service, centrally located hotels that offer an extensive array of amenities. This would suggest there is a group of travelers who are willing and able to pay these higher rates. Similarly, the existence of low cost, "no frills" accommodations suggests some travelers prefer the cheapest possible option. Both of these hotel types may find sufficient customers.
Cost is just one example of how the hotel market might be segmented. There are other many ways.
Based on your research, identify two to four groups of customers relative to their needs/wants and on their ability/willingness to pay. Compare/contrast the characteristics of each group. Give each group a name.
At this point, you are NOT asked to choose a group. Instead, list two to three key questions your business should seek to answer before choosing which customer group to target.
Describe how your inn would create value.
Value is often defined as the benefits in excess of the costs. What we think of as a good value really means we think the benefits we receive from a purchase out-weigh the price of our purchase. Just as the benefits of a hotel stay could include things beyond a room to sleep in (a pool, free breakfast, convenient location), costs too should be viewed as including more than just the monetary price of a purchase.
In a half a page, describe how your bed and breakfast or small hotel would create value (deliver benefits in excess of cost) for the customer and yet still make money for the owner. Be specific about what you would offer. *Note: Resist the temptation to suggest high quality, low price. This is an unsupportable approach. Amenities and high-level service are expensive to provide.