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09/05/2012

My wife and I are approaching the time to sell our NC business, which is heavily real property oriented. We are exploring new alternatives including Country Inns and have just begun our research. We have a large potential capital gain so, while taxes should never be the primary element in this kind of decision, it will certainly play a meanigful role. Under certain conditions, we can sell our property and buy one of equal or greater value and defer taxes. Needless to say, an Inn might fit the bill but we need to figure out if this business is right for us. We are goinjg to attend a couiple of seminars this fall to find try and figure that out. In the meantime, I just found this great site and thought I would ask a few questions.

We are both workaholics and my wife is great business partner (fortunately she is a lot smarter than I am).

We prefer a business that is heavily seasonal so we can have a break in the year for ourselves.

  1. Country Inns come in many sizes and it seems to me that at a certain number of rooms a manager or assistant manager might be advisable and afforable. If true, where is the size break?
  2. We should have about a 70/30 debt:equity ratio that we must maintian to qualify for tax deferral. If we cannot get that type of bank financing will owners take back a second (assuming the bank will allow it).
  3. How do you split duties? I have a strong management and financial background and can do the books,taxes etc. My wife is great with people and terrific with details - nothing gets by her. Is this a good mix of attributes/experience for the business?
  4. Can someone give me an idea of per room operating costs?
  5. Is there a better location - resort area, college town etc?
  6. It seems to me that the restaurant business is a totally different business so it appears that if the Inn has a restaurant, the Innskeeper is really running two different businesses. Restaurants scare me - am I right to be wary or can that be handled by a hired manager?

Thanks very much.

 

Arks's picture
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05/22/2010

I'd always heard that 8 rooms was the point at which a B&B can become profitable. I don't have any figures to back that up, but have seen that number used more than once. Of course, you can make a go of it with fewer rooms, but 8 seems to be the point at which income can start to go off and leave outgo and lead to a good profit.  (As opposed to bad profit? wink)

p.s. ... hate these new emoticons. Hope Swirt is able to get the old ones back soon.

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Madeleine's picture
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09/29/2011

Definitely 8 rooms in the right location!

Fewer in a better location. But not if you're hiring it all out. Unless you started out not owing anything on the business.

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05/30/2008

 Former owner/innkeeper here... I am currently staying at a 16 room inn in a high tourist location.  Owner is local but comes around every 6 months or so, according to innkeeper. They have housekeepers for each floor in high season (rooms are large).  Two people at desk during the day who multitask, concierge until 10 pm, a full-time chef (really a cook), and landscape maintenance company.  They have a couple of laundry rooms, so do their own linens.  It is a beautiful place.

Depends on where you are to make the real $$$.

It always surprises me what folks will tell me when they find out I had a B&B....

 

 

 

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Madeleine's picture
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09/29/2011

OK, so that is twice the size of here. That is still a lot of overhead on the employees. Nice to be able to hire so many and give people jobs but tough on the bottom line.

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05/30/2008

Yes, it's hard on the bottom line for sure and they also have one of the housekeepers as the "head" housekeeper so she might probably get a bump in pay. 

This city is a tourist mecca!  Lots to do, lots of history, lots of great restaruants, easy travel access, and a thriving downtown university.  Location, location, location...

birdwatcher's picture
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02/22/2009

Welcome-location is one of the most important if not the most important to any purchase of any inn. If you want a large in then you would  have to hire housekeepers, managers etc-because eventhough you may do something better than your partner both of you need to have at least some  knowledge of what the other does and can do either one-specially because you can get so burned out so fast if all your partner will do is meet, greet and care for guests-if you look at some of the threads here you will get the jist that every person is different. You also have to have some kind of outside life and to do this you will have to share all work for the Inn. You also have to be able to work together-sometimes you will have to do what she does for whatever reason and you will have to know that you can work together through the rough times specially in the beginning-have you worked together in the past? that is a very important aspect of owning a business specially a Bed and Breakfast.

Be careful because Innkeeping is a 24/7 job-its not a "job" per say its a lifestyle and its something that you LOVE to do-being workaholics has nothing to do with being innkeepers-think of it as being a parent to a child for a very long long time and if you want to get away you would have to get a innsitter that you can trust-

My husband and I have been both owners and now we work for an Inn as Innkeepers-this is the best forum of the best innkeepers, managers and owners -we are all in this together and we have a love/hate relationship with our jobs.

WELCOME Smiling

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09/05/2012

 Thanks so much for your insight - very helpful. I thought that 25 rooms might be near the breakpoint and we will stick to that. Any thought on cost/room?

 

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10/18/2008

 Crusty I see you keep asking about cost per room this is not like going to Holiday Inn and getting a franchise license and them giving you a package that based on x state in or near x city with x number of rooms with or without a restaurant and whether or not you will be the owner or the manager as well that your cost per room is y. 
 
Every single inn is unique. Cost per room? Daily based on cost of amenities, service style, location, whether all rooms are en-suite, how much help you need, types of linen you use, will you need a yard service.? What are county requirements for equipping with safety systems? Cost of commercial insurance in you area? Cost of complying with new SERVSAFE regs for food service because as a new owner you will not be grandfathered in.
Until such time as you have some idea of what you are looking for and where you will be located and looked at comparables this question is not possible to answer in any way shape or form. Sorry. 


There are really other things you need to look at... ADR, RevPar, occupancy, LOS (multi night stays in some cases reduces cost)

 

Joey Camb's picture
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04/02/2010

then our thoughts wern't much different! lol - As regards costs I am sorry but as a UK business our costs, taxes and permits etc are very different to yours so am not much help. Was working on our cost to turn around a room for another project we are considering and it works out at £26.46 per double room and £21.27 per single room (you could double it for US dollars) however this includes gas,electric and water per room but does not include fixed costs ie permit per year costs X whether you let 1 room or 50.

Worked this out this way as am looking at a project where would be bringing online 1 room at a time so need to know how much revenue per room would be added as each room was added for a 3 phase plan.

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Joey Camb's picture
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04/02/2010

you are right to be scared by restaurants! It can be handled by a manager on a daily basis but a good understanding of the technicalities is important, as because you are the owner the buck stops with you if there are any problems ie food poisoning etc.

As a 12 bed place with approx 75% occupancy we support a 9am-3pm housekeeper 7 days a week but would not put in a manager, so would suggest being being bigger than that to support a manager for the inn, realistically i'd say 24 bedrooms to make enough money for it to be worth it.

I would get in contact with the PAI who can give you tourist figures but I would be very wary of if I build it they will come - it is slow and hard work to become a destination rather than buy a going concern (going concerns will be more expensive but its safer)

Different areas have different markets - but i can recommend anywhere with a strong business community as business guests are much less demanding of your time and attention - tourists "need" a lot more attention for the same profit margin!

As regards the split - this is a common one but be careful that one of you doesn't get stuck with the heavy lifting and starts to resent it. Housekeeping every day is back breaking - I only have to do it if my chamber maid is off and that is more than enough!

Also be very aware that marketing is incrediably important and you can start your social media campaign even before you have bought a property - you can start a twitter following today, this means you have a bunch of people ready to book right from the get go. Also be very aware of what you are buying in this regard ie web domains, transfer of facebook accounts, twitter accounts etc that are already in existance. There are more and more marketing techniques comming online every day - make sure you are not at the back of the pack.

 

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