THE BUSINESS Ready for a vacation from life as you know it? Consider this well-known resort, whose enticements include a rustic lodge, bubbling hot springs and spring-fed pools, and more than 100 undeveloped acres. Relying mainly on word of mouth and travel writers' recommendations, the 90-unit resort attracts 40,000 guests yearly. Its biggest revenue draw is a top-quality restaurant. Slightly funky hotel facilities, probably due for a face-lift, bring in another $1.1 million. The owner wants to retire; his key managers will likely check in for extended stays.

PRICE $7.2 million (owner financing possible)

OUTLOOK The $467-billion U.S. travel-and-tourism industry is as hot as, well, hot springs, thanks in part to an especially strong winter season. This resort's growth potential could be, too, if a new owner invested in a full-scale advertising campaign, upgraded the hotel rooms, and created convention and spa facilities to enhance the natural attractions. Structure your financing terms carefully, and you should have the cash flow to swing it.

PRICE RATIONALE Viewed as a pure hotel play, the sales price is a bargain: hotels normally go for two and a half times gross revenues, suggesting an $8.28-million price tag. But you might want to appraise this deal differently because less than half the resort's sales come from its rooms. Start by appraising the hotel (two and a half times $1.16 million, or $2.9 million); then value the restaurant and bar business (40% of combined annual sales of $1.8 million, or about $720,000). But the $3.6-million total doesn't take into account the value of the springs themselves, which bring in about $150,000 from day-trippers.

PROS Live life in a hot tub...only better.

CONS Without cash to upgrade, this deal might be too hot for comfort.

Financials 1994* 1995* 1996*
Gross Revenues $3,374,925 $3,396,818 $3,311,893
Recast Earnings** $521,417 $759,747 $595,305
*Fiscal year ends on June 30.
**Before depreciation, interest, taxes, and owner's compensation

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 Mark DeGroot, DeGroot Commercial Corp., 406-586-7750.

Published on: Jun 1, 1997