Inn Start-Up, Is It For You?

It seems that we are always asked by people considering innkeeping, why not do a start- up? We always express our concern that it is much easier and more cost effective to purchase an up and running business, but that does not suppress the desire by many people to start an inn from the ground up. We are not saying that it can't happen, but one really has to be sufficiently funded and have the ability to succeed even in the difficult situations. Recently we were hired to consult with a nice couple from Europe who were purchasing an inn which was essentially a start-up business. We thought we would share some of the details with you.

The inn which they were purchasing was essentially a start-up. We say this for many reasons. First, it had a first generation website, which means it was totally useless. Nothing that spending $20,000 for a state- of-the-art website couldn't change. The inn wasn't computerized, and therefore had no mailing list which could be utilized. Next, the dining room had not been in operation for many years and it needed to be updated and opened accordingly, with no history of a successful dining business. No marketing had been done to the inn for MANY years, as the owners were going through a divorce and did the minimum amount of work to keep the inn open. So in reality, this inn was a start-up.

Renovations for the inn were projected to be $1,500,000. This was about 50% of the purchase price of $2,900,000. When substantial renovations are being done to a property, the Americans with Disabilities Act (ADA) gets involved. When renovations on a start-up property occur, they demand that 20% of the renovations be dedicated to the needs of handicapped individuals. This includes access to the inn, rooms that can accommodate handicapped people, public bathrooms built to handicapped standards, and oh yes, if you have more than one floor, the ADA requests an elevator be installed! The most amazing thing about their renovation was that the monies were basically geared to the first floor only of the inn, and only one guest room out of nineteen was being redone. This is something to keep in mind.

During renovation of the first floor, many surprises came into play. Old buildings may look fine on the outside of the walls, but just wait until they are opened! Also remember that this inn was inspected by a structural engineer, but he couldn't see within the walls either! Not one, but two steel beams were needed because the main support beams of the inn were damaged. The front of the inn faces the elements of the ocean and this caused the complete rotting of the front of the inn, which needed to be replaced. Windows were removed to upgrade to new windows. In the process, it was found that past construction was done incorrectly, and supports above the windows were non-existent. I could go on and on, but I think you are getting the picture.
Now, let's talk about contractors and deadlines. This inn happens to be located in a very seasonal part of the world. Most cash flow is earned Memorial Day Weekend through Columbus Day Weekend. Projections were made and the contractor promised release of the building by mid-May. It was clear by the first of May that the deadlines would not be met. So to fix this, the contractor started working a six day work week. Isn't that great! Now the new owner has to pay time and one-half to get the work done! Not quite in the budget! Needless to say, they couldn't open for Memorial Day Weekend. The rooms did get released so that the Inn could open the week after, but some business still was lost. I hope that you noticed that I haven't mentioned the dining room. It is currently estimated to be released by the contractor by June 15th, but I wouldn't place any bets yet!

If you want to do a start-up, please do so. However, we want you to be successful!! Please go in with your eyes wide open, pockets deeply lined with money, and be ready to work with delays!