Urgently Wanted Aviation/Entrepreneur

[Jay Honeck]

In a stunning move, our buyer has backed out at the 11th hour and 59th minute, leaving Mary and me in a terrible bind. At this point we are looking at stripping out everything and either (a) bringing it with us to the new hotel on Mustang Island, or (b) selling everything at auction. Either way, we are leaving Iowa City on 3/31/10.

If you've ever wanted to own and operate a profitable and successful turn-key aviation business, now is the time to step up to the plate. We've spent eight years bulding the Alexis Park Inn & Suites into the success it is today, with each suite a different era of aviation history -- and it would be a tragedy to see it go, but that's what we're up against.

We've got 48 hours -- if you're interested, contact me directly at 319-331-7395, or via email at jjhoneck@gmail.com

 

[EdFred]

You could donate all the stuff to SHCAHA and write it off on your taxes.

 

[ScottM]

You could donate all the stuff to SHCAHA and write it off on your taxes.

Move the whole hotel up to Sidnaw!!

 

[EdFred]

Move the whole hotel up to Sidnaw!!

The school would make a perfect hotel. Lotta work to do though.

 

[bbchien]

Gadzooks. I had the stinkin suspicion it was too good to be true...

 

[EdFred]

Hey Doc, you said you wanted to get ouf of practicing right. This would be perfect for ya!

 

[wabower]

I think it might be the answer for any of your patients who know their time is limited and inquire if there's any way to make the remaining time seem longer.

"Yeah, you could always move to Iowa City and buy a hotel."

Gadzooks. I had the stinkin suspicion it was too good to be true...

 

[bbchien]

Why do I suspect that running a Hotel is NOT in my skillset?(!!)

 

[Dave Siciliano]

Jay: I just hate to hear this. Do you mind if I post this on AvSig and Beechlist? Might stir up someone interested.

Best,

Dave

 

[steingar]

Aren't you looking for a hotelier?

 

[murphey]

Jay:

I'll fly over and help you pack everything up to take along. Or, pack it up and put it into storage there for the time being. I can't believe there's no option for all the stuff you've collected over the years.

 

[Jay Honeck]

Jay: I just hate to hear this. Do you mind if I post this on AvSig and Beechlist? Might stir up someone interested.

Best,

Dave

No, go ahead -- that would be fine.

We've dropped the price to a paltry $150K for everything -- the artwork, memorabilia, website, phone system, 800 number, and every fixture in the place. (This does NOT include the property.)

That's for stuff valued at $275K -- so we're priced to sell. But we need an answer in 24 hours, or it all goes to auction. We're simply out of time.

BTW: This sale has NO bearing on our new hotel in Texas, the Harbor Inn -- soon-to-be Amelia's Landing. That is an entirely separate deal, and we are 100% on track to open in Port Aransas on 4/19/10.

 

[Jay Honeck]

Jay:

I'll fly over and help you pack everything up to take along. Or, pack it up and put it into storage there for the time being. I can't believe there's no option for all the stuff you've collected over the years.

Oh, there are options, but none of them good. If I was buying a hotel somewhere nearby, it would be a simple thing to move everything from this hotel to that one. Unfortunately, the Harbor Inn is 1240 miles away, and moving costs are prohibitively high.

I'm afraid we have been good and royally screwed, for sure. We're absolutely down to the wire.

 

[Trapper John]

What's the landlord going to do with the property if you don't find someone to take over?


Trapper John

 

[damonb]

Why not keep the the hotel in IA open and have someone manage it? Maybe just start a whole chain of aviation themed hotels.

 

[murphey]

Jay:

have you contacted the aviation museum in Galveston? They had MAJOR damage with the hurricane/flooding last year but might be interested in some of the artifacts.

http://www.lsfm.org/

Wings Over The Rockies

http://www.wingsmuseum.org


Folks - get this message out to the museums in your area. They may be interested in buying some of the material before auction.

 

[murphey]

As a followup....here's a list (probably incomplete) of museums by state.

http://www.aero.com/museums/museums.htm

Folks - contact the museums in your state to see if they're interested in any of the artifacts.

Jay - do you have an inventory of the artifacts? You might get a better price than letting everything go to auction.

 

[Jay Honeck]

What's the landlord going to do with the property if you don't find someone to take over?


Trapper John

The landlord is a good friend of ours who is now retired and living at an airpark in Florida. His son is now running his business up here, which is primarily apartments.

If we don't have a buyer for the place, they will probably convert the property to apartments. The son has no interest in running an aviation themed hotel, sadly.

 

[Trapper John]

The landlord is a good friend of ours who is now retired and living at an airpark in Florida. His son is now running his business up here, which is primarily apartments.

If we don't have a buyer for the place, they will probably convert the property to apartments. The son has no interest in running an aviation themed hotel, sadly.

Bummer - I would think he'd like the rental income stream from a hotel better than what apartments would generate...


Trapper John

 

[Jay Honeck]

Why not keep the the hotel in IA open and have someone manage it? Maybe just start a whole chain of aviation themed hotels.

That was our initial plan -- we wanted one in the sunbelt (for us to run in winter), and one up here (for us to run in summer).

Unfortunately, as we got deeper into the Texas deal, we started running scenarios that made "remote ownership" look less and less workable. First of all, running a place like the Alexis is an intensely personal thing. You've got to really WANT to be in the hospitality industry, you've got to really WANT to hang out with pilots all day long, and you've got to really WANT to do whatever it takes to keep guests happy.

IMHO, this level of committment is rare in an hourly employee. Although we currently have a great staff -- certainly our best, ever -- they are (a) not immortal, and (b) not owners. At the end of the day, I simply do not want my name attached to a business that I cannot control, and there is no way to control much of anything when you're 1,240 miles away, trying to start ANOTHER business.

Thus, we came to the decision to sell. We really, truly thought we had the perfect couple as buyers, but we were obviously wrong.

 

[Jay Honeck]

Bummer - I would think he'd like the rental income stream from a hotel better than what apartments would generate...


Trapper John

He doesn't need money.

 

[Jay Honeck]

As a followup....here's a list (probably incomplete) of museums by state.

http://www.aero.com/museums/museums.htm

Folks - contact the museums in your state to see if they're interested in any of the artifacts.

Jay - do you have an inventory of the artifacts? You might get a better price than letting everything go to auction.

I do. What we will PROBABLY do (and this plan is changing every minute, it seems) is remove all artifacts and memorabilia, and load the stuff into several "PODS" (those portable storage units).

I'll then ship them to Mustang Island, where we can sell the stuff off over time, either on Ebay or as you describe. There is simply too much of it to sell all at one enormous auction, without watering the value down tremendously.

We may also re-think our theme for Harbor Inn/Amelia's Landing. We were going to concentrate on floatplanes/flying boats, with a Jimmy Buffet-style emphasis on flying, but we can always precisely replicate the aviation theme we've got going here. That would mean simply re-hanging much of the "stuff" at the new property, saving us huge time and money down there.

Dunno yet. We're getting some pretty strong nibbles now, thanks to the power of the internet.

 

[Jay Honeck]

BTW: We currently have over $65K in future reservations already booked for the upcoming months...

 

[Paul Allen]

No, go ahead -- that would be fine.

We've dropped the price to a paltry $150K for everything -- the artwork, memorabilia, website, phone system, 800 number, and every fixture in the place. (This does NOT include the property.)

That's for stuff valued at $275K -- so we're priced to sell. But we need an answer in 24 hours, or it all goes to auction. We're simply out of time.

BTW: This sale has NO bearing on our new hotel in Texas, the Harbor Inn -- soon-to-be Amelia's Landing. That is an entirely separate deal, and we are 100% on track to open in Port Aransas on 4/19/10.

What a steal! I wish I could take you up on your offer.

 

[Jay Honeck]

What a steal! I wish I could take you up on your offer.

Barring some sort of last-second deal, Mary and I have decided to keep both hotels in operation. It's not an optimal set up, being 1200 miles apart, and very much more risky than I'd like -- but our alternative (thanks to the suddenly short time constraints) is to sell our hard-won collection of aviation artwork and memorabilia for less than 50% of what we paid for it. After a day of pondering the alternatives, that's just not acceptable.

On the brighter side, we held a meeting with our employees, and our husband/wife management team are greatly excited (and relieved) to remain in our employ. They have been a huge part of our success over the last few years, and I am optimistic that they will step up to the plate and keep the Alexis running the way Mary and I have run it.

We are still looking for a buyer, but we're back to the original asking price of $275K. Anything less than that, and we may as well keep it running ourselves.

Many thanks to the many private messages and phone calls this thread produced. There are a LOT more people out there interested in running an aviation themed hotel than I would have believed!
--
Jay

 

[Henning]

I think it might be the answer for any of your patients who know their time is limited and inquire if there's any way to make the remaining time seem longer.

"Yeah, you could always move to Iowa City and buy a hotel."

You beat me to it....

 

[Henning]

Barring some sort of last-second deal, Mary and I have decided to keep both hotels in operation. It's not an optimal set up, being 1200 miles apart, and very much more risky than I'd like -- but our alternative (thanks to the suddenly short time constraints) is to sell our hard-won collection of aviation artwork and memorabilia for less than 50% of what we paid for it. After a day of pondering the alternatives, that's just not acceptable.

On the brighter side, we held a meeting with our employees, and our husband/wife management team are greatly excited (and relieved) to remain in our employ. They have been a huge part of our success over the last few years, and I am optimistic that they will step up to the plate and keep the Alexis running the way Mary and I have run it.

We are still looking for a buyer, but we're back to the original asking price of $275K. Anything less than that, and we may as well keep it running ourselves.

Many thanks to the many private messages and phone calls this thread produced. There are a LOT more people out there interested in running an aviation themed hotel than I would have believed!
--
Jay

Can you structure an ownership deal with your current management team where you finance it on a 10 year note and collect the interest, or until they refi and pay you off?

 

[Jay Honeck]

Can you structure an ownership deal with your current management team where you finance it on a 10 year note and collect the interest, or until they refi and pay you off?

They were the people we initially wanted to sell the place to. I have suggested that we revisit this issue after we run it from afar for the next 6 months.

They are good hotel managers, but they have no experience actually running a business. Those are two entirely different skill sets, and I hope the next six months will give them a good training ground. We'll see how they do.

 

[wabower]

I think that formula is much more likely to succeed than selling it to some hot-dog who thinks he's a business genius but has no knowledge of the hospitality industry. Unless the hot-dog can pay cash.

They were the people we initially wanted to sell the place to. I have suggested that we revisit this issue after we run it from afar for the next 6 months.

They are good hotel managers, but they have no experience actually running a business. Those are two entirely different skill sets, and I hope the next six months will give them a good training ground. We'll see how they do.

 

[Jay Honeck]

I think that formula is much more likely to succeed than selling it to some hot-dog who thinks he's a business genius but has no knowledge of the hospitality industry. Unless the hot-dog can pay cash.

Me, too. I hope it all works out for them.

On the other hand, I thought we had really found ideal buyers. They were local, the guy's an aircraft owner/pilot, the wife's a nurse -- in short, they were almost identical to Mary and me 8 years ago.

The big difference: No prior business ownership. The hotel was our third business, so we were used to hanging everything out on the line. The buyers who got cold feet had never worked outside of the corporate world, and I think that when it came down to "decision time", they just couldn't bring themselves to forgo all those big-company perks. And you know, it's hard to blame them -- why give up six weeks of paid vacation, 401Ks, and virtually guaranteed success for a life of risk?

Personally, I enjoy the challenge and have fun doing it -- but most people apparently don't.

 

[wabower]

If they are doing well now, it would definitely take them out of their comfort zone. The new deal may work better for everybody.

Me, too. I hope it all works out for them.

On the other hand, I thought we had really found ideal buyers. They were local, the guy's an aircraft owner/pilot, the wife's a nurse -- in short, they were almost identical to Mary and me 8 years ago.

The big difference: No prior business ownership. The hotel was our third business, so we were used to hanging everything out on the line. The buyers who got cold feet had never worked outside of the corporate world, and I think that when it came down to "decision time", they just couldn't bring themselves to forgo all those big-company perks. And you know, it's hard to blame them -- why give up six weeks of paid vacation, 401Ks, and virtually guaranteed success for a life of risk?

Personally, I enjoy the challenge and have fun doing it -- but most people apparently don't.

 

[Mxfarm]

If they are doing well now, it would definitely take them out of their comfort zone. The new deal may work better for everybody.

+1, working without a parachute isn't for everyone.

marc

 

[Jay Honeck]

+1, working without a parachute isn't for everyone.

marc

Yep. And working in the corporate world isn't for me. The buyer who backed out has run $100 million dollar production facilities for major Fortune 500 companies. You couldn't force me to do that, for ANY amount of money.

Funny, isn't it?

 

[N801BH]

Yep. And working in the corporate world isn't for me. The buyer who backed out has run $100 million dollar production facilities for major Fortune 500 companies. You couldn't force me to do that, for ANY amount of money.

Funny, isn't it?

What's funny is this buyer who backed out and supposably ran a $100 million production facility for a Fortune 500 company was not able to save a measly 275,000 over their lifetime in the corporate world and just pay cash to you and Mary. Running a facility that large should have paid in the mid to high six figure range. They also could have structured a self directed IRA and used Axesis Park as a revenue vehicle for future earning. My guess is they had very little self control over their finances and by ****ing it away they were not in a position to attempt this type of business venture. I could be wrong though. IMHO

Going the route as you are this hour, as in retaining ownership of both operations is your best option.... Chin up and keep marching forward Jay.

 

[alaskaflyer]

What's funny is this buyer who backed out and supposably ran a $100 million production facility for a Fortune 500 company was not able to save a measly 275,000 over their lifetime in the corporate world and just pay cash to you and Mary. Running a facility that large should have paid in the mid to high six figure range. They also could have structured a self directed IRA and used Axesis Park as a revenue vehicle for future earning. My guess is they had very little self control over their finances and by ****ing it away they were not in a position to attempt this type of business venture. I could be wrong though. IMHO

Going the route as you are this hour, as in retaining ownership of both operations is your best option.... Chin up and keep marching forward Jay.

Well, as Devil's advocate who in their right mind would purchase a business with their own money when they could put someone else's at risk instead? Someone in the corporate world would presumably know this very well.

 

[Jay Honeck]

What's funny is this buyer who backed out and supposably ran a $100 million production facility for a Fortune 500 company was not able to save a measly 275,000 over their lifetime in the corporate world and just pay cash to you and Mary. Running a facility that large should have paid in the mid to high six figure range. They also could have structured a self directed IRA and used Axesis Park as a revenue vehicle for future earning. My guess is they had very little self control over their finances and by ****ing it away they were not in a position to attempt this type of business venture. I could be wrong though. IMHO

Although there was more to the buyer's decision than just money, you're close to being right on. The dude lives in an $800K home, but was having to finance the sale. I thought that was pretty telling.

You don't run a small, aviation themed hotel to get rich, you do it cuz it's fun, and because you WANT to do it. In the end, I think he just realized that the corporate "womb" is a nice, safe place to be. Nothing wrong with that decision, but (for our sake) it needed to be made sooner.

 

[Jay Honeck]

Well, as Devil's advocate who in their right mind would purchase a business with their own money when they could put someone else's at risk instead? Someone in the corporate world would presumably know this very well.

On a small purchase (like the Alexis Park Inn business), cash is still king. $275K is chicken feed for a business that grosses $450K+ annually, and the return on investment far exceeds anything you can get in the market today.

However, on a larger purchase (where land is involved, as in our purchase of the Harbor Inn), the current interest rates make borrowing money advantageous. This is one reason we made the buy down on Mustang Island. Right now obtaining business financing is EXTREMELY difficult -- but if you DO qualify, as we did, it is possible to obtain a loan in the sub-5% range.

In historical terms, that is essentially "free" money, making it wise to use the bank's (rather than your) money. If you believe (as I do) that we will soon be entering a nasty period of inflation, locking in a 20-year SBA loan at 5% is a good thing to do.

IMHO, of course.

 

[wabower]

Nothing particularly unusual here, and certainly no reason to conclude or even suggest that the buyer doesn't have significant tangible net worth.

Many financial advisors advocate investing in large homes (or did prior to 2008) so I don't fault the guy for that. They could also have significant retirement accounts with his/herover which they do not have investment discretion, and because such accounts are not available to creditors, they might wish to keep separate from any personally-owned businesses.

Finally, his choice to finance the business rather than paying cash should not be seen as anything other than a personal decision rather than any scheme regarding the use of somebody else's money. Anybody who does deal financing understands that the personal guarantees necessary to secure funding for these deals are very strict, and that there ANFL.

Although there was more to the buyer's decision than just money, you're close to being right on. The dude lives in an $800K home, but was having to finance the sale. I thought that was pretty telling.

You don't run a small, aviation themed hotel to get rich, you do it cuz it's fun, and because you WANT to do it. In the end, I think he just realized that the corporate "womb" is a nice, safe place to be. Nothing wrong with that decision, but (for our sake) it needed to be made sooner.

 

[Trapper John]

On a small purchase (like the Alexis Park Inn business), cash is still king. $275K is chicken feed for a business that grosses $450K+ annually, and the return on investment far exceeds anything you can get in the market today.

However, on a larger purchase (where land is involved, as in our purchase of the Harbor Inn), the current interest rates make borrowing money advantageous. This is one reason we made the buy down on Mustang Island. Right now obtaining business financing is EXTREMELY difficult -- but if you DO qualify, as we did, it is possible to obtain a loan in the sub-5% range.

In historical terms, that is essentially "free" money, making it wise to use the bank's (rather than your) money. If you believe (as I do) that we will soon be entering a nasty period of inflation, locking in a 20-year SBA loan at 5% is a good thing to do.

IMHO, of course.

In order to get an SBA 7A loan, it means you can't qualify for conventional financing...and the taxpayers are guaranteeing your loan...

But if you got 5% on a 7A for 20 years, good for you. They're usually NY prime +2.75, which is closer to 6% right now.


Trapper John

 

[Steve Foley]

On a small purchase (like the Alexis Park Inn business), cash is still king. $275K is chicken feed for a business that grosses $450K+ annually, and the return on investment far exceeds anything you can get in the market today.

Something that needs to be considered is the amount of owner participation necessary to realize that ROI.

Can a non-participating owner invest $275K and expect a 10% ROI? That would imply that a professional management is being paid for before net profits.

So, for $275K, is someone really investing, or are they buying themselves a job?

Also, some unsolicited advice. My employer (I gave up self employment seven years ago) is semi-retired. He has houses in Florida and on the New Jersey shore. He comes here (Massachusetts) three days each month just to keep an eye on things. In the seven years I've been here, he missed one visit. I suggest you do the same thing.