Hospitality Business, Capital Raise and Financing Options?

September 01, 2021

by a searcher from East Carolina University in Winston-Salem, NC, USA

Hello all-

I wanted to get the community's thoughts on the hospitality business and opportunities to update/convert 60's era Motel stock into appealing hospitality options for today's traveler?

I am heavily involved in real estate, and in particular short-term rentals. I'm currently evaluating a 60's era motel that is no longer being used as a motel. However, all of the rooms remain in original configuration and conversion back would not be an issue. I believe for the high quality spaces I put out, there would be incredible demand for this type of product. There would be the opportunity to build direct reservations through a website/SEO, as well as utilizing platforms like Airbnb, VRBO, Booking.com, etc.

My question is, does anyone have any experience in this? Has anyone utilized an SBA loan for acquisition + renovation/upfit? Has anyone raised capital for something similar, and do you have recommendations/tips for how to structure such a deal?

Thanks in advance!

Daniel Johnson

Reply by a searcher
from Columbia University in Jacksonville, FL, USA

No, but have looked at this space a lot. It can be very lucrative. I looked at a place in Savannah, GA that used to be a brothel in the old South days (can't give you an exact time frame - Civil War era). It was right off the main square and it was performing at a 50% EBITDA margin, whereas a super high hotel is ~###-###-#### % EBITDA Margin. But all the value was out and it would have been a coupon clipper. But usually, you need to put a decent amount in and know where the value is added best.

Reply by a searcher
from University of Colorado at Boulder in Winston-Salem, NC, USA

Daniel, I saw a property recently near Winston-Salem that fit this description. I think it was Mt. Airy? Old motel that was converted into apartments. Is that the property you're looking at?

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