An overview of a Welsh hunting lodge offered for sale. Includes the price, how the business was valued, the outlook of future sales, and the pros and cons of the purchase.
The Business: Have you been longing to take aim and fire all your pent-up energies at a unique (and we do mean unique) business opportunity? Try this historic hotel and hunting lodge in North Wales, in the U.K., which has been owned and managed for the past four years by an American who spends most of his time stateside, running another business. The assets include an upscale restaurant, nine guest rooms, nine scenic acres, and proximity to pheasant and wild-duck hunting. But don't dismiss this as just another bed-and-breakfast. The main building dates back to the 15th century, and the property can be traced further back, to when it was given by Prince Gryffydd ap Madoc to a couple of heroic Crusaders. The lodge's guest roster includes Queen Elizabeth I. And perhaps best of all, this historic property can count on financial support from the Wales Tourist Board for some of its future renovations. After overseeing a prolonged period of restorations, the current owner feels ready to abdicate, but his staff of nine, including an on-site management couple, should stay on.
Outlook: There's plenty of potential here, but the quest to turn this property profitable could generate nearly as much effort as the Crusades. The most immediate challenge is upgrading its marketing efforts, since the lodge's occupancy rates have been flagging at 37%, compared with a regional average near 57%. Plans for an $800,000 expansion (one-third subsidized by the tourist board) include the addition of 21 guest rooms and new conference facilities; that should help sell the lodge as a corporate retreat. But a growth-oriented new owner will want to add Internet advertising and build relationships with U.S. travel agents (since only about 30% of visitors now come from the States). And don't leave home without your traveler's checks: there's probably about $100,000 worth of renovations, including a kitchen upgrade, still needed.
Price Rationale: If you, like the current owner, fall in love with what is truly a one-of-a-kind property, you probably won't get too bogged down by conservative valuation methods. Still, it's worth emphasizing that inns typically sell for 4 to 5 times their earnings (and this facility doesn't have any yet--a good indicator of how risky this deal could be). If you treat the property like a hotel instead, you might be able to justify a price of 2.5 times gross revenues. Be cautious, though, and rely on a three-year average of revenues--$372,000--which would suggest a bid of $930,000. But set that as your absolute upper limit: after all, you still have to finish your renovations and figure out how to attract more guests before you'll show a profit.
Pros: Anybody can be a CEO. But here you'll be lord or lady of the manor and get to write off all those hunting vacations. Bring on the grog!
Cons: You could lose your head more quickly than Henry VIII's enemies did if you don't rapidly get this inn into the black. -- Jill Andresky Fraser
*Before interest, taxes, depreciation, and owner's compensation. Note: Results have been converted from the British pound using an average conversion rate of one pound = $1.66.
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Bill Farden, 206-782-4711.