A Close Brush with Financial Disaster

Some years ago, I came very close to jumping off the financial cliff: I seriously considered buying a 100-year-old bed-and-breakfast in Flagstaff, Arizona. I was reminded of this episode by a post at Manely Montana, a blog whose proprietor runs an inn that appears to be very beautiful. All so idyllic.

The Inn at 410 occupied a fine old building, an elegant Victorian house in the middle of Flagstaff’s gentrifying downtown. It was owned by a couple who had moved to Flag several years earlier, having long dreamed of living in a small town. He was a successful businessman—had an MBA and ran the family business in Chicago for many years. At one point, the house had been a Northern Arizona University frat house, and as you can imagine it was quite a mess when the students were done with it. It was, however, a historic house in the center of what was once the town’s ritziest district, formerly inhabited by movers and shakers, some of whom went on to do some moving & shaking on a national level.

They renovated the house to the nines. At the time I stumbled upon it in connection with a story I was writing for Arizona Highways, it was just lovely. Because of the article, they comped me a couple of weekends. I was enchanted.

For a number of years I’d been teaching in a nontenurable position at the Great Desert University’s unhappy west campus. The job was underpaid and the workload was obscene—often I put in 70- and 80-hour weeks, with no overtime pay, and I spent my unpaid summers preparing the following year’s courses. When I started, it was an upper-division and graduate-level campus serving older students, and so the teaching wasn’t intolerable. But now the university was converting the campus to a four-year institution, and suddenly I was being expected to teach freshman English, a task that in the academic world ranks slightly below cleaning the toilets. I had not signed on to teach freshmen, and many years before, after TAing my way through graduate school, I had pledged that I would go on welfare before I taught freshman comp again.

If that weren’t enough, the atmosphere on the campus was toxic. Morale had taken up permanent residence in the sub-basement: everyone was miserable, from the provost’s office on down. At one point two of my colleagues came close to a fist-fight. We kept driving young faculty insane, quite literally. One of my students, a cop, blurted out that she had arrested one of my wacko fellow professors for beating up a young boy—and that guy was not the only one who took a swan-dive off the deep end. We were all swimming in the deep end, truth be told, and I wanted to get out of the water in the worst way.

So I was on the job market. For a time, I’d been applying to anything and everything I thought I might conceivably, by any stretch of the imagination, persuade an employer I could do. But there were never many jobs for the likes of moi, and as I grew older, fewer presented themselves.

A year or so before I made the acquaintance of the Inn at 410’s proprietors, I had fallen in love with Santa Fe. I would have killed to live there. In fact, I applied for a job at a private college there and was told that I was decidedly not their type. I considered applying for an opening at the city newspaper, but the pay was far too low to support anyone in that expensive venue. While I was wandering around the town, I came across a busy, successful bed-and-breakfast near the downtown area. Its owner took time to chat for a few minutes and said that she and her husband had always dreamed of living in Santa Fe—owning an inn was the only way they could afford it, since the place provided them a place to live as well as a living. They were, she claimed, very happy.

So, when the owner of the Flagstaff inn told me that he and his wife wanted to sell the place, he got my attention in a big way.

I started to think seriously about buying the business. Although I had no spouse to help and was not about to get one, Northern Arizona University had a world-class hospitality program. The inn had hired one of its senior-level students as its full-time maitre-d’ and general factotum. The guy was good, and it was clear that he was doing much of the heavy lifting. The proprietors spent a great deal of time hiking, volunteering for The Nature Conservancy, and hob-nobbing with the town’s business class. They would show up to supervise the cooking of breakfast and socialize with guests, and then they were outta there. The grass on their side of the fence looked mighty green.

In the course of considering this scheme, I became friendly with the young man, who clued me to a number of issues, not the least of which was the amount of work and expense entailed in maintaining a century-old building. Not long before, he revealed, they had had to jack up the structure (!) and rebuild its foundation to keep it from collapsing. The place had over a dozen rooms, each of which had to be cleaned and restocked every day—assuming you could keep them occupied. The kitchen was actually a licensed restaurant, with all the regulatory and tax issues that entailed. There was lots more, too.

On the other hand, because it was a business, the Inn made life virtually tax-free for its owners. They lived on the property, meaning the business paid the cost of their quarters. The business owned their vehicle. The business paid their salary. The business paid for their groceries. The business bought their health insurance. Clearly, setting up your entire life as a business had its advantages.

But on the other other hand… After a while I noticed that the proprietors didn’t spend a lot of time together. When the breakfast rush ended, he went off to spend most of the day hiking and bicycling. She disappeared in some other direction. Why, I wondered, did they want out of this arrangement if it was as idyllic as he claimed? I began to suspect that all was not beer and skittles in Paradise. Could it be that their marriage was strained as a result of the stress and demands of running a very public, very work-intensive operation from which they evidently had no easy escape?

When I sat down with the guy to discuss a deal, he offered to sell the inn for something over a million dollars. My house was paid for, and it was worth about a fifth of that—enough to make a down payment. The economy was good at the time, and I would have had no trouble getting a business loan to cover the rest of the sale price. He offered to hang around for a year on a consultant basis, to assist me in learning the business and to help keep it going until I could develop the experience and expertise to operate the inn on my own.

It wasn’t a bad offer. But a million and a half bucks? Wow! It did give one pause.

It gave one a long enough pause to look at other inns that were on the market…and to discover that most of them had been for sale for years. Even in some of the most spectacular and desirable areas of the country, bed and breakfasts do not sell quickly. In other words, if this scheme didn’t work, there was no easy escape plan.

Further investigation showed that one of the reasons the couple wanted to sell—besides the one I suspected to be their real motive—was that a long drought was devastating the tourist business in Flagstaff. The town’s main draw as a tourist venue is not the Grand Canyon, which is a long way off, but a small ski area on the nearby dormant volcano. Although tourists pass through Flag on the way to the Canyon, relatively few of them stay there. They stay at the lodges around the Canyon itself, of course. No snow meant no tourists.

Global warming was already being talked up, and some people (such as the Nature Conservancy types the proprietor hung out with) were predicting that the drought would be a permanent fixture. If that was so, Flagstaff—and the Inn at 410—was withering on the vine.

Looked like Bankruptcy City to me. I declined the offer.

Sometimes I wonder what my life would have been like if I had bought the inn. Other times…well, I can just imagine! I think I made the right decision. It’s never a good idea to get into something without a credible escape plan, and “no credible escape plan” described that scheme to a T.

NAU announced it would its hospitality program, shutting the spigot on quality low-cost hired help. The drought continued for several more years, spurring a massive die-off of the ponderosa forest that covers northern Arizona. Each summer brings huge and dangerous wildfires, some of which encroach on Flagstaff itself. And of course, now that we’re in a deprecession, the hospitality industry in general is suffering.

I managed to escape teaching and land in a decently paid editorial job. It’s boring as hell, but it is a job. Though I’m sure life as an innkeeper would have been interesting, it might have been a bit too interesting. I’m glad I looked before I leaped.