How To Invest
About The Room Flip Opportunity
Buying and re-selling hotel rooms is a huge business. Expedia Group (which also owns Hotels.com, Hotwire, Orbitz, Travelocity, Trivago, carrentals.com, Venere, cheaptickets.com…) earns over $7 billion annually ‘flipping rooms’, all without owning any real estate or even cleaning these rooms. Expedia buys blocks of rooms from hotel chains in advance at ‘wholesale’ discounts and then re-sells the rooms at retail prices often repackaging them with flights, car rentals or other services. Why do hotels pre-sell rooms to Expedia? It’s a form of insurance. Hotel rooms are a ‘perishable’ commodity, which has no ongoing value the day after. Pre-selling rooms, even at a discount, provides the hotel with at least a partial income guarantee to offset fixed operating costs.
Why You Should Participate
Old fashioned concept; buy wholesale, sell retail:
(i) You know exactly how much your proﬁt is
(ii) You know when you will be paid.
(iii) No work involved, no expenses, no time wasted on property management & tenants
Offering the rooms to our investors instead is mutually beneficial:
Selling rooms through Expedia costs a hotel 20% +/- in discounts and fees.
Expedia’s projected room rate is based on the past performance of a hotel operation. Because the hotel (formerly Adams Mark) is now being upgraded as ‘the Buffalo Grand’, future room rates will, in fact, be higher; if we sell the rooms to Expedia, the upside is theirs.
When we sell rooms to 3 rd party websites, we lose control over the re-sale pricing; if a travel website reduces rates to sell their rooms, we are forced to price-match.
By retaining control of a direct sales process, we increase direct contact with our customers, (existing and potential) and we can build – faster – our own hotel marketing database.
How You Can Participate
The Buffalo Grand Hotel – like all hotels – pre-sells rooms to Expedia. We have decided to offer a similar arrangement to our investors (buy low, sell high).
An investor buys a block of (100) rooms at wholesale prices in a future month
Buffalo Grand significantly discounts the room, in return for prepayment.
On the due date, the investor receives the full retail value of the original room.
The hotel pre-sells only a limited quota of rooms per month; discounts are adjusted as remaining room inventory diminishes (i.e. act soon)