The hospitality industry has seen a very successful year. As market improvements continue there has been an increase in the number of hotel, motel, and resort Inn sales taking place. Buyer demand remains strong, reaching activity levels that have not been seen for years, and low interest rates continue to help both buyers and sellers complete profitable transactions. Our brokerage firm is experiencing one of the most active years in our history, facilitating the transaction of numerous properties in the $6 – $8 million range, with highlight properties such as the historic Colonial Inn in Massachusetts at $12 million. Some other transactions include:
- Comfort Inn Maine, all in price of $55,000/key
- Franchised Hotel in Eastern Massachusetts, all in price of $75,000/key
- Franchised Hotel in New Hampshire, all in price of $43,000/key
- Franchised Hotel in Vermont/NNN Leased Restaurant – under agreement
- Seasonal Motel in the Lakes Region of New Hampshire – under agreement
- Inn and Motel in Maine – under agreement
- Independent Hotel in Woodstock VT at $100,000 per room
With year to date sales volume already far exceeding expectations, we are very pleased to put a record breaking year on the books. We anticipate that buyers will continue to buy with the belief that values will continue to grow, and sellers will continue to sell knowing that low interest rates create favorable pricing due to low capitalization rates. It is overall a very positive environment for our brokerage firm as well as buyers and sellers throughout the hospitality market.
Despite the positivity in the hospitality real estate business right now, there is one glaring problem for property owners that cannot be ignored. There is a serious lack of staffing for hospitality businesses, specifically middle management, house keepers and kitchen staff. According to Greg Dugal of the Maine Innkeepers Association, “The labor situation is the worst I’ve seen in over 30 years in the industry, similar to the late 90’s. The industry is working with the Maine Office of Tourism on a survey to identify the need and quantify it so that we may create a benchmark for where we stood this summer with open positions and staffing issues. We are also working with our national trade associations to push for a more robust and easier to use H-2B visa program.”
I’ve also spoken to numerous property owners who have said staffing is hurting their revenue and operations. One owner of a large New Hampshire restaurant property told me that he had to close 30% of his dining room due to lack of kitchen staff. Another owner of an ocean front hotel said he had his best and worst year ever, with record revenue while being consistently understaffed. He went on to explain that minimum wage was not an issue; he was offering $15 – $20 an hour for housekeepers. A third owner of a property even told me that they were pulling front of the house managers to work on the kitchen line.
Staffing is a real and immediate problem in our industry, and I have agreed to engage with a taskforce to address this problem, working with Bill Zellif, former NH Congressman and former owner of the Christmas Farm Inn in Jackson, NH. I hope to be addressing the issue directly with Congress and Washington, specifically in regard to the H-B2 visa program which has been capped, reducing the region’s seasonal workforce. Unions have pushed for this legislation, but it is hurting New England’s economy and preventing the hospitality industry from seeing the growth it could see if a sufficient workforce was available. Hospitality businesses will continue to suffer if nothing is done to lift the H-B2 visa program cap and consider this problem from a global perspective.
For anyone reading, please respond with issues that you’ve experienced in your hospitality business due to lack of staffing. I’ve been asked to potentially speak before Congress on this issue and would like to bring all your concerns to their attention.
On a more positive note, hospitality owners are benefiting from the use of social media in more and more ways. For examples, “likes” and “shares” on Facebook serve as personal recommendations from friends and family. Also, hospitality businesses have seen increasing opportunities to push promotions, discounts, and special offers through Facebook and Twitter specifically. Sharing events and communicating the latest news is another way hotels, motels, Inns and restaurants are making the most of social media. Lastly, customer reviews can significantly enhance your business; managing your reputation by requesting positive reviews from happy guests and responding effectively to reviews from the unhappy ones can mean big changes in your profitability and popularity in the years to come. So if you haven’t already, it’s time to get engaged with social media and online reviews to connect with customers, manage your relationships with them, and turn any negatives into positives to improve your reputation.
Best wishes to all as we benefit from another busy fall season.