STR hotel makeover

[Craig Jones]

I posted briefly about this back in July or August before we closed, but thought I'd write a little update because it's been an interesting ride.  We bought a place in Truckee, CA (Tahoe area) across the street from Donner Lake, a few minutes off I-80.  It's a good market with year-round demand that peaks in both winter (ski season) and summer (beach / lake / hiking / etc) season.  April is the only real low month.

It's a funky place -- essentially a 5 room motel (originally built 1959) with a manager's unit (built 1984) tacked onto it. But the manager's unit is really a 3000 sqft / 4 br / 2.5 ba SFR, and we live there as our primary residence. Though the buildings are attached, the guest rooms all have individual exterior entrances with no interior connection to the residence. The upper story and deck of the residence come out over the top of the motel forming kind of an exterior corridor or breezeway that pops out on the front of the building. There's also a detached two-car garage and workshop.

It exists in kind of a twilight zone between commercial and residential. In some cases that's amazing -- one part of the town gov't considers it to be a commercial lodging establishment so it's exempt from STR permitting and regulation. And another part of the town considers it to be residential, so it's exempt from most building codes and inspections that would normally apply to hotels. 😊

In other cases the ambiguity made it almost impossible to buy and insure.  No residential lender would touch it.  Nor any commercial lender, because the previous owners ran it as kind of a retirement hobby and the historical P&L's were crap.  In the end we presented evidence that no buyer would be able to finance it and got them to agree to 85% seller financing.  That was truly a rabbit out of a hat.  

We made light investments in guest room makeovers, outfitting each room with a Queen + Twin XL bunks.  Also pro photos and a PMS with listings on Expedia, Booking.com and AirBnB.  The previous owners took reservations mostly by phone, wrote them on a big paper wall calendar and hand keyed CC numbers into a terminal 😲

The bunk beds have been a huge win.  Families with two teens (or tweens) can get one room and their kids don't have to share a bed.  Same with three dudes up for the weekend to snowboard.  And it doesn't seem to spoil the charm for couples on a romantic getaway.

We've been able to raise the nightly rate 2-3x with better occupancy.  We're priced somewhat above a fairly new Springhill Suites about 4 miles away.  And I think we still have some headroom with rates as we build reviews.  AirBnB has been the biggest surprise.  I didn't expect that audience to go for what is essentially a hotel room, but more than 1/3rd of our bookings come from there.  

We'd definitely do another similar property if the opportunity arises.

Before (actual website / listing photo):

After:

[Victor Patel]

Great job!  One thing you might think of doing is having and promoting your own website to avoid the exhorbitant fees charged by the third party sites such as Expedia, Booking.com and Air BnB.