Inn Consultants and Brokers Since 1993

Rick Wolf and Peter Scherman (that’s Rick on the left and Peter on the right) are both experienced speakers who have presented on a range of innkeeping related topics at the state, regional, and national level. They gather and analyze research for the Innkeeping industry and welcome the opportunity to share it with others. Contact Us

The B&B Team
 

Posts Tagged ‘feasibility study’

How to Make Your Dreams Come True

December 31st, 2014 by Janet Wolf

Make Your dreams come true

Jiminy Cricket
‘When You Wish Upon a Star’ Song by Leigh Harline & Ned Washington. Sung by Cliff Edwards for Disney’s 1940 adaptation of Pinocchio

When you wish upon a star…your dreams come true.  Thank you Mr. Disney for that wonderful sentiment and beautiful song. We should never stop wishing and dreaming but…wishes and dreams have no substance unless they move beyond the dreaming stage. How to go about making your dreams come true in 2015?

The B&B Team believes that dreams can turn into reality if you pursue those dreams with a lot of thought and planning. That includes education. Will 2015 be your year of action? As in all things, your dreams will need capital to make them happen. 2015 has a good feel to it. Economically speaking here are some forecasts that may give you some confidence to venture forth beyond the dreaming stage. The following information comes from ‘Looking to 2015, Economists See 5 Reason to Celebrate’, by Marilyn Geewax.

  • GDP will keep growing quickly. The commerce Department’s latest revision shows GDP advancing at an astonishing 5 percent over July, August and September. Lower energy prices will give consumers more money to spend, and should help boost revenues for stores, restaurants, hotels and more.

 

  • Inflation will be exceptionally low. The Federal Reserve has sharply cut its forecast, saying that inflation will run between 1 percent and 1.6 percent in 2015.

 

  • Interest rates will inch up. OK, you’ve heard this before. Nevertheless, economists think this time is different and that rates really will rise in 2015. It will lead to a slow, steady ratcheting up of interest rates to more normal levels. (Key words here are ‘inch’, ‘slow’ and ‘steady’.)

 

  • Stocks will go higher. The stock market has been zooming for years now. Some skeptics think the stock market is due for a “correction”. But the more typical prediction is that oil prices running so low, investors will want to keep putting money into companies that stand to benefit from increased consumer spending.

 

So the ‘feel good’ for the New Year has some good stats to back it up.

Suggestion. Take a few minutes or an hour and sit down with a pad of paper and write down your dreams for 2015. Are they ready to take a leap off the paper and be put into action?  If so, what is your next step?

  • If you have been dreaming of becoming any innkeeper then The B&B Team offers over 23 ‘Better Way to Learn Innkeeping’ seminars. The best first step any aspiring innkeeper can take.
  • If you have been dreaming of an innkeeping ‘afterlife’ then we can also help you plan your exit strategy. Just give us a call.
  • For innkeepers that have been dreaming of adding to their business to help it grow, we can help with a feasibility study.

We at The B&B Team are not economic strategists with global insights. We leave that up to the experts. (Bloomberg Radio on satellite radio is a great way to keep abreast of what is happening).  But we do know the innkeeping business and we really like to share our knowledge. Dreams can turn into reality but again as mentioned before with a big dose of education to start the process. Once you aquire that you can make good and sound decisions about your future. 2015 is here, the wishing stars are bright, let’s see them soar.

Thanks for Listening,

Janet Wolf

 

 

 

F is for Feasible Inn for Sale

September 7th, 2011 by Peter Scherman

Feasible? What’s “feasible?” On our Inns For Sale page, The B&B Team® defines different types of inns as being either “lifestyle,” “financially viable,” or “feasible.” Unlike lifestyle or financially viable inns, by “feasible” we mean “properties with a size and location that have the realistic potential to become financially viable. They may include unique hospitality properties that are distressed, closed, under-performing, or currently used for other purposes.” What kinds of bed & breakfasts are we talking about?

In this era where many inns have gone out of business, closed by choice, or been foreclosed upon, there are potentially a number of feasible properties for sale in this category.

Take the example of a bed & breakfast that was purchased at the peak of the market in 2006. The buyer may have paid top dollar, may have bought it figuring he would make money reselling it no matter how the business did, “because real estate always goes up” (did you ever hear that before?). That buyer may even have invested in fixing the property up, assuming that money spent translated to increased value. When the Recession hit and business went down, he could no longer afford the mortgage, and the bank now owns a property that is closed, has no business track record to speak of, but is ready to go. This is the “perfect” feasible inn to buy if it has the size, location, and condition that lend themselves to a successful business, but there’s no cash flow to help acquire it. So, it takes some financial wherewithal to make it happen, but banks are often willing to offer favorable terms to a strong buyer.

Another example could be the ten guest room B&B that was started in the early 1990’s. It was run well for a few years, but became tired. Business declined, and the owners thought they were too old to learn all the new tricks (social media, blogging, online reservations, etc.). The bed and breakfast may have had a good reputation, and may still enjoy some good will, but it needs updating in decor, amenities, and marketing to make it financially viable. It doesn’t have revenues that live up to its inherent potential. Priced right, this could be another example of a feasible inn. Fix it up, ramp up the marketing, and you’ve really got something.

Then there’s another possibly feasible inn. There are two structures, one with 9 guest rooms, the other with four and a restaurant that has been open and closed three times in the past three years, and the rooms are a disaster. The property has a good location but has been abused and neglected for a long time. No one would seriously consider it for a residence, so it really should be an inn again. But it needs a LOT of work. In theory it might be feasible. A professional feasibility study of the property indicates that the size, location, and potential business mix have every reasonable potential to make money. The price tag from the bank (it’s another one of those bank-owned properties!) seems reasonable. But the fix-up costs seem daunting.

In this case, the study reveals that successfully renovated, updated, and operated the inn could, in fact, be a money-maker, but whether it would make financial sense and could become viable depends upon the fix up cost. If the work could be accomplished for $500,000, the feasibility study indicates that the buyer could eventually (in 5-7 years) realize a solid return on their investment. But if the fix-up costs were to reach $1,000,000, one would be ill advised to take on the project. So, “feasible” becomes a potentially risky and expensive proposition, depending on the total initial investment.

Is there a risk-reward equation to consider? Certainly there is, as with any investment. And a smart buyer will want to have a feasibility study performed to assess the inherent risks and potential rewards before acquiring an inn that is distressed, closed, under-performing, or currently used for other purposes. “Feasible Inns For Sale” can afford excellent opportunities. To know the risks and evaluate the opportunities, hire professionals who can guide you to an educated decision. You’ll be rewarded for taking the time and investing in seasoned advice.

At The B&B Team® we love this kind of work. We enjoy sharing creative ideas with you to look at the exciting possibilities. But we also bring you down to earth about the realities. If it makes sense, we’ll support you all the way. And if it’s seems like a bad choice with unacceptable risks, we’ll let you know that, too. The job of the inn consultant is complex, but the role of the inn consultant is simple: We guide. You decide.

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