HIP E84 Hillary Folkvord - Occupancy 40 to 80 Fix

[Music] The Hotel Investor Playbook. Your guide to building wealth and freedom through hotel and hospitality ownership. [Music] Welcome back to the Hotel Investor Playbook. I am Michael Russell, founder of Malama Capital and your host. On this podcast, we talk story about everything you need to know to make money investing in hotels and in hospitality assets. Today's guest is someone who has done best the hard way. Hillary Falkord is a sixth generation Montana who started running a 1910 historic hotel at 23 years old with zero experience. She's also turned this sketchy roadside motel into one of the most talked about boutique properties in Boseman. And is now chasing the goal of owning 10 hotels in 10 years. We're going to get into the deals, the disasters and what it actually takes to build a real brand in this business. Hillary, welcome to the show. Thank you so much for having me. I'm excited for this conversation. I could talk about hospitality, building brands, mistakes, all the things all day long. Yeah, so your home base there is Montana, which is beautiful. I had the privilege of spending some time there. We're looking at a couple of hotels there there in Montana. Not too far from Boseman where you operate that motel that you converted, that roadside motel. That is now really sweet, awesome, kind of unique to T. Cotel stay or Boutique Hotel. You did a nice conversion there. I want to ask, how many hotels do you currently own an operate now? Technically, there's five in the portfolio. We just sold one of our boutique hotels, our beginning property, the 1910. This was the Sacaja, we had hotels and three forks, 30 minutes west of Boseman. So that was a little bittersweet, but the timing was right. So now we are focused on two boutique hotels and then three flag hotels. Well, congrats. I mean, you've gone full circle. I did look that hotel up in preparation for this and that thing was sweet. I mean, that was an amazing hotel, historic hotel and was it a fine dining restaurant that you also operated out of it? Yes, fine dining. There's also a pub and a wedding venue. As you guys know, who run hotels that are like that, they are beasts. They are so much fun, but there's a lot that goes into it. We did that for 18 years. We took it from nothing. It was shut down. They were turning into a rest-time training facility. And then we said, we can do this. We were never in hospitality, we eating my family. I come from the sixth generation farming family in the community. And we did a nine month renovation, topped a bottom and we reopened that beautiful old hotel. You know, they don't make buildings like that anymore. And we knew that we needed to keep that in the community. It's always been a gem. And we had a lot of fun with it for 18 years. It was a really good run. And I was 23 when I started, which is wild to think and kind of throw into the business, which is sometimes the best way to learn. Yeah, it feels like sometimes when you jump into something like this, it's like drinking water out of a fire hose. There's so much to learn. If you were to go back in time to think about those few moments, what were some of the challenges that you faced early on? There were so many. I mean, we had no hospitality background. This hotel was not running. There wasn't anywhere to start in terms of creating your PMS and how are we going to get bookings and how are we going to do it? So it was started from scratch with every single system, every single employee. It's very food and beverage heavy, which is not, is very unique for this hotel model with 29 keys. So we had to focus a lot on food and beverage. We had an amazing chef and he was with us for 17 years, which is unheard of, right? In that world. So it took a lot of blood sweat and tears, but we just started systemizing things. One thing at a time and over time it worked out well. Okay, great. Well, let's flash forward. You just sold how long ago did you sell this property? That was back in February. So like I said, it was bittersweet. It was kind of our baby, it was kind of our project. But we said if we found the right buyer and the price was right, this was after 15 years, that we would do it. And again, I work in a family business. My mom does all the books. We have nine LLCs. My sister is my business partner and my dad. He's really good at real estate. So it came down to a family vote. And here we are, which is kind of crazy. But it's given us some room to breathe for some other projects. We're really good at hotels. The food and beverage is very challenging. As a lot of people know that are in that space. And it takes away from a lot of the hospitality parts of the hotel that we really want to focus on. So we were able to buy another property. We renovated that and we could talk about that. As well. So we're down to two Bochie Coatels and hopefully some more to come. Okay. So you said that if you got the right price, was this property publicly listed or was this an off-market deal? It was an off-market deal. We had a broker, though. We always send the back of your mind. If you had the right buyer, we wanted someone locally from Montana who understood hospitality, who really wanted to take this property to the next level. And he found one for us and it worked out. It was a quick deal. It happened literally in 20 days, which was wild. Wow. Okay. And why did you not list it publicly? We wanted to make sure a few races. We wanted to make sure again, it was a right buyer. We wanted to kind of find them ourselves. And number two, we come from a small town, a small community. And I think that worries people and staff and employees. I mean, it's a town of 2,500 people. So that's really tricky. And so we wanted to make sure that we did this very intentionally and with a lot of thought behind it before we just made the sale happen. Yeah. I mean, I can imagine when you go through that process when you decide that you're willing to sell, you have your, you said it was bittersweet for yourself. So imagine the folks that are working there, there's anxiety, there's the potential that your staff may quit if they think that there's not longevity there. And so this becomes a little bit of a tricky situation for hotel operators because logically, if you were to put this on the open market, you get presumably a higher price because there's more people that are aware of it. And ultimately, the logic would be that, you know, someone would be willing to outbid another person. And when it's not publicly listed, you don't really know what the firmark of value is. Was that a tough decision for you to make? We knew what it was worth and we knew that we could get that price if we did this deal internally. But Montiel is an interesting place, right? We were stewards of this land and it's still the wildest and we want to keep it that way. And we didn't want a big corporation coming into buying it because again, this is a small town and it's a different dynamic here in Montana and I think we have to be very intentional again on how we expand and grow and Montana is growing like crazy, but it needs to be really thoughtful. Yeah. Who ended up buying it? It's a local family here that actually owns some travel lodges and some RV parks and they want to get in the luxury hotel market. So it was like the perfect, perfect store. Okay. Cool. Do you mind sharing what you sold it for? I should not. I don't know if I should share that. I'm not disclosed that with the family. I don't think that number has been thrown out there yet. And again, small. Well, I'm always going to ask, but you have to respectfully decline. That's okay. I'm curious because you held this thing for nearly two decades. And so I imagine there was some significant equity and it's just kind of curious to give people inspiration like, okay, well, what could this mean for me in the long haul? Absolutely. I would say definitely, we bought it for $400,000. We put $2 million into it. So it really, what we, I mean, it was an amazing deal for us. But again, I think hospitality and purchasing right now with hospitality is risky and a lot of banks don't like that, right? And we dealt with that with RSVP. We can talk about that a little bit, but they're exciting projects, but they're risky, right? Yeah. Well, let's jump into that. The RSVP, that's the name of your motel conversion, right? This was a property in Boseman. Is that correct? We reimagined this eight years ago. It was a motor in 1950 hotel. It needed a lot of love. It had the shade carpet. And I mean, one room, we called it purple rain because it needed a lot of love. So we came into this market. We were really excited about Boseman, obviously pre-COVID and Boseman's exploded even more since then. But we knew we wanted to have a piece of it. And this property had a lot of potential. So we did the renovation. It's 38 keys as well. When we got into the actual nuts and bolts of it, there was a vestus and there was no foundation. And so this project went from a little lipstick to a much larger project. Also there was another property that was its whole block. That was a motor, a car motor spot. We wanted to turn into a vet venue. So we also purchased that. It really made the entire project go up and cost. So when we're talking about how do we fund that? Thanks for very scared to do this project. We did find some new market tax credit money. And this is something for a lot of people, maybe in areas with over-general districts. And there should be some funding to be put behind that. So we applied and they gave us $3 million. And it took us, we had a seven-year span to pay it off, which was great. But it was really great to have that extra capital coming in because the project just got so much bigger than we had anticipated. Okay. Well, let's talk about that piece there. Because I think a lot of people experienced this unwittingly, they go into a project. I believe I read in your situation, you went from expecting a $4 million project and it ultimately ended up costing $7 million. Is that correct? Yes. So you're pulling up the carpets. You notice there's all this deferred maintenance. Like, let's start there. What exactly did you find that led this thing to be $7 million? You said foundation issues. I want to dive into what some of the potential obstacles or challenges that one could encounter when doing a renovation like this. And we learned from doing the sacchegria hotel, which is a 1910 property. You need to do it right from the beginning because these older buildings, they will just give you headaches, right? So the plumbing, the plumbing had a very bad, I know with the plumbing that connected the city was all screwed up. So that was a big one. No foundation. The walls had to be completely stirrupts. We went down to the stars. At the end of the day, we looked back at it. We loved the idea of reimagining properties, but should we probably scrape the property probably for what we ended up paying? This was nine years ago. see. So it was like really diving into these things we didn't want problems with. later, we also added a cafe. So it's the farmer's daughter's cafe and I went to our childhood. And that was a big project because we needed a full kitchen. We needed storage and all the things that went into that as well. That was eight years ago. So you're in a different position now, but going back, you just said that you probably shouldn't have done this. I mean, knowing what you know now, would you still have moved forward with this renovation or this purchase as acquisition? That position, yes. I think that, I mean, that property and the way that Bozeman has grown was a really big win for us against scraping it versus renovating. That's where the question is because nine years ago in the renovation actually took place, you can build around here for much less. I mean, now it's crazy. But back then, you could do builds for a pretty reasonable price. So it might have been worth it because of all that, you know, it's their thin walls. Again, the best is, but all the things that we dealt with like with these properties that it might have been worth to scrape it. Well, having gone through that experience, like, I guess what's the question you were asked yourself now before buying any building that was maybe built before 1980? I, the inspection would be a whole, a whole other world. I think when we're talking about plumbing, that, that is a huge cost. I think that was a half a million dollar investment, which was crazy. So it's really getting that inspection very thorough and really having a better game plan of what we wanted to do. We thought, we're just going to put, you know, some paint on here, paint on there. And it just got so much deeper and bigger than we had anticipated. So I think we didn't think that would be the case. So I think really knowing what's in those walls and what's under that floor. And we just did a renovation project up in Flyhead Valley. And again, this was so much easier this time around because we made mistakes, so we didn't ask the right questions. So it was good for us to know like you really got to get into these buildings, especially the old ones. Hey guys, if you're getting value out of this conversation, do me a favor and take 30 seconds right now and leave me a review on Apple podcast or Spotify. It literally takes half a minute, but it makes a huge difference in helping other hotel investors find the show. Okay. Now back to the episode. Well, like what kind of specific inspection would you go through now? Like knowing what to look for if someone was in the same position where they're expecting maybe a cosmetic renovation, but just they should do the inspections just to be certain before they close like plumbing. Like what the how does someone know whether the plumbing is bad? Well, that is a great question. But the plumbing was the big one of the biggest problems. And I don't know who needs to go in there and do that. But that was in these old buildings. I mean, the piping is just terrible. So I think going into these old buildings, knowing you're just going to replace it. That is the fire system. That was another huge one. You want to be grandfathered in or not and you don't have the sprinkler system. That's another half a million dollars. So it was all these big costs that are not like the fun stuff like the renovation stuff that I wish we had known. And that's the one thing even with our new property is like we did a huge thorough review of all the water heaters. How are we doing with all these like little things that we've learned that are going to need to be replaced? Who's going to do it? Are we going to before we sign the paperwork as a new owner? Are the old owners? Are they going to take care of that? Is that our problem? So we've learned a little bit along the way. Okay. So let's talk about that then. This new project. Walk me through exactly what you're working on right now. Yes. So this is called the cottages. This is up in Flathead Lake. That's about five hours and worth of osman. It's near Glacier National Park. It is absolutely one of the most beautiful places I've ever seen. So I highly recommend people seeing it. So these are 13 individual cottages. So very different than what we have done in the past in terms of they have kitchenettes and they have some of two bedrooms and they're really beautiful. It's right on the river that goes into the lake. So that's been really fun. They're luxury. And so that's when the renovation we did all of renovations ourselves, all the interiors in terms of the design and it's definitely elevated. And so that's been really fun for us to not only see a different ADR, a different clientele, but also just seeing people enjoying this place in a whole other way. And we love to do so many special amenities inside of each room. And now I can do even more when the ADR is at a different higher price point. Yeah. Well, let's maybe transition that into just deal evaluation in general. I've read that you do like napkin math with your family. You guys just kind of shut down. And from a high level figure, I'll like, Hey, what is this thing in a cost to buy? What are the things we need to fix? And then what's the minimum occupancy threshold in order to break even on a property? Like maybe just can you walk us through how you evaluate whether something is worth buying in the first place? Yeah. So we take what the price is, then we take it and say, let's say we were at 50% occupancy. Let's just low ball. Right. And then let's say our ADR, we just we low ball the ADR, just say, worst case scenarios. Right. What do we have to renovate this project for to just break even? And my husband and my father, my husband and finance, and they created this napkin at some bar in New York City one night, but it really does work. And if you want to reach out to me, I'm happy to share that even more in depth, but it was just worst case scenario. We low all you can see low ADR to break even what does that look like? And that was kind of what the processes that we go through. And as I help younger new entrepreneurs in the hospitality space, I always send them that equation and say run this through just to see if you're even in the ballpark. Now the cottage is the price point was a little higher because that market is crazy up there in terms of buying and selling. However, we knew that we can turn this into a luxury stay where we can get a thousand dollars a night or a plus. And so that's that's the exciting part of doing something completely different than our inside motor and hotel. Okay. So you measure occupancy, you measure ADR, is there anything else that factors into this equation? And then no, didn't then just price point of the total cost of the project. Meaning what are you going to buy the dirt for the current property as is? Okay. So maybe let's break down occupancy a little bit more specifically like what is the minimum occupancy threshold on a boutique property that would make a project work for you? We say 50% let's just say hypothetically for the year you're at 50. That's like worst case scenario. And is that what you generally run at your properties in Montana? Every region is a little different, but when you're evaluated properties in near or around Boseman, like what kind of occupancy do you use? We're running in Boseman at 75% or plus like it's the market's great. The cottage is a little more seasonal. So it'll be a little different, but again that ADR is going to make up for that seasonality. Okay. Gotcha. And so why the shift into more of a luxury cottage? I mean, sounds like it's more of an Airbnb or I should say short term rental setup. Why the shift towards that? Something so unique and different for our portfolio. Personally, I love to travel and I love luxury travel and whenever I go somewhere, I get ideas and bring them back to our properties. So this one is fun. Again, with a higher ADR, I can do so many more things. I can do champagne hour at night. We can do is a cherry. They do have like a huge cherry season fresh cherries in the room upon arrival. These little touch points that just really set us apart from anything that's going on up there and no one's doing that right now. So that's what we're kind of the leaders in this area. And that's why Montana is so fun is it's just such an untapped market in terms of hospitality and both tea cost Italian luxury hospitality. There is room to grow and you can really wow people here. Like there are for a very low it's like a low cost point for the property, but it's really a wow factors for the good. What is like like a wow factor like what kind of ADR are you talking about for what is luxury to you? What does that mean in terms of dollars? If we can get $81200 a night for just our average ADR of the cottages, that's a great place for us to be. Again, these are like little small Airbnb. So I think the value is absolutely there. They're on the river and we run it. They renovate them beautifully. So the price, the values there for the gas. So I think we can get that for sure as we're coming into our summer months. That's what we're priced at. It's our first season. So it's always you're playing with those numbers a little bit, but we're sold out for the entire summer, which is great. I think we have literally four dates open right now, which is wild. Wow. So you've already acquired this. You've performed the renovations. You're operational and for the summer, you're running close to 100% occupancy then. Yes. Which my mentor would always say that's not where you want to be 100% occupancy is not necessarily a good thing for the property. But this one is really seasonal. So we really have three months to really make this place pay for the rest of the months, right? You know, we know how that works. You care? And it's a $8100 to $1,200 a night. We are in, which is exciting. Again, like we're pushing it. And I do know how that would be. We have to vote. We're going to push right and see how the summer goes. And then we can reevaluate. But I know the products there. I mean, I did every interior of myself. I spent so much time and love winning to every place. So I know when guests walk in, they're going to have that feeling of like, okay, this is worth it. Yeah. What size units are these? Are they studios? One, two, three bedrooms? What are they? They're all a little different. We have two bedrooms, one bedroom, some with one, two queen beds and one bedroom and studios. There's four units that are very small, like standard king bed, king rooms. So all very different, which has been fun for us every unit. We've decorated differently. It has a theme, which has been great, kind of play up the area. I am genuinely interested in them also blown away. And respectfully, I hope you understand, like when I think Montana, I don't, the idea of $800 to $1,200 a night accommodation doesn't come to my right. And that's partly because I've been to Montana and I've looked at a lot of the accommodations. In fact, we had a conversation before we started recording about Livingston Montana. It's a place that I visited when I was evaluating active hotels that were available for sale. And coincidentally, you and your family and partnership group own a couple of hotels in the same town, the home to suites, the marriage very outfare field, which are really, these are nice properties. They're franchise properties, so they're commodity hotels, which doesn't give you necessarily the ability to pull the levers that you can with some of the boutique stuff that you've been referencing. But of all the different types of assets you could have invested in, you shifted away from the franchise hotel, the home two suites, the Marriott. You went into this 13-caughters boutique resort style. I guess I'm just really curious, and it seems pretty obvious, but I want to hear from you why the big shift away from the branded flag hotel into this luxury boutique model. Right. Well, my wheelhouse is experiences for guests. That's what I love to do. That's the best part about my job. That's how do I create something that's so special and so unique. Again, when I travel with my family, that's what I'm always looking for. So I wanted a property, 13 keys, not nothing crazy, but that we can really specialize and we can really create best folk experiences for people coming to Montana. There is a huge market for that. There are luxury markets, five-star hotels are starting to come into Montana, but there's two technically in Montana, which is wild. So I think if I can create a five-star experience in my little boutique property, that's going to really make the wow factor for people. That's going to get people coming back again and again and creating that buzz of you can get this five-star experience. This beautiful quay is a hallmark town. Oftentimes when you find the luxury travel, they've done the luxury hotels. This is luxury at a whole different experience and that's what I think makes us really unique. Well, all the data suggests that we're in this K-shaped economy where luxury hospitality is performing, over-performing, doing very, very well. But the low and mid-tier properties are struggling. The rev-par is either flat and depending on the property. There's their negative, particularly to circle back with Livingston. I was looking at the Wyndham travel lodge and super eight hotel package. They're for sale now. I mean, you go check them out. But when I started looking at the revenue and actually the cost is a big part of it because the labor costs, there's just not a big pool of population for people to work in these. It was becoming very difficult for this to pencil. I'm curious, like, your experience in Livingston with the Marriott and the home, too. These are off-market. These are for sale, correct? Yes. What is there? Why you're transitioning out of owning those? We, like I said, we love unique hotels. I like things that have character. I think our legacy as a family projects are creating special places for people. And that's what we love. These big bucks of towels, they're great. They're cash cows. They're really not where the passion for me is at. And at this point, in my career, I'm looking for things that are fun and things that really fill my cup and things that I think are really good at. I'm not very good at penciling those numbers every day with, but a lot of those like hotels, that's not my passion. That's something that I want to do. So that's why we really believe that we can find these unique experiences. And Montana is so untapped. So Livingston is a great market because you're on the gardener side going into Glacier, going into Yellowstone. And there's one high end hotel that's on the way out on the way to Yellowstone. Otherwise, there's really nothing in Livingston. There's such potential for a roadside motor in hotel there that has a lot of country character. And that town is so unique. And I think when people come to Montana, they walk down that downtown. That's what they're looking for. They're looking for artists. They're looking for great restaurants, cool shops. And that's what Livingston has to offer. So we think it's a great market. We started an online platform that was specific guides to everything in and around Yellowstone. And Livingston was one of our biggest markets. When you come to Montana, you have to see this. You have to go to Paradise Valley. If you like the show of Yellowstone, that is exactly what you're looking for. So it's a really interesting place. And I think, again, the experiences that people are looking for, it's a different traveler. You know, RSCP is very similar. These are people that are seeking out unique experiences that have some local flair. They've stayed at the hotels and I just don't think that market is converting like it used to. Yeah. Yeah, I mean, for all those reasons, I was attracted to Livingston, but, you know, I'm going to be real here. I just don't know. Like, can you make money on those properties? These box hotels. Like, are they profitable? Because when I ran the numbers in Livingston, I didn't see a way in which there was a way. I didn't see a path to profitability. I say yes for us, absolutely. We've done it. And it worked out great. It was 2020 when the first one opened and Montana exploded. And then Livingston does get a lot of filming groups there because there's some great tax credit there. And so we were full for two summers with all these filming groups coming in. It's still a great spot because you're off the interstate. And there's nothing really between those men and buildings to stay at right off the interstate. So I believe this market's still there, but it's just not for us. It's not something that I want to do again and again and again. I'm okay flipping hotels. We did that once with a super rate. Great. I'm open to it if we can buy right. Let's flip it. Let's sell it. But otherwise, hang on to it. It's just not something more interested in. Yeah. How much do the recurring PIP fees play into that decision? You know what? It's not even the PIP fees. It is the monthly fees for marketing and all of their software and all of those things that that's the killer. That is that is hard to do. And we spoke a little bit offline. We almost turned the RSCP into a windum, one of their specialty properties. Our occupancy was low. It was 40% after two years of owning it. We're like, what are we doing wrong? We know the market's hot here. What's happening? We went to the windum conference. We were ready to really do this deal because I didn't know what else to do. And as we were there, I was having dinner with a fellow windum hotel owner and he said, "I have a consultant that you need to call. Call him now." I stepped out. I called him. He flew to Montana the next week. And over at our occupancy went to 40 to 60 and now to 80, which is pretty incredible. He really gave me the playbook on how to hotel 101, all the things I didn't know, how to work with OTAs, how to find a marketing team that actually knows how to market hotels. There was just all of these things that I didn't know and he taught me. And so I'm starting to do this with other young entrepreneurs as well and how to tell it. Here's what I know. If you want to know all the ins and outs, I wish I wouldn't know. Okay. And the future acquaintance, Ken, you said, flew out and is now. No, this was a different consultant, but he had worked with Lights on Digital as his preferred marketing group for his hotels. Okay. And so he really, he had a built hotel, sold hotels, had his own marketing firm. So then he was just doing consulting and he really just told us, "Hey, start taking notes and if you do XY and Z, you're going to see results." And we did, which was crazy. One of those was hiring a marketing firm. So we worked with a marketing firm locally, which was great. And they did a great job in our branding, great job in our website when it came to actually marketing our hotel. They just didn't know the hospitality space. Working with OTAs, they were always our enemy and we did everything we could not to work with them. And my consulting, he said, "You got to play the game. You need to befriend them. You're an independent hotel. You are a nobody. You need to play the game with them." And we started to do that with Expedia and booking.com, even though it's so painful to write those checks every month at the 20%. They, at least, we are very visible online. And the goal is, people find this on Expedia and hopefully they booked direct or maybe if they stay with us the second time around after booking in OTA, they booked direct, which we see that all the time. So that was really helpful for us in growing that business. So you hired this consultant. He came out, visited the property. What were two or three of the specific things that he recommended you implement to be profitable? One of the things that I stands out and I always tell people in the hotel we're all to do this is TripAdvisor. I first know like TripAdvisor, but apparently people love this website. They can book from it. They love leaving reviews. They love reading reviews. So he said, "You really need to work on your reviews and get those to be the highest in those." So now we're number one in those on TripAdvisor. So what he recommended is inside our hotel rooms, we have little note cards that says, "Your room has been serviced by it." So, and so they could write their name in. If you had a great experience, here's a QR code, please leave us a review. So we really went, that really helped us gain a lot of traction and bozeman. It also helped our SEO, which was crazy because if you're googling where to stay in bozeman, all of a sudden we were coming top of mind, that was huge. The other one was, for example, working with Expedia. He said, "Do all of the promotions you can with them, when they have something going on, do their sales, do it so you can become number one on their site as well." So all of a sudden, our traction kept going up and our SEO performance kept going up and our website traction, it was just a snowball effect of working with these other entities that can be painful at times, but work with them in a way that you can work together. Yeah, you know what, that's somewhat counterintuitive. I'm glad you brought that up. You mentioned now the OTAs were a big part, a couple of times here. So let's unpack this a little bit because I do believe most independent operators, when you talk to people about OTAs, most people are a little, at minimum, they're a little uncomfortable with them. And sometimes they're just straight out furious with OTAs and they just hate paying the fees. And you're kind of promoting, like, "Hey, here's a different perspective." Like these are your partners. Like you're paying a percentage, but it's helping your occupancy and ultimately your bottom line. So ultimately, though, I think the goal is the strategy is to convert someone who maybe is from a book down an OTA into a direct booker the next time. But one of the specific things that you do to get someone who's accustomed to booking on an OTA to book direct with you. We, our good bi-text, we do a lot of, we're very tech savvy at the RSVP and I work with an amazing group of Gen Zers, so they're really good at this. This is "Fire of our Goodbye" Texas. We would love, if you wanna come back, we'd love for you to book direct text us here and we'll send you a link so we make it super easy for people like we wanna make the check-in process, I wanna make the booking process, all that as simple as possible for guests and to keep us top in mind. So I think that's been really huge. The other thing that was really, really helpful for us is our brand awareness at RSCP. We started building this brand a year before the business was even open. So I think continually having that brand recognition, email is just everything when it comes to conversions and how quickly you can make conversions off email, newsletters, I highly recommend that to every single person. I don't care what industry you're in, you need to collect these emails. So again, it's that brand awareness and keeping us top in mind when people have good experiences, just continually to reach out and we're here for you if you need us. So I just think kind of training your staff on how do you revoke these people and how do you keep yourself top in mind for them. - Wow, now this is so good. I mean, I appreciate you sharing this. And I thought I heard you say that you went from around 40% occupancy and what are you running now for this property, the RSCP, the one in downtown England? - 80%. - Yes. - 80% goodness. - Yes, that's incredible. So how much would you say that your revenue comes from OTA versus other marketing avenues, direct bookings, for example? - Unfortunately, 60%, which is wild, but it works. And therefore, some reason they're picking us over someone else on Expedia. - I appreciate the honest answer though. A lot of people I think are really hyper focused on the metrics of direct bookings. And the reality is you're saying, hey, look, I at the end of the day, as long as we're hitting our numbers, whether it comes from OTAs or not, it's collaborative effort. I think of course, it is the objective to get more direct bookings, but it is a function that's proven it is working. - When you have small marketing budget, we'd love to spend thousands and thousands of dollars on SEO every month, right? So we have a budget of $3,000, that's our max. That's it. Otherwise, we have to use these other tools to help us bring in bookings. And it's been one strategy that's worked for us. - Well, what about revenue management? Who's doing that? - That's also done through our marketing team, which has been great. So they have a third party person that we work directly with. It changed the game. I was doing rate management. Again, I didn't know what I was doing. And it's always hiring smarter people is a very important key. And so they're looking at those star reports. They're doing the comparison. They're seeing where we're at in the market. And it's a really nice weekly overview to see how are we comparing to our competitors? How is our ADR? Where are we at on occupancy? So that's been an amazing tool for us. And having someone that really understands these hotel markets to give us some guidance. - And just to clarify, that's an agency that you've outsourced, that's a third party. Then is through our marketing firm, they outsourced this person. But we work directly with them, which is great. So whenever we're making changes, whether it's new packages on the side or I know that it's gonna be a busy weekend coming off, so let's raise our ADR. I just email them and they make things happen, which has been great. They also work with our OTAs directly, which is so huge for me because that's taking me out of doing a lot of extra work with OTAs, all our outreach, all of her motions, all of the things going on there. So that's been really great. And then my favorite thing to do is to turn off those OTAs and our occupancy is a certain amount and they do that for me too. When we're looking at that together, we're like, all right, we're turning them off for the weekend, which is a really good feeling. Hopefully, Expedia's not listening to this. - Well, listen, I wanna transition a little bit here because we've been in the weeds a little bit about occupancy and revenue management OTAs. But you can work on all of that. At the end of the day, though, the product is an experience, and you've built this brand. You have built, I think you're keen on offering all of your guests a sensory experience. I read that there's three things that you recommend a property has. There's a signature scent, color, and playlist. I wanna know, where do that framework come from? And can you explain why each of those three things matter? - Yes, well, I love to entertain at my home. And these are things that are very important to me when people step into my home. I want them to feel a feeling. Whatever you want it to be, I can create that. So when I have these hotel properties, I want that when people step through the door that it creates, whether it's a nostalgia of growing up and the station wagon coming to your 19, retro hotel, or whether you're walking into an elegant lobby, whatever it is, I wanna create that feeling for people. And I think that's the direction that hospitality is moving. We're moving into more of how do we create brands versus just these businesses? And it starts with the feeling for the guests, the first touch points of how is a website experience? How is the confirmation email addressed? How is the wording? How is the fonts? How is the color? Is it all starting to incorporate into this whole test for your stay? We do a contactless check-in, so they get a text before they check in. Again, it's the way that we're wording things. I want them to know the place that you can come and slow down and relax and really have this beautiful experience throughout your entire stay. So this is the stuff that I love to do because this is the fun stuff. This is how do you create memories moments for people that are lasting? - Yeah. And I think all of that is personally fulfilling as the host. You describe, you led with, you like to host people at your house and you want that experience to be transferred with your hotels. But from a financial perspective, I wonder, is there a measurable outcome tied to these sensory investments? How do you know it's working? - I know it's working because I continually hear guests say, well, how we've never had this happen before. And we've stayed all over the world at those moments. We do complimentary champagne at every hotel when you check in. And it's a very small cost to the hotel, but it's a huge value add to the guests. And it's those little moments that I'm seeing the reviews online they're talking about these experiences and they're telling their friends about that. And at the end of the day, I always believe word-of-mouth is everything, right? So they're taking a picture on their phone and posting it to their Instagram account. That goes really far. So it's like, how do you create such wonderful experience that people want to take a photo? They want to post it, they want to share or they want to tell their friends about it. That's what I'm trying to do with a lot of our properties. And we see return guests over and over again, or friends of a friend. They said, our friends said, you must stay here. So those are really rewarding experiences to see when their friends are here, their family's back. - Yeah, well, you can see the personal touch. I mean, you can feel it when I visit your website and I see the design and the decor. I mean, there is a passion that is, you can clearly sense it. And so, you know, on the one hand, I think that that is a measurable aspect that people are willing to pay for. And then also my mind starts to shift to go, this oozes Hillary everywhere like your personal passion. And you've got multiple properties. So now I start thinking about like, how do you functionally operate this? Like you can't be everywhere all the time making sure that the playlist is just perfect and that the scent is right and the color lighting and the hue and everything is perfect. Like I think a lot of people hit this wall where they're trying to do everything all themselves and there's gotta be a breaking point. Like how have you addressed this so that you can outsource this brand essence without being there all the time? - Right, it's a really good question and I have just found and hired some of the best people to work with people that really understand my vision from the beginning. I always say it starts with the leadership right, it starts with me on how I'm gonna present myself and my product and my passion for this. And hopefully that's conveyed to them and it seems that my leaders on these teams, they really understand that and we continue to talk about it every single sync meeting that we have on how are we creating feeling, how are we treating our guests, customer service, where are we at? And then I'm constantly seeing reviews and I'm constantly asking guests for feedback, good or bad, I want it, I wanna hear the good bad and the ugly because that way that we can build and we can be better. So those are little metrics that I'm always using say how are we hitting those marks? Are we hitting those marks? How are we doing? And again, just bringing on the right people and the team that's the most important and I've learned that the hard way. - Yeah, well, so you're tracking this and like you said, you're constantly monitoring the results. If someone's listening to this and they're like, yeah, I'm feeling overwhelmed, I'm feeling intimidated by doing all of this. Like hiring the right staff, hiring the right team person. Like you can't walk through your whole operational staff, personnel and everything, but if someone wanted like a key person, like who would you recommend that they hire to be able to accomplish what you described? - Yeah. Well, I used to do it all myself. I used to staff every single apartment at the RSEP, including food and beverage and I did all the scheduling, I did all the hire. It was hard. There was so many years of very hard. And finally, I hired an operations director, which the bottom line, I said, well, we can't afford her, but I need her help and I was having children. It was like all these things, it was craziness for us. So we hired someone and she paid for herself within the first year easily. I was able to work more on the business forces in the business and it was amazing to see the growth to the directory of the business and just get better and better because I wasn't in it every day. So trying to find that right person, they have to be aligned with your values. They have to be able to see your vision. Both times I've hired some really, really young people right out of college who were eager to learn and that was really exciting for me because I could teach them the way that I see the hospitality space. But again, just, I always come from a place of kindness and I'm like, this is how I want our guests to feel. I want you to feel this way and that's how we're going to lead and that's been really helpful for me as I'm hiring people and trying to find the right people in our team. - So you hired a director of operations and I want to share, I'm going to share a mistake that I've made. Okay, and this is nothing against the folks that we hired, but we hired folks that were inexperienced. And here was a challenge. I needed to take stuff off my plate, but when we hired people that didn't have experience, then I ended up being more responsible. 'Cause now not only was I doing a lot of the work, I was teaching. I'm reaching a lot of the work and I really needed someone that had more experience than me. I could trust, just understood. I needed someone that had a higher skill level than me in the areas in which I needed to step away from. That was a mistake because I had felt like, "Oh, we can't afford it." The reality is you can't afford not to. It is a tough position, the chicken, the egg syndrome here, because you want to get to scale, but in order to get to scale, you got to hustle and do all the hard work yourself. How did you make that transition from doing it all yourself to being able to pay and hire someone? Can you walk me through how you solve that? Yes. Again, I hire someone with no experience, not a lot of experience, but I knew that I could do something. You did the office window. I've done it twice now and it's worked really well for me in that regard where I start offloading a few things, like staffing, because I was waking up every morning with four texts from every department of who's calling out, right? That was one barrier to entry. I needed to put someone in between myself and all the staff in terms of what's going on for the day. That was step one. That took off so much from my plate. It was like, "Okay, now I need you to do this part." Now we're feeling really good. I say for me, it took a good year of us working so closely together. We're going to do this. It's not going to be easy. We're making beds together. We're cleaning rooms together. I'm showing you exactly what I would do and how I want it done. Again, that's just my leadership type as we're going to do it all together. I'm going to show you what I do. We can learn from there. I'm a very hands-on type of learner. It seems like the people I've hired are the same. I start offloading a few more things and a few more things. My operations director, who started a year ago, she's 24 years old. I just promoted her to the GM position. She's 24, the GM of this hotel, which is crazy. I'm still there, but my sister and myself have become this management company almost for all of these hotels where we're overseeing what's going on for the day. Who needs what? I'm really good at delegating, really good at checking in, really good at being available for everyone. If you need me to help you solve problems, but again, I feel like the more that we were problems falling together, the better and more confident they became. It's worked out really great for me and my experience and I'm so grateful for these people on my team. Let's talk about your personal brand as a business asset. You've got Lady H, which is a personal brand that you've built. What exactly is it? Why did you launch it? Yeah. Lady H, I started in 2017. I was running the Sacaja B.A.D. hotel as a GM. I was doing other marketing and I was listening to Gary Banner, Chuck, which maybe some of you are familiar with. He's like the OG of starting personal brands and how to build an online business. He said, "If you want a business since the 2017 and you don't have a personal brand, you are missing a huge opportunity." People really want to see the ends and outs behind the business and the story behind the business and you kept going back to the story. Tell you your story, that's what sets you apart. I started this brand as a lifestyle brand, sharing the things that I love, travel, motherhood, fashion, cooking, all of those things, but it's been incredible. All the opportunities that have opened because of this personal brand that I started a long time ago. We were on the Magnolia Network. We were on the Today show and they all found our properties through my Instagram page. It's been really great for me to connect in different ways with people around the world and to really showcase what we're doing behind the scenes. I think people love the process of the cottages, for example. They've been with us through the entire renovation and I've been sharing the before and afters and the decision-making as I did all the interiors and all of the behind the scenes and that's been fun. I feel like people are invested. Now they, now I have to stay there. I saw the ends and outs and they are working. It's been really fun and it's a really amazing way for us to talk about our business and it's almost like his value add way. Sometimes on your business page, you've got a key to business. On the back and page, I can tell you that was really going on in the business or I can show you behind the scenes or where those ideas come from, whether it's from things that I'm doing in my real life. It's been an interesting ride of a great experience altogether. Building this personal brand has really directly translated to awareness for your hotel. I'm curious, are you using your personal brand for anything besides driving revenue? Are you doing coaching or consulting? I do a lot on that personal brand that has actually evolved, which is so interesting. I mean, one thing I do is I share a lot of my life on there, sharing what my fashion, sharing all those things and I do make revenue off of that. But the other thing that I've really moved into that's been so fun is working with entrepreneurs, a lot of hospitality, those in the hospitality space, other young female entrepreneurs who just need some guidance and coaching. This one-on-one mentorship is really where I'm putting a lot of time and energy and it's been so fulfilling to watch in three months, these people take their businesses and the growth that they've seen and that's been amazing. That's definitely part of the direction of Lady H. Now that you're performing, you're doing some of this consulting work, I guess I'm curious to know what is maybe the number one mistake you see boutique operators making with their marketing when they first come to you. Working with OTAs, that's a big one and I always really recommend do it, especially when you're new and not understanding the revenue management part of it. Whether I mean, probably with AI and all the things now, you can probably do a lot of it on your own, but really understanding your market, taking your top five competitors and studying that and study what their rates are, study how they're doing and how are they getting bookings, where are they at on the internet? When you're googling, where to stay in your area, where are you coming up? Where are you on page one or page 10? Those are a lot of big things. Oftentimes when I'm working on marketing, I put myself in the consumer spot and I say, okay, I'm just going to go to Google, let's just say I'm coming to LA, where to stay in LA or what's cool in this, you know, and that's how I think as a consumer. So I think how are guests going to do that when they're coming to Bozeman or in the forehead? What do I need to be focused on? So those are big ones, but when do I biggest takeaways and we talked about it a little bit is you've got to create this brand, this feeling, tell your story. There's a lot going on online. It's just how are you going to separate yourself? And I think that's what people are looking for. They're looking for something really genuine. They're looking for authenticity and how can you convey that through your brand and the business that you're building? Okay, but I got to ask this. That would be a remiss if I don't ask this because you're very good on camera. Like I go to Instagram page or you've got the stage presence, so to speak. And for an owner or hospitality or business operator in general, that maybe you know his camera shy that doesn't feel comfortable doing social media and being the face of the brand. Like are there any alternative options for someone that doesn't want to be on camera? Absolutely. I would tell them to go check out our cottage page on Instagram with their looking for some inspiration. This one, I feel personally that we have nailed from the beginning. I'm not the face of it at all. We have created a feeling from day one of going to the lake, having, you know, where moments are slow and relaxed and all these ideas of like this nostalgia of going to the lake growing up. And so we've created that through Pinterest boards through very easy Instagram reels, things that again are creating a feeling for people when they see that and it's performed so well. Again, people want to see themselves in this space or wherever they want to travel. They want to feel that, right? So how do you create feeling? You don't have to put your face out there. But how do you create little moments within your property that creates something for someone that might get to their heart? And that's what we're always trying to work on with our properties is what is really resonating with people. What are they looking for? What's going to make them really excited about coming here or just putting on their list to come here some day? Yeah. Hillary, this has been generally, this has been great. Like not only are you just like such a boss, but like your story, your balance between managing, you know, being a mom as well, which is a whole other segment. Like, I've got matter spec for you. I love what you're doing. Your properties are beautiful. You've had tremendous success and you've got ambition on this last note here. What's in store for you? What's the goal? What's the vision over the next five to 10 years? Where are you going to be? Well, we always said 10 hotels and 10 years. We're a little bit behind, but we are growing. So that's exciting. But I want to do more projects like this. I want to either help others do and dream together on these projects or do some more ourselves ones that are smaller keys, but really intimate, very unique and just have a little bit of elevated luxury as guests stay there. Awesome. Well, not note if any of our listeners want to get in touch with you or just follow along with your journey. Where can they reach you? They can find me on Instagram @hillaryfalkford. All right. Awesome. Well, that was a great episode. I feel like there's so much more down pack, but you've got a lot going on. So I'm going to let you go and we'll have to stay in touch. But thank you listeners for tuning in. This has been another episode of the Hotel Investor Playbook. If you've enjoyed this episode, take five seconds and share this with someone who could benefit from listening to the show. Until next time, I am Michael Russell. Oh, loha.