After much anticipation, the 2009 Inns For Sale Study researched by Hilary Jones of Inngenium, LLC was released at the recent Innkeeping Conference and Trade Show hosted by PAII, the Professional Association of Innkeepers International, in Atlanta.
The study, now in its fifth year, takes a snapshot of the bed and breakfasts and inns for sale in March of the year and breaks the statistics down into several categories by price, size, state, region, and the country as a whole. The core criteria is that the property be currently operating with two or more guest rooms, be for sale, and be advertised in at least one of several primary "inns for sale" websites.
In March, 2009 there was an increase over 2008 of 6.4% in the number of inns for sale across the country, rising to 990 properties. New to the study this year was an examination of how many inns had verifiably sold since the previous study. 82 properties had sold, indicating that there is currently a twelve year supply of inns for sale, assuming no changes and no additions!
On average, despite a soft economy and a devastated real estate market, prices on average were up 0.7% nationwide, though this varied by region and property size. The increase was "1.5% for inns in the 5-10 room class and 10.9% in the 12-15 room class. Prices did however drop for larger inns (17-40 rooms) by almost 2%." Regionally, prices trended up everywhere except in the New England, Pacific, and South West regions. Only the East North Central region remained static.
Another important observation of the study is that inns appear to remaining on the market longer with 21% being for sale for two or more years and 5% still available after three or more years. The B&B Team, sponsors of the study, believe that this 2-3 year time period to sell a bed & breakfast inn is not unusual, but there is clear statistical evidence to support this. Additionally, a large number of properties which are still operating dropped off the list in 2009, indicating discouragement with the marketplace.
In light of the large numbers of B&Bs and inns for sale, The B&B Team believes that the smaller properties, those that would be desirable as residences, should focus their efforts on selling as residential real estate rather than as B&B's. This will increase their owners' chances of a successful sale in a timely fashion. Inns that are viable going concerns should ensure that their asking price reflects what an over-saturated marketplace and lenders will find "reasonable and defensible."
We agree that Inns should consider selling as private residences, and the asking price should reflect that considering the economic situation, as well as licensing, fire & safety code requirements, lead paint and other issues that would be required of a new owner to make expensive renovations before being allowed to serve the public.
There are many smaller properties that may indeed be better suited as becoming private homes when offered for sale. There are also many smaller properties that are viable as lifestyle B&B’s, depending upon the owner’s requirements, wants and needs.
Because each property is unique, as are the state, county, and even municipal requirements for licensing, life-safety, lead paint and other issues, it becomes incumbent on the potential new owner to be sure that all due diligence is properly and thoughtfully performed.
This is the best way to insure compliance and avoid unexpected “surprises” for new owners.