Brightsparks, I completely understand your frustration. We do not have a guaranteed income - ever and that is a huge stressor in this job. I also do virtual tours of other peoples daycares in my area and am sometimes very impressed and an equal amount of times wondering what the heck they are thinking calling their living room with a toy box a daycare playroom.
I have my playroom and nap room in the basement and have made every effort to make it "light looking" by installing light ceramic flooring, light coloured walls and installing extra pot lights with natural light simulating bulbs. My clients also know we are outside a lot and eat and wait for pick up upstairs.
I think the revamping you suggest is excellent. In interviews up play all the special features of your daycare proudly and do not mention the daycares that you know of who provide much less. You want intelligent clients and they will be the ones who will see the superiority of your daycare over the others.
Chin up, it is already hard to come back to work after a great vacation and then find out you are losing a client so now get your confidence back, stand up straight, put a smile on your face and advertise like heck. You can do this.........you know you can