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SH (A) - CI Easterly - 2023

The owner of the Easterly bed and breakfast inn in Salt Harbour is concerned that a new coffee shop being built by Brims, a regional chain, will interfere with the inn's view of the harbour and negatively impact business. The owner's lawyer has challenged the building permit with the local regulatory board, arguing the parcel is too small based on zoning laws, giving them a 50% chance of stopping construction. It would be better to negotiate buying the lot from Brims to prevent any construction, rather than going through a lengthy legal battle. The owner has gathered key financial figures to inform negotiations, including the $100,000 Brims paid for the parcel, the $350,000 estimated loss from lost harbour view, and $

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Dhananjay Mishra
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172 views4 pages

SH (A) - CI Easterly - 2023

The owner of the Easterly bed and breakfast inn in Salt Harbour is concerned that a new coffee shop being built by Brims, a regional chain, will interfere with the inn's view of the harbour and negatively impact business. The owner's lawyer has challenged the building permit with the local regulatory board, arguing the parcel is too small based on zoning laws, giving them a 50% chance of stopping construction. It would be better to negotiate buying the lot from Brims to prevent any construction, rather than going through a lengthy legal battle. The owner has gathered key financial figures to inform negotiations, including the $100,000 Brims paid for the parcel, the $350,000 estimated loss from lost harbour view, and $

Uploaded by

Dhananjay Mishra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Salt Harbour-Confidential information for Easterly

You are the owner of the Easterly – a bed and breakfast inn located in picturesque seaside village of
salt Harbour. Three months ago, Brims-a regional chain of coffee shops acquired a parcel of property
in the resort community of Salt harbour to build a new shop. You are concerned that their structure
will interfere with the inn’s view of the harbour that will have serious impact on your inn business.
You wished that you had bought this parcel 10 years ago when you bought Easterly, but your stretched
budget was better spent in refurbishing the inn. Moreover, you always believed that the parcel is
smaller than the minimum required for zoning as per current commercial zoning laws stipulated by
Local Governing Board (LRB) and hence not buildable. Acting on your lawyer advice you have
challenged the issuance of building permit to the local regulatory board. Your lawyer said you have
50% chance of ultimately stopping issuing of building permit for coffee shop.

However Irrespective of decision that the LRB issues either party can go to the court and the case may
take years to get resolved. Unless Brim is demanding unreasonable price it would be better to buy the
lot from Brims instead of going to the court. If you buy the plot you plan to landscape it nicely.
However, there is very little else you could do with the plot. The only reason to buy the plot is to
prevent someone else form building on it.

To help you plan for your negotiations you have confirmed following figures:

1. $100000 – the amount Brims paid for the parcel 3 months ago.
2. $200000 (plus or minus 5%) Your guess of what Brim may have to pay for a comparable site in
the village of Salt harbour
3. $350000 (plus or minus 10%) the loss you would suffer if the water view is lost due to any
structure in the lot. This estimate takes into account reduced rent you could charge, loss of
your property value, as well as subjective factors reflecting your sense of disappointment due
to loss of view.
4. Your lawyer estimates $25000 in legal fees for going through regulatory procedure at LRB,
court trials and appeals.

Prepare for negotiation by completing provided excel template before starting negotiation with Brims.

This case has been adapted by Satish Duryodhan from Salt Harbour-Prof. Wheeler HBS
This case has been adapted by Satish Duryodhan from Salt Harbour-Prof. Wheeler HBS
Bed and Breakfast Business-Industry note
It’s an image that puts you in an instant state of relaxation—a roaring fireplace in a cosy rural bed and
breakfast, sharing stories with fellow travellers while enjoying a cup of coffee. The romantic notions
so closely associated with a bed and breakfast have made owning one a popular dream for many
people. This is one of the reasons the bed and breakfast (B&B) industry has grown so significantly in
recent years.

What is a bed and breakfast? If you’ve never had the unique pleasure of staying in a bed and breakfast,
you may easily confuse it with other small, privately run inns and motels. A bed and breakfast are a
hybrid which blends the luxury and comfort of an upscale hotel with the atmosphere and décor of a
beautiful private residence. As the name would suggest, the nightly fee includes a hearty, home-
cooked meal the next morning.

The state of the B&B industry In the United States alone, the B&B industry is a $3.4 billion industry
with an estimated 17,000 establishments across the country. Unlike major hotel and motel chains, bed
and breakfasts are typically not owned by corporations. According to the latest figures, B&B ownership
in the United States breaks down as follows: 72 percent of owners are couples; 18 percent of owners
are individual females; 5 percent of owners are individual males; 5 percent of owners are non-couple
partnerships and 79 percent of owners live on the premises. The average American bed and breakfast
has an occupancy rate of 43.7 percent and an average daily rate of $150.

A successful bed and breakfast owner plans for cash flow, hire and manage staff, strategize to maintain
maximum occupancy rates, and negotiate with contractors and suppliers. To be successful and stand
out amongst the competition, there should be something unique and attractive to the building you
plan to use. Many bed and breakfasts use a historic angle to draw guests. Often a Victorian home can
give travellers a sense of what it would be like living in the area in the late 1800s. Others may use
proximity to the waterfront or other notable features as a way to entice guests to stay there. You may

This case has been adapted by Satish Duryodhan from Salt Harbour-Prof. Wheeler HBS
have the most beautiful, well-maintained vintage property that seems perfectly suited for bed and
breakfast conversion, but if it is in a strictly residentially zoned neighbourhood, it may be over before
you begin. Like any other part of the hospitality industry, staying at a bed and breakfast is really a
luxury which is not available to everyone.

It is crucially important that B&B is located within a community that has a proven tourism track record
and a local economy that can support it. Questions for discussions: 1. How bed and breakfast business
differ from Hotels and Inns? 2. What are the personality characteristics and skills needed for the owner
of bed and breakfast venture? 3. Identify some critical success factors and potential risks for a bed and
breakfast venture

This case has been adapted by Satish Duryodhan from Salt Harbour-Prof. Wheeler HBS

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