Lorraine Freel is in a confident mood - as befits the woman who runs one of Europe's top 10 bed-and-breakfast establishments. "The only things we don't provide which a hotel does are a bar and a restaurant," she says.

In fact, four of the B&Bs in the top 10 are in Scotland, according to TripAdvisor, a Massachussetts-based website which rates hotels and guest houses throughout the world using reports from independent travellers.

Trafford Bank, Lorraine's guest house in Inverness, joins three in Edinburgh - Elmview, Geraldsplace and Blacket Garden Flat - in the top 10 of what claims to be the world's largest awards competition for hotels and guest houses. "My partner, Koshal, and I both lived in London, but I am Scottish and my parents lived in Inverness for many years," explains Lorraine, now 46. "When I was made redundant we bought this house to turn into a guest house."

To that extent, it is a familiar enough story of a couple seeing a Highland holiday business as the perfect means of escaping the rat race for a better quality of life. Lorraine and Koshal's attitude, however, is an indicator of how the old concept of making some money out of your spare rooms has evolved into a 21st-century niche business. "When we started out, I said to the bank that I wanted us to be one of the best guest houses in the UK, if not in Europe," says Lorraine. "I don't suppose they believed me because I'd only been around for a couple of months, but that was our aim and now we have achieved it."

Lorraine was a web designer in London, which means that the Trafford Bank website is not only professional but frequently updated. "If we refurbish a room, it's on the website within a week. We have loads of people saying they chose our guest house because of the website - and weren't disappointed when they got here.

"We do everything to the highest level we can. We've invested hundreds of thousands of pounds in the house - but it is our home as well as our business, so it's as we would want our home. And our guests say they do feel at home."

The B&B is open all year round, though in winter it caters mainly for business clients. "A lot of single business ladies stay with us because it's friendlier than a bigger hotel," explains Lorraine.

The key ingredients for a good B&B, she believes, are comfort, friendliness, a sense of being welcome - and, let's not forget, a "fantastic breakfast".

"Guests choose what they want from a menu of local produce. We have haggis from the butcher, plus home-made sausages, Stornoway black pudding and fruit pudding," she says. "Because we have a lot of Europeans staying with us, we have fresh fruit salad, cold meats, cheeses from Arran and oatcakes. And it is all served in pottery made in Tain."

Visitors, adds Lorraine, tend to be looking for a Scottish experience. That's why the rooms contain soaps from Skye and Arran.

But if you think B&B ownership is a way to make easy money, think again, warns Lorraine. "If you want to make a lot of money, this is not the business to be in. You're always upgrading things and investing - but we enjoy that."

While things are healthy at the top end of the market - Trafford Bank, Lorraine points out, "has five AA stars and is not cheap" - the more pertinent question for the Scottist tourist business is how the mid-range is faring. Have we finally abolished the re-heated frozen meals, the stony-faced proprietors and the nylon sheets? Yesterday VisitScotland called the TripAdvisor awards "great news for Scotland", but the agency's spokeswoman conceded that "quality varies across the industry and we are working continually with B&B and guesthouse proprietors to ensure it continues to improve".

Although TripAdvisor relies on recommendations - and criticisms - from fellow travellers, most people still rely on official grading systems to help them make their choice. The grading system of one to five stars has now been co-ordinated across the UK. An establishment's rating doesn't depend only on the physical facilities available; it takes into account more subjective judgments such as the local knowledge offered by the host and the use of local produce. "Our follow-up research shows that, for foreign visitors, the highlights of their stay are the scenery and the people - and that is reflected in our slogan Welcome to our life,'" says Visitscotland's spokeswoman.

Joan Campbell has been welcoming strangers into her life at Melvich, near Thurso, for the past 40 years. Her guest house, The Sheiling, has five stars from VisitScotland, and she was runner-up in the AA 2003 Landlady of the Year Award.

"I started off because I had a brand new house and a brand new baby and in those days it was difficult to work with a small child, but I was itching to do something.

"Standards have changed enormously since then. I used to charge five shillings per person for bed and breakfast, and 2/6 for high tea. Now it's from £33 per person per night. I no longer do dinners, but breakfast includes a variety of local produce - such as local trout in oatmeal or salmon with eggs - as well as the traditional breakfast, and home-made yogurt and jams. One thing that hasn't changed is that people like to eat fresh, local produce. Now they're looking for far more fresh fruit - and good- quality coffee."

Joan was one of a number of landladies who started Scotland's Best B&Bs, a brochure that listed establishments (with no more than three bedrooms) that had received highly commended status from the then Scottish Tourist Board. "There was a need to highlight the top end of B&Bs," she says. "It must have taken at least 20 years to realise my dream of having a B&B with all the facilities."

Now that Joan's husband has retired, the couple run the business together. She continues to do the cooking, which means getting up at 5.30am to start preparing breakfast.

"After 20 years, I started pushing to get bed and breakfast recognised as a good job rather than something people just did for pin money," she says. "Caithness and Sutherland Enterprise then backed me in providing seminars for the industry. Highlanders are renowned for their hospitality, but the incomers have also contributed a lot from their experience elsewhere. There is still room for improvement, though.

"At one time B&B was the cheap option compared to a hotel, but people soon realised they were getting value for money. Then they began to demand more, and now they are willing to pay for quality."

Ask Joan for the important factors in a top B&B and she goes back to basics: "Cleanliness, ambience and welcome. People need to feel at home."

Ardoch Lodge in Callander was the Good Hotel Guide's Scottish Guest House of the Year in 2006. For the past 16 years it has been run by Yvonne and John Howes. "I have an absolute love of food," says Yvonne. "I'm not formally trained, but my family was in the hotel business and my mother and grandmother were fantastic cooks."

In her experience, guests want "good, comfortable beds, a well-equipped bathroom and freshly prepared food. You need to anticipate that different people want different things for breakfast. They're not all going to want a full Scottish. Some will want vegetarian or fruit. Breakfast is the last meal people have before they leave, and it's the thing they often remember the most."

Like TripAdvisor, the Good Hotel Guide is valued by Yvonne because "you can't buy your way into it. All the reviews are done by people who have stayed there independently."

So, top marks for top B&Bs - but all the more reason for others not to rest on their laurels. The competition is hotting up - at last.

How different guest houses compare

Charges for B&B in Scotland can vary from about £25 to £80 or more per person per night.

  • At the Amadeus Guest House in Glasgow, rates are £23-£29 for a single room, or £48-£52 for two sharing.
  • At Trafford Bank in Inverness, prices range from £80 to £98 a night for two people sharing a room. A single person would be charged £60-£75 a night.
  • Ardoch Lodge in Callander costs between £35 and £45 per person sharing a room, or £71 for dinner, bed and breakfast.

The other Scottish B&Bs in the TripAdvisor top 10:

  • Elmview in Edinburgh: £80-£115 per room for two sharing.
  • Geraldsplace in Edinburgh: £74-£119 for two sharing.
  • Blacket Garden Flat in Edinburgh - £30-£45 per person per night in a double or twin room.

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