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Updated 10 months ago, 01/31/2024
Boutique Motel Owners
I'm in the process of buying a small, boutique motel (7 rooms in the motel and 12 stand-alone, seasonal cabins) that's on 3-acres. There is also a house onsite that the current owners live in and manage the business from. I will be looking to hire someone to run this business for me and they will be able to live in the house as part of their compensation.
My goal is to renovate the rooms and cabins and expand by adding more year-round cabins designed for longer stays. Are there any other moteliers in the BP community? If so, what lessons have you learned along the way and what tech are you using to automate. I'm looking at ResNexus with keyless entry locks. What's your experience with running a motel?
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#4 Short-Term & Vacation Rental Discussions Contributor
- Investor
- The worst town to live in, KS
You'll find that someone with furnished houses with full real kitchens, a real washer/dryer in each unit, cable and wifi will put a boutique motel out of business. I know this guy in a refinery town that has done that with his furnished houses. People might stay 1 week at the motel then move out once they find out about the houses. This is especially true with large groups of people renting multiple units. All it takes is one. Rent one house out to a guy or two, they'll tell their co-workers, and within 2 weeks you have an entire work crew renting all your places.
@Account Closed - how did it go with the purchase? I'm interested in getting into this space. Any insight you have would be welcome!
Quote from @Timothy Hogan:
@Account Closed - how did it go with the purchase? I'm interested in getting into this space. Any insight you have would be welcome!
The motel needed a lot of renovations and I was not able to find a decent contractor willing to do the work in that area. I called at least five contractors and it was as if they were all reading from a script, “I’m booked up 18 to 24 months out.” They would say. Rob found someone over an hour away to come do the work.
The previous owners were an old married couple that did no renovations to the rooms. They did do some large cap ex repairs like all metal roofs and burying the power lines but they didn’t do anything to bring people in like building a nice website.
That is about all I did before I sold it. I built a much nicer website than what they had and used a booking engine called ResNexus (which is awesome, BTW) that allows you to set dynamic pricing. I was able to increase bookings and nightly rates compared to what the previous owners did. They had a very poor website that you could not use to book a room.
They had set pricing for the weekdays and weekends, and based on the tax returns they sent me it appeared they were not reporting all their income. They most likely pocketed a large portion of the cash and only reported the credit card transactions. I did not accept cash because I wanted every penny accounted for. With commercial properties you are valued based on NOI, so if you can increase that you can increase the valuation.
I had someone running the place for me who was recommendation from a friend in the area. She had no experience and she was the only person I could find in the area willing to take the job. I should’ve spent more time looking for some by using online job boards, because the person I hire was not a good worker and I had to get rid of her.
I tried finding someone using Indeed and she was going to start a couple of months before I made the decision to sell but she told me her mother was going to die of COVID and was not going to be able to start working for me. That is when I decided to sell.
I reached out to Rob on Instagram and spent the next couple of months going through negotiations. I bought the place for $389k and sold it for $825k after making no repairs or updates other than a website with a profit of about $500k. Not bad for a “little rinky dink” website.
Sounds like an outsized value add story! Love it.
Great story! I am also in the process of purchasing a motel in NY. Luckily, my husband is a general contractor so I don't have to deal with finding quality workers. That really is over half the battle!
Quote from @Natalie Gelbke-Mattis:
Great story! I am also in the process of purchasing a motel in NY. Luckily, my husband is a general contractor so I don't have to deal with finding quality workers. That really is over half the battle!
That's awesome. I own in NY as well. Did you find your motel on the MLS?
Quote from @Kevin Escobar:
Quote from @Natalie Gelbke-Mattis:
Great story! I am also in the process of purchasing a motel in NY. Luckily, my husband is a general contractor so I don't have to deal with finding quality workers. That really is over half the battle!
That's awesome. I own in NY as well. Did you find your motel on the MLS?
I visit the ADKs every December up near Lake Placid. I can't believe you picked that up for $389K - that's insane lol.
Quote from @Kevin Escobar:
I visit the ADKs every December up near Lake Placid. I can't believe you picked that up for $389K - that's insane lol.
Haha yeah, they didn’t know what they had.
@Account Closed Before you purchased the motel, how were you finding your data on ADR and occupancy rates? And how did that compare with what you experienced after you purchased and were operating? I've been looking into the Adirondacks but find that data is a bit harder to nail down than other areas.
I didn't have that information but I was able to get financial and tax information from the previous owners. They told me what they were charging per night and I searched other motels/hotels in the area to get an idea of what the going rate was. Also, based on the information they provided, I was able to estimate what the occupancy rate was per month. I used a spreadsheet designed for analyzing large multifamily properties and modified it for the motel. My estimates were fairly close as far as occupancy rate, though I was a bit optimistic about the winter months. However, I did zero advertising. I was very low on my ADR. I blew that out of the water and was able to make a lot more per night than I was expecting. I used a booking engine called ResNexus, which allows for dynamic pricing (actually called yield management) based on vacancies and events going on in the area. If you buy a motel in the area, I would highly recommend ResNexus or look into Little Hotelier.
Whoa! Cool story! Glad I read it to the end, I am going to look into ResNexus, I use Little Hotelier right now, and while it is cheap, it is very basic and doesn't have any yield management or dynamic pricing tools. Also for anyone wondering, I use RemoteLock door handles and locks and they sync with another program(Guest Talk) that links to Little Hotelier and automates everything. Great flip! Finding cleaners would be the next thing that is nearly impossible to find. That's why I just purchased an RV park, still get to work in Hospitality but the clients take their mess with them LOL.
Will you buy another motel or is this a 1 and done for you?
Quote from @Jonathan Mueller:
Whoa! Cool story! Glad I read it to the end, I am going to look into ResNexus, I use Little Hotelier right now, and while it is cheap, it is very basic and doesn't have any yield management or dynamic pricing tools. Also for anyone wondering, I use RemoteLock door handles and locks and they sync with another program(Guest Talk) that links to Little Hotelier and automates everything. Great flip! Finding cleaners would be the next thing that is nearly impossible to find. That's why I just purchased an RV park, still get to work in Hospitality but the clients take their mess with them LOL.
Will you buy another motel or is this a 1 and done for you?
Quote from @Account Closed:
Quote from @Jonathan Mueller:
Whoa! Cool story! Glad I read it to the end, I am going to look into ResNexus, I use Little Hotelier right now, and while it is cheap, it is very basic and doesn't have any yield management or dynamic pricing tools. Also for anyone wondering, I use RemoteLock door handles and locks and they sync with another program(Guest Talk) that links to Little Hotelier and automates everything. Great flip! Finding cleaners would be the next thing that is nearly impossible to find. That's why I just purchased an RV park, still get to work in Hospitality but the clients take their mess with them LOL.
Will you buy another motel or is this a 1 and done for you?
ill have to look into that little Hotelier feature. We are currently looking for some work campers for the RV park as it's a value add and needs a full rehab so hoping to get some more help. Eventually we will expand and add some glamping and then we will need the work campers for housekeeping.
Quote from @Account Closed:
I'm in the process of buying a small, boutique motel (7 rooms in the motel and 12 stand-alone, seasonal cabins) that's on 3-acres. There is also a house onsite that the current owners live in and manage the business from. I will be looking to hire someone to run this business for me and they will be able to live in the house as part of their compensation.
My goal is to renovate the rooms and cabins and expand by adding more year-round cabins designed for longer stays. Are there any other moteliers in the BP community? If so, what lessons have you learned along the way and what tech are you using to automate. I'm looking at ResNexus with keyless entry locks. What's your experience with running a motel?
How did you find this when you were looking to buy? Was it online, through a broker, or did you approach them?
- Cliff Benner
It was listed online. I just contacted an agent in the area and they helped me with the transaction.
Quote from @Account Closed:
It was listed online. I just contacted an agent in the area and they helped me with the transaction.
What website did you find it on?
- Cliff Benner