by Larry Mundy
|One problem with hotels is that they are by definition big and expensive.
Historically, if you wanted to own a nice hotel, you had to start out by
having a few million “extra” dollars to play with. I don’t know about
you, but I’m still struggling to pay the monthly mortgage on a three-bedroom
Then you had to find a lender willing to kick in a few million more. In return, the lender would get first crack at the hotel’s cash flow, your first-born child, and your future poker winnings. And if you ever skipped a payment, they could also take the whole hotel away from you, returning only the first-born child (probably with a full diaper). And lenders would first require some sort of evidence that the hotel might actually be profitable, and that you had paid your debt to society after that nasty legal incident with your failed mail-order vitamin company. What a hassle.
So if you want to own a hotel, have a “credit score” lower than a carpet beetle, and haven’t won the Powerball Lottery recently, what are your options? Well, you can buy a share in a public lodging company, most of which will send you a pretty stock certificate for less than the price of a fancy dinner. But that probably won’t impress your poker buddies, because they will know there are 1,835,643,681,567 other shares outstanding, all just like yours, and thus that you have about as much influence on the management of the company, as I have to affect the diphtheria-suppression policies of the government of Kurdistan.
If you always wanted to own a piece of a resort-type hotel anyway, you could buy an interest in a timeshare. The cost of this is closer to the cost of a small economy car, but most timeshare projects will accept a small deposit equal to 100% of the “headroom” on your MasterCard, and finance the balance in easy payments keyed to your actuarial life expectancy. The good part is, their marketing people will fly you and your spouse to the resort, put you up for 3 days and 2 nights, and feed you a lovely dinner, if you will simply consent to be locked in a windowless room with a sales representative until you are ready to sign anything, including a confession that you in fact traveled back in time and kidnapped the Lindbergh Baby. You emerge the proud owner of the perpetual right to a week in unit 437 during locust season.
If, however, your uncle Herb forgot to make good on his threat to cut you out of the will, and left you a good-sized chunk of change, you can buy that same guestroom for year-round use in what’s called a “condo” hotel. These have been around for decades but are enjoying new popularity. You buy all of room 437, wall-to-wall, forever. It’s your own little hotel-ette. Then you contract to place it in the “pool” to be rented out to others, because you want someone else to enjoy the wonders of locust season once in awhile. “Condo hotel financing” has allowed many hotels to be built without involving those greedy lenders, because each individual unit owner has to find his own greedy lender.
But what if timeshares and condos are still beyond your meager means? What if you’re like me, and have enough problems making the payments on your 2002 Chevy, complete with crumpled fender? I would like to suggest an all-new concept, which I hereby dub “FOOT” financing.
“FOOT” stands for “Fractional Ownership Of Things,” and is simply the next step in hotel financing. When you think about it, a hotel is full of various things, some expensive, some not. What a hotel buyer or developer would do, is assign a price to each item in the hotel, and sell those to whoever wants them in exchange for a fractional share in the ownership of the hotel itself. There would be something at every price point. The outside wall and window combination in room 363? $9,000. The boiler room and all its contents? $950,000. The desk in room 224? $300. The toilet flush handle in 603? Two bucks.
You could even corner the market, so to speak. Someone of relatively modest means could own all of the flush handles in the entire hotel, or all of the luggage racks, or all of the peepholes in the doors. Then you lease them back to the hotel itself, for a tidy return on your investment. Want to impress your poker buddies? Let them know you hold the lease on all the wallpaper in the Grand Luxe Acres Villa Resort and Day Spa. Or ask them rhetorically where all those rich resort guests would be without your flush handles.
Of course, in a large hotel, even peepholes and flush handles can add up to a tidy sum. But FOOT is flexible, and can even accommodate time-sharing of items. You could own the ceiling of the Presidential Suite for a week in October – the very suite where a famous movie star was seen cavorting with an actress who is not his wife! You could own all the carpet on the 5th floor, for the weekend of the Monster Truck Bash at the nearby stadium. You could even hold title to a half-dozen swag lamp pull-chains on only your birthday, for less than the cost of a pack of gum. What a great gift idea!
All of this would have been impossible just a few short decades ago, but powerful modern computers can track and account for anything, now matter how small (if you don’t believe me, try shorting your next electricity bill payment by just one cent, but have a stock of candles handy first). Soon everyday Joes with dicey credit and $12.56 in their pockets – like me! – will be able to invest in the last three pages of the room service menus, and still have enough left over for a Twinkie.
So next time you’re at a swank hotel eating foie gras, drinking expensive
wine and cavorting with some starlet, take it easy on the flush handles.
If it’s the second week in February, they’re mine.
Larry Mundy works for a hotel company in Dallas. His views are his own, and may differ considerably from those of a sane person."
|Also See:||Hotel Floor Surfaces - Hard or Soft? / Room With a View - a Column by Larry Mundy / July 2006|
|Hotel Bathroom Origami - That Tiny Detail of Carefully Triangulated Toilet Paper / Room With a View - a Column by Larry Mundy / July 2006|
|A Chain, a System, a Franchise, a Collection, a Group, a Brand... / Room With a View - a Column by Larry Mundy / July 2006|
|The Forensic Hotel Housekeeper / Room With a View - a Column by Larry Mundy / July 2006|
|The Exercise Room in Your Hotel - Sweating the Details / Room With a View - a Column by Larry Mundy / June 2006|
|Remembering the old-time Hotel Engineering Department / Room With a View - a Column by Larry Mundy / June 2006|
|Curse of the Hotel Lobby-Dwellers / Room With a View - a Column by Larry Mundy / June 2006|
|What Do You Do With an Old Hotel? / Room With a View - a Column by Larry Mundy / June 2006|
|Hotel Smokers: A Dying Breed / Room With a View - a Column by Larry Mundy / May 2006|
|The New Food & Beverage – Food “Just Like Home” / Room With a View - a Column by Larry Mundy / May 2006|
|Guest Privacy – It’s Not Just a Door Tag Anymore / Room With a View - a Column by Larry Mundy / May 2006|
|The Future of Hotel Reservations / Room With a View - a Column by Larry Mundy / May 2006|
|Soon Every Town in America Will Have an Unused Convention Center / Room With a View - a Column by Larry Mundy / May 2006|
|Hotel Pool Safety 101 / Room With a View - a Column by Larry Mundy / May 2006|
|Where Not To Build a Hotel / Room With a View - a Column by Larry Mundy / May 2006|
|“Exterior Corridors” – Disappearing, Because They Never Existed / Room With a View - a Column by Larry Mundy|
|My Top Ten Worst Hotel Inventions / Room With a View - a Column by Larry Mundy / April 2006|
|Bed Tech / Room With a View - a Column by Larry Mundy / April 2006|
|A Sense of Arrival / Room With a View - a Column by Larry Mundy / April 2006|