Questions for Innkeeper when purchasing an inn

[undersea]

Welcome Lisa. Here's an interesting question to ask yourself before you go forward - is it the cooking that you love or having guests stay in your home and being on for most of the entire day that you'll love? I just had a guest stay with us this week who owned both a restaurant and then a small inn. I asked her which she preferred and without hesitation she said the restaurant because "at the end of the dinner service, I could lock the door, finish up and go back to my home until the next day." I think this is way more important that the operations of the inn and one most of us probably didn't investigate long enough before moving forward. I would certainly want to know the following:
1. income after expenses and debt service (will you have money to live on and take your own vacation or will it all be in the business)
2. how many hours do the innkeepers work a day on average
3. how much outside help do they have an does their help turn over every year -- very difficult finding good housekeeping help
4. Is the business very seasonal? If so, you'll want to be sure to take deposits on reservations so that you have cash flow over the year to survive
5. as others have said, zoning -- be sure that they've got everything done right or you could find yourself with costly upgrades like sprinklers, etc. if they have recently become mandated; also find out what is going on in the Town. Is it growing or dwindling? Any projects like landfills, groups against the Town growing, etc. that could lessen your business in the coming year. We had originally been going to build in one town and when I bought their local newspapers found out an inn's construction had been halted by a group trying to stop any development in their town. Cost the innkeeper tons of money. It's good to know if a town takes favorably to their businesses. Also, see what the planning board has recently approved - if any other hotels or inns are coming in which could take some of your occupancy away. We built at the same time that a local inn was selling and we have better occupancy than they do now and they have put all of their rooms on the OTAs.
6. if you want to do dinner, what is required for you to do so? You'll probably need a full commercial kitchen (along with fire suppression) so will it be worth it with the expense? Are you going to do breakfast and dinner? That's a really long day and why I haven't opened our restaurant yet even though I have the space and a commercial kitchen ready. I don't want to work 16 hour days. If you're going to hire help to do either breakfast or dinner, be sure the cost of the chef will leave you with a reasonable ROI.
7. what will you do about healthcare? I pay over $800 a month for a plan that only gives our family of 4 one physical a year and my mammogram - basically the only thing affordable to small business owners is what I refer to as a "god forbid policy" - it's in case we get seriously injured or sick and then we also have to cover the high deductible. A lot different than when I worked in the corporate world and one of the biggest expenses innkeepers have to figure out if they aren't working outside of the inn
8. after you've answered all of the above, is the scenario at the inn you're considering going to provide you with the life you want?
Good luck..

#2 - reminded me of a pizzeria many years ago we looked into buying. Working owners said it make $X net profit. I asked, do you pay under the table? Seemed the labor $$$ wasn't right for the financials. Also, I asked, how many hours do you work here weekly? He said "100" I asked, "and your wife?" "100". Basically, if all the numbers were correct, they each made about $7 an hour, not counting the payments we would have had to make to buy the business. And of course, self employment tax, the risk, etc,
Net profit is AFTER reasonable owner's salaries. That is why biz buy sell . com type sites call it "owner benefit" or hint at tax savings. In other words, the business might be unprofitable and they are trying to spin it.
There is a reason they are selling. It is rarely because they are full and happy with so much money they just want to move on with their lives. Watch restaurant or hotel impossible, etc. The frustration, anger, hostility, heavy debt of the owners will be YOU, if you are not careful!!!
.

This is a very good reminder that the failure to account for ALL of the work is the number one reason why innkeepers are unbalanced, burned out, and unhappy. Over and over again this scenario plays out in the bnb industry.
Undersea, I am increasing sure that won't be you. I like that you are putting your past business experience into play to ensure that whatever you end up doing will have a solid foundation going in.
.

I bought someone else's roofing company many years ago and got badly burned. It LOOKED really good and I did a lot of due diligence. Spent a fortune on lawyers to qualify for a loan. Would not believe all the judgments and unpaid taxes the man had. He cheated his church, his brothers and many others. Lying, conniving person.
Ran it for 3 years and learned more than I ever imagined. Now I could tell people what to look for.
I have quietly observed a LOT of the commentaries from some active innkeepers here. I saw myself, when I finally got out from under that mess. The mail, the phone calls for money (which I did not have).
I think some forget this is a business. When an innkeeper takes a bad review or comment personally, that goes with the territory. If I pay an innkeeper $125 for one night, and they are miffed I don't praise their breakfast, or have a dietary issue and they are unhappy about the inconvenience or a host of other complaints I see here... In what other business model do these attitudes fly? We can rant here, but some are living in a world that no longer exists. There is a lot of competition out there. We have to step up our game.
.

Well, that is a big topic when you talk about the changes and what is required to be a part of the positive change that is going on in our industry. One thing to consider is that there is going to be less competition for certain markets that are emerging and building brands that bring your perfect guest from those markets to you is important. I have been thinking of starting a thread about it.
.

I posted a week or so ago a book that I think nails it. Becoming an expert in something, especially if it is something special in your area.
I don't think it was really grasped. It is a French Bed & Breakfast owner, Yvonne Halling. I didn't go or her course, but her book is a wises read: Bed and Breakfast Magic: How to Transform Your Bed and Breakfast Into A Booming 6 Figure Business.
It is not about having bicycles available, or catering to hikers or bikers or fishermen or skiers or having equipment available.
It is about finding a niche (you enjoy) and becoming an EXPERT in it.
As she describes herself: "I'm currently in the heart of the Champagne region of France, and I welcome people from all over the world, helping them to discover the hidden gems of Champagne."
People come internationally - champagne aficianados - to her B&B, and she connects them with small champagne growers, in the very heart of champagne country.
Essentially, she is not competing with others, asshe is it and people seek her out.
THIS I think is the future. Ask any serious business coach, and they will tell you the value of education, expertise in something that you pass on to others - appealing to hobbyists.
So maybe you are an expert in model rocket, astronomy, the bayous, ghost hunting, antique weapons, the hiddens of a tourist city, coins, mineralogy.
You then set yourself up as the expert, and people at your B&B (themed, classes, displays, whatever) get the deep value of your wisdom, knowledge and connections to excite enthusiasts.
Her theory is, you an charge what you what, since you essentially have no competition.
.

Becoming an expert in something, especially if it is something special in your area.

It is essential

It is about finding a niche (you enjoy) and becoming an EXPERT in it. Essentially, she is not competing with others, as she is it and people seek her out.

Talked about this a lot in the past.

THIS I think is the future. Her theory is, you an charge what you what, since you essentially have no competition.

Been sayin' this for years.
You'll find that there are a couple others on this forum that believe in these concepts and they are successfully operating experiential destination based properties. It is true that many continue to operate mainly as a place to stay that supplements what people come to do in their area, but that type of property is going to feel a lot of pressure in the years to come as the hotel build out continues to expand to meet the demand.
I'm kind of glad to have a chance to reaffirm all these principles every so often. Thanks.
So...what will your area of expertise be? What niche is yours for the taking? What brand will you build?
.

Dup

 

[ChrisandShelley]

Hello, Lisa. My wife and I are finalizing our first B&B purchase on the 1st of June. Our process has been relatively smooth--so smooth, in fact, that I am hoping that I'm not forgetting anything. We have been fortunate enough to have good B&B mentors. We went to the PAII conference and met some really great veteran innkeepers that were great about sharing experiences and advice.
We found out (and are still finding out) that we just don't know what we don't know. But the more we ask the more we learn what we don't know and what questions we should be asking. I ask the same questions to different people then take the best answer. Taking advice is like taking bids for a job. The cheapest is not always the best, but it doesn't mean that it isn't good.
Good luck with your venture.

 

[JBloggs]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it.

 

[OnTheShore]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it..

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...

I have encountered an innkeeper that was still (or back) under that delusion after more than 10 years on the job! In this case, she had already moved on (especially in her attentions), leaving her partner to be the boots on the ground, and she was imagining friends of theirs taking over for them -- "he can play guitar on the porch to entertain the guests, and she can bake muffins!" (exactly her words). It was definitely not what that inn needed at that transition!
The other couple did go on to open a coffee house (so indeed they are playing guitar and baking muffins...).

 

[JBloggs]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it..

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...

I have encountered an innkeeper that was still (or back) under that delusion after more than 10 years on the job! In this case, she had already moved on (especially in her attentions), leaving her partner to be the boots on the ground, and she was imagining friends of theirs taking over for them -- "he can play guitar on the porch to entertain the guests, and she can bake muffins!" (exactly her words). It was definitely not what that inn needed at that transition!
The other couple did go on to open a coffee house (so indeed they are playing guitar and baking muffins...).
.

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...

I have encountered an innkeeper that was still (or back) under that delusion after more than 10 years on the job! In this case, she had already moved on (especially in her attentions), leaving her partner to be the boots on the ground, and she was imagining friends of theirs taking over for them -- "he can play guitar on the porch to entertain the guests, and she can bake muffins!" (exactly her words). It was definitely not what that inn needed at that transition!
The other couple did go on to open a coffee house (so indeed they are playing guitar and baking muffins...).

I just commented on a local coffee house owner who is doing the same and her comments were "I am sitting outside the coffee house in warm sunshine enjoying a coffee and where are all of you who said I needed to be open Saturday mornings?"
Baking muffins and playing guitar...if only that could pay the bills.

 

[user 26]

I am familiar with the Yvonne Halling webinars and her consulting service.
Being reminded of her, I went to her website http://bedandbreakfastinchampagne.com/book-online-now and ...
would like to know why they are not accepting any reservations for the remainder of 2015 at her b&b in Champagne. Illness? If they were full, I'd expect more recent postings than the last Blog post on her website that was Happy Christmas 2014. Worrisome.

 

[EmptyNest]

I am familiar with the Yvonne Halling webinars and her consulting service.
Being reminded of her, I went to her website http://bedandbreakfastinchampagne.com/book-online-now and ...
would like to know why they are not accepting any reservations for the remainder of 2015 at her b&b in Champagne. Illness? If they were full, I'd expect more recent postings than the last Blog post on her website that was Happy Christmas 2014. Worrisome..

Maybe she's making so much with her book she doesn't need the B & B LOL! Her blog hasn't been done in ages.

 

[user 26]

I hope not! Before I buy someone's product (book, consulting service, webinars, etc) to help me improve my business, I look at that person's original business to see if it's doing great, website appealing etc.
She put a lot of thought into referring people elsewhere ... but if her b&b is thriving, being managed by the team she mentions in her webinars and books, so that it hums along while she concentrates on other revenue streams, why no updates to the blog? Can all rooms be booked for the year? Like I said, worrisome. Unless it's just changing hands.
Can certainly learn a lot from her approach but now my curiosity is high ...

 

[Lisa1958]

Hello, Lisa. My wife and I are finalizing our first B&B purchase on the 1st of June. Our process has been relatively smooth--so smooth, in fact, that I am hoping that I'm not forgetting anything. We have been fortunate enough to have good B&B mentors. We went to the PAII conference and met some really great veteran innkeepers that were great about sharing experiences and advice.
We found out (and are still finding out) that we just don't know what we don't know. But the more we ask the more we learn what we don't know and what questions we should be asking. I ask the same questions to different people then take the best answer. Taking advice is like taking bids for a job. The cheapest is not always the best, but it doesn't mean that it isn't good.
Good luck with your venture..

I know that there is more I don't know than I know!
Good luck! What is your background? Previous life?

 

[Lisa1958]

Thanks everyone. The inn is in a fairly large city. We got the financials and some response from the owner. It looks good on paper. There is a small staff and good occupancy rate. We have a million questions for them and ourselves. We will find out more this week but you all brought up some great questions..

I can appreciate holding your cards close to your vest. Perhaps you can share more later. ( or not) Sounds like you are fully financed and trusting the paper they gave you. So if you truly are down to the operations, Small staff? Occupancy rate?
Best wishes on your adventure, but one last thought from another thread.
What do you want to be? What expertise do you plan to promote? How do you plan on becoming a singular experience? What passion is driving you to own an inn? What's your niche? Why on this green earth would I want to stay with you? Hopefully its not because your a clean comfortable bnb two miles from the world's largest ball of twine. Hopefully its because you have something to offer I can't get anywhere else and I want what that is.
.

Occupancy is above 50%. There is a small staff in place. Thanks for you thoughts.

 

[happykeeper]

Thanks everyone. The inn is in a fairly large city. We got the financials and some response from the owner. It looks good on paper. There is a small staff and good occupancy rate. We have a million questions for them and ourselves. We will find out more this week but you all brought up some great questions..

I can appreciate holding your cards close to your vest. Perhaps you can share more later. ( or not) Sounds like you are fully financed and trusting the paper they gave you. So if you truly are down to the operations, Small staff? Occupancy rate?
Best wishes on your adventure, but one last thought from another thread.
What do you want to be? What expertise do you plan to promote? How do you plan on becoming a singular experience? What passion is driving you to own an inn? What's your niche? Why on this green earth would I want to stay with you? Hopefully its not because your a clean comfortable bnb two miles from the world's largest ball of twine. Hopefully its because you have something to offer I can't get anywhere else and I want what that is.
.

Occupancy is above 50%. There is a small staff in place. Thanks for you thoughts.
.

Best wishes on your efforts.
Occupancy is a slippery measure. We don't even look at it anymore.
The EBITAD or the Net Revenue Before Taxes( I think that what it's called) is less slippery.
Occupancy can be manipulated rather easily. How much money was made before you took advantage of your deductions is a little harder to fudge, but even there, you have to be on the look out for if the books are cooked. Were maintenance costs hidden, payments excluded, or owner's salaries manipulated.

 

[Joey Camb]

Thanks everyone. The inn is in a fairly large city. We got the financials and some response from the owner. It looks good on paper. There is a small staff and good occupancy rate. We have a million questions for them and ourselves. We will find out more this week but you all brought up some great questions..

I can appreciate holding your cards close to your vest. Perhaps you can share more later. ( or not) Sounds like you are fully financed and trusting the paper they gave you. So if you truly are down to the operations, Small staff? Occupancy rate?
Best wishes on your adventure, but one last thought from another thread.
What do you want to be? What expertise do you plan to promote? How do you plan on becoming a singular experience? What passion is driving you to own an inn? What's your niche? Why on this green earth would I want to stay with you? Hopefully its not because your a clean comfortable bnb two miles from the world's largest ball of twine. Hopefully its because you have something to offer I can't get anywhere else and I want what that is.
.

Occupancy is above 50%. There is a small staff in place. Thanks for you thoughts.
.

Best wishes on your efforts.
Occupancy is a slippery measure. We don't even look at it anymore.
The EBITAD or the Net Revenue Before Taxes( I think that what it's called) is less slippery.
Occupancy can be manipulated rather easily. How much money was made before you took advantage of your deductions is a little harder to fudge, but even there, you have to be on the look out for if the books are cooked. Were maintenance costs hidden, payments excluded, or owner's salaries manipulated.
.

true - a perfect example is my neighbour who is trying to sell, they are doing a 12 bed place no staff so as to make profits look as good as possible to sell - anyone taking it on would be crackers to try and do it with not even one chamber maid!

 

[JBloggs]

I hope not! Before I buy someone's product (book, consulting service, webinars, etc) to help me improve my business, I look at that person's original business to see if it's doing great, website appealing etc.
She put a lot of thought into referring people elsewhere ... but if her b&b is thriving, being managed by the team she mentions in her webinars and books, so that it hums along while she concentrates on other revenue streams, why no updates to the blog? Can all rooms be booked for the year? Like I said, worrisome. Unless it's just changing hands.
Can certainly learn a lot from her approach but now my curiosity is high ....

You know, I read what you wrote and clicked over, and thought "boy has time passed" I better be careful when I say something, like I do. I say things about places and then realize, it has been FIVE YEARS since I have been there! How in the world has that happened. So, for my prev comments, it has been a few years since I read what was written, and so my comments were from back then. If a person is a social media person and doesn't update anything, then that is not on. I don't know or understand any of the video letting people know of another place, other than she is closing down or sold, or personal reasons. In any event, I hope it is a good reason!

 

[happykeeper]

Thanks everyone. The inn is in a fairly large city. We got the financials and some response from the owner. It looks good on paper. There is a small staff and good occupancy rate. We have a million questions for them and ourselves. We will find out more this week but you all brought up some great questions..

I can appreciate holding your cards close to your vest. Perhaps you can share more later. ( or not) Sounds like you are fully financed and trusting the paper they gave you. So if you truly are down to the operations, Small staff? Occupancy rate?
Best wishes on your adventure, but one last thought from another thread.
What do you want to be? What expertise do you plan to promote? How do you plan on becoming a singular experience? What passion is driving you to own an inn? What's your niche? Why on this green earth would I want to stay with you? Hopefully its not because your a clean comfortable bnb two miles from the world's largest ball of twine. Hopefully its because you have something to offer I can't get anywhere else and I want what that is.
.

Occupancy is above 50%. There is a small staff in place. Thanks for you thoughts.
.

Best wishes on your efforts.
Occupancy is a slippery measure. We don't even look at it anymore.
The EBITAD or the Net Revenue Before Taxes( I think that what it's called) is less slippery.
Occupancy can be manipulated rather easily. How much money was made before you took advantage of your deductions is a little harder to fudge, but even there, you have to be on the look out for if the books are cooked. Were maintenance costs hidden, payments excluded, or owner's salaries manipulated.
.

true - a perfect example is my neighbour who is trying to sell, they are doing a 12 bed place no staff so as to make profits look as good as possible to sell - anyone taking it on would be crackers to try and do it with not even one chamber maid!
.

anyone taking it on would be crackers

LOL I haven't heard that forever.

 

[ChrisandShelley]

Hello, Lisa. My wife and I are finalizing our first B&B purchase on the 1st of June. Our process has been relatively smooth--so smooth, in fact, that I am hoping that I'm not forgetting anything. We have been fortunate enough to have good B&B mentors. We went to the PAII conference and met some really great veteran innkeepers that were great about sharing experiences and advice.
We found out (and are still finding out) that we just don't know what we don't know. But the more we ask the more we learn what we don't know and what questions we should be asking. I ask the same questions to different people then take the best answer. Taking advice is like taking bids for a job. The cheapest is not always the best, but it doesn't mean that it isn't good.
Good luck with your venture..

I know that there is more I don't know than I know!
Good luck! What is your background? Previous life?
.

I work as a safety and performance consultant in the oil field and my wife was a medical technologist, but she did a mid-life career change to massage therapist. She has been doing that for 12 years now. I will continue to work for a little while until we get a large chunk paid on the property and some remodels completed.
Being a massage therapist, Shelley will be able to offer onsite massages. I see that you are a Chef. That seems to fit right in with the B&B business.

 

[undersea]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it..

I saw tonight my goal clearly. In the movie ratatouille, the tough critic Ego is served "ratatouille" - a peasant food. He is rude and doubtful, until he is takes a bite. Suddenly, he is transported back to his childhood with his mom, remembering his poor upbringing. He is stunned.
Years ago, I spent 5 weeks traveling in Alaska. My first ever flight was around Mt McKinley/denali. I was stunned. Their tourism ad was "once you go to Alaska, you never come all the way home.
Nice breakfast and clean room is noise. Will your guests remember you 10 years later? Will you stun them?
A vacation is nice. But how will you change their existence?
I do not expect a serious response. But this is my set direction.
Halling is a sizable step in that direction, but not the whole path

 

[undersea]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it..

.

 

[happykeeper]

I don't think anyone comes into innkeeping with those concepts Unders, unfortunately, they think it is baking muffins and entertaining...and I agree it can make or break you. I think Yvonne has nailed it and I love reading her pov too.
Thanks for the insight into her book and recommending it..

I saw tonight my goal clearly. In the movie ratatouille, the tough critic Ego is served "ratatouille" - a peasant food. He is rude and doubtful, until he is takes a bite. Suddenly, he is transported back to his childhood with his mom, remembering his poor upbringing. He is stunned.
Years ago, I spent 5 weeks traveling in Alaska. My first ever flight was around Mt McKinley/denali. I was stunned. Their tourism ad was "once you go to Alaska, you never come all the way home.
Nice breakfast and clean room is noise. Will your guests remember you 10 years later? Will you stun them?
A vacation is nice. But how will you change their existence?
I do not expect a serious response. But this is my set direction.
Halling is a sizable step in that direction, but not the whole path
.

I do not expect a serious response. But this is my set direction. Halling is a sizable step in that direction, but not the whole path

Okay, I had to look it up. It certainly sounds like an amazing dance. Will it rock me? Maybe so. Is it something that is super big in your area?

 

[An Old Tavernkeeper]

You wouldn't buy a car without test driving it.
Ask if you can stay there for a week and work for them in exchange for a free room.

 

[Garden_Pix_Inn]

Thanks everyone. The inn is in a fairly large city. We got the financials and some response from the owner. It looks good on paper. There is a small staff and good occupancy rate. We have a million questions for them and ourselves. We will find out more this week but you all brought up some great questions..

I can appreciate holding your cards close to your vest. Perhaps you can share more later. ( or not) Sounds like you are fully financed and trusting the paper they gave you. So if you truly are down to the operations, Small staff? Occupancy rate?
Best wishes on your adventure, but one last thought from another thread.
What do you want to be? What expertise do you plan to promote? How do you plan on becoming a singular experience? What passion is driving you to own an inn? What's your niche? Why on this green earth would I want to stay with you? Hopefully its not because your a clean comfortable bnb two miles from the world's largest ball of twine. Hopefully its because you have something to offer I can't get anywhere else and I want what that is.
.

Occupancy is above 50%. There is a small staff in place. Thanks for you thoughts.
.

Best wishes on your efforts.
Occupancy is a slippery measure. We don't even look at it anymore.
The EBITAD or the Net Revenue Before Taxes( I think that what it's called) is less slippery.
Occupancy can be manipulated rather easily. How much money was made before you took advantage of your deductions is a little harder to fudge, but even there, you have to be on the look out for if the books are cooked. Were maintenance costs hidden, payments excluded, or owner's salaries manipulated.
.

Occupancy can be manipulated rather easily. How much money was made before you took advantage of your deductions is a little harder to fudge, but even there, you have to be on the look out for if the books are cooked. Were maintenance costs hidden, payments excluded, or owner's salaries manipulated.

I've turned my IRS filings over to my inn brokers at www.innpartners.com. who is handling finding me a buyer. There is no fudging that way. The ONLY thing real is what you report (all else is smoke and mirrors or lies).
Occupancy depends on a lot of things. I always tell "newbies" I could have 100% occupancy this year IF I rented for $25/room/night. OR, I could make a $100,000 threshhold IF I could rent to George and Mrs. Clooney for one night. Neither is happening! Reality is somewhere in between. Having had a 70-75% occupancy urban inn and now a rural inn at half that, "it depends." Historic buildings need care and suffer when in constant use while not carefully kept. Innkeepers suffer from "too many guests at too little room night payments."
Pricing has got to be the most difficult (and important) aspect of any innkeeper's day/week/year.
I caution against buying an inn where the owners have already squeezed very potential dollar out of the market. There is nowhere to go but DOWN. Instead, find one where--if you add your passion and develop your niche market--the only way to go is UP with the rates and the occupancy! Look for strong groundwork.
PS If you have very high occupancy your rates are too low! Raise them ASAP. Work smarter not harder.