Converting the Windridge estate to a bed and breakfast

B&B Project

Watch Hill, RI Bed and Breakfast Conversion: A Project Management Outline and Proposal

The Windridge estate in Watch Hill, Rhode Island, contains a large and historic nines-bedroom and five-bathroom house with extensive grounds and ocean views, making it a secluded and picturesque location that is still easily accessible and within several hours of major population centers (the New York and Boston areas, specifically, as well as other surrounding New England urban areas) (Coleman 2010). This makes the estate an ideal location for conversion to a Bed & Breakfast business enterprise, with very little in the way of structural or grounds modification necessary to ensure the estate's attraction to potential guests (greatly reducing initial start-up costs) and a geographic location that is at once central to many popular travel destinations yet enough out of the way to provide the privacy and seclusion that many travelers increasingly desire (Teal 2007; Adams & Adams 2006).

Initial startup costs, including the down payment and closing costs for the purchase of the existing estate, permits, taxes, and constructions costs for modifications to the property as well as the construction of an owners cottage on the property (which will allow for greater profitability of the business as a whole) are estimated at one-million and on-hundred-thousand dollars ($1.1 million). Monthly mortgage payments and tax payments would be approximately twenty-thousand dollars; additional operating costs would be minimal with owner-supplied labor. Profitability would be low in the first year and increase dramatically thereafter (Teal 207).

Initiation

The initiation of the proposed Bed and Breakfast project at the Windridge estate will require a substantial outlay of initial capital, totaling just over one million dollars. Eight-hundred-thousand of this, the vast majority of startup costs, will serve as a down payment on the property, which is currently listed at four million and two-hundred thousand dollars ($4.2 million), and which it is believed can be negotiated down to an even four million dollars. Closing costs on the purchase, calculated at three percent, would one-hundred-and-twenty thousand dollars ($120,000), brining the total cost of the initial purchase of the property to nine-hundred-and-twenty thousand dollars ($920,000). At an annual percentage rate of four percent on the three-hundred-and-twenty thousand dollar loan and a property tax rate of one-and-a-quarter percent, monthly payments for the structure and property would be equal to approximately twenty-thousand dollars (MC 2010).

Construction costs will form the bulk of the remaining startup costs. There is currently a one-to-one bedroom/bathroom ration in the structure, but only one bathroom is en suite. The two-second-floor bedrooms without attached bathrooms can be converted to full suites; the addition of a third bathroom upstairs and the conversion of the three upstairs dens to two larger bedrooms will increase the number of available bedrooms in the structure to eleven, with no more than two bedrooms sharing a bathroom and with an un-assigned half bath on the second floor (Coleman 2010).

Total construction costs for these modifications are not expected to exceed one-hundred thousand dollars ($100,000). The remaining eighty thousand dollars will be primarily for permits and the construction of a small one-bedroom one-bath owners cottage, separate from the main structure, allowing for all eleven bedrooms to be occupied by paying guests and providing some privacy and respite to the owners. All construction and necessary inspections and licensing is expected to be completed within a three-month period; this will add an additional sixty-thousand dollars in mortgage payments to the initial costs before the business is ready to begin receiving guests, though booking can start in advance assuming an on-track construction timeline. Total timeline and costs from purchase to opening is three months and one-million one-hundred-and-sixty thousand dollars ($1.16 million).

Execution

The operation of the project has also been carefully planned in a way that will both attract consumers and ensure profitability for the owners/operators. The full operation of the business by the owners, with the possibility of hourly-waged employees during busier seasons and doubtless with vendor support, is a key to profitability in the Bed and Breakfast industry, and the proposed Windridge project is no exception. Daily upkeep, including basic repairs and maintenance, cleaning, cooking, and all guest services would be provided by the owners, thus greatly reducing operating costs (Teal 2007).

The eleven rooms available in the estate's main structure would be rented at a nightly rate of $100-$250-year round, which is essentially in keeping with nearby businesses, such as the Stagecoach House Inn in Wyoming, Rhode Island (SHI 2010). Rates at this inn actually reach their limit at $199 for the Honeymoon Suite; the slightly increased prices for the proposed project at the Windridge estate is justified by several reasons. The grounds and views surrounding Windridge are far more desirable and striking than those at the Stagecoach House Inn, and Windridge also offers greater seclusion while still providing easy accessibility to the town of Watch Hill and the major urban areas already mentioned above, making it a more attractive setting to many travelers (SHI 2010; Adams & Adams 2006). The substantial grounds and the flat meadow area that are part and parcel of the Windridge estate also make the location ideal for events such as wedding ceremonies, which could be hosted on the property at premium rates, further increasing profitability and helping to justify higher single-room rates.

Also justifying these slightly higher rates is the fact that Watch Hill currently contains only one operating hotel, and this hotel's complex consists of residential condos as well as the hotel, which is very modern in design and in the service and amenities offered (Trip Advisor 2010). Though this hotel has received excellent reviews and is well established in the area, the planned Bed and Breakfast at Windridge estates would be marketed towards a different brand of tourist, seeking the privacy and romanticism not available at larger hotels (Teal 2007).

Assuming an average rental rate of $175 per room per night and an average of total monthly operating costs of approximately twenty-three thousand dollars ($23,000), which includes the mortgage and tax payments as well as costs for food, utilities, and upkeep, the Bed and Breakfast would need to book a total of 132 room-nights per month in order to cover costs. This is equivalent to booking half of the available rooms for twenty-two nights every month, or approximately four-and-a-half rooms a night every night in a thirty-day period. It is likely that some months will not reach these numbers, but other months are very likely to exceed them, and full occupancy (almost double what the Bed and Breakfast would need to achieve in order to break even) could be reasonably expected during the summer tourism months based on currently available information from nearby competition (SHI 2010; Trip Advisor 2010). This does not take into account any tourism-vendor profits or any other profit-generating activities such as extra meal provision or event hosting.

Monitoring and Controlling

The monitoring and controlling of the project's costs and profits will take place on a daily and near-immediate basis through the on-site management by the owners. Rate adjustments and vendor negotiations will take place accordingly, maintaining annual profitability while absorbing potential monthly losses through the use of long-term projections and data (Teal 2007). Adjustment of rates based on occupancy levels can also take place regularly and directly.

Community activism on the part of the owners will also be a necessary part of the control exerted on the business; ensuring the town's size and sprawl does not impinge on the current character, both in terms of accessibility and as a getaway from major urban areas and average American suburbia, are crucial to the design and continued profitability of the operation. The fact that the estate is located on its own extensive private grounds provides some insulation from the effects of larger community changes, but of the character of Watch Hill were altered significantly, it would doubtless have effects on the attraction of the Windridge Bed and Breakfast and the marketing of the project to the public (Teal 2007; Adams & Adams 2006). Maintaining the environmental and social qualities that currently exist in Watch Hill and the surrounding landscape are definitely in the interests of the project's success.

Closing

The project is expected to be a long-term endeavor, continuing under the same ownership and management for at least two decades if not longer. Closing is therefore not considered an essential item for the project at hand, though a commitment to excellent maintenance of the structure and grounds will be maintained in order to ensure a substantial resale value. The existence of an operating business on the estate will greatly increase the sale price of the property, making the enterprise both a profitable business and a very sound investment for the future.