The Business An elegant lakefront inn on a quarter acre, complete with a colorful 150-year history (Mark Twain built its fireplace), a gourmet French restaurant serving 115 diners nightly at $35 a head, seven posh suites, a 100-seat deck-side lounge, and a marina. Food receipts are 70% of sales; suite rentals, at $175 a night, 30%. Occupancy averages 58%. The owner is selling in order to devote all his time to the sister eatery he opened on a nearby bluff.

Financial Summary

(in thousands) 1991 1992 1993*
Gross revenues $1,070 $1,250 $1,350

Recast earnings before $174 $288 $335

interest, taxes, depreciation,

and owner compensation


Price $4 million (seller financing available)

Outlook The Tahoe area is suffering from a six-year drought that has affected every recreational opportunity dependent on water (or snow) -- and tourism is idling at 6% below normal as a result. But despite the all-too-fair weather and the general ills of the travel business, lodges like this one have fared well, and this hostelry in particular has done better than simply survive -- posting not only steady revenues but also almost-unheard-of margins (23%).

Price Rationale Multiples for luxury inns run 8 to 10 times earnings, making this establishment's $4-million price tag (which represents 13.7 times the weighted net) look more than a tad ambitious. The wild card here, of course, is real estate. Though industry gurus say it's impossible in this case to separate land value from business value (the location is the business), would-be buyers will have to be property speculators at heart. The gamble could be smart; even undeveloped Tahoe shoreline plots can cost $1 million to $3 million, and with waterfront turf a hot commodity, thanks to an aggressive, ecology-minded land-buyout program, the supply-demand scale should tip even further in a landowner's favor.

Pros Unusually solid profits. The charms of a consummate recreational resort. And the prediction in the Old Farmer's Almanac that the drought will be remedied this winter.

Cons The price is still too high. Real estate values -- as so many bankers have learned -- don't always go up. And the Old Farmer's Almanac is only marginally more accurate than the National Weather Service. How lucky do you feel?

-- Karen E. Carney

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 Geneva Business Services, in Irvine, Calif., 800-854-4643. n