Innkeepers, Save Your Sprint for the Homestretch

Something interesting happened yesterday, and it made me really sit back and think. A few days ago, we had shown a very well located but non-operating hospitality property to one of the most experienced innkeepers in Colorado. This man had sold his inn a couple of years ago, an investment grade property with 8 guest rooms, and gross revenues in excess of $400,000 a year. Pretty amazing, right?

He was obviously an extremely successful innkeeper, and I was really surprised when he took a pass on this non-operating, pre-foreclosure property despite the fact that it was a great deal. This property had 9 guest accomodations, and was located just a mile or so from a world class ski area. Priced at $650,000, the property had been recently valued at over a million dollars.

As it turned out, our man just didn't have the risk tolerance to take that on, and despite the fact that he had a history of delivering extraordinary results, he was just too scared. Innkeepers, if a guy like this is afraid to tackle a high risk inn, think about how much more difficult it is for an innbuyer coming into the industry for the first time? They are TERRIFIED!

So, knowing what we know about the typical innbuyer's lack of risk tolerance, why do so many innsellers take their eye off the ball, and settle into mediocre management of their properties at such a critical time? When a patient is undergoing surgery, does the surgeon walk out of the operating room in the middle of the procedure? Of course not!

Then why is it that most innsellers think that they can take their foot off the gas pedal when their inns are up for sale? Hey guys! We KNOW you're tired! But, do you want to shoot yourself in the foot now? In the homestretch, where performance matters the most?

We've been innbrokers for about six years now, and I finally understand why most inn brokers turn into consultants. Personally I used to think they were just pansies. Now I understand! It can take years of prep to make an inn salable, and frankly, the majority of innkeepers should pay a lot more attention to their exit strategy planning.

I can't tell you how many declining p&l's we come across! And we hear the same old excuses from owners: they have health problems, the economy is down, their dog ate their homework.... bla bla bla.

Well, you know what happens to the racehorse that loses? They go to the glue factory.

Innkeeping is serious business. And, in these days, if you don't want to lose your shirt (which is happening all over the country these days) then you'd best put your nose to the grindstone, excel in your hospitality, stay on top of internet marketing trends, get some good education, keep your property in tip top shape (including the owner's quarters), and put the pedal to the metal. Remember this, every $10,000 of net operating income is worth approximately $100,000 in value. If your NOI drops by $20,000 because you're having a tough year, plan to take $200,000 off of the price.

Listen up innkeepers! Don't drop dead on the homestretch, or the glue factory awaits.