Question about Websites when selling your B&B

Bed & Breakfast / Short Term Rental Host Forum

Help Support Bed & Breakfast / Short Term Rental Host Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.

Don Draper

Well-known member
Joined
Aug 10, 2008
Messages
2,863
Reaction score
1
We are in the process of being reassessed in our county, and going through our original sale documents has got me thinking about how commercial mortgage appraisers are handling Websites...we bought in June 2006 and what we inherited was a static, 3 page website. The site itself is not specifically mentioned in any of our documents.
Since we've been here we've invested close to $10K just in building the site, and that's not even looking at what the site brings in in terms of bookings, gift certificates, etc. Can a website get its own line item on an appraisal? Similar to a "non-compete" clause? If you are selling a business is the business website automatically included in the sale?
I'm guessing the answer will be that you can structure it however you like, for those of you who are for sale currently be sure you are properly valuing your website if it is functional and well-designed!
 
I would think the web site could be a definite selling point for sure. That is your key marketing piece. Now having said that..if it is a piece of crap....who wants it? A site has to prove its worth to be worth anything.
 
It's definitely a great selling point and a good question!
From experience...the website is not included if the purchase document doesn't say it's included. Similar to the furniture!
We had to fight with the website developer to get access. He insisted it was all his content and design. My IT lawyer laughed. The whole site was done with FrontPage, so nothing 'proprietary.' We had a simple line that said we were to receive everything necessary to running the business. The developer felt that did not include his work, that he did for free for the PO's, so he refused to give up the passwords to the webhost. We could have started from scratch but did not know this was going to happen until we tried to get the passwords at closing. Too late at that point.
 
Difficult is to convince a buyer how much is actually invested in a website and other marketing, I saw a B&B for sale yesterday that was selling the business separately. You had to buy both but sold separate as it was owned by an LLC.
If anyone has time to spare - put together a conveyance list from your B&B and see exactly how much money all of this is WORTH. Your jaw would drop. If not all rooms, do it for just one room and common area.
No matter what its value or cost should be included in the list of business property. Unfortunately the rose colored glasses aspirings don't often see what an asset a good website can be, they just see the inn itself.
Good topic!
 
One more point - without the website you don't exist.
If we didn't have a good quality functioning website. The website is the gateway to your guests. I will try not to go off on my usual rant at this point. Like CL said, most websites are worth beans, but some, like you mentioned Innsider are costly AND VERY VALUABLE TO YOUR BUSINESS.
Just ensure your potential buyers realize the bulk of your business is DUE to your website. As for assessment, it will not even factor in.
Example: When you think of the cost of adding a bathroom, you can get an appraisel and a 3 bathroom home will be a COMP to your 9 or 10 bathroom place. They don't get it, so it is up to us to make sure it is conveyed properly.
 
The website can and should be a line-item to sell with the business to at least have it noted that it will or will not convey. Evaluation of it is pretty sticky though as many of the appraisers I have talked with are really incapable (by my standards) of saying what a website is worth. I think much of it comes down to, it being the value that it contributes to the occupancy rate and ADR.. it is those that directly drive the value of the business.
Example, a great property with a horrible occupancy rate will be devalued when it comes time to appraise the business value. While a mediocre property with a great occupancy rate will have added value. So if you have a great website and it has had an impact on your business, then it will already have some value assigned to it in the appraisal of the business. Saying "this is a great website and is worth an extra $10K" is probably not going to work out since the value would be being included twice .. since it lead to the great occ rate and ADR.
 
One more point - without the website you don't exist.
If we didn't have a good quality functioning website. The website is the gateway to your guests. I will try not to go off on my usual rant at this point. Like CL said, most websites are worth beans, but some, like you mentioned Innsider are costly AND VERY VALUABLE TO YOUR BUSINESS.
Just ensure your potential buyers realize the bulk of your business is DUE to your website. As for assessment, it will not even factor in.
Example: When you think of the cost of adding a bathroom, you can get an appraisel and a 3 bathroom home will be a COMP to your 9 or 10 bathroom place. They don't get it, so it is up to us to make sure it is conveyed properly..
I have to agree with you on this. website=business! Just finishing our first year & we were getting bookings from the basic site we had within the first 3 months. Now we are getting referrals & repeats, but we would not have been even close to our bookings that we had this year without the internet.
BBBBoB
 
A lot depends on how well optimised your website is and how you are on Google for related searches and in local business listings.
I believe that websites rankings, if high, should be included into the value of the website.
 
On the website/sale issue, it definitely needs to be itemized in the purchase agmt. In my agmts., I specify items such as web, phone#, email address, etc. & then wrap the bus. transfer language with an inclusive statement: "including but not limited to”. I’m aware of sales that the buyers neglected to incl. furnishings, web domain & gift certificates.
As far as a separate valuation for the web, it would be incl. in it “goodwill”. It’s those intangibles like book of business, name, etc. that add value to the hard assets.

The web’s value is specific to that inn. Sometimes B&Bs that are being sold as homes will barter their web, phone# & email address to another area B&B in exchange for honoring the selling B&B’s gift certificates.
 
On the website/sale issue, it definitely needs to be itemized in the purchase agmt. In my agmts., I specify items such as web, phone#, email address, etc. & then wrap the bus. transfer language with an inclusive statement: "including but not limited to”. I’m aware of sales that the buyers neglected to incl. furnishings, web domain & gift certificates.
As far as a separate valuation for the web, it would be incl. in it “goodwill”. It’s those intangibles like book of business, name, etc. that add value to the hard assets.

The web’s value is specific to that inn. Sometimes B&Bs that are being sold as homes will barter their web, phone# & email address to another area B&B in exchange for honoring the selling B&B’s gift certificates. .
Welcome to the forum, Bob!
 
On the website/sale issue, it definitely needs to be itemized in the purchase agmt. In my agmts., I specify items such as web, phone#, email address, etc. & then wrap the bus. transfer language with an inclusive statement: "including but not limited to”. I’m aware of sales that the buyers neglected to incl. furnishings, web domain & gift certificates.
As far as a separate valuation for the web, it would be incl. in it “goodwill”. It’s those intangibles like book of business, name, etc. that add value to the hard assets.

The web’s value is specific to that inn. Sometimes B&Bs that are being sold as homes will barter their web, phone# & email address to another area B&B in exchange for honoring the selling B&B’s gift certificates. .
welcome.gif

 
A lot depends on how well optimised your website is and how you are on Google for related searches and in local business listings.
I believe that websites rankings, if high, should be included into the value of the website..
KrystianShas said:
A lot depends on how well optimised your website is and how you are on Google for related searches and in local business listings.
I believe that websites rankings, if high, should be included into the value of the website.
Welcome Krystian.
This is true, they should be included in the value. The problem is that the value from Google can be fleeting. I would say 90% of most inns that sell with good standing in Google, lose that good standing within only a few months. The reason they lose that is often due to a combination of several common mistakes.
  • New owners alter more than two things in the website historical trinity. Generally you want to avoid changing two or more of the following at the same time (or you risk Google tossing out the history of the site which is the one thing you can't buy or rebuild).
  1. Domain name transfered to new owners
  2. Change of website host
  3. Large content changes
  • Deleting of old file names and creation of new pages with new file names without correctly re-directing the old file names. (File names should never be altered if it can be avoided. If it can't be avoided then they should be redirected by a proper 301 redirect.
  • Rapidly dropping directories as a way of saving money. (results in a large decrease of incoming links)
This is probably why appraisers often consider them "goodwill" or "intangibles". They rarely have any value if separated from the inn, so its kind of like placing a value on an antique chair that by design turns to dust if removed from the livingroom.
We know their value...but in terms of finances, it is hard to convince a lender that the website has a dollar figure if they can't seize it and sell it should the loan go bad.
 
On the website/sale issue, it definitely needs to be itemized in the purchase agmt. In my agmts., I specify items such as web, phone#, email address, etc. & then wrap the bus. transfer language with an inclusive statement: "including but not limited to”. I’m aware of sales that the buyers neglected to incl. furnishings, web domain & gift certificates.
As far as a separate valuation for the web, it would be incl. in it “goodwill”. It’s those intangibles like book of business, name, etc. that add value to the hard assets.

The web’s value is specific to that inn. Sometimes B&Bs that are being sold as homes will barter their web, phone# & email address to another area B&B in exchange for honoring the selling B&B’s gift certificates. .
welcome.gif
Welcome Bob!
 
Back
Top