Has anyone purchased a hotel/B&B?

[DevonshireDumpling1]

A hotel local to us has recently gone up for sale.
35 bedrooms - with a large restaurant/bar and function room. It’s still trading although does look like its does need a refurb to ‘inject new life into it’

Owners are retiring and want a quick sale - and it’s priced to sell at £750k.

We’ve been discussing it for weeks and we could sell our current home and a rental property we own but would still need a small mortgage as we would want to make the refurbishments straight away and ‘relaunch it’
There is an owners apartment on site so we would move in.

We are both currently in full time employment and we would probably continue this for a few more years until we’ve built up a real profitable business.

Just wondered if anyone has ever done it and can offer advice?

I'd have a serious look into the costs. I'd hate to know the utility costs alone! Our school spends the best part of £100,000 gas, electric and water, I'd imagine it's much worse for a hotel even not running at full capacity. I know nothing about running a hotel though, it just seems a huge risk to me. Is it a dream of yours to own a hotel or just an opportunity you've come across?

I just had a look at hotels in Devon, and that does seem like a bargain price for 35 rooms. I can see it would be tempting in theory, but in practice it's a different story.

I was almost tempted by this one, which is a bit smaller, but a similar price. I was thinking I could buy it with a few friends, and we could retire there like The Golden Girls.😀
www.rightmove.co.uk/properties/143804270

Hospitality is bloody hard work. No experience sounds like a disaster. You may get away with it with a small B&B but not a 35 bed hotel!

And I hope to god it’s not in Wales where the rules, tourist tax, rates and so on make it a very unattractive option. Scotland not much better.

I am literally shuddering at the cost of keeping that huge building heated over the winter, while your DH does his piecemeal renovations and you try to learn how to do VAT accounts after you get home from your fulltime job.

Have either of you got your Personal Licence? Done a Level 3 Food Hygiene course? Done a Cellar Management course?

It's no life running a small hotel! I never saw a weekend off or a summer holiday for half my life until out of that game. I couldn't even begin to list how bad an idea it is but many previous posters have.

So you complete in three months. That's June. And you're planning to do renovations before you relaunch. So you will be closed over the summer period, which is when you should be banking money for a quiet winter.

The renovations are going to take - three quarters of a year? One week per bedroom, bearing in mind that you seem to think your husband will be doing it all himself, and a few weeks for the large bar/restaurant area, and the function room.

Have you actually timelined and costed this all out, OP? The more I think about it, the madder it is.

As well as everything already mentioned, have you factored in how you're going to buy stock? Most suppliers, particularly in the current climate, won't give you a credit account right away, perhaps not for many months. So when you go to the C&C or a brewery, they'll want paid right away.

I think good luck! For whatever reason it's a bargain, so hopefully you'd make a healthy profit even if you ended up just doing it up and selling it on, having saved on the costs because your DH is a builder.

🤨🙄

missed of post about friends family hotel

they do room only on air b and b
and converted a small bedroom to a kitchen for air b and b guests nothing fancy fridge microwave ,crockery and dishwasher

easy way to fill empty rooms

With this one posted above (http://www.rightmove.co.uk/properties/143804270), and I'm guessing Ops is similar, its worth noting that the sale can be "our clients would consider a 'subject to planning' deal for potential re-purposing". Which makes me think the more viable option is buy it and turn it into a nursing home - which of course is not an easy option and as a business comes with its own cost, regulations, employment issues etc but is I'm guessing where the demand is for large/multi bedroom properties.

I mean, I get it running a hotel sits up there with my "book shop with a small cafe " daydream so as much as I think its madness there's part of me (a selfish part) that would love Op to go for it and keep us updated.

Bookshop with a small cafe is a much better daydream (if not that much more realistic, if you want to actually earn a living). At least the customers go home at night.

I don't think people realise how hard it will be to find a manger to run the place, staff shortages are a major issue!

That's an interesting option. The problem for the OP, with this property, is the large function room and bar/restaurant area. Those spaces will need heating and cleaning, whoever is in the rest of the hotel.

There'll be a large kitchen that has to be cleaned and maintained as well, if they want a good hygiene rating.

What part of the country are you in? I thought hospitality was in a very bad state at the moment and I thought that most people would prefer to go on holiday abroad rather than stay here.

Please stay away from this, I’m in the business but a much smaller property. You are massively oversimplifying running this. You will have no life or downtime. You cannot rely on a manager, even the nicest employees will steal from you and will be unreliable including managers.

Yup, and that's where the Working Capital comes in. Which OP doesn't seem to have budgeted for at all. As I said earlier, I reckon £50,000 for such a large business. Even if they tried to shave things with Working Capital of £25,000, they'll burn through that quickly unless they get some good income coming in quickly.

But so far the only money OP has mentioned is a £100,000 mortgage for the renovations, and her salary. That's it.

It seems like you are a high-up teacher OP? Head, or head of dept?

Were you thinking you could just run the place in the holidays, or something?

How are you going to pay the bills for the hotel while it's being done up? Business rates, power, heating, water, insurance, and more?

Yes, a building that size you're looking at bills of what - £4,000 per month? Just to keep it ticking over, with no customers. Especially during the winter.

I’d say more than 4K for 35 bedrooms. I know someone paying 1.2k a month for a six bed period family house with commercial boilers.

Do you have Capital Gains Tax to pay on the residential rental property sale? That has to be paid quickly after completion.

I think you have completed underestimated everything when it comes to this.

A 35 bedroom hotel selling for 750k which the EA mentioned is worth nearly a million quid and the owner wants a quick sale - is that not a big enough red flag for you?
Retirement or not, any credible business owner would plan for their retirement and market their business accordingly.

As everyone on here has pretty much eluded too - your plan will not work. You cannot work full time and then get this business operating - it is too much of a mammoth task. You won’t be making much (if at all) a profit for many years.

You mention you have no experience in this field but you’re going to employ a manager to do everything for you - but pay them an average wage. I don’t think you’ve really considered the financial implications to this.

You are buying a 35 bedroom hotel for £675k that needs renovations - consider about £300k at least to a top standard finish. You’ll then have all the added extras that you’ll need to do before you consider opening the doors. You’ll be spending at least £1.2m before you get to that stage!

This property/hotel isn’t right for you at all.

If I was you, I would withdraw my offer. Continue with the sale of the rental property and look to invest your money elsewhere.
Could you buy an established holiday home that needs no work and you can operate straight away. You’ll need maintenance/cleaner but it won’t be as full on as a 35 bed hotel is!

Even with dh in the construction game your budget is wildly off.
Son in law has a construction company specialising in hotel refurbishments. Minimum room refurbs cost 10k. 5 star finishes 25k and up
100k won't even get the communal areas refurbished unfortunately
I'd say with working capital you need a budget of 500k+

The arrogance lunacy of your "plan" is staggering.

We are both currently in full time employment and we would probably continue this for a few more years until we’ve built up a real profitable business.
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My OH is a builder and I have a relative who is an architect so there will be family involvement. He will be working on the project full time along with a team.
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I think I was being optimistic thinking that we both work full time jobs.
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No experience in hotel or hospitality sector but it would be easy to grasp - we would employ a manager though to oversee the operation.
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the owner needs to essentially cut their losses and move.
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All cosmetic and can be done with £100k budget as an absolute maximum as OH will be doing most of the work - it will be materials that cost the most.
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We’ve made an offer on the hotel for £675k and this has been accepted on the basis that we complete within 3 months.

I really, really hope, OP, that you have withdrawn your offer and are licking your wounds as you realise what dopes you and your DH have been - and you say you have been discussing this for weeks!!!

I think the biggest facepalm for me is that you are planning to sink all your money - and more - into a commercial property that will take months to sell on, if you're lucky and somebody even takes it off your hands.

I can't get over the 'it would be easy to grasp' comment 😳