The decision to expand to a second property is fraught with risk and potential reward. Should you do it? If so, when, why and how?
Those questions spark an additional set of questions whose honest answers will determine whether to take that plunge:
Can the concept be replicated?
When owners Gary and Linda Dower conceived of Mirbeau Inn & Spa, they placed the 34-room Monet-inspired boutique property in picturesque Skaneateles, New York, a perfect setting for an elegant retreat with a world-class spa and culinary offerings that would draw both overnight guests and day guests from the Finger Lakes region. From the start, they envisioned replicating the concept elsewhere, and today, the second Mirbeau Inn & Spa is under construction in historic Plymouth, Massachusetts, a boutique gem in the award-winning, established community called The Pinehills. Additional Mirbeau retreats are in the development stages in other Eastern U.S. communities, illustrating the appeal of the concept based on the tenets and track record of the original.
Is expansion financially feasible?
The major question is whether the second property can be built at a cost that is reasonable and considerably less than what most developers spend per room for a 4- to 5-star resort. Here, the number-crunching is key to determine whether the second property can be built and managed to create the revenue and profit that will provide the desired and necessary return on investment.
Do you have faith in your organization’s ability to successfully take on a second property?
In the case of Mirbeau, we had almost a decade of experience before committing to the second property. During this time, we were able to prove the appeal of the concept and build revenue streams that incorporated day spa, dining and retail guests as well as overnight guests who avail themselves of the full range of services. We generated a robust revenue stream for gift-card sales, particularly tied to specific holidays. And we survived two major recessions, affected significantly less than industry standards and rebounding more quickly than others in our sector.
Answers to our questions, along with a sound expansion strategy, pointed to the feasibility of a second property. I look forward to delving into other aspects of this topic, addressing the economies inherent in replicating with the potential growing pains that go along with it. Stay tuned.