The Orcas Hotel

Orcas, WA (San Juan County)

Orcas Hotel Front porch View
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Asking Price: $1,490,000

Cash Flow: N/A

Gross Revenue: $1,000,000

EBITDA: N/A

FF&E: $380,000

Inventory: $15,000*

Real Estate: $1,900,000

Established: 1998

*not included in asking price.

The Orcas Hotel

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Business Description

The Orcas Hotel, Cafe and Bistro

My family has owned the Orcas Hotel for 21 years and operated it with an espresso cafe, 12 guest rooms and a bar with nine tables for dinner. In 2008 we had an appraisal done for the bank The values of the appraisal are listed below. We are located at the ferry landing on Orcas Island and have thousands of residents and visitors streaming past the building. Location, location, location!

Indicated values
Cost Approach: ` Income Capitalization Approach: Sales Comparison Approach:
ANALYSIS OF VALUE CONCLUSIONS
$1,932,000 $1,945,000 $1,920,000
18 ORCAS HILL ROAD ORCAS ISLAND WA 98280
?The analysis and reconciliation of all approaches to value is the final step in the appraisal process. This procedure requires the evaluation and weighing of each approach to value and determining the reliability and relevance of each process to the question of market value for the subject property.
The Cost Approach examines the value of the subject site, as though vacant and ready to be put to its highest and best use and in this instance is arrived at using several market perspectives. The improvement value is based upon relevant building cost data, verified with builders and contractors and then applied to the physical characteristics of the subject improvements. Accrued depreciation from all sources (physical, functional and external) is estimated and subtracted from the cost new for the subject. The value of the land is then added to the depreciated cost new of the improvements to arrive at a cost approach value. The primary weakness of this method is that, although cost data is essentially market derived in nature, it is not as reflective of the activities of the market as the other two approaches. However, when appraising properties such as the subject, with unique structural elements and operational use, sometimes the Cost Approach exemplifies the efforts of the market to replicate the performance aspects of the property. This can only be accomplished through an assemblage method and is a viable perspective to the market for unusual properties. The market for classic hotel properties such as this is more likely be focused on the location, size and cost of the buildings versus existing available substitute properties. Thus, the cost approach method tends to reflect the middle range of value and receives substantive weight in the final reconciliation.
The Income Capitalization Approach researches the market for comparable rentals, derives a forecasted and stabilized rent estimate, accounts for vacancy and expenses and then capitalizes the net income stream into a value for the subject property. This method is reflective of the state of mind of potential investors seeking to capture a reliable income stream with a modicum of risk relevant to other potential investments. The principle of anticipation drives the Income Approach as investors seek increasing values. Key to this in the office market is proper site size, building square footage and good locational appeal and traffic counts as well as supply and demand factors to create income production. Since the subject offers a very unique circumstance and because reliable income and expenses were unavailable, a pro forma was constructed to replicate the subject’s operation and performance. This method receives least weight in the analysis due to the less reliable information.
The Sales Comparison Analysis identified sales of hotel and bed and breakfast properties considered relatively comparable to the subject. The four comparables offered are the best available properties with which to derive reliable elements of comparison and are deemed to supply confident and reliable information with which to value the subject property. Therefore, the Sales Comparison Approach is considered to be the most reflective of current market conditions and receives greatest weight in the analysis.

Detailed Information

Location:
Orcas, WA
Inventory:
Not included in asking price
Real Estate:
Owned
Included in asking price
Building SF:
8,000
Employees:
17
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
The sale includes all furniture, fixtures and equipment. Priced reduce for a quick closing. Hoping to sell before the end of the year.
Competition:
We are located on Orcas Island, right next to the ferry dock, so we have thousands of visitors walking thru our hotel and property when they get on the island and when they leave. It is also a great place to stay on the island and visit the other island. We do have some competition for the lodging dollars, but have an advantage over most do to the ease of turning over the rooms nightly and not requiring an two or three night stay.
Growth & Expansion:
Could expand rooms or further update the facility. Cost vs benefit for me at my stage of running the hotel does not work. For a new owner the updating and expansion could be an option.
Financing:
Property reduced to $1490000
Support & Training:
I would be agreeable to training and supporting the building and business until you feel confident in running it.
Reason for Selling:
Time to move on, family is now raised and it is my turn to do something else.
Business Website:
http://www.orcashotel.com
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Business Listed By:
Doug Tidwell

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