Lake Placid, NY

Lake Placid Lodge

Deal Summary

Ramsfield Hospitality Finance (“RHF”) originated a mezzanine loan for reconstruction of the primary building at the Lake Placid Lodge, a 30-room Adirondack-inspired, luxury resort affiliated with Relais & Chateaux, in June 2007.

Borrower transferred property to RHF in May 2010 through a negotiated deed-in-lieu due to the economic downturn and construction cost overruns.

RHF created a luxury boutique management company and implemented industry best practices to drive revenues and manage expenses.

Operational improvements earned numerous awards and accolades for the property including:

  • 2011 Andrew Harper Grand Award
  • Four stars by Forbes
  • 2012 Relais & Chateaux Rising Chef Award

RHF sold the Lake Placid Lodge for $19 million ($633K per key) in April 2013.

During RHF’s ownership, the property’s RevPAR increased by 53.7% to $509 and NOI increased over ten-fold from $155K to $1.7 million.

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Revenue Growth

RHF increased property revenues through the following initiatives:
  • Shifted strategy from ADR-focused to RevPAR-centric and implemented a revenue management system.
  • Revamped marketing plan and developed new business partnerships to increase exposure to key target markets.
  • Created food & wine culture at property by recruiting new F&B team, building a teaching kitchen and chef’s garden, and hosting special culinary event weekends.
  • Redeveloped digital commerce and marketing platform including website redesign, search engine optimization, monthly email blasts , social media engagement, flash sales (both third party and in-house), and creating data tracking systems with measurable results to increase accountability of staff.
Results
  • Room revenue increased 59.9% since RHF took ownership of the property.
  • F&B revenues increased 58.0%, driven by increased room occupancy and growth in local F&B following.
  • Since data tracking was implemented in February 2011, website traffic increased by 50.9% as of TTM 3/13 to 281K visitors, and new visitor traffic has increased by 90.1% to 174K.  Online booking revenue  increased by 35.5% over the same time period to $699K.
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Expense Savings

RHF reduced operating expenses through the following initiatives:
  • Invested capital to create on-site laundry facility and reduce laundry expenses.
  • Improved labor efficiency through time-motion studies and increased monitoring.
  • Instituted a preventative maintenance program to perform deep cleanings and minor repairs.
  • Conducted ROI analysis for capital expenditures and implemented capex program accordingly.
  • Reduced wine inventory and adjusted wine purchasing program to shifting consumer tastes.
  • Aligned management interest with ownership through incentive compensation tied to profits.
  • Appealed property taxes.
Results
  • NOI Margin increased from 3.2% to 22.2% with year over year NOI flow-through in excess of 200% since RHF took ownership.
  • Reduced laundry expenses by over $140K annually with only a $25K capital investment.
  • Reduced housekeeping labor expenses by $17K while occupancy increased by 4.2 percentage points in 2011.
  • Prolonged life of usable equipment and fixtures through preventative maintenance and prevented cost overruns in capex spend.
  • Decreased beverage costs by 4.6% in 2011 even with a 4.2% increase in beverage sales.
  • Lowered assessed value of the property by $5.7 MM resulting in annual tax savings of $61K.
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