The working budget for The House of Salt & Such has several components and is created with market research and financial data provided by two of the properties being considered for purchase. Revenue calculations are generated by using seasonal rates by anticipated occupancy percentages. The occupancy numbers were checked against historical data which has been provided by the current innkeepers of the properties. Additionally, beginning in the second and third year of operation, we look forward to hosting weddings and private events at The House and have accounted for this revenue as well.
Expenses are divided into two categories, Fixed Accounts and Variable Accounts. Fixed Accounts include the cost of the primary mortgage, property tax, business insurance, licenses, training, building maintenance, lawn service, professional service, continual renovations or repairs, property management booking portal and website hosting fees. These costs are calculated and expected to stay the same each quarter.
Variable Accounts include the anticipated cost that are expected to fluctuate depending on the season. These accounts include utilities, food and beverage, special events (this cost only exists when a revenue is projected), staff salary, host salary, health insurance (anticipated for the hosts only), lodging supplies, credit card fees, booking commissions, advertising, firewood, and miscellaneous.
As outlined above, The House is seeking a financial partner to contribute funds for three major areas
It is intended that the financial partner will be re-paid with a return on investment at four points in time and defined as key performance indicators. The three year mark will be the first point in time, followed by the five year mark, then the seven year mark, and finally the ten year mark. The hosts are confident of our ability to outperform the key performance indicators and repay the investor quicker, but first ensuring that the business is financially capable of making a faster repayment of key performance indicators.
The financial partners investment is secured with physical real estate being held as collateral. The ownership of the financial partner will be equal to the percentage of the partner’s financial contribution. Each payment of key performance indicator will return investment for the financial partner and reduce ownership percentage in the property LLC.
Staffing and Human Resource Needs
The House will require well trained seasonal and year-round staff, Maria and Jesse will reside at The House as Full-Time Innkeepers. They will work 40-50 hours a week, with two floating days off. It is estimated that there will be an additional staffing need for the following positions: 1 housekeeper, 1 assistant innkeeper (part-time), a maintenance/groundskeeper (part-time). There will also be a need for contracted workers including: an attorney, CPA and inn-sitter to cover vacations and other short term staffing needs.
The goal of the transition of ownership is to retain current employees who are working for the current inn. This will allow for minimal training and recruitment expenses. However, if this is not the case, use of internet advertising and a staffing agency will generate The House roster.
Due to the fact that the current staffing expenses are not readily available, research has been conducted on the salaries for the position stated above.
Housekeeper The average salary in Massachusetts is approximately $12.78 per hour. Given the research of the cost of living in Provincetown, we would hire an individual at $15.00 per hour. The estimated expense for housekeeping will be roughly $31,200.00 annually. We also anticipate additional staff during peak season. We have accounted for this by increasing the housekeeping budget $8,000 annually.
Assistant Innkeeper The average assistant hotel manager makes roughly $40,000.00 per year. Since this is a part-time position, the estimate for this position is $20,000.00, long term goals would be to bring them on full-time as the Inn increases its annual occupancy rates. This position isn’t intended to be filled until after the third year.
Groundskeeper The salary will be roughly $16,000 per year, about half of what the average full-time maintenance person earns. This position isn’t intended to be filled until after the third year.
Lastly, the resident Innkeepers, Jesse and Maria, have agreed to a stipend not to exceed $8,000.00 annually for each position, this will be amended once The House has paid off the private loan. Additionally, The House will pay for the cost to insure Maria. The total first three year staffing estimate is $56,000 annually, which will comprise a majority of the variable operational expense budget.
The House of Salt & Such will use a phased approach in updating the property to fit the overall branded feel as outlined above. The phases will be carried out over the first two winters, during off-peak season, as outlined below.
In the first year of ownership, the first phase will be a kitchen and dining room re-design which will blend the existing elements with large and impactful upgrades. These include a wall removal, new flooring, new countertops, backsplashes, lighting and cooking equipment. The first phase will include decor changes in the communal areas, utilizing what is on site and bringing in fresh modern lighting, paint and furniture. Lastly, we will also be on updating the 8 bedrooms and corresponding baths. The changes will include utilizing what is on site and bringing in fresh modern lighting, paint and furniture.
Estimated kitchen cost: $100,000.00
Estimated communal cost: $10,000.00
Estimated per bedroom and bathroom cost: $4,000.00
In the second year of ownership, the second phase will include work on the exterior, which includes new door and trim paint, and an outdoor kitchen. It will also include extensive work in the gardens surrounding The House, the gardens will mix both native plants and non-native plants to create a “English Garden” look, while having a low environmental impact.
Estimated garden cost: $10,000.00
Food and Beverage Budget
The food and beverage budget will be seasonal like the menu at The House. A sample menu of our peak season offerings is provided in this proposal and has been analyzed for cost on a per person cost basis. The cost estimate does not account for distributor discounts, and it is based on the estimated occupancy rate for each quarter. Utilizing the average cost of all meals on a per room basis, we calculated $14.57 per room per night of cost. Our budget is built on $17.50 per room per night of cost to account for other factors not able to be calculated. The total yearly budgeted cost was compared to financial data provided based on past performance of two of the properties being considered. The House food and beverage portion is 20% to 30% higher than other properties, which fits accordingly with our vision.