How Boutique Hotels Are Revolutionizing The Hospitality Industry

Okay, so welcome to the new episode of the Boostly podcast. This is the podcast that gives hosts the tools, the tactics, the trainings, but most importantly, the confidence so you can go out there and get more direct bookings. My name is Liam Carolan and I'm Mark Simpson's co host. Today we are going behind the host. This is the mini series on the Boostly podcast where we dive into successful and interesting short term rental hosts and their business. So we can ask lots of questions, extract all those juicy answers that you may be able to take and implement some of these ideas into your own business as a host yourself. So today we're going behind the host with Rich Summers. He's from ExcelsiorDays.com and his investment arm of his business is SummerCapital.com so you can go and check those out. We'll dive into Rich's business and yeah, we can, we can sort of chew the fat. So Rich, welcome along. Thank you for joining me.

Liam. Thank you for having me on the show. I'm excited for the, the conversation today. It's a pleasure to be here.

Thank you so much for, for being here. So if you wouldn't mind introducing yourself where your business is in the world and really how you operate, what sort of model that you use.

Yeah, absolutely. So I have a multifamily background. I was buying multifamily, still own a lot of multifamily. It's probably accounts for about 80% of my portfolio today. But while I was investing in multifamily, I backed into my first short term rental here in San Diego. It was a two bedroom condo that I got on a no money down mortgage and that thing was just humming along and so pandemic started and I thought, well, what if I go and buy another one and let me see if I can get another no money down mortgage through a local credit union. And I was able to, so I picked up another two with that mortgage out here in San Diego. And while I was still investing in multifamily, I thought, man, these things are just cash flowing like crazy. Why don't I do some more of these? And so actually sold an apartment deal a little while back And I actually 1031 those proceeds into a luxury rent splat in Scottsdale, Arizona, which is a big vacation destination here in the states. And it was a $2.4 million property and did a full renovation, put about $800,000 into a full renovation. It's a really, really cool, unique place. We did a basketball court, full court, we did A beach volleyball court, we did a putting green, we did a speakeasy. I might be one of the only, well, it's the only short term rental that I've ever heard of that has a speakeasy in inside of it. We got a fitness room, we got a gym, it's eight bedroom, eight bath, 7,600 square feet with a guest house and a pool and relaunched this thing and was able to refinance it. Took it from 2.4 million to 4.9 million evaluation, refinanced it out and now we're, you know, cash flowing as a short term rental. And then I also have, as you mentioned, Excelsior Stays, which is a hospitality brand and a management company to where we manage not only my short term rentals, but also boutique hotels and also short term rentals for third party clients. With a special focus on boutique hotels. Right now we're really trying to scale the boutique hotel side and how that came to fruition is I thought, man, we already had the systems and process in place. We, we're managing short term rentals in about nine markets around the country. What if we bought a boutique hotel and you know, basically use this arm to manage the boutique hotel remotely, free of on site management, allowing us to bring the manager's unit online for additional revenue and then we just do kind of a self check in, self checkout model with the guests and so bought the first hotel about six months ago up in Northern California. It's beachfront, we did a full renovation, we just relaunched it and we're actually managing another hotel in Oregon for a third party owner and we're actually under contract right now in a 24 unit boutique hotel here in downtown San Diego, about six blocks from our office. So that's kind of my story in a nutshell.

And what we do, that's amazing and I mean we'll go off piste a little bit and just say yeah, why, why boutique hotels at night? Why boutique hotels so popular? What is the, why are guests loving them and what is the attraction from an investor's point of view?

Yeah, well I think right now in the US you're seeing a lot of heavy regulation in a lot of different markets around the country and how it pertains to short term rentals. And so as these markets extend or increase their regulations, it's going to bring more demand to those who can legally operate. So boutique hotels are going to benefit from this model. But also when you go buy a single family house here in the States and no matter how you Operate it in terms of short term rental income. You're not really increasing the valuation of the property because it's not valued like commercial real estate. So on the flip side, boutique hotels is commercial real estate. So they're valued based on the income approach. So I know if we can go in and buy a tired but well located boutique hotel and renovate the entire property and bring in good management operations, we can really drive or force the appreciation, which I love, which allows us to refinance money out or sell for a profit. And it gives us a lot of different options that you don't get. The single family model.

That makes sense. That definitely makes sense. So I definitely want to dive into some of the management and operations. But before we do, take me back. What did you do before you got the hospitality bug or. Or the. I should say the real estate bug? What did you do before and what you do now?

Yeah, so I was always taught from a young age to go to school, get good grades, go to college and get a job. And for the most part, that's what I did. My mom is an immigrant from Taiwan, and both my parents know the value of working hard and saving your money. And so for the most part, that's what I did. I have a background in sales, so as I was going to college, I sold cell phones, and then I went on to sell cars. And that was kind of my first taste of what it's like to control your paycheck to a certain degree. And so I did really well at sales because I'm of a competitive background. I used to play baseball and basketball as a kid growing up. And so I wanted to sell commercial real estate when I got out of college. But I graduated in 2008, and as your listeners know, the whole economy was coming down at the time. And so I found myself on a car lot wondering, what am I going to do with my life? And I actually backed into a job as an air traffic controller with the faa, which is a government agency here in the States. Did it for 11 years. But along the way, I read the book Rich Dad, Poor dad, and I remembered real estate. And I thought, man, I got to get back into the real estate, but I'm going to do it on the investment side. So I just became obsessed. I started studying books, listening to podcasts, I started going to networking events before I even owned any real estate. And about nine months into my education process, I thought, man, I got to take action. So I cashed out my 401k and I used the 401k as my seed money to buy the first deal. And the first deal was 11 unit apartment building in Cincinnati.

Nice. Nice. That is. That book is the classic, isn't it? It is the go to which sparks so many people's journeys, which is amazing to see. So how did you find the first one? What did you do? What did you look for? I guess so for people listening, a lot of our audience will be newer, short term host, or maybe not quite as far into the journey. How did you go about finding the right property for yourself to do short term rentals, any anything you used or any advice?

It's funny you say this because like all the multifamily deals that I bought, all the apartment deals, all the boutique hotel deals that I've done, every deal to this date, I've put a lot of due diligence into except for that first short term rental. Like I mentioned before, early in the show I had the no money down preapproval from a local credit union here in San Diego. And I thought, you know what, why don't I just go use this on like a new construction. I found a new construction, it was an eight plex and they were selling them individually as condos. And the HOA at this complex allowed for short term rentals. And so I thought, okay, I can buy a brand new construction two bedroom, two bath condo in a great location here near, just outside of downtown San Diego in a neighborhood that I understood. And I thought, okay, the bank's gonna put up all the money. The seller I was able to negotiate for them to cover all the closing costs. So all I had to come up with was the cost of furnish the place. So I spent about $14,000, got it furnished. I wasn't using air DNA at the time, I wasn't using any of those, those third party softwares. And I just bought it and I said, you know what, I'm gonna furnish it and see how it does. And that thing has been doing about a hundred to $110,000 gross every single year since I've owned it. And the cool thing is I bought it for like 574 and now the thing's worth about 8:25, 8:50. Which is crazy.

That is crazy. And I mean not only that, if you get the first one right, the, the benefit that gives you, the springboard that gives you is amazing. And hospitality is really quite forgiven. Out of all industries, you know, there's not many industries you can set up and, and you know, choose areas and there's a demand in all areas. It's just some areas are better than others, isn't it? So yeah.

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Let's dive into the management side of things then. So at the moment you manage from afar, all these these nine different markets across the the U.S. how do you do so who's on your team and how do they help you and what's your role sort of day to day?

Yeah. So we have a operations manager, her name is Jennifer and she oversees a lot of the different functions within the management business. She works with the clients, she works with our accounting team. We use a company called Exemplify to do all of our profit and loss statements for the owners. And then we have another individual, her name's Andrea and she does a lot of the vendor relationships. She manages a lot of our VAs and then we have two VAs full time in the Philippines who do a lot of the guest communication and a lot of the back end stuff. If you would.

That's cool. What advice would you have to somebody who's looking to manage a market from afar where it's not a local market. What should they be considering and what do they need to know?

I guess, yeah. Honestly, I think this the same way that we approach managing an asset in our own town of San Diego is the same systems and processes that we use for any market. If there's a plumbing leak or a repair maintenance item that needs to occur or a guest needs a key, we if it's an asset here in San Diego, we don't just go drive there and take care of ourselves. We leverage everything out. And so the only two things you need in terms of boots on the ground if you're going to manage any assets that are long distance are you need housekeeping and you need a good maintenance arm. And so if you have those two things, everything else can be done remotely in terms of the guest communications, the vendor relationship, investor relations, all that sort of thing. And even the accounting, of course. But you, what we do is we will leverage our housekeeper or our maintenance, a handyman, should we have an issue. So, for example, let's say a guest is like, hey, I really, it'd be really nice if we had, you know, a toaster, for example. I'm just making something up. We'd love to have a toaster or a blender for our stay. We'd love to make some margaritas. We can just order it on Amazon Prime. That will show up directly to the guest. Or if the guest needed like a key or something physical, we could just leverage our housekeeper or maintenance handyman to go do that for us. If you would.

That makes sense. And this is such a good way of doing it, isn't it? So, yeah. What, what tech do you use rich in your business? Is there any, if you was to say the top pieces of tech that have helped you within your hospitality business, what would they be and why?

Well, I would say starting with the revenue side. It's, it's Price Labs. I mean, they've been huge in terms of, you know, pricing, because without bringing in revenue, you're not going to have a successful business. And so I always say start with Price Labs. You know, we know the big weekends out of the year, you know, Fourth of July and New Year's and Christmas, but we don't know when, you know, a big name artist is in town for a big concert in the middle of the week in some random market in the country. We don't know those kind of things, which Price Labs does. And then a lot of the other tech we use is like more security measures. So we use noise aware, we use ring doorbells, cameras to kind of monitor who's coming in, who's coming out of the properties. We use Guesty as a channel manager. And so everything kind of flows through Guesty. And Guesty's kind of cool because we can make, you know, adjustments. We can sync up the Price Labs to it, and then those adjustments go out to all the OTA platforms such as Airbnb, VRBooking.com, hotels.com, et cetera. So those are the main staples that we use right now.

There's some really cool pieces of tech there. And especially like you say, the ring doorbells and things like that just, it gives you eyes from afar. But having a good PMS is just so important as well. And as you say, I mean, Price Labs is something that, you know, we absolutely believe in. And I sometimes get hosts say, hey, I've Only got one or two properties. Do I really need price labs? And you just go, well, yeah. How sure are you that you're capitalizing on every event? You know that it just takes so much hassle out of, out of managing the revenues, doesn't it? Which is cool.

Oh, it does. I can't imagine, you know, when I first started it was just myself and the first listing or two, I was doing the pricing myself. Which is fine if you're doing yourself, but you're still leaving money on the table. So I always tell people, even if you only have one listing, it's so worth it to pay the 20 bucks a month for the price labs because it's going to make you a lot more than that 20 expense and it's going to make your life a lot easier.

That's how I feel about my accountant. They should, they should make me, they should save me more than they cost me. And it's the same with dynamic processing process, dynamic pricing, isn't it? Do you know what I mean?

Absolutely. But I will also say for your listeners out there, you know, don't assume if you're going to use price labs, it's not a, hey, push and plug and play type of thing where you're just going to be completely hands off on autopilot. We use price labs for all of our listings, but we are very, very hands on. We are going in there at least twice a week. We typically do Mondays coming off of the weekend and then Thursdays going into the weekend where we will comb through every single one of our listings through price labs and go and see how we're doing on occupancy, how are we doing on adr? And we will be tweaking and dialing in different settings within the price labs for each listing. And we're doing that twice a week and it is very time intensive, but we have to push and pull on the price labs. It's just a tool to make things a little bit more hands off. But it's not a plug and play thing for your listeners. So if you're going to do the price labs, just know you're still going to have to be in there a couple times a week.

That's cool. That's cool. And what would you say? So you went from that, that first one, which is, is cash flow and a really good real estate deal, and now you've gone on to manage these nine different areas across the US and, and these different structures to your business. What would you say has been the biggest successes along the way or the biggest wow moments and also flipping that on his head afterwards. What's been the biggest challenge and why?

Yeah, so the biggest win, I would probably say there's, there's been a few. That luxury rental in Scottsdale was definitely a big win. We just got a 40. We got a $46,000 booking for three nights on that property for a Super bowl weekend major.

Literally, when you said 46,000, I was like, ah, that's, that's a few months. No, three nights. Wow. Yeah, that's the biggest one.

Yeah. And so I would say, and then that property, you know, buying it for 2.4, putting 800 into it, and then refinancing it at 4.9 in just like six months time. That was probably one of the biggest wins in my real estate investing journey. But in terms of what was the second question? What was the biggest loss?

Yeah. What's the biggest challenge? What's the biggest challenge and how did you overcome it?

I'm actually going through a challenge right now. So we have a 24 unit boutique hotel under contract right here in downtown San Diego in a neighborhood. It's the trendiest neighborhood in all of San Diego. We're three blocks from the bay, we're close to the airport, we're right next to the 5 Freeway. So this, this hotel gets about 30,000 cars that drive by every 24 hours. And we're under contract right now. And this is a very unique situation because we're going to be converting it from a traditional hotel to basically like a luxury hostel, like a buy the bed model, because we found that was the best ROI and use for this particular property based on the different metrics that we studied within our market. But right now we're under contract. And so I had a lender, two lenders lined up, one that we, we thought we're going to go with. The entire time we were waiting for a letter of intent, like a term sheet to come back verbally. I was told, hey, it's going to come in at this specific number, you're good to go. But this lender pulled out just recently. This is as of a few days ago. And so now we're in a position to where we're a little bit tight on timeline. We're about $30,000 and sunk in costs into the deal in terms like legal fees and all that sort of thing. Because it's going to be a capital raise. We're going to go raise money from our investors. And so with that, one of our lending options that we thought we're going to go with pulled out, which is completely out of our control. But it's my fault because I was trusting this individual that they would come through and they didn't. And so I should have been sourcing other lending options this entire time. And so come Friday last week, we get this news. I'm like, holy cow, we got to push this out into, you know, get it out in front of other lenders. So we got another lender that wants to come in. So now we got two options. And so now it's just a matter of reviewing these two options and seeing which one we're going to move forward with. But it, you know, it delayed things a little bit on my end. It's a big mistake on my end. So that is a challenge that I'm dealing with. And we're still kind of, you know, figuring it out as we go. But, hey, that's why we do what we do as real estate investors, right? I love this stuff at the end of the day and I love solving problems, you know, 100.

And do you know what this, that reminds me of? We had Bill Faith on last week and he said, you know, sometimes success is just how much debt you're willing to shoulder at any given moment. And just, you know, you look at it, okay, that's right. This, that problem would floor a lot of people. Whereas for yourself, it's like, okay, this problem, I've got to solve it. I've got this much time. You know what, that was only last Friday, we're now Tuesday. And you've got options to review and go about the business. So amazing way to look at it and a good mindset thing for the listeners, which is cool.

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So one question I'd love to ask you. What advice would you have? If you could give advice to people out there who are just Getting started, particularly around what metrics should they be looking at within their business? Ones which have helped you to look at within your business that could also help them.

I would say this is for someone looking to do their first deal.

Yeah, sure.

I would say, you know, don't get too hung up on buying the perfect deal because at the end of the day, I think a lot of people never actually get started because they're waiting for the perfect plan, they're waiting for the perfect real estate deal in the perfect market. And so they will go through analysis paralysis. And I went through this as well when I was just getting started. And it's easy to get hung up on finding that perfect deal. And I like to say that first deal is typically not going to be a home run. The true value of doing the first deal is just getting your feet wet, getting the experience. You're going to make mistakes. I made a lot of mistakes with my first deal. But you know what, you get through it and you get on the other end and that's what gives you the confidence and experience to do more and more deals. And so my advice would be just take action. Don't get too hung up on buying the perfect deal. Just go get your feet wet with any deal and that's what's going to lead you to do deal number two, three, four and so on.

The more that I speak to successful people, the more I understand that speed is the key. You know, it is a case of, hey, get in there, get some experience, upgrade the next level and then, and then move on. So as I know, we're short on time today and I want to respect your time and I want to also get in some good sort of some fun questions towards the end of these rich, which we like, of course like to ask. So if you had a time machine, which time period would you travel to and why?

To be on quite completely honest with you, I wouldn't trade this time that we're living in for anything. With social media and with YouTube and podcasts and all the different channels out there to where you can learn. There's never been a better time to learn how to do something new or to become a real estate investor or an entrepreneur. Social media has made it very, very easy to build your brand. If you would. You know, if you think about our parents generation, you know, my parents grew up in the the 60s and 70s, you know, and back then it's like, man, you really had to rely on someone's word for an investment opportunity. There was not all these different Reviews online and different things that you can go leverage to find out if something is a good deal or an opportunity. But today you can do that. And so with masterminds and all this sort of stuff today, it's never been a better time to learn something new. So I wouldn't trade it for the world.

I love that answer. Great answer. And we're going to segment to a slightly different question then. So what resources would you recommend that everybody listening go and check out, whether it be a book, a podcast, a course, a mentor, other than obviously rich dad, poor dad.

Yeah, I would say go check out my podcast, the Rich Summers Report. Um, I bring on a lot of really cool guests, some heavy hitters in the real estate entrepreneurial space. And then I do a lot of like solo episodes on like how to. Outside of that, I would say go find a local meetup in your local network. Everyone has, you know, depending on where, what market you're in, there's local real estate meetups. And that's where I learned everything I learned and that's how I connected with the people that helped me do my first couple deals was by going to local networking events. So that would suggest that.

Nice. I like it. Who would play you in a movie about your life?

Oh man, that is a great question. I'm not a big movie person, I got to be completely honest with you. But I did just watch, I rewatched it. It was the Wolf of Wall street. So I would have to say Leonardo DiCaprio. We're about, about the same age. He's a little bit older than me though. Yeah, I just, I don't date 19 year olds though. Some.

Somebody made me laugh because he, he pretty much plays himself in that, in that movie. Do. I mean.

Yeah, I know, that's true. That's true.

That is such a good movie. And as we bring things to a close, we always love to ask, is there a saying or which really resonates with one that you kind of passionately believe in?

I would say don't fear failure, fear regret. You know, all those risks that people allude to are real. And unfortunately a lot of those, those come from family members and coworkers and colleagues. They're gonna, they're gonna outline all the risks whenever you wanna do something new in life, whether it's buying that first deal or starting a business. So all those risks are real looking back. So put some weight on em. But on the other side of the balance scale is another risk. And it's this. I could be 80 years old one day laying in my bed, staring at the ceiling, kicking myself because I never tried anything in life. How about that risk? Because that's a risk too, that a lot of people don't allude to.

It really resonates with me and certainly if, if anybody listening hasn't already, there is, I mean, this sounds really dark, but you can read the, the last thoughts of people who are OAPs, you know, old age pensioners and stuff like that, and never once do they say, hey, I regret trying that thing, or I regret trying. You know, it's all about not trying as opposed to trying. So what a great way to, to, to bring this to a close. So, Rich, I, I've from this I've really got push forward for opportunity. Don't be scared of the big numbers. Make sure you get those wow features in your properties. I mean the Speakeasy. This your first person I think I've met who's got Speakeasy in, in one of their properties. So some of these wow things are amazing. And yeah, just I feel energized from, from speaking with you, Rich. How can the listeners get in touch with you? And if I throw it open to you now, what's the best way to come find out more.

Yeah, best ways on social media. I'm very active on Instagram. My handle is at Rich Summers. That's S O M E R S. And if you want to learn more about investing in hotels, you can check us out summerscapital.com and then if you want to check out my podcasts, I do two episodes a week and I got a podcast studio here in San Diego. It's the Rich Summers Report.

Nice. Nice. I'm definitely going to be downloading that, subscribing to it. So Rich, thank you so much for, for this, for sharing the behind the host journey. Thank you too. If you're listening in on the podcast or watching on YouTube, we know there's a lot of places you can put your attention and we thank you for putting it with Boostly. So yeah, that brings it to a close. Was there any last sort of closing thoughts, Rich, just before we. We bring it to a close.

Liam, I appreciate you having me on my man. I would just say get out there and take action for all your listeners. Make it happen. And we're put on this planet to do big things. So go chase your dreams.

Brilliant. Well, thank you so much, Rich. And yeah, that's buy from Rich. That's buy from me.