Developing a Boutique Hotel

[Wesley Sherow]

Hi Bigger Pockets Community! 

I am entering into an excellent deal renovating and redeveloping a historic boutique hotel in Albany, New York. I am looking for others who have done similar projects to chit-chat with and discuss strategy. I've done AirBnB's for many years, but this is my first jump into the formal hotel ownership space, and I'm wondering what pitfalls others have seen that I may avoid. 

This is a development from gut renovation, of a historic Victorian era property in the Capital Square region. You'll find a picture of it on my profile page. Some questions that come to mind: 

- Would you hire a full-time house manager for a 13-15 bedroom B&B?

- What economies of scale issues might I have to look out for by operating such a small hotel? 

- Would you treat this more like a large AirBnB, or like a small commercial hotel venture? 

Anybody who has done work in this space I would love to connect with to  learn more about it! 

[Bonnie Griffin Kaake]

Quote from @Wesley Sherow:

Hi Bigger Pockets Community! 

I am entering into an excellent deal renovating and redeveloping a historic boutique hotel in Albany, New York. I am looking for others who have done similar projects to chit-chat with and discuss strategy. I've done AirBnB's for many years, but this is my first jump into the formal hotel ownership space, and I'm wondering what pitfalls others have seen that I may avoid. 

This is a development from gut renovation, of a historic Victorian era property in the Capital Square region. You'll find a picture of it on my profile page. Some questions that come to mind: 

- Would you hire a full-time house manager for a 13-15 bedroom B&B?

- What economies of scale issues might I have to look out for by operating such a small hotel? 

- Would you treat this more like a large AirBnB, or like a small commercial hotel venture? 

Anybody who has done work in this space I would love to connect with to  learn more about it! 

 Hi Wesley, There are some differences between an Airbnb and a hotel that you will want to take into consideration regarding taxes. Both are depreciated over 39 years. If you purchased this property between 2017 and 2022, you have some great tax benefits and extra cash flow available to you. The Airbnb is treated like a business and allows you bonus depreciation if you spend more time than anyone else "materially participating" in the property. A hotel does not have that requirement, even though both are depreciated over 39 years. A hotel is automatically considered an active investment and qualifies for the bonus depreciation available for the year you bought it or the year it is first occupied, whichever comes last. 

Hopefully that helps. If you have additional questions, let me know.