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Western Montana and Northern Idaho hotels currently represent excellent
investment values…. possibly the best in the United States.
My opinion is based on my knowledge and experience as a hotel broker
through the past thirty-three years.
Gross multipliers, per room costs and capitalization rates, more
or less, directly reflect SUPPLY (hotels for sale at any given time)
and DEMAND (active/qualified buyers). As is pretty much true with
real estate values and equity appreciation through history, the
lower the supply and higher the demand, the more prices will escalate.
I’ve watched and witnessed, maybe played a small part in, gross
income multipliers climbing from four to five through the past eight
years in southern California, from 3.5 to 4.5 the last five years
in northern Arizona, and from three to four times in the Seattle
and Vancouver areas…
Since 2001 I’ve obtained my broker’s license in Montana,
moved here (although I still office and broker hotels in southern
California), sold four hotels and purchased two. I currently have
listed for sale, or know of, seven hotels in northern Idaho and
western Montana, with asking prices from 3 to 3.5 times gross. I’ve
tracked hotel sales in my market since 2001, and know that sale
prices have ranged from 2.7 to 3.1.
This pristine geographical and healthy economic area is just now
being discovered. Hotels are being developed here. In 2005, Hilton
Garden Court hotels will open in Bozeman and Missoula. A Marriott
Courtyard will open in Missoula. A new Holiday Inn Express has just
opened in Coeur d’ Alene. At least one new hotel will begin
construction in Kalispell. Big Mountain at Whitefish is undergoing
a $150,000,000 overhaul and expansion. Big Sky, between Bozeman
and Yellowstone National Park, is developing exclusive private golf
courses, condominiums, homes and estates for the rich and famous.
Even Bigfork, a little three-block long town at the north end of
Flathead Lake, north of Missoula, has an exclusive new golf course,
yacht club, and hundreds of new homes and condominiums developed
and sold through the last few years from $300,000 to $1,500,000….
Western Montana includes both Glacier and Yellowstone National
Parks, realizing three to four million visitors each year. The winter
ski and recreation areas here are unsurpassed, with lift, accommodation
and daily cost rates twenty to forty percent below other popular
U.S. winter areas. Getting in and out of western Montana and northern
Idaho is convenient and relatively inexpensive, with several major
airlines serving international airports in Spokane (30 miles from
Coeur d’ Alene), Kalispell, Missoula, Helena and Bozeman.
Bozeman’s State University, the University of Montana at Missoula,
Carroll College at Helena, and an extensive State community college
system, represent the highest standards in education and national
championship athletic programs.
The picture is clear. At around three times gross, $25,000 to
$45,000 per room, with 15 to 20% capitalization return on investment
rates, Western Montana and northern Idaho represent excellent investment
values.
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