Friday the 13th...The Final Chapter / Part IV

Our only possible way out of this financial doomsday was to try and sell the hotel. It had been our plan to give the hotel business at least five years, and as many as ten, at which point we’d have the business soundly established, the place refurbished, the mortgage retired, and we’d sell the joint for $2 million bucks and move on to the next phase in our lives. Can you guess how far reality has taken us away from that scenario?

Now comes proof positive that not only is there a just God, but more importantly, proof of the existence of a God that seems to have a soft spot for idiots. In April of 2009, my old employer called, out of the blue, and asked if I’d be interested in working on some special projects for them. It had been a year since I’d left their employ, and had virtually no contact with them during that time; regardless of how dire my situation had become, my last expected source of relief would have come from a company that, with no warning, I had walked out on. There were some in the organization that were upset with me for leaving; they’d had plans to promote me and move me to Jackson, MS, and my leaving put a bit of a hole in their organizational chart. I didn’t figure they’d have me back if I’d have come begging and crawling, let alone have them initiate my return; I’d have never hired me back. Wonders truly never cease, and the sun occasionally shines on the simple minded.

The offer was for me to work ‘part-time’ for as long as the next two years, during which time we would sell the hotel, and then come back to work full time; and no ifs, ands or buts, that full time thing included relocating to the corporate office in Jackson. Some might have cautioned that I play harder to get, as it was they who contacted me, and in spite of the Business Boner of the Millennium that I had committed, they still placed a value on my services. Let me tell you, I was as coy with them as a Times Square hooker; a nanosecond seems an eternity to the speed at which I accepted their generous offer. The only one who moved faster than me at accepting their largesse was Julie in pushing me to accept; I believe I still have the bruises on my shoulder blades where she pushed me.

And then came Miracle #2 – we had a buyer for the hotel. We were approached by an individual – a local – who expressed what I felt at the time was a serious and sincere interest in buying the hotel. Not only did they have the desire to own The Riverside, but I believed that they had the resources; mentions were actually made of “cashing in CD’s” to fund the purchase of the property. It was at this point that Julie and I mentally checked out as the owners and operators of The Riverside. Julie immediately went from looking online for 2nd income opportunities to looking for tony residences in Mississippi. We weren’t going to sell the hotel for that gaudy dream sum I mentioned earlier, but we were going to recoup all that we had invested into the business, and that was enough to get us out of debt and put us into a home in Jackson.

However, that “mentally checking out” thing ended up being critical towards our ultimate demise, as we would have definitely done things differently if we didn’t think (actually, we were 99% certain) that we had the place sold. I’m not saying we would have been able to salvage the place, just that we would have put time, money and resources in different areas that may have allowed us to ultimately sell the property, and at the very least, minimize some of the bleeding that ultimately occurred.

I really checked out, as I started traveling a bit for the new job in early June, leaving Julie and Rachel behind to fend for themselves. I also quit paying attention to the business side of the business, the penalty of which I would later pay for with some late, frantic nights trying to assemble for the IRS the gory financial details of a year in ruin.

In the middle of July, the buyer for the hotel swiftly, and without warning, backed out of the deal. We quickly contacted a realtor – a friend who was confident that if properly marketed, we’d be able to sell the hotel, even in the current economic climate – and officially put the hotel on the market. In the first few weeks, we had a few people kick the tires, but no serious buyers. What appeared to be our first serious prospect were a young couple who flew down from New York to look at the place – it was their dream to own a B&B in Colorado; and while they loved The Riverside, they were savvy enough (as savvy as your average 5-year old would be savvy, which is unfortunately savvier than me) to know what a tough go it would be to make a living in the out-of-the way shithole that is Hot Sulphur Springs. “Thanks, but no thanks”, they said.

Next we had a business owner from nearby Glenwood Springs, a man who’d made a good living in the construction supply business and was looking to sell that business and make a lifestyle change. (Take it from me; buying The Riverside and moving to Hot Sulphur Springs would slake the thirst of the thirstiest lifestyle changing wanna-be.) This really had me excited, as here we had an individual that was a native, already accustomed to the brutal life and winters of small town, mountainous Colorado, which was the major put-off for our heretofore interested Yankees; and more importantly, he had the money to actually make it happen. His first tour of the property had him salivating, envisioning then vocalizing the improvements he would make, including building a covered, heated deck overlooking the river, with French doors out of the dining room onto the deck. I watched with muted glee as he excitedly painted a picture of the life he was going to change and the business he was going to transform. As he left, he made arrangements to come back and spend the next weekend with his family at the hotel. I never heard from him again.

Then there was a woman from Iowa, who’d inherited a large sum of money and “really wanted to do something crazy with the rest of her life”, something I suppose that wouldn’t ultimately define her as an Iowan. It turns out she met a man from Denver, (in an ‘online’ dating forum, that sacred place where those oh-so strongest of personal bonds are formed), and he knew of The Riverside and knew with the right people running the place, they could make a go of it. He actually told our realtor that we were idiots and had no clue about what we were doing, which was why we were failing so miserably; while his assessment of us was spot on, my hurt feelings would have quickly disappeared when the check cleared. The woman was making the arrangements to visit us, and her cyber beau for the first time, when she called to ask me some questions. It was maybe a few words into the conversation when it occurred to me that if there was someone on this earth with less sense than I, she was in fact now on the other end of the phone line, in Des Moines. She told me that she was starting to have second thoughts, not so much about buying the hotel and moving to Colorado, but about her boyfriend, as in their last few discussions, he had become verbally violent and abusive towards her, and she wasn’t certain if she still wanted to include him in the venture. “Oy!” I thought. She never heard from me again.

And so went the attempted sale of The Riverside…….

Friday the 13th...The Final Chapter / Part III

The previous owner of The Riverside ran a cash-only business, (I think, duh, maybe for screwing the IRA tax reasons) and therefore, kept no reliable records as to the earning potential of the hotel and restaurant; no occupancy rates, no average # of diners/month, no monthly or annual revenue figures – nothing. So not only did we quit good jobs and leave friends and family to buy a 106-year old haunted building in need of major repairs with fetid living quarters in an out-of-the-way town that smells like rotten eggs in a climate that would freeze the ass off of Nanook of the North for nine months out of the year, we also invested our life savings into the textbook definition of a financial "pig-in-the-poke".

The business plan that I developed for the bank was based upon some wild-ass guesses using formulas that involved days of operation, number of rooms, number of dining room seats, room rates per night and price of the average meal ticket, and put that against estimated monthly expenses – most of which came from Abe; no, unfortunately not Honest Abe Lincoln, but Abe Rodriguez. I conservatively figured, or so I thought at the time, that our break even point was at a 20% occupancy rate. I actually took a lot of time putting occupancy numbers together, with bell curves trending during busy seasons along with expenses, and felt that I had a pretty good grasp of things. After all, (although most who’ve read prior entries to this blog and have marveled at my lack of business acumen, nay in many instances, my lack of a single, properly functioning brain cell, will call absolute screaming BS on this) I ran a successful business for the better part of 20 years, a large part of which involved the financial management of budgets and expenses and generation of revenues. So while I was a neophyte in the hotel and restaurant business, I certainly wasn’t a neophyte in running a successful business. While The Riverside was nothing but an endless string of bad decisions, I previously had a history of making mostly good decisions; the bank relied upon that fact in buying into my 20% occupancy rate business plan, which included 5-year cash flow and pro-formas.

The first summer seemed to go pretty well, in spite of the fact that we’d done zero marketing or advertising. We ended up being at full occupancy every Saturday night from the middle of June until mid September, with numerous near sell outs throughout the weeknights. Our lunch traffic was steady to good throughout the summer, with bustling dinner business on the weekends. I was able to comfortably pay the bills, and even had the cash to make an extra mortgage payment in September. But in October and November, our business dropped like a Boulder boulder; but the expenses held steady. I started eating through our cash like a victorious football team at a post-game buffet. A decent Christmas season helped momentarily to right the ship; then came the off-season (January, February and March), followed by the dead season, or more commonly referred to as ‘mud season’, which is comprised of April, May and the first two weeks of June. I terrifically miscalculated the amount of business that was available to us during Ski season; from a lodging perspective, it was virtually non-existent, as skiers want to be on the slopes, and we were 25 miles away from Winter Park. If not for Valentines Day weekend and a couple of group events, our first full winter would have been disastrous. It was in March that I went to the bank for that promised line-of-credit that was ultimately denied; if not for me raiding my 401k, we wouldn’t have made it to our second summer season.

We shut the hotel down in mid-April after an Easter Sunday brunch and headed to KC for a few weeks. We still had our unsold, unoccupied home in KC that we were making payments on – a situation that never even in my ‘worst case scenario’ plan occurred to me when we packed up in June of 2008 and headed west; not only was I not budgeting in a house payment, I had budgeted in the income from the quick sale of that house at pre-depression real estate values.

There was another nasty little ‘what if?’ that I missed when I was running the business plan numbers on this venture that was now strangling us to a slow, very intense fiscal death – the depression. While I now have profound doubts about our ability to have been successful at The Riverside in a robust economy, I for damn sure know the current state of the economy didn’t do anything but hurt our situation. As bad as things are nationally, they’re far worse in Grand County, CO, with the hub of the pain and suffering being centered in Hot Sulphur Springs – the county seat. The whole raison d’être behind Grand County, CO is tourism, and tourism is fueled by discretionary spending and discretionary spending is the first thing to dry up in a depressed economy.

The difference between our first summer (economy still robust) and our second summer (economy in the toilet) was profound and immediately discernable. Our bustling lunch business of 2008 disappeared in the summer of 2009; on many days not a single soul walked through the door, but a cook was paid and the prepped food went to waste. It was a slow, agonizing financial death; by August I’d sent home all of the peripheral help, and it was down to Julie, our cook and me to handle all of the chores. I had way too much 10:00 AM – 2:00 PM empty lunch time, listening to the dining room playlists and reading books, whilst sitting, hoping and praying that a customer would walk through the door; not one second of it was relaxing or enjoyable.

Our 2009 pre-season hotel room bookings were non-existent and the Saturday afternoon walk-in crowd of 2008 that filled the hotel every single weekend was hunkered down someplace else. Business was in the toilet but the fixed expenses were still in the penthouse.

We were bleeding, we were dying, and the coffers were bare….