Buying a hotel in Costa Rica: A new owner’s advice
If the American dream starts with buying a home, the expat dream seems to start with buying a hotel.
Paige Cain and her husband — and her brother — recently bought the Mono Azul, a mid-priced hotel on the hotel-infested road between Quepos and Manuel Antonio National Park. It’s a medium-size hotel with two swimming pools, a restaurant, a bar, a pool table and 21 perfectly adequate rooms, nothing luxurious but nothing to complain about.
There are countless smallish hotels and bed and breakfasts in Costa Rica owned by foreigners, often middle-aged couples who quit the rat race, moved to paradise and bought their stake in the hospitality business because, well, they could.
Cain, 50, from Ocala, Florida, spent 16 years in Minnesota and the last four in the Virgin Islands before closing on the Mono Azul in December. She sat down with the Tico Times on Thursday to recount her experience and offer her advice for prospective new buyers.
Q: How did it happen that a brother and sister and husband went into this business together?
A: My husband and I were planning on doing this just because I twisted my husband’s arm and said this is what I want to do, and he typically says yes when I say I want to do something.
And I found a hotel to look at in Costa Rica. My brother happened to be in Panama. I was in the Virgin Islands, which is a lot further, and I said, “Scott, go check this out for me.” And he said, “Well, I want to help.” So he did. And he does.
Q: Why Costa Rica?
A: Because I’ve looked everywhere else. I’ve been looking for years. I looked in Utila, one of the Bay Islands of Honduras; I looked in the Virgin Islands — too expensive. I’ve looked all over Mexico, Central America, Caribbean. This just happened to be something that caught our eye.
A friend of mine was actually looking online and found a hotel in Quepos that was for sale and said, “Here, Paige, this one would work for you great!” And we didn’t get that one, but it brought us to Costa Rica, and my husband and I came in June to do a tour to see a whole bunch of hotels before we decided. And we got off the airplane [in Quepos], and we looked at each other and went, “Yep!”
We knew that this felt right. It’s a little teeny-tiny town and that’s what we were looking for. I wanted it to be touristy because that’s the only way we can survive, having tourists come and stay in our hotel. But I didn’t want a big city. I didn’t want San Jose. Jacó is even bigger than I wanted. I wanted little, teeny-tiny. Although I went to Uvita — too small. It’s beautiful, it would just be really hard to make a living.
Q: So you worked in the Virgin Islands at a hotel but didn’t own it?
A: Yes, we were there four years, I worked for three different people, but all of it in hospitality. I managed a big nine-bedroom high-end villa, and a very affordable 10-room inn, almost a bed and breakfast.
Q: But you had a dream.
A: For 10 years I wanted a bed and breakfast or a hotel. My husband fought it for a long time, and finally he gave in.
Q: Why did you want this so much?
A: It just seemed like the thing to do. I’m a really good hostess, and I like it.
Q: So Scott came here, and he was kind of your scout on the ground?
A: Yeah, he came, he talked to the people here, he talked to some real estate agents, and then said OK, and so my husband and I flew out for a week and saw basically everything up and down this road, from Quepos all the way to the park.
Q: Meaning everything that’s for sale?
A: It’s all for sale.
Q: It’s all for sale?
A: You can hardly walk up to any hotel on this road and ask them if their hotel is for sale and have them say no.
Q: Really? Why is that?
A: I think it’s the same as it was in the Virgin Islands, it was dead for so long that people were so ready to turn over again, you know, things just kind of transition through. There are those people who can only do it for a couple years, or people who can do it for 5 to 10 years; nobody can do it forever. And when the economy is down, the natural churn doesn’t happen. So everything has been for sale recently.
Q: What are the range of prices that you’ve seen in this area for hotels for sale?
A: I’ve probably looked at everything from 400,000 to 3 million.
Q: So what was your experience like buying this place? Were there any setbacks, difficulties, challenges?
A: Yeah, there were a lot of challenges. And I don’t know how much you really want to make public, so you’re going to have to edit some of it. We had a little bit of a bad experience and I would say that that’s probably frequently the case. You come from North America, your expectations are already set in your head as to what the real estate game is like. And I’m a licensed real estate agent, so I really had expectations for real estate, what the transaction process would be like, even knowing that we were in another country, still, my expectations were that there are rules and guidelines and things like that.
And, like I said, we had some tough times with it, but we ended up learning a lot really fast. And because of all the stuff we went through, we saw all the hotels, we lost some financing, we had to find new financing, we ultimately came up with the best plan for us here. In the long run, what we’re doing now is better.
Q: What kind of condition was this place in when you bought it? Have you made improvements?
A: We’ve made a lot of improvements. We cleaned out all the landscaping, which was all overrun and wild and crazy. There was a huge area right there between those two big trees that was cordoned off, and it had stuff in it, signs and metal and racks and stuff. We got rid of all that, cleared out a bunch of stuff. My husband refinished all the wooden signs. We put up a new wall, that wall over there where the TV is, put up the new TV, added the little walkway through there. Little tiny things that we’ve done that just have all just kind of snowballed into making it a little bit better.
And we’re replacing the air conditioners, we’re working on replacing mattresses, getting all new linens next month, so it’s just, you know, slowly but surely all those little things that need to happen are in process.
Q: How many employees do you have?
A: Typically around 12.
Q: Would you have any advice for people who are considering doing something like this?
A: The biggest advice that I would have is that you have to be prepared, you have to know what you’re getting into, and it is not, it’s not possible to do this absentee. That’s the biggest problem with everything along here that’s for sale, is half the hotels that I looked at, the owner doesn’t live there. You cannot run a hotel if you don’t live in it, because they’re not profitable enough to pay a manager of the caliber you need.
You have to love it. You have to be passionate about it and make it work. And you can’t pay for that out of the profits of these places. They’re just not that profitable.
Costa Rica is not cheap to run a business. My employee benefits are well, well over 25 percent of their salary. And the taxes are 25 to 35 percent. So your profit goes away quickly.
It can be very, very expensive to do business here. You have to want to do business here.
Q: So you opened in December?
A: Dec. 1. The hotel was closed for September, October and half of November while he was selling it. He opened it back up Nov. 15, and I contacted him and said, ‘I want it,’ and less than two weeks later I bought it, on Dec. 1. And spent the first month and a half cleaning it, because obviously it had been closed for two and a half months, it needed it. And then it got busy. We had Christmas.
Q: Busy is good.
A: Busy is good. And Costa Rica and the hotels around here aren’t very technologically advanced. So we introduced a computerized reservation system. You can book my rooms on my website, hotelmonoazul.com, and it tells you all of my availability, the prices of rooms for every season, which kind of rooms I have, all of it on there, you can make the reservation, put in a credit card number, you get a confirmation back. And within the next month or so you will be able to check in remotely and just show up and ask for your key….
I think part of what people would need to know, my biggest thing is you have to really, really want to do it. This is not a get-rich-quick scheme. This is hard work, and you have to love it, and you have to be passionate about it. And if you want to do it, it’s fun. But it is a lot of work.
Q: I asked Scott what’s special about this place, and he said this country doesn’t understand customer service, either in dining or in hotel management, and he praised you and said your experience, your training with Marriott and your experience with customer service is the secret sauce.
A: Well, I think that it is customer service. I think that we get, because of the reputation of the hotel from before we had it, we get a lot of Ticos come to stay here, because they know they’re welcome. They were in the past, so they come, and we give them exceptional customer service, and they think that’s awesome.
The North Americans come and they have North American expectations, even when they’re in another country. They don’t want to live the way the Romans do in Rome. They want what they want because they’re on vacation.
So by really working hard at teaching my employees that my customers really do want the bill before two hours….
Q: Really? You tell them that? I’m shocked. It’s considered very rude here to bring a check to someone if they didn’t ask for it.
A: I know, and I try to educate the guests at the same time as I’m trying to train my employees. I just tell the guests, when it looks like they’re sitting there for a long time, I tell them in Central America and Mexico it is considered rude to give you your check if you haven’t asked. But I’m also trying to teach my employees you don’t have to bring the bill, but when the customers are done and they’ve stopped asking for drinks or something else, you have to go back to them and say, “Do you need anything else?” Because if you say, “Do you need anything else?” they will say, “The bill.”
I’m trying to bring a good marriage of North American customer service expectations and still keeping it casual and tranquilo and pura vida.
We’re trying to up the quality of the amenities as well. The caliber of sheets that you buy here in the store is horrible. The caliber of mattresses that you buy here is horrible. So you have to work really hard to get something that I consider acceptable. I’m probably going to have to import the mattresses. I found a couple of places to get the sheets in San Jose.
Q: What thread count?
A: Three hundred is my minimum. Five hundred is better but not always easy to find. Anything over 500 takes too long to dry.
You have to weigh the balance between a nice, comfortable, absorbent towel and one that takes an hour to dry, because those really thick, plush, awesome towels take a long time to dry, and electricity is expensive and gas is expensive and manpower is expensive. So you need to go somewhere in between, balance it out. I do not want see-through, thin, really small little teeny-tiny towels, which is the standard, but I want it be nicer than that. So I’ve kind of moved it up.
Q: Anything else you’d like to say?
A: I love what I’m doing. It is really hard and frustrating and some people couldn’t do it, but if it’s what you want to do, it’s a really cool place to be doing it.
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