It is the start of the New Year and this is it! You have decided to finally quit your job in the corporate world and take the plunge into Innkeeping! You are serious, but what to do first? Let’s outline the seven steps to successful Inn ownership in 2007!
1. It is time for a reality check
2. Evaluate your financial situation
3. Define your Inn model and the needs of your family
4. Conduct your search
5. Evaluate the numbers
6. Make an offer
7. Quit the job and close on the Inn!
It is time for a reality check. First, ask yourself if you really want to do it? What impact will it have on the family? Do you really want to work with your significant other 24 hours a day? Can you give up the weekend activities with your friends? Can you adjust to a different lifestyle? Income will be adjusted, can you adapt or will you need a defibrillator? It is okay if you say Innkeeping isn’t for you, but if you are still saying you can deal with these changes, let’s go forward.
Evaluate your financial situation. How much money is in your savings account? What is the capital in your home? How long will it take to liquidate your home? How much money is in your 401K (we don’t really encourage using it, but it is good to have as a back- up plan)? Are there investments that can be liquidated? Will your family be able to assist you in the investment? Finally, look under the mattress and make sure that all monies are accounted for. When this is all tallied, keep in mind that a bank will be asking for about a 25% investment from you when purchasing an Inn. Now you know the price point that you can realistically afford to purchase.
Define your Inn model and the needs of your family. In the Fall, 2005 newsletter (available on our website in newsletter archives), we had an in-depth discussion on building a model. In addition to building a model that works for you, your individual family needs have to be considered as well. Do you have children at home? Are they old enough to be part of the Inn or do you need to have private space away from the Inn? Can you live in a conservative owner’s quarters to begin with and then expand into larger quarters as the time passes? All of these considerations should be incorporated into your model.
Conduct your search. Visit Inns, stay at Inns, speak with Innkeepers, and find an area where you will truly enjoy living. Join Innkeeping associations, network with other people who want to become Innkeepers, and be open to new ideas. This will be a rewarding journey if you approach it with your “eyes wide open”.
Evaluate the numbers! You have found an Inn that meets your needs. The emotions are running high and you need to make an offer before someone else buys it! STOP!! Rein in the emotions and make a logical evaluation of the numbers. Make sure that it all makes sense and hire professionals to assist you. We have been involved with too many Innkeepers who now need assistance because of financial hardships. This could have been avoided if only they had evaluated the Inn prior to purchasing it. SLOW DOWN!
Make an offer. You have poured through the numbers and everything seems to make sense. Make an offer and move forward. This is a stressful time and it is important to have a good working relationship with the Innkeeper who owns the Inn of your dreams. Howard has a saying, “there is a lot between the cup and the lip”, meaning that the offer is only the beginning. There will still be many negotiations as you work through the purchase and sale agreement.
Quit the job and close on The Inn! The offer has been accepted, you have completed the purchase and sale agreement, and the bank has approved your financing. You have waited a long time to do this and have had a good time doing it! Quit the job and don’t look back. It is time for a long overdue lifestyle change. The Inn is in your hands now. Our words of wisdom are to have a good sense of humor, remember that decorating is tax deductible, take at least one full day a week off to enjoy with your partner, and enjoy the new lifestyle. You worked hard to get here and now we want you to enjoy it!
P.S. Burn the suits now because you won't be needing them again! Have Fun!
Monday, December 18, 2006
Wednesday, December 06, 2006
Yield Management? Not!!
I was looking at the December edition of PAII's Innkeeping this morning, and had a thought that I wanted to pass on. Clearly this falls in the range of “for what it is worth.”
I have heard Bill Carroll talk several times on Yield Management, including at last year’s PAII Conference. He is clearly a bright and thoughtful professor. However, this discussion turns me off every time I hear it. It seems to be all about the money and not about the guest. It seems to be the antithesis of the kind of hospitality that we strive for as Innkeepers. Even mentioning the possibility of overbooking rooms and having different rates for the same type of rooms on the same days, makes me cringe. Working hard to have a strong Inn business is something we have taught for many years, but the means of achieving this goal also matters. I think, bottom line, that Yield Management is perhaps the opposite of what we should be teaching Innkeepers or Aspiring Innkeepers. Our segment of the Hospitality Industry has always, always differentiated ourselves based on the high level of individual hospitality we provide to the guests. This has helped us considerably in the tough times following 9/11 when the larger hotel industry was killing itself with discounting and hotels.com type distribution channels. In my opinion, the future of our way of Innkeeping seems to depend upon increasing the level of hospitality to the guests, not becoming more institutionalized and impersonal. We need to continue to think about what is the next amenity that we can provide to the guests, not how much money we can get.
Now, Bill Carroll is writing about Demand Management. Once I got past the Yield Management stuff in the article, however, I actually thought that some of it made some sense to me. Analyzing marketing expenses, sources of contacts, and tracking web results (i.e. spending time trying to figure out who the guest is, and why and how he finds the Inn) is all something that most good Innkeepers have been doing for years. Asking the question “How did you hear about us?” is such a standard question that every Innkeeper must ask a prospective guest. Treating “loyal guests” (i.e. repeat guests) as special is one of the essentials of good Innkeeping. I recall an article in Innkeeping many years ago by Maureen McGee from Rabbit Hill Inn in Vermont, on how to answer telephone calls for reservations. This was done before anyone ever heard about the Internet. Some of this article is clearly still relevant. Asking about why the guest was coming and how they heard about the Inn were such basics even at that pre-web time. Tracking sources of contacts has been present from the earliest days of bed and breakfast reservation software.
In sum, let’s get back to basics. If we treat all the guests as very special, they may want to come back. If we treat repeat guests even better, they might clearly refer more business to us. No matter how much the Internet and computers become a part of our lives as Innkeepers, the best, least expensive, and most lasting form of marketing, is and always will be treating the guests to superb hospitality. Modern electronic marketing has become very important, and will succeed if we remember that is all about serving the guest and their needs. If Yield Management is the way of the future, then I have sincere doubts about how we can continue to differentiate ourselves from every chain hotel off the highway.
I have heard Bill Carroll talk several times on Yield Management, including at last year’s PAII Conference. He is clearly a bright and thoughtful professor. However, this discussion turns me off every time I hear it. It seems to be all about the money and not about the guest. It seems to be the antithesis of the kind of hospitality that we strive for as Innkeepers. Even mentioning the possibility of overbooking rooms and having different rates for the same type of rooms on the same days, makes me cringe. Working hard to have a strong Inn business is something we have taught for many years, but the means of achieving this goal also matters. I think, bottom line, that Yield Management is perhaps the opposite of what we should be teaching Innkeepers or Aspiring Innkeepers. Our segment of the Hospitality Industry has always, always differentiated ourselves based on the high level of individual hospitality we provide to the guests. This has helped us considerably in the tough times following 9/11 when the larger hotel industry was killing itself with discounting and hotels.com type distribution channels. In my opinion, the future of our way of Innkeeping seems to depend upon increasing the level of hospitality to the guests, not becoming more institutionalized and impersonal. We need to continue to think about what is the next amenity that we can provide to the guests, not how much money we can get.
Now, Bill Carroll is writing about Demand Management. Once I got past the Yield Management stuff in the article, however, I actually thought that some of it made some sense to me. Analyzing marketing expenses, sources of contacts, and tracking web results (i.e. spending time trying to figure out who the guest is, and why and how he finds the Inn) is all something that most good Innkeepers have been doing for years. Asking the question “How did you hear about us?” is such a standard question that every Innkeeper must ask a prospective guest. Treating “loyal guests” (i.e. repeat guests) as special is one of the essentials of good Innkeeping. I recall an article in Innkeeping many years ago by Maureen McGee from Rabbit Hill Inn in Vermont, on how to answer telephone calls for reservations. This was done before anyone ever heard about the Internet. Some of this article is clearly still relevant. Asking about why the guest was coming and how they heard about the Inn were such basics even at that pre-web time. Tracking sources of contacts has been present from the earliest days of bed and breakfast reservation software.
In sum, let’s get back to basics. If we treat all the guests as very special, they may want to come back. If we treat repeat guests even better, they might clearly refer more business to us. No matter how much the Internet and computers become a part of our lives as Innkeepers, the best, least expensive, and most lasting form of marketing, is and always will be treating the guests to superb hospitality. Modern electronic marketing has become very important, and will succeed if we remember that is all about serving the guest and their needs. If Yield Management is the way of the future, then I have sincere doubts about how we can continue to differentiate ourselves from every chain hotel off the highway.
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