MIB July E-news header
Dear: Innkeepers and Aspiring Innkeepers 
From: Don, Ed and Rick,
 
 
The Maine Inn Brokerage Team would like to express our sincere "thank you" to all Innkeepers and aspiring Innkeepers who have emailed us, phoned us, and spoken to us with their very positive feed-back on our first E-news and E-news Extras.
It is our mission to keep the Maine Innkeeping community and those of you who are aspiring to be a part of that community, as informed as we possibly can.
As you can see from the table of contents; as promised, we are bringing you the subjects that we know you are most concerned about. 
In this month's issue, we are beginning our monthly columns that we hope will help to keep you informed about the Maine Innkeeping world. Here are a few of the subjects we are going to cover this month and in the months to come:
  • From the Buyer's Point of View written by Don Johnson
  • From the Seller's Point of View written by Ed Mitchell and 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:
  • Thoughts on Trip Advisor
  • Q&A's
  • Enter for a free subscription to MAINE FOOD & LIFESTYLE
  • and more

 

Maine Inn Brokerage July E-news...

C O N T E N T S
Dear Innkeepers and Aspiring Innkeepers
From the Buyer's Point of View
From the Seller's Point of View
Contact Us
Interviewing Potential Design Partners
Inn Info & Your Computer
From the Bank's Perspective
Happings in the Maine Inn/B&B World & Current Listings


INN YOUR DREAMS
 
Aspiring Innkeeper Seminars 
 ************
15 years of classes 
************
Spend Sunday afternoon lakeside at The Woolworth Estate (Yes, that Woolworth!) Use your imagination and turn the property into an Inn.
 
 
 
*For further information:
 
 
 
 

port. head light

From The Buyer's Point of View______________
 
 By Don Johnson, Legacy Properties Sotheby's International Realty Senior Vice President and Maine Inn Brokerage Team Leader
 
Looking at the Process from 2 Sides 
 
The purpose of this column is two fold. The primary function is to help inform the Inn seller as to the various concerns and needs the buyers have when purchasing an Inn. Number two is to inform the buyers of the concerns and needs they should have when purchasing an Inn. Buyers and sellers often ask me, "What is the number one element that buyers should be/are looking for when they are thinking about purchasing an inn property?" Of coarse there are the obvious things such as income, condition, location, Innkeeper's space; all very important aspects of the purchase and all will be addressed in the coming months.
 
Is there a foremost concern among these? Number one is usually in the eye of the beholder. To some buyers, there is no question that number one is the "bottom line". Much to their disadvantage, they sometimes will not even look at a property unless it has what they consider the proper "numbers". As buyers become more educated, I am finding that the myopic "bottom line" buyers are becoming fewer and fewer. The reason for their diminishing numbers has a lot to do with understanding the very individual qualities of each inn, unlike other commercial entities. If the potential is real, each inn's viability can be manipulated and improved by the new owners. Looking at the total model and assessing each factor in light of the asking price, will give the best picture of the Inn's feasibility as a business.
 
To other buyers, number one is the emotional values of the property -i.e. how does it look and feel. Just like the buyer who is focused on the bottom line, the aesthetic buyer needs to understand that "the look" is, in most cases, changeable. With a little imagination and $s, it can all be reworked. Unlike the "bottom line" buyer, the aesthetic facet may not be reflected in the price. The current owners may feel that they have created the most beautiful Inn the world has ever seen and they will not understand the buyers need to come in and make drastic changes to "the look".

I think that it all adds up to the fact that a buyer's broker needs to be able to read their clients and totally understand their individual needs. As you have seen, the needs will vary from buyer to buyer (often within the same couple). The broker may have to urge the buyer to also look at and understand the multitude of aspects that should be important to them if they are not readily realizing their importance up front. Once the broker has properly determined their client's needs, the broker needs to communicate them to the listing broker. Together they can then determine the appropriateness of a property's value for the particular buyer.

As you can see, there are a lot of combined efforts in play in order to meet the needs of both sides of the transaction. The end result is: there is not a single value that the buyer is looking for or that the seller needs to supply. It is as individual as the Inn property itself; and finding that common ground makes for a beautiful combination - and sale!



 
 
 Questions or comments for Don? Please send them to: DJohnson@LegacySIR.com  
 
 
 
 
 
 


From the Seller's Point of View_______________________ 
 
By Ed Mithchell, Vice President  Legacy Properties Sotheby's International Realty - The Maine Inn Brokerage Team
 
                                    Selling Your Inn:  Where do you start?          
                                                  #1 - Setting the Price

 
Like residential real estate transactions, the ultimate price a buyer is willing to pay for an Inn is contingent on a number of factors....some objective and some subjective.  However, the leveling factor with a Bed & Breakfast is that it is first and foremost a business.  In all situations, critical factors, such as location and attractiveness of the property, contribute to and account for the success of the B&B as a viable business. Thus, your starting point in determining an appropriate price is the ability to generate a suitable profit or the REAL potential of generating a profit
 
A property can be the most beautiful or well-located Inn in Maine, but without the ingredients that make it a profitable business or the REAL potential, buyers will pass you by.  In absence of financial statements or other compelling factors supporting business expectations, the property becomes just another multi-bedroom residence.  As in any competitive free market, the B&B market looks for common rules of thumb to simplify the process of evaluating B&B's against their competition.  The GROSS MULTIPLE rule of thumb (Price x Gross = Listing Price) has evolved as the most commonly used tool in comparing the price to the business viability.  Not to over simplify, this is the starting point in your price consideration.  Obviously, not every B&B will meet the target ratios for the industry average, however, sellers must be able to point out factors that have lead to a less than satisfactory GM, i.e. the seller whom has been in the business for a number of years, is satisfied with the current amount of income - which often leads to underdeveloped marketing and a complacent attitude toward repairs and updating. 
 
Remember, this is a starting point. In future letters, we will address how other factors affect the price.  
 
Questions or comments for Ed? Please send them to EMitchell@LegacySIR.com 

 
 
 
 
 
 
 
  
 
 
inn_team 
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
                                     DJohnson@LegacySIR.com
                            www.MaineInnBroker.com
                           www.InnYourDreams.com
 
                                         Ed Mitchell: Inn/B&B and Residential Broker
                                         | o 207.230.1003 | c 207.975.5776
                                      EMitchell@LegacySIR.com
 
 
 
 
________________________________________________________________
The Internet and You________________________
 By Todd Morrissette www.afterfivebydesign.com
 
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  

after five logo

 Interviewing Potenial Design Partners

You may spend a considerable amount of money with your website designer, and you may work with them for many years.  Their work may also have a critical impact on your business.  Therefore you should take the time to select a designer that is right for you.
 
Treat the screening and interview process with as much importance as you do when hiring your own staff.  You will be employing this person or company and the costs of making a poor decision can be great.  Also take advantage of this opportunity to get expert feedback while interviewing; this will help refine your own ideas.
 
It is important to choose a company with the right mix of skills and experience, and an approach that fits with you.  Some designers are strong on graphic arts and will create an attractive site that will have appearance and image as its main strength.  Others are more technical programmers who will create a functional site that is technically robust.  You need an appropriate blend of the two, with the weighting depending on your website and business objectives. 
 
The size and culture of a design company is also important.  It relates to their ability to deliver what you want in your given timeframe, and also their ability to have a good working relationship with you.  As a client will you be calling them every day wanting to add or modify things, or leave them to it and just get updated at key stages?  Different designers have different approaches to work and billing, and you need one that matches your personal approach.
 
It is important to find a company with solid marketing and business development skills that will take the time to understand your needs.   Thousands of companies can build basic websites; ideally you need a company that can partner you in developing a site as an effective communication tool.
 
A key initial indicator is whether or not the design company tries to understand your needs and objectives first.  It is not a good sign if someone starts selling you a solution before they have understood your situation.
 
 
Question or Comments for Todd? Please send them to MaineInnBrokerage@legacySIR.com
 
 
__________________________________________________________________________
 
 
 
 
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.
 

 
Which Guest Management System Should You Use?

Choosing a guest management system is one of the most important,
and often most challenging, decisions an innkeeper faces. Do you keep
the system used by the prior innkeepers? Do you search for a new one?
These questions are just the beginning of the things an innkeeper should
consider.

Different systems work well for different properties and different
innkeepers. Some need more support than others. Some will need
flexibility to access the system from outside the inn - perhaps even
from a phone or mobile device. Others have no such requirements.

Some of the things to consider in approaching this decision are whether
or not the current system is up to the task. If it is, there may be no
reason to change. If not, there are many other things to consider in
choosing a replacement.

Often guest management systems are installed on a computer in the Inn,
while others are accessed over the Internet. If you routinely need
access to the system while away from the property, a web-based system
may be preferable, or a system that is installed, but can be used from
remote systems, or even phones and handheld devices.

We'll discuss these and some of the other considerations in selecting a
guest management system in upcoming issues.
 
Questions or Comments for Scott? Please send them to
MaineInnBrokerage@legacySIR.com
 
 
 
_____________________________________________________________ 

bangor SB-logo

 
"Maine banks are ready to lend to qualified buyers purchasing valuable properties with strong histories. At Bangor Savings Bank, we look for sound fundamentals, including consistent annual revenue and expense documentation, with a history of profitability. The basic lending policy comes down to the "three C's of credit: Cash flow, Collateral, and Character." Specifically, we'll ask the following questions:
Is the cash flow from the B&B strong and sufficient to support the requested loan?
Is the value of the property strong compared to both the purchase price and the loan request?
Does the prospective buyer have a history of paying debts responsibly and the ability to support the loan during potentially rough times in the future?
 
If the answer to these questions is "yes', then there is a strong likelihood of a buyer being able to obtain funding from a local bank.
 
In addition to looking at information specific to an individual inn, it is important to compare industry averages. There are several key metrics in the B&B industry. We look at both occupancy rate and revenue per available room (RevPAR). RevPar is calculated by multiplying the occupancy rate by the room rate. The most recent industry data indicates that the average occupancy rate for B&B's is approximately 43%, while the occupancy rate in the lodging industry as a whole is 63%. B&B's, however, generally command a higher room rate than other types of lodging, thereby offsetting the lower occupancy rate. The average revenue per available room industry-wide is $65. Potential buyers can use these measures to gauge the strength of one inn to another, and an attractive, well-run establishment should be able to readily provide these measurements!
 
Many borrowers wait until late in the game to start making loan requests. At Bangor Savings Bank, we like to get involved early on, when a prospective buyer is still researching potential inns. It's important for both banker and borrower to develop a sense of trust and expectation. Your loan officer should be able to provide strategic analysis regarding the financial performance of the inn that you are considering, and will be able to explain the bank's standards in regards to measurements of cash flow and collateral. So get your business banking officer involved early on!"
 
 
 Questions of Comments for Skip? Please send them to:
MaineInnBrokerage@LegacySIR.com
 
 
 
_____________________________________________________________ 

 
EG - exterior 13 
Happenings in the Maine Inn/B&B World____________
 
Thoughts on Trip Advisor by Don Johnson
 

In the last few years, the words "Trip Advisor" have crossed the lips of almost every Innkeeper. The words that have preceded or followed "Trip Advisor" have either been unpublishable in this forum or they have been glowing expressions; and sometimes, a little of both.
As I was preparing this article, the latest PAII Innkeeping Newsletter reprinted a commentary about Trip Advisor along with a multitude of reactions. See June PAII Innkeeping.
 
Before I read the article, I decided to jot down my own thoughts. In doing so, I thought about a situation that was brought up on a visit to an Inn during one on last years Inn Your Dreams aspiring Innkeeper classes - www.InnYourDreams.com.
The situation isn't directly connected to Trip Advisor, however I think it reflects the position I have heard from many Maine Innkeepers and Inn guests.
The Innkeepers that related the following story was doing so because they wanted my opinion and the class's opinion on a particular situation that had just occurred. I like having these kinds of scenarios in class because they reflect the real situations that these future innkeepers will incur. 
 
The story... 

Potential guests called the Inn to make a reservation. They had looked at the Inn's website and requested a particular room. The room happened to be available and they booked it - end of story - not quite.

 


They called back a couple of days later and said that they had forgotten to mention their special dietary needs. OK thought the Innkeeper, this is not a problem. The guest proceeded to describe their needs - they were vast. So vast that she said that rather than explaining it all over the phone, she would send an email. Red flags began to rise. The Innkeepers are of coarse very accommodating to special dietary needs, but this one seemed extreme. However, before we jump to any conclusions, we'll wait to receive her email. The email came and the Red flags rose higher on the pole. These were not really dietary health needs, these were simply personal preferences - and they were vast. The Innkeepers did not have the requested items on hand; it required a special trip to the market. OK thought the Innkeepers - we will not make this a problem. Then came another phone call from the upcoming guests - "Oh, by the way, we had to change our plane reservations and we will be arriving later than expected." OK thought the Innkeeper, we've come this far; we will work with this - "How late will you be?" The guest explained that it could be close to midnight. The Innkeeper explained that she would leave a key and directions to there room and she would look forward to meeting them at breakfast. Again, OK thought the Innkeepers, it's just one night and late arrivals are not uncommon.

 


The fateful arrival day came. The Innkeeper left the key in the designated spot and went off to bed. She did hear some noises in the night, but that is part of Innkeeping. The Innkeeper's had a full house. They arose to prepared breakfast for their guests, and also prepared the special meal that their late night arrivals had requested.

 


At breakfast the other Inn guests happily chatted, ate their meals and everything was fine. One couple mentioned that they thought that somebody had tried their door in the night. Even though they both heard it, they laughed it off as both having the same dream. The breakfast guests finished their meals and either checked out or left for the day's activities. Nine thirty, ten o'clock; the special "late" guests had not yet come down to partake of their specially prepared meal. The Innkeeper's, being hospitable, gave their late arrivals a little benefit because they may have arrived later than planned. As the morning wore on, they heard some commotion from the room, but did not see their guests. The meal was no longer in edible condition and just as the Innkeeper was about to discard it, there was a loud knock on the kitchen door. Her husband was already involved in cleaning rooms. It was almost 11:00. She opened the door with a smile on her face and with a chipper voice, she said, " You must be ___ and ____.

 


She was greeted by a couple with bags in hand and snarls on their faces. Before the Innkeeper could even express that she hoped they had slept well, they started a verbal rampage that did not stop until they got in their car and pulled away.
The words that the Innkeeper could make out were spoken through snarled lips and raised voices, and seemed to consist of: arriving at 3:00 - couldn't find the key - finally found it - it was 4:00 by the time they went to bed. They were awoken at 5:00 because their room was at the front of the Inn and "hundreds" of construction trucks were passing by under their window. They got up to see if there was another room available. They tried doors to no avail. They went back to their room and finally went to sleep about 7:30. They were then awoken by people's voices in the hall - and on and on and on. The Innkeeper, who had tried to apologize during the tirade, finally sighed a sigh of relief when the car door slammed. Nevertheless, as they pulled away, the window was rolled down and another comment was made regarding telling everybody about the terrible time they had at the blankity blank Inn.

 


It didn't end there! A couple of weeks later, the Innkeepers received an email from the guests reiterating their stay, and demanding their deposit back!
How does this all apply to Trip Advisor? The Innkeeper's question to the class and me was what would we do in this situation. My question to them was "what would you like to do?" Their answer was that they would like to write them a letter stating that as Innkeepers they felt that they had done everything that was asked of them and that they would not return the deposit. Even though in my classes I preach hospitality (the customer is always right etc. etc.) I also stated that there are times, very very few, but there are times when you need to do what would make you feel satisfied and not kowtow to guests that you really wouldn't want to return anyway. I stressed that these kinds of circumstances are extreme exceptions. I know these Innkeepers very well and their hospitality is exemplary. The class agreed with my answer. When I asked the Innkeepers if they were going to follow through on the letter, they said, " We wish we could, but we can't - we'll send their money back." I thought they meant their "hospitality conscience" had gotten the best of them, but no. They could not do what they felt was right for themselves because they were afraid that their guests would write a scathing review on Trip Advisor.

 


I thought for a minute and said - "How sad that the hospitality world is being held hostage to their true feelings because of Trip Advisor.
 
I think there are many changes that need to be made concerning Trip Advisor and I am very happy to see that PAII and other organizations have taken it on. I am not saying that I would eliminate the Trip Advisors of the world, however I am saying that I don't think that we can build our world around them. If we are doing everything we can to be hospitable and accommodate our guests to the definitive degree - that is the main thing. We just need to let the Trip Advisors of the world fall where they may. 
                      

Please send thoughts and comments to don@maineinnbroker.com
 
 
 
_____________________________________________________________________
 
 
 
 
 
 Q&A
_____________________________________
 
 
Q. From a potential Inn Seller: I keep hearing that the buyer's are out there. However, I also hear from my colleagues who have their Inns on the market that they have buyer's look at their property - get excited, and then they are never heard from again. Alternatively, if they are heard from, the listing agent gets the word from the buyer's broker that the buyer's are having a hard time making a decision and they are putting it off for a while.
Is this the norm for today's buyer?

 
A.From Don: The answer is a qualified - yes. Just as Legacy SIR residential buyers are beginning to understand (and our "under contracts" show), now is the time to buy. Prices have gone down, interest rates are low - all of the positive "buyer aspects" are in place. It is taking the Inn/B&B buyer a little longer to recognize these positives and make their decisions. Why? It is much more than just buying a house, it is buying a lifestyle. It is changing the way a potential buyer has lived. They've left their job, they're moving to a new state, they are going to live a life they've never lived before. Unlike buying a residential home, there are many many factors involved. Because of the current economy, many of us are thinking twice about spending just a few extra dollars. The aspiring Innkeeper/Buyer has a lot of decisions to make; spending the money, and completely changing their lifestyle. As I often tell my buyers, sometimes you just have to "bite the bullet and go for it". I honestly can't think of a better time to chomp down on that bullet. Just as the residential buyer is coming around, the Inn/B&B buyer is also beginning to make great strides in the direction of realizing their Inn/B&B dream - they just need a little more time.

Q. From an Innkeeper whose Inn is currently on the market in the Western Lakes and Mountain area of Maine: Are most Inn buyers looking strictly on the coast or are they also asking about inland properties as well?
 
A. From Don: I don't think that it is a secret that the majority of Inn/B&B buyers who are thinking of looking in Maine are first attracted to the Maine coast. Many times it is because they are just not familiar with interior Maine.
I think that the first job of a buyer's broker is to determine the needs, wants and financial capability of their buyers. That determination is most often made before the buyer ever comes to Maine. Many times those needs and wants will change once they start looking. The financial capability does not change as readily and this may be a large reason of why I suggest that they look at some inland properties. They find that inland, their dollars can be stretched a lot further than on the coast.  It is usually just a matter of education about an area and giving the buyer the chance to explore places they may not have thought about.
 
 
 
 
 
 
Speaking of Lifestyle...            
 

Maine Food & Lifestyle          EG - exterior 13

 

 
I know that many innkeepers are already familiar with the magazine MAINE FOOD & LIFESTYLE. This is Maine's only food magazine and its happy mission is to connect those of us who live here to the food we eat. Each issue abounds with stories about fisherman, farmers, artisan food producers, and professional chefs who use local ingredients in their restaurant kitchens. In addition, there are plenty of delicious recipes! Food is the common thread that weaves through every article, and every page is chock full of stunning photography.
 
 
Maine Food and Lifestyle and Maine Inn Brokerage of Legacy Properties Sotheby's International Realty would like to offer our Innkeeping friends the opportunity to become further acquainted with the magazine.


The first 10 Innkeepers and the first 10 aspiring Innkeepers that send us an email will receive a one-year subscription to MAINE FOOD & LIFESTYLE.
 
Innkeepers, send you entry - ALO
NG WITH YOUR  MAILING ADDRESS  to: MaineInnBrokerage@LegacySIR.com

 

Aspiring Innkeepers, send you entry - ALONG WITH YOUR MAILING ADDRESS to: DJohnson@LegacySIR.com 
 
Happy reading...

 

 
 
 
 
 
 
 
 
 
 
 
_____________ 
 
 
*B&B possibilities or former B&B
 
  • Watch your email from E-news Extras and our new listings 
______________
 
For further information and an experienced opinion on the above properties or any 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!
 
 
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