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Dear: Aspiring Innkeepers & Maine Innkeepers From: Don, Ed and Rick,
Innkeepers, we know that August is a very busy period for you and time seems to slip away very quickly. Take a minute, get a cup of tea (or possibly something a little stronger), sit back, relax and read this month's MIB E-News. We think that you will find this month especially worthwhile.
We want to thank those of you who have expressed such strong and encouraging feedback on the June and July issues of MIB E-News. We especially would like to thank you for the exceptionally positive reaction to our E-News Extras. Many of you have said, "Keep them coming!" - and we will.
You've seen a number of new listings from Legacy Properties SIR (many of them in response to our MIB E-News and E-News Extras), and this is just the beginning. As I write this, there are many news listings in the works and a lot of talk about new listings that will be coming our way in the Fall. Believe me, we will keep you posted.
As always, we look forward to hearing your response to our articles and your comments on the type of information you would like to have presented in the MIB E-News.
This month in the MIB E-News...
- From the Buyer's Point of View (and Seller's POV) written by Don Johnson
- From the Seller's Point of View written by Rick Griffin
- The Internet and You written by Todd Morrisette, owner of After Five by Design
- Inn Info and Your Computer written by Scott Thomas of The Brewster House Inn in Freeport
- From the Banks Perspective written by Skip Bates, Business Banking Officer of Bangor Savings
Plus other pertinent articles and information -
Maine Inn Brokerage
August E-News... | |
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Spend a part of Autumn
in Maine....
I N N Y O U R
D R E A M S
Aspiring Innkeeper Seminars
************
Maine's Oldest and Most Comprehensive Source of Innkeeping Information
Thank you for your response to the Labor Day Weekend class - the class is filled!
Please join us for our next class Oct. 18-21 at
For further information:
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Blue Hill Inn
From The Buyer's Point of View...(and Seller's POV) _____________________
By Don Johnson, Legacy Properties Sotheby's International Realty Senior Vice President and Maine Inn Brokerage Team Leader
Positive Market Changes
As I am sure you have been hearing, the Real Estate market is beginning to see changes. The amount of residential properties that are under contract and the number of closings has dramatically increased in the last few months. (See Legacy Properties Sotheby's International Realty Aug. E-news). While we have seen the increases, we have also seen a decrease in the average selling price of properties. Still good for buyers; if not as positive for sellers, at least sellers know that at the right (realistic) price, properties are selling.
How does all of this affect the Inn/B&B market? As I mentioned a few months ago in the first Maine Inn Brokerage E-News, through this whole "leveling off" period, the Inn/B&B market has lagged a little behind. Buyers have been hesitant to buy and sellers/Innkeepers have been hesitant to lower the price on their Inns.
In the last month, I have seen a major turn around. The buyer inquires are up and inquires are beginning to turn into showings - which are beginning to turn into offers. Sellers who are lowering their existing prices, are starting to see results.
At listing appointments, I have also been struck by the very realistic attitude the seller/Innkeepers have about pricing their properties. For the most part, I am no longer hearing the Innkeeper expound on why their property should be priced beyond what the market will bear. The days of the "inflated" price are gone and Innkeepers who really want to sell are looking at their prices in a much more realistic vane. They understand that just because Joe Innkeeper down the street sold his property for $1,000,000 3 years ago, today's market is very different and the educated buyers are not even willing to look at properties where the price is not supported by income or at least "Real potential".
In short, a rational market is a positive for all sides.
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From the Seller's Point of View_______________________
By Rick Griffin, Senior Vice President Legacy Properties Sotheby's International Realty - The Maine Inn Brokerage Team
Preparing for the Sale of Your Inn
When an owner of a B & B or Inn decides to sell their property to maximize their investment, it is imperative to take appropriate steps in preparing the property. Proper planning can have a significant impact on what profits you walk away with. It is what you net that is most important, not the sales price.
Innkeepers take enormous pride in their businesses. We all know that the physical structures require constant maintenance. Before you bring the property to market, it has to look fresh, clean and up to date. This is not the time for major renovations; rather, make that extra effort to make it look loved and well cared for. This small investment will more than come back to you in a higher return.
Every bit as important as having the physical property looking good is having your books look good. Often owners will try to minimize the profit to avoid the taxes. Take some time and build that bottom line; concentrate on getting your occupancy up, practice yield management and when you know you are not going to be full, have an affordable room for those budget minded travelers, ask other innkeepers for referrals, have multi-day packages with area restaurants and attractions. Focusing on building the income and cutting expenses can have dramatic results.
Getting professional advice from your account or financial planner is critical to minimizing your capital gains and maximizing what you have in the end. Whether they recommend a 1031 tax deferred exchange, a Defined Benefit Retirement Account or something else, most of these vehicles require advanced planning and are worth the time and money spent to set them up.
Finally, choose your realtor carefully. You want a professional who knows and understands the business, someone who can represent you and your property, and present your business to buyers in the best light possible.
Questions or comments for Rick? Please send them to RGriffin@LegacySIR.com
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The Maine Inn Brokerage Team
Contact Us:
Rick Griffin: Inn/B&B and Residential Broker
| o 207.967.0934 | c 207 468.8470
Don Johnson: Maine's only Exclusive Inn/B&B Buyer's Broker
| o 207.770.2240 | c 207.232.1450
Ed Mitchell: Inn/B&B and Residential Broker
| o 207.230.1003 | c 207.975.5776
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Todd is owner of After Five by Design, one of Maine's leading business web site companies with many of Maine's finest Inns as clients
Preparing A Website Budget
When developing or improving a website or intranet, all clients are on a budget. Budgets may vary hugely from a small business owner needing a basic online presence, a Marketing Manager requiring an international eCommerce site, to an Online Services Manager requiring a Government intranet, but all will have to justify their expenditure.
There is great value in recording and comparing estimates in a structured manner. It is not just a matter of finding the cheapest option. The process of comparing quotes from three or more designers will:
Help you select the best designer to work with (given that cost will not be the only factor).
Uncover hidden costs that one may have raised but others overlooked (ensure nothing 'falls through the cracks').
Give you a reality check on how much certain generic aspects of website design should cost.
Allow you to see 'best' and 'worst' scenarios of cost and timeframes.
Help you to allocate funds and plan when they are due to be paid.
It can be difficult to compare designers as they may present quotes or estimates differently. Some designers will charge a lower hourly rate but take longer to do things while others may offer free services up front to encourage a client but then prove to be more expensive or slower later on. Many designers may be unwilling to quote an exact amount because their experience will tell them that clients invariably want to add or change things often during the development process, which takes up more time.
When scoping designers it is important to not fully focus on cost. Other criteria about a designer that may be important to you could include:
Their experience in your industry
Their personal approach
Their knowledge and experience
Your 'gut-feeling' about them
In addition, a common cause of conflict during or at the end of a web project is over what has been promised by a designer for a fixed or estimated fee and what has actually been developed. In some cases the client has demanded a lot more than they originally asked for and the designer has put in much more time. From the client perspective they may have not been given the features or quality that they originally asked for. The conflict is often around what was 'within spec' and included in the original price, and what is 'out of spec' and extra or new and thus requiring extra work by the designer.
Question or Comments for Todd? Please send them to: maineinnbrokerage@LegacySIR.com
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Inn Info and Your Computer __________
By Scott Thomas, owner/ Innkeeper along with his wife Ruth of the Brewster House Inn in Freeport, Maine www.brewsterhouse.com
Scott has a background in customer management software and is a continuing student of computers and computer programs. He has extensively studied most of the various Inn reservation and record keeping programs. Scott is available for personal one on one consulting. He can be reached at scott@brewsterhouse.com or 207 865 4121.
Selecting a Guest Management System
Assuming you have decided to find a new Guest Management System, let's look at the process of choosing from among the many products available.
The first step may not be the expected one, but looking at it first may save headaches later. Determine whether or not you will be using a third-party system for online bookings. That is, (a) will you accept online bookings, and (b) if so, (1) will you require that your Guest Management System provide built-in online booking capability, or do you want a third party online booking system, and then, (2) if appropriate, which third party system will you select.
Resolving these questions up front allows you to eliminate products which will not satisfy this requirement. Some guest management systems only work with their own integrated online booking module, while others interact with a variety of third-party systems. If you determine that you want an integrated system, that eliminates all products requiring a third party online interface. Conversely, if you require a third party online system, that eliminates systems using only integrated online capability.
The first question to resolve, then, is whether or not to accept online bookings. If you are one of the few for whom having online bookings and availability are not desirable, we'll talk in the next installment about selecting the actual Guest Management Software. In view of the proliferation of Internet-enabled devices, easy web access, and the increasing number of Internet-generation inn-goers, for most of us, having real-time web availability and booking capability is essential.
Assuming that we do want online booking capability, then, we must determine if we want a guest management system providing integrated online bookings, or whether we want to use a third-party system for online availability and bookings. Considerations in making this choice revolve around whether an integrated system is so far superior to all of the third-party systems that you feel it is clearly the best choice, as opposed to keeping your options open to change Guest Management Systems, without being required to also change the online booking system.
Once again, the answers will differ for different owners, properties and areas. If all other things (features, reliability, support and reputation) are roughly equal, my personal preference is toward not being locked in to a single vendor and a single product. Consequently, unless a product with an integrated online booking and availability system is clearly superior, my preference would be to use a third-party for online availability and booking.
To determine which product best suits your needs, open up a spreadsheet, or grab a paper and pencil, and then visit the web sites of the different vendors of online booking products. List all the features of each (they may use different names for a feature, but you should consider that as only one feature) in one column, then make columns for each product, and make an entry indicating whatever is relevant for the feature from each product. Include a column for price, as well. If a product has different levels and prices, make a separate column for each. For example if we have 3 products, and one feature is "Reservation requests" (the booking isn't final until confirmed - often requested by innkeepers who like to be sure a room hasn't been booked over the phone before sending a confirmation to an online booking request), if only Product Number One has this, then it gets a "Yes" in that box.
Creating a listing of products under consideration and the features and cost of each will help you to determine which will best suit your needs, or perhaps, that more than one is a good fit for you. In addition, if you have some idea of which Guest Management System you plan to use, make sure one of the features for the online availability and booking system is compatibility with the Guest Management Systems you are considering.
Questions or Comments for Scott? Please send them to: MaineInnBrokerage@LegacySIR.com
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Weathering the Storm
In the last issue of MIB E-News, I discussed two key metrics in the B&B industry, occupancy rate and revenue per available room. These are useful statisticsfor comparing the performance of one inn to another. The average occupancy rate in the B&B industry is 43%.
What this figure doesn't take into account is seasonality. In developing a business plan for financing the purchase of an inn or B&B, it's essential to consider how a prospective establishment performs during difficult periods. We all know that Maine is called "Vacationland", and that summer is considered the high season. Therefore, one would expect to see much higher rates of occupancy during the summer. Any reasonably strong establishment will run at closer to 90% occupancy during the summer. At the same time, innkeepers are often able to charge premium rates during the busiest seasons.
However, the best performers will also maintain relatively strong occupancy rates during the shoulder seasons of spring and fall, and, depending on location, a really strong inn will maintain a customer base through the winter. Establishments that are in the vicinity of ski resorts, hunting lodges, or other winter time recreation may be able to generate customer flow throughout the year. Otherwise, some inns have developed attractions as culinary destinations or benefit from their proximity to indoor attractions such as fine art museums.
For the purposes of a business plan, it is essential to consider not only the total income and average occupancy, but to also consider the seasonal cycles of revenue and cash flow. Off-season occupancy rates may fall to 20% or lower, and some establishments actually close up during the slowest part of the year. Developing a plan that gets you through the slow periods is a vital part of any successful venture.
Consider a couple of approaches:
Saving for the hard times. Highly disciplined innkeepers will generate and save excess revenue during their busy seasons, creating a cash cushion to get through the winter. Innkeepers can work with their bank to find appropriate short-term investment vehicles for their savings.
Working capital line of credit. Commercial working capital lines are intended to help with seasonality. The best practice is to utilize the line during downtimes, while paying the line off during peak season. It is essential to recognize that credit lines should be paid in full on an annual basis.
Seasonal payments. Many banks will help smooth out cash flow concerns for borrowers running seasonal businesses by setting up a payment schedule that matches the revenue trends for the business. Instead of having 12 monthly payments each year, it is possible to have 4, 6, or 8 payments, as appropriate, based on the inn's business cycle. For example, a B&B that is closed from January-March might fit best with 9 payments annually, to match the operating season.
Outside income. A time-honored approach to smoothing out cash flow concerns is to maintain a secondary source of income. While a life of semi-retirement as an innkeeper is a dream for many people, it is often necessary to maintain additional income. In fact, 58% of B&B owners have outside sources of income.
Knowing how the inn performs during traditionally slower periods, and having a plan to get through those periods is essential to operating a strong business and to obtaining favorable bank financing. Your Business Banking officer will be glad to help develop those strategies, so be sure to engage your banker early!
Questions of Comments for Skip? Please send them to: MaineInnBrokerage@LegacySIR.com
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TKTenniston hill inn 
Happenings in the Maine Inn/B&B World____________
by Don Johnson
Trip Advisor and Personal Review Sites:
There were many comments concerning last months article about Trip Advisor. I can't say that the comments were either pro or con to my conclusions. I think the best thing to say is they were inconclusive. From the comments, I feel that the jury is still out on Trip Advisor and other personal review sites. I think a lot depends on how an individual Inn has been treated by the sites - or the views that were expressed on the site.
My conclusion remains the same: If you truly feel, as an Innkeeper, that you are doing the best job you possibly can and you continue to work at exceeding the expectation level of your guest - you've done your job and the majority of your guests will be aware of that and pleased to experience the hospitality you offer.
Reservations made online or with a phone call?
I ended the above subtitle with a question mark because I am hearing from the Innkeeping world that many innkeepers are asking why the tide seems to have slightly turned and they are receiving more phone reservations than they have in the past few years. I am certainly not saying that phone reservation are replacing online reseverations as when the reverse happened a few years ago, however I am hearing that many Innkeepers are finding that the potential guest is finding the availability on line, but finalizing their reservation over the phone.
Maine Innkeepers, what are you experiencing? If that is the case, what do you attibute this to?
Please send thoughts and comments to don@maineinnbroker.com
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10 lucky Innkeepers and 10 lucky aspiring Innkeepers will be receiving a years subscription to...
Maine Food & Lifestyle
Thank you to those of you who took the time to Email us about you desire to receive our free one-years subscription to Maine Food and Lifestyle. Enjoy! |
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O U R C U R R E N T L I S T I N G S
Other B&B Possibilities________________________________________
Brunswick Victorian Design- $975,000 - Previously B&B, 5 bdrms, 2 acres, water frontage, deep water dock, many possibilities
Rte 1 Cape- Waldoboro, ME - $927,00 Antique Cape 1830 - 92 acres - Many possibilities - High traffic area
Lake House Rd. Naples, ME - $895,000 Renovated Williamsburg design - B&B, Restaurant, many possibilities - sweeping lawn overlooking Naples Causeway
Hollis 1820 Colonial - $399,00 1820's Brick Colonial - 7.4 acres - 6 Fireplaces - Wide pine floors - 2-bdrm apartment in carriage house
Watch your email for E-news Extras and our new listings |
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C O N T A C T I N F O R M A T I O N
For further information and an experienced opinion on the above properties orany Inn/B&B property* in Maine, Contact Don Johnson at don@maineinnbroker.com or call 207 770 2240
Please remember, Don is Maine's only exclusive Buyer's Broker!
*A few recommended web sites to see most listed properties:
At Legacy Properties Sotheby's International Realty, our brokers have a number of new Inn/B&B listings in the works. Through our E-News Extras , we will make our buyers aware of new listings, status changes on existing listings and sold properties.
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Watch your email for September's Maine Inn Brokerage E-News
and
E-News Extras - When things happen in the Maine Innkeeping world!
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