Crested Butte Boutique Hotel/Vacation Home

This beautiful and spacious mountain home currently operates as a boutique hotel in Colorado called the Crested Butte Retreat(www.crestedbutteretreat.com).  We have worked hard to create a unique, customized guest …

This beautiful and spacious mountain home currently operates as a boutique hotel in Colorado called the Crested Butte Retreat(www.crestedbutteretreat.com).  We have worked hard to create a unique, customized guest experience, grow the business, cultivate a set of loyal customers, recruit and train an outstanding team (including gifted therapists who specialize in various types of massage, Reiki, Ortho Bionomy, Yoga, and Pilates), and generate a great deal of excellent national publicity for the property.  The Crested Butte area is also riding a crest of interest and unprecedented exposure.  We are currently listing this unique and beautiful facility for sale (www.39whetstone.com).  I believe there are at least 3 segments of potential buyers for this property: 

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          First, an individual or group who would like to own and potentially run a luxury boutique hotel in a spectacular natural setting.  The business is growing and profitable and has excellent upside potential.  For a couple that wants to transition from an urban, corporate career to a more relaxed and energizing mountain lifestyle, this can be a combination business and lifestyle opportunity.  For an investment group that wants a fun lifestyle investment this is a great way to combine financial upside with ownership of a luxury property in a premier vacation spot.
          Second, this facility can function as a phenomenal second home for someone who likes to entertain, get away with groups of family and friends, and have a stream of income to help with mortgage payments.  It is the largest home in Gunnison County (11,500 square feet, 11 bedrooms and 14 baths, 6 hot tubs, 2 saunas, a gym, massage room, restaurant style kitchen, 7 outdoor decks, 11 car parking, and can seat 24 for dinner in the dining room), is a short walk from the ski slopes, has exceptional Rocky Mountain views, and comes furnished with beautiful international furnishings, art and antiques.   Gunnison Crested Butte Regional Airport is just 30 minutes away and services private jets as well as commercial flights direct from Denver, Chicago, Dallas, Houston, Atlanta, Newark, and Salt Lake City.
          Third, this facility is perfect for corporate retreats.  It can handle meetings of up to 40 people and social events of up to 100.  It is a beautiful, energizing location for team building, strategy retreats, creative offsites, or reward trips.  Our professional staff can take care of every need as well as customizing experiences in the nearby mountain wilderness.  The existing business and customer base can help keep the hotel occupied during the times when your company is not using the space.
 
The listing price of $7,995,000, or $695 per square foot fully furnished, is below many of the other high end properties in the area (which are priced around $800/foot unfurnished) and substantially below comparable properties in places like Aspen (which is 10 miles away over a mountain pass and where prices are as much as $2000/foot).  Bill Murray and Drew Barrymore recently bought places nearby, Ski magazine named us “Inn of the Month” this winter, Outside magazine featured us in an article about national parks (and also listed Crested Butte as one of the best places to live in the U.S.), Colorado Meetings and Events did a cover story on us, and Travel & Leisure is doing a spread next winter.  There are some additional thoughts on the value proposition for a potential buyer below the photos, for those who are interested in delving a bit deeper.
 
If you introduce me to someone who eventually buys the property you will be eligible for a$20,000 referral fee
(excluding real estate professionals, who should contact the buyer’s agent for commission details).                                               
 
Some key elements of a buyer’s investment rationale:
 
1)       Compared to market prices in Mt. Crested Butte, the purchase price for the real estate, furnishings, and business assets is a great deal.  Of the 17 properties in Mt. Crested Butte over 4500 square feet, over 2/3 are listed at greater than $700/square foot and over half are listed at greater than $800/square foot.  The Retreat is listed at $695/square foot and includes several hundred thousand dollars worth of furnishings, art, and antiques, a growing profitable business, and business assets like a customer list, trained staff, a number one Tripadvisor.com rating, and a professional website and internet marketing program.  Conservatively valuing these additional assets may take the listing price down closer to $600/square foot on an unfurnished basis, or 10 to 25% below other large properties in the area.
2)       The Crested Butte market is early in its development curve and undervalued relative to other premier Rocky Mountain ski towns.  Average prices in the Crested Butte and Mt. Crested Butte markets are 30-40% of those in Aspen and 60-70% of those in Telluride.  Crested Butte has comparable natural beauty, and while less developed, has a robust range of both outdoor and cultural options for vacationers.
3)       Demand for real estate in “places of great natural beauty” should outstrip supply in the long run.  Many high net worth investors believe that the scarce real property in places of great natural beauty (mountain and beach resort locations, national historic districts, adjacent to national parks, etc.) are both compelling long term investments and energizing places to spend leisure time.  Data suggests that prices are stickier downward in these markets than in urban and suburban markets and vacation spots close to them.
4)       There is substantial growth potential and upside in the business.  This business is currently generates positive operating cash flow at a relatively low utilization rate (34% in 2007).  In a highly fixed cost business increases in utilization result in dramatic improvements in profitability.  At an industry average utilization rate of 65% this business is projected to generate as much as $500k of annual operating cash flow.
5)       A re-zoning could enable a highly profitable exit in a fractional sale or condo conversion.  If a buyer were to re-zone the property, the range of exit options could expand to include fractional ownership techniques that could increase the exit valuation by 25-50%.  For a group of buyers who wanted to permanently own the property, a tenants-in-common structure could potentially result in a very attractive purchase price for shared long-term ownership.
6)       (For a foreign buyer) the dollar is inexpensive relative to most foreign currencies, enabling a purchase at price dramatically below comparable international properties.
7)       With 80% leverage, an investor would need roughly $1.6 million in equity.  A group of 10 equal investors could each own 10% of the property and business for a $160k capital contribution.  At 90% leverage, all those numbers cut in half.  For someone who is interested in taking on day-to-day management of the operation, they could move into the owners’ apartment, reduce expenses and make the business even more profitable with “sweat equity,” in a location Outside magazine named one of the top 10 places to live in the United States.
 

 

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