Sold in 30 days:
Interstate Inn —
Blue Springs, MO
Property: Interstate Inn
Market: Blue Springs, Missouri
Property Attributes
The Interstate Inn was built in three separate phases and was owned by its original developer at the time of its sale. The property suffered a significant decrease in revenue and net operating income in 2003.
This suburban Kansas City property was located on I-70 with excellent interstate visibility. The property consisted of three separate buildings. The two end buildings were constructed in 1973 and 1977, were both exterior corridor, and had 48 rooms and 72 rooms, respectively. The middle building was constructed in 1997, was interior corridor, and had 77 rooms. The property totaled 197 rooms.
| Year 1 | Year 2 | Year 3 | |
| A.D.R. | $26.70 | $27.51 | $27.77 |
| Occupancy | 37.3% | 57.8% | 52.2% |
| RevPar | $9.97 | $15.91 | $14.51 |
| Room Revenue | $716,766 | $1,143,682 | $1,043,106 |
| Total Revenue | $741,556 | $1,199,826 | $1,091,713 |
| NOI | $46,902 | $337,387 | $388,549 |
*NOI expressed before deduction for FF&E Reserve and Management Fees.
Owner Objective
The owner’s desired outcome was to dispose of the hotel as part of a debt restructuring agreement with the lender. This hotel and two others were to be sold in order to protect the owner’s cash-flowing hotels. As a result, the owner was motivated to ensure that this property sold before the year 2003 ended. After a buyer procured by the owner failed to perform, ownership listed the property with Hotel Source, Inc. in early November with the primary goal being to have the sale of the property completed by December 31, 2003.
From a buyer’s perspective, the property faced numerous future challenges. Demand generators for that location had been reduced as development within Blue Springs had occurred primarily at the other Blue Springs exit along I-70. Two of the buildings were becoming obsolete and the financial performance had taken a significant downward turn in 2003. Buyers were also required to close in an accelerated time frame of approximately 30 days. The transaction also needed to receive approval in bankruptcy court.
Sales/Marketing Process
Using a marketing approach that targeted Midwestern hotel owners with independent or economy franchises, Hotel Source, Inc. was able to attract buyer interest within hours after emailing the initial marketing materials. Through quick response to inquiries and personal contact with the most likely 100 purchasers, Hotel Source was able to arrange multiple inspections within the first four days of taking the property to market, and had a signed contract one week after the initial marketing. This enabled the owner to set a bankruptcy court hearing prior to the end of the year, while accommodating for the holidays.
Negotiations
Hotel Source continued to respond to interest from other potential buyers even after the property was under contract, because bankruptcy law allows alternate purchasers the opportunity to appear in court in order to attempt to outbid the incumbent buyer.
The owner ultimately sold the hotel at a price that was 5% higher than the initial offer accepted.
Conclusion
The property sold in 30 days. The seller received bankruptcy court approval and was able to close the transaction prior to December 31, 2003. The buyer received an asset consisting of three buildings that afforded numerous rebranding and redevelopment opportunities.