07 · The market & the numbers
A $40 room in a $145 market.
That gap is the business.
Public market data + industry norms, translated for a first-time hotel owner. Three terms to know: Occupancy = % of rooms sold each night · ADR = average price per sold room · RevPAR = the two multiplied (the one number hotel people compare).
$145
Colorado Springs avg. room rate (ADR)
~65%
Market occupancy — steady, high-60s expected in 3 yrs
40
Rooms at the property (balconies/patios on many)
#101 of 102
Current rank among COS hotels — the turnaround story
Honest read: the market has headwinds (Space Command HQ relocation, softer government travel, ~800 new rooms coming). The plan does NOT depend on the market growing — it depends on closing the gap between a $40 product and the $90–145 its neighbors already charge.
Where the neighbors price — the ladder we climb
| Tier | Nearby example | Typical rate |
|---|
| Where we are | Rusina inn today | $40–45 |
| Budget branded | Super 8 Garden of the Gods | $41–70 |
| Quality economy | Quality Inn & Suites Garden of the Gods | $90–95 |
| THE VIEWPOINT target | Remodeled boutique-budget, book direct | $89–119 |
| Branded midscale | Holiday Inn Express class | $110–140 |
| City average | All Colorado Springs hotels | $145 |
The target sits deliberately UNDER the branded midscale tier: guests get a boutique-looking room for Quality-Inn money — the strongest value story on the corridor.
The 3-year model — 40 rooms
| Stage | Avg. rate | Occupancy | Room revenue / yr | Est. profit / yr |
|---|
| Today (est.) | $45 | ~45% | ≈ $296K | thin — rate can't carry costs |
| Year 1 — rebrand + ramp | $85 | 55% | ≈ $683K | ≈ $100–135K (15–20%) |
| Year 2 — reviews compound | $105 | 62% | ≈ $950K | ≈ $215–260K (~25%) |
| Year 3 — stabilized | $119 | 66% | ≈ $1.15M | ≈ $320–370K (28–32%) |
Math shown in full: revenue = 40 rooms × occupancy × rate × 365. Profit = revenue minus ALL running costs (payroll, utilities, booking commissions, supplies, insurance, property tax, upkeep, marketing) at small-hotel industry norms. Break-even is roughly 40–45% occupancy at the new rates — below Year-1 target. Estimates, not guarantees; refined with the CPA after 90 days of real numbers.
The team it takes — 6-7 people
1Owner / general manager — rates, money, vendors, the standard
2Front desk — 2 people covering 7am–11pm; self check-in tech covers the night
3Housekeeping — 2 full-time + 1 part-time (one cleaner handles ~14–16 rooms/day)
4Maintenance / grounds — part-time or on-call to start
Payroll lands ~25–30% of revenue at stabilization — the normal band for a well-run small hotel.
The long-term upside
↑Cash flow: ≈ $320–370K/yr profit at stabilization — from a property earning almost nothing today
↑The building re-rates: hotels are valued on profit. A motel doing ≈$300K+ NOI appraises in the multi-millions — several times what a $40/night motel is worth (appraiser confirms)
↑Rate ceiling: every review milestone (top 50 → top 25) supports the next $10 of rate — the city average is $145 and we start at $89
↑Later add-ons: lobby coffee counter, patio firepit events, long-stay suites — all optional, none required for the model above
The 7 numbers the owner watches (weekly, one page)
Occupancyrooms sold ÷ 40 — target 55% → 66%
ADRaverage nightly rate — $85 → $119
RevPARocc × rate — the one health number
Direct %bookings not paying OTA commission
Review score#101 of 102 → top 50 → top 25
Payroll %stay in the 25–30% band
Break-even line~42% occupancy — never plan below it
The valuation — what the building is worth at the 65% threshold
Hotels are valued on profit, not bricks: Value = yearly profit (NOI) ÷ cap rate. The "cap rate" is the return a buyer demands — economy hotels in this market trade around 8.5–9.5%. Example: $345K profit ÷ 9% = $3.8M building.
| Mode | Revenue / yr | Profit (NOI) | Value @ 8.5–9.5% cap | Per room |
|---|
| Today (as-is) | ≈ $296K | ≈ $60–75K | ≈ $1.2–1.6M (land + keys set the floor) | ~$30–40K |
| Boutique · 65% occupancy | ≈ $1.15M | ≈ $320–370K | ≈ $3.6–4.1M | ~$90–100K |
| Crew-contract mode (fund blocks 32 rooms) | ≈ $1.08M | ≈ $400–455K | ≈ $4.3–4.9M | ~$108–122K |
The fund agreement, spelled out
→32 of 40 rooms blocked for the construction crew at a flat ≈ $75/night, 12-month term — that alone is $876K/yr guaranteed (32 × $75 × 365), paid whether beds are slept in or not
→8 rooms stay public at boutique rates (≈ $109, 65% occupancy ≈ $207K/yr) — keeps the brand alive and the reviews compounding
→Why profit jumps: zero booking-site commissions on 80% of revenue, weekly (not daily) housekeeping, near-zero marketing and vacancy — margin ~40% instead of ~30%
→Why value jumps: a signed corporate contract reads like a lease to banks and buyers — the income is bankable, and a refinance at the new value can return the renovation money (SBA loans are standard for exactly this)
!The honest risk: one client = concentration. Protections in the agreement: take-or-pay minimum, 90-day notice, annual rate escalator, and the 8 public rooms as a permanent second engine
Sensitivity — same profit, different buyer appetite
| Cap rate | Boutique ($345K NOI) | Crew mode ($430K NOI) |
|---|
| 8.5% (strong) | $4.06M | $5.06M |
| 9.0% (base) | $3.83M | $4.78M |
| 9.5% (cautious) | $3.63M | $4.53M |
+$2.5–3.5M
Value created by the turnaround — from ≈$1.2–1.6M today to ≈$3.6–4.9M stabilized
Valuation estimates from public market norms — a licensed appraiser and the CPA confirm before any purchase, contract, or refinance decision. The crew-contract numbers assume the fund's rate and room count as stated; the real agreement's terms move the math.
The corner, not just the hotel — the parcel next door
The fund's contracting company already owns the adjacent restaurant parcel and its large parking lot (county records: ~0.7 acre, 1983 building, closed restaurant, total assessed actual value ≈ $1.07M; land alone ≈ $300–450K at area commercial land prices of $10–15/SF). Four ways to put it to work, cheapest first:
A · Crew yard + mess (now, ~$0)40–60 paid parking/staging stalls for crew trucks ($75–150/stall/mo ≈ $45–90K/yr) + the old dining room as the crew's mess hall — feeds the hotel contract, zero construction.
B · Re-tenant the buildingSecond-generation restaurant space leases $18–24/SF in this corridor → ≈ $80–110K/yr → parcel worth ≈ $1.1–1.4M leased. Light cleanup, no demo.
C · Split off a padThe parking is big enough to carve a drive-thru pad (coffee/QSR). Ground leases run $60–90K/yr — a pad alone can be worth ≈ $1–1.4M, with zero building risk. Keeps A or B running on the rest.
D · Demolish → small commercial center~8–10K SF strip fits with parking. All-in ≈ $2–2.6M (less if the fund's crews self-build) → ≈ $200–250K/yr rents → worth ≈ $2.8–3.5M leased. Only build once tenants are pre-signed.
Sequence that compounds: A immediately → C within a year → D only with signed leases. Every step also lifts the hotel — an activated corner supports higher room rates. County parcel data (PPACG 2025); land split and zoning confirmed with the El Paso County Assessor and a land-use attorney before any demo or subdivision.
A feed that sells the view,
not the room rate.
Instagram + Google Business Profile, run as one system. Three posts a week from four content pillars — every asset generated from the property's own photography and the brand system.
VIEWPOINT
HOTEL
a greater
perspective”
→
AFTER
Launch-grid concept using the makeover renders.