Broker, Consultant & Expert Witness California Boutique Hospitality
Inn Sellers|California's Many Faces|Inn Buyers|Inn Listings
Johanna Welty<br />Boutique Hospitality Broker, Consultant & Expert WitnessJohanna Welty
Boutique Hospitality Broker, Consultant & Expert Witness

(925) 708-4505 (Mobile)

California Boutique Hospitality Sales
PO Box 902
Alamo, CA 94507
925.708.4505

Boutique Hotel / Inn Buyers

Aspiring innkeepers should consider the following before purchasing a boutique hotel or historic inn.

Do you have the type of personality required to own and operate a successful hospitality establishment?  Do you have the fundamental willingness to “serve” the public graciously as well as the ability to roll with the punches that hospitality and the economy can throw your way?

Have you read books that discuss owning boutique hospitality properties?  Have you interviewed existing innkeepers or enrolled in professional seminars designed to educate aspiring innkeepers?

  

Location, Size & Physical Condition

Just as with all real estate, “location” remains the single most important consideration in purchasing an inn with potential for growth and future success.  “Location” is vital because “hospitality” is all about “destinations,” i.e., “locations” where travelers “want” to visit.  Because location is so important, selection of the right location not only heralds the promise of a rewarding business future, but also forecasts a viable “exit strategy.”  (Please call or email to receive an article on “The Importance of Exit Strategies.”)

Size of an inn can also be an important factor in determining future success.  Inns with five or more rooms offer the best chance of profitability.  However, other important considerations include:

 

Does the inn provide adequate common areas for guests to relax?  These can be interior or exterior.

Does the establishment provide adequate and/or legally "permitted" guest parking?

Do all guest accommodations offer private baths?
Do "entitlements" -- also known as CUPs -- transfer with new ownership?
Does the inn include a commercial kitchen conveniently located to a guest breakfast room?

Does the inn offer adequate storage and laundry facilities?

Does the inn offer easy-to-see and welcoming signage enabling visitors to locate the inn?

Does the inn reflect “deferred maintenance” and require updating? If so, at what cost?

Is the inn ADA-compliant?

 

 OWNERS’ Quarters

Owners’ quarters are increasingly important to aspiring innkeepers.  After a long day, innkeepers need a private place to relax and call “home.”  Unfortunately, some inns frequently offer extremely small owners’ quarters – sometimes merely one bedroom and bath without even a kitchen.  The size of owners’ quarters can make an impact not only on every day inn operations but also on the future of an inn sale. 

 

Business Financials & Inn Appraisals/Valuations

Traditionally, small luxury inns have been appraised primarily for their real estate value rather than for any business value.  For example, with an inn appraisal of $1,150,000, the valuation could break down roughly as follows:

 $1,000,000 (Real Estate, including Buildings and Land)

      100,000 (FF&E -- Furniture, Fixtures and Equipment)

        50,000 (Business Value)

The above offers a rough generalization but should be considered by aspiring innkeepers and owners alike.  Buyers often want to see financials documenting last three years of business operations.  Naturally, such financials can reflect an innkeeper’s managerial talents but, frequently, also are controlled by the economy or immediate locality.  A poor economy or poor location can upstage even the greatest managerial talent and negatively impact P&Ls.

 

As a result, appraisers feel safe evaluating only what is “real” (tangible “real” estate property versus “personal” property) with intangible managerial talent  becoming the least quantifiable element in the equation.  For this reason, appraisal reports always assign most value to the tangible land and buildings, some value to tangible FF&E "personal property," i.e., furniture, fixtures and equipment, and the least value to the “business” (intangible managerial skill and/or marketing talent).  Thus, buyers should not be overly influenced by financial disclosures that reflect uncertainties of past intangible management.

 

Conclusion

In summation, any aspiring innkeeper today should not place too much importance on sellers’ past business financials but, rather, should focus on the far more important value of inn location, size and physical condition.  From a business growth standpoint, any serious boutique hospitality buyer must ask himself/herself if he/she has those essential managerial/marketing talents required to take advantage of California's unparalleled hospitality growth.

 

BUYER REPRESENTATION SERVICES / FULL MARKET COVERAGE

If you wish to tour boutique inns and historic hotels that are for sale and not simply those listed only by me, I still am able to help you.  However, before I am able to serve you with full-market coverage, I will need you to review and sign an Exclusive Buyer Representation Agreement drafted by attorneys serving CAR (California Association of Realtors).  A copy of this Agreement can be obtained by emailing me at: BoutiqueHospitality@Hotmail.com

REALTOREqual Housing Opportunity
CalBRE Lic. # 01307696

© 2017 Properties Online, Inc. (PropertiesOnline.com) Content including property details, articles or opinions posed on this website have not been independently verified and cannot be guaranteed. All information offered within this website should be independently verified.  Website content is provided at the reader's own risk and the reader will not hold the parties involved in creating, producing or delivering this information liable for any loss, injury, claim, liability, or damage of any kind resulting in any way from any errors in or omissions from the information. Laws and taxes vary from state to state. You should consult with your individual CPA or tax attorney when purchasing or selling real estate. By providing links to other sites Properties Online, Inc. does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to the agent, brokerage, brand or Properties Online, Inc.

Equal Housing Opportunity.
SERVER: PROPSON-WEB02