Measuring an inn's business

[happykeeper]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.
After that, I looked at:
Occ (or Occupancy) – The rate of occupation of a hotels total rooms, at any given time. For example, an occupancy rate of 95% would mean that 95% of a hotels room inventory is presently occupied.
The key take away here is that the percentage is based on hotel room inventory. If you have 4 rooms, one is removed from service, and two are occupied, your Occ would be 66%, or two out of three available rooms.
At this point I can calculate both the:
RevPAR – Room Revenue, Per Available Room. The gross room revenue is divided by the amount of available rooms to calculate the RevPAR – a common figure used to benchmark performance (based on rates and hotel occupancy levels)
Which will help me determine the:
GOPPAR – Gross Operation Profit Per Available Room.
I can also calculate:
Total RevPAR - Total Revenue per Available Room. This is distinct from RevPAR which is based only on Rooms Revenue
I can also calculate:
ADR - Average Daily Rate. The revenue for one day divided by the number of rooms sold. ADR along with the property's occupancy are the foundations for the property's financial performance.
With an occupancy percentage and an ADR, I can compare that with:
Rooms Yield - Average revenue of all rooms, divided by the number of rooms in a hotel, divided by 365 nights.
This will help understand where adjustments can be made to increase the:
GOR – Gross Operating Revenue.
GOP – Gross Operating Profit (Total revenue less expenses)
Needless to say, it made my head spin a bit, but it is helpful for those that are actually trying to figure out what their business is actually doing. This is the sort of stuff I would have to learn before considering the purchase of an operating inn. Feel free to correct whatever assumptions I made outside the definitions. You can even challenged the definitions I looked up if you think they are incorrect.

 

[Momma Smurf]

I hope that all of you using RezKey use that multi-functioning and faceted report that I, and others helped work on with John for indispensable business history information on a multitude of levels: Income Comparison by Date Report

 

[TheBeachHouse]

I use the DH Mood Detector method to measure occupancy. If DH is stressed, we are doing great.

 

[Lee2014]

I use the DH Mood Detector method to measure occupancy. If DH is stressed, we are doing great..

I use the DH Mood Detector method to measure occupancy. If DH is stressed, we are doing great.

Grin!

 

[muirford]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan.

 

[Breakfast Diva]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan.

I totally agree. I run aspiring innkeeper seminars and can tell you that 99.9% of the numbers given to prospective buyers are inaccurate. The banks don't care if you blocked off a week, a month or more for vacations, renovations or repairs. Occupancy rate covers 365 days a year and uses ALL of your rental rooms. Gross/net revenue, occupancy & revpar. The only time that 'potential revenue' is considered is by the buyer, but that can't be figured as part of the selling price.

 

[Morticia]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

 

[happykeeper]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

No arguments from me on the rigors of lending or what they look at.
I can't really say this is how we run our business either. As I implied, it's just a learning exercise.
The definitions were not mine either. That's why I went with quotes.
I was just applying what little logic is left in my brain to see what it would look like. Kind of the learning by putting some links together and seeing where it snaps.
Now, I will say that when I laid this stuff out, it seemed like these different terms can help tell your business story.
Also, I thought, but am not sure, that the rooms yield measure was most like what you are describing a banker would want to look at.

 

[muirford]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

No arguments from me on the rigors of lending or what they look at.
I can't really say this is how we run our business either. As I implied, it's just a learning exercise.
The definitions were not mine either. That's why I went with quotes.
I was just applying what little logic is left in my brain to see what it would look like. Kind of the learning by putting some links together and seeing where it snaps.
Now, I will say that when I laid this stuff out, it seemed like these different terms can help tell your business story.
Also, I thought, but am not sure, that the rooms yield measure was most like what you are describing a banker would want to look at.
.

The definitions were not mine either. That's why I went with quotes.

Not exactly. Inventory = rooms available to be sold. You added the disclaimer that blocked rooms aren't available. That's your definition, and exactly where it veers from the standard.
I mean, obviously, blocked rooms aren't available - but there is no standard for when it's 'okay' to block a room and it won't count against your occupancy.
Unfortunately, that number is the basis for many of the others, so if it is not standard, then nothing else is. No one can compare apples to apples. Again, fine for running your business internally, as long as you're not fooling yourself about what your occupancy really is.

 

[Breakfast Diva]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

 

[happykeeper]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

No arguments from me on the rigors of lending or what they look at.
I can't really say this is how we run our business either. As I implied, it's just a learning exercise.
The definitions were not mine either. That's why I went with quotes.
I was just applying what little logic is left in my brain to see what it would look like. Kind of the learning by putting some links together and seeing where it snaps.
Now, I will say that when I laid this stuff out, it seemed like these different terms can help tell your business story.
Also, I thought, but am not sure, that the rooms yield measure was most like what you are describing a banker would want to look at.
.

The definitions were not mine either. That's why I went with quotes.

Not exactly. Inventory = rooms available to be sold. You added the disclaimer that blocked rooms aren't available. That's your definition, and exactly where it veers from the standard.
I mean, obviously, blocked rooms aren't available - but there is no standard for when it's 'okay' to block a room and it won't count against your occupancy.
Unfortunately, that number is the basis for many of the others, so if it is not standard, then nothing else is. No one can compare apples to apples. Again, fine for running your business internally, as long as you're not fooling yourself about what your occupancy really is.
.

You are correct. After the quote, I added my interpretation, which establishes what "available to be sold" might mean. So the question here is what is the accepted method for determining if a room is available to be sold.
I guess my thought was that I can control that inventory. That is a bad guess.
so I found this excellent report on the subject
http://www.str.com/Media/Default/Documents/STR_DATA_REPORTING_GUIDELINES.pdf
At first glance, my definition is incorrect. I am going to read this further to see if it captures our property in it's definition. It does appear to very distinctly address seasonality and mixed use.

 

[Morticia]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!

 

[Breakfast Diva]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!

I'm right there with ya. Except we started last year kicking things up. After the economic slump happened and hit us a little, we really started our exit strategy last year. This year has been fantastic and we're hoping for the same next year. That will make 3 years where our revenue has increased and will look much better to both banks and buyers. Another thing you can consider is to stop taking write offs so your net profit increases. You have to pay a little more tax right now, but should be worth it for the sale.

 

[MtnKeeper]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Great idea to get occupancy up before selling but I'm not worrying about that right now - we're more interested in living. Currently we block off midweek all winter long as both our kids play basketball and we go to every game. Once they are off to college, we won't be doing this so the numbers will look totally different. We also take a summer vacation with the kids which costs us over $10K in lost income on top of the cost of the vacation. But it's so worth it to us. But we will be changing all of that when we get ready to execute our exit strategy.

 

[GoodScout]

What's your formula for computing GOPPAR?

 

[gillumhouse]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!

I'm right there with ya. Except we started last year kicking things up. After the economic slump happened and hit us a little, we really started our exit strategy last year. This year has been fantastic and we're hoping for the same next year. That will make 3 years where our revenue has increased and will look much better to both banks and buyers. Another thing you can consider is to stop taking write offs so your net profit increases. You have to pay a little more tax right now, but should be worth it for the sale.
.

I stopped taking deductions for anything "material" other than food a long time ago. Anything on my Schedule C gets on my business as Personal Property on which I have to pay tax for 10 years until it has totally depreciated (10% per year). Rather eat the expense. I have enough deductions in advertising and marketing and utilities/food to do it for me with taxes.

 

[muirford]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!

I'm right there with ya. Except we started last year kicking things up. After the economic slump happened and hit us a little, we really started our exit strategy last year. This year has been fantastic and we're hoping for the same next year. That will make 3 years where our revenue has increased and will look much better to both banks and buyers. Another thing you can consider is to stop taking write offs so your net profit increases. You have to pay a little more tax right now, but should be worth it for the sale.
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I stopped taking deductions for anything "material" other than food a long time ago. Anything on my Schedule C gets on my business as Personal Property on which I have to pay tax for 10 years until it has totally depreciated (10% per year). Rather eat the expense. I have enough deductions in advertising and marketing and utilities/food to do it for me with taxes.
.

I stopped taking deductions for anything "material" other than food a long time ago.

I'm sure you would advise any potential buyer of your place of all those expenses, claimed or not. The feds won't care if you overstate your income, but a buyer would. Again, buyers and aspirings need apples to apples comparisons.

 

[gillumhouse]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!
.

Which explains why friends trying to sell a 'lifestyle' inn are still working 5 years later.
We are keeping this in mind as we get closer to deciding it's time to sell. Then vacations will go the way of the dodo bird and we'll lay out a packet on marketing.
Get the numbers up for 2 years and hopefully sell. Because 2 years of high occ will kill me!

The banks go back 3 years

OK, then next year we have to get on the ball again. Enough of this 'senioritis' I've had for 2-3 years now!

I'm right there with ya. Except we started last year kicking things up. After the economic slump happened and hit us a little, we really started our exit strategy last year. This year has been fantastic and we're hoping for the same next year. That will make 3 years where our revenue has increased and will look much better to both banks and buyers. Another thing you can consider is to stop taking write offs so your net profit increases. You have to pay a little more tax right now, but should be worth it for the sale.
.

I stopped taking deductions for anything "material" other than food a long time ago. Anything on my Schedule C gets on my business as Personal Property on which I have to pay tax for 10 years until it has totally depreciated (10% per year). Rather eat the expense. I have enough deductions in advertising and marketing and utilities/food to do it for me with taxes.
.

I stopped taking deductions for anything "material" other than food a long time ago.

I'm sure you would advise any potential buyer of your place of all those expenses, claimed or not. The feds won't care if you overstate your income, but a buyer would. Again, buyers and aspirings need apples to apples comparisons.
.

Not a lot of stuff to start with - a few linens mostly - but the big items will be staying with the house such as the tea cabinet in the dining room, the sideboard in the kitchen, and the bookcase headboard were the major things I did not claim. Computers need replaced from time to time so I do not consider that. IF I am the one selling, the contents of the house other than my personal stuff (meaning paintings and m-i-l's dolls and OQ furnishings) will be a bonus. Not selling the furniture, linens, dishes, silver, etc separately - it is a gift.
I am in a different category than most - being as old as dirt I do not have a future to fund. I just need enough to buy a small trailer to put in the park here in town or get an apartment in the old people's complex. I do have good revenue records, occupancy, etc. No one will get cheated by me unless it is me - and I am planning that from the get-go.

 

[happykeeper]

For my own benefit, I decided to go through some of these terms to understand better what the heck I am talking about without getting all these terms jumbled around in my head. Seemed like it was worth sharing.
I thought the best place to start was:
Room Inventory – the volume of rooms available to be sold.
The key take away in this definition is “available to be sold”. If a room is blocked, it is not available to be sold.

This, in my experience, is where your definition is different that an industry professional. Blocking a room for whatever reason - vacation, don't want to have more than five rooms, whatever - and removing it from the inventory throws the measurement off, because every owner will have different rationale and different denominators for measurement.
I'm not trying to quibble about how you run your business - all those definitions must surely help you understand it and manage it as successfully as you have. As a word to aspirings, and those selling their businesses - banks and brokers care about room occupancy on a 365 day/year basis, and no one will lend money on what you MIGHT do if you unblock those rooms or don't take those vacations - loan officers no longer bet on the come (it's a gambling term). That is my experience buying a working B&B with a commercial loan and selling a working B&B with a commercial loan..

Great idea to get occupancy up before selling but I'm not worrying about that right now - we're more interested in living. Currently we block off midweek all winter long as both our kids play basketball and we go to every game. Once they are off to college, we won't be doing this so the numbers will look totally different. We also take a summer vacation with the kids which costs us over $10K in lost income on top of the cost of the vacation. But it's so worth it to us. But we will be changing all of that when we get ready to execute our exit strategy.
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Call us crazy, but we don't look at our upcoming closure as lost income.
I am not as inclined to recommend working more before selling. I would rather sell the business in it's current workable form than work my butt off for three additional years to drive revenue up and show artificial profits.
Although it gets a lot of back draft here, I am absolutely certain that the numbers we have, including all that we have talked about here and our EBITDA, will sell. They will sell a profitable business, a great lifestyle, and an enormous potential for growth. I really do not understand this idea that you would limit deductions to inflate profit. Yes, that is what a banker wants to see, but is it really an honest expression to the new owner?

 

[Mary at Bridgewater Inn and Cottage]

HappyKeeper = after ready this all....... I need a nap... My tiny BnB has to be sold as a home ( town code) .