Maintaining confidentiality for a family businessHotel for Sale: Best Western Harborside
Market: Port Washington, Wisconsin

Best Western Harborside was developed by a local family that owned and operated a successful restaurant and bar for many years. The family constructed a 60-unit hotel adjacent to their restaurant, which they later expanded to 96 rooms. The new wing contained guestrooms which were far more spacious than the original rooms and offered upgraded amenities. Although the guestroom attributes were much different, the new and original wings were connected seamlessly.

Located in Port Washington, Wisconsin, just 20 miles north of Milwaukee and three miles off Interstate 43, this five-story hotel overlooked Lake Michigan, the downtown marina, and the shopping district. It featured a breakfast room, bar, indoor swimming pool, 1,200 square-foot meeting space, and game room.

After the hotel's new wing opened, the owner, who had managed the property, went into semi-retirement for health reasons and relinquished the day-to-day operations to his son. Under new management, the hotel's bottom line improved substantially by reducing expenses, but the new operator did little to market the property to the business community who could provide corporate demand. Instead, management relied primarily on print advertising to lure leisure traffic.

*NOI expressed before deduction for FF&E Reserve and Management Fees.

Hotel Owner Objective
When the hotel owner initially contacted Hotel Source, Inc., they had been presented with an offer of $4,800,000 by a local real estate broker on behalf of a buyer. Not sure if the price was a true indication of value or if the hotel buyer had the ability to consummate the sale, the owner desired an objective opinion of value for their hotel. Based on this opinion and their own expectations, they would decide whether to hold onto the property or sell.

Hotel Source was among three hotel brokerage and advisory services firms to present an Opinion of Value and hotel marketing proposal. Hotel Source reviewed the hotel's physical attributes, condition, operations, nearby hotels, and the owner's perception of market demand. After analyzing this information, Hotel Source viewed the Best Western Harborside as an opportune acquisition for a savvy hotel company with strong marketing resources. The hotel had great untapped potential, being in a prized location with high barriers to entry.

The hotel did, however, present many challenges. It was unattractive to many buyers because it was not near an interstate, could not be reflagged into a more upscale brand, had evidence of obsolescence, and did not contain enough guest rooms or meeting space to interest most buyers. In addition, the market demand generators could not be easily quantified.

The Opinion of Value to ownership called for a marketing price of $5,500,000. The hotel marketing plan was to offer the asset to a targeted audience who possessed the desire and wherewithal to acquire this type of hotel, and who would be able to see and understand the underlying potential. This analysis caught the interest of the owner and Hotel Source was engaged for the assignment.

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