An Overlooked Strategy That Makes $7M Hotel Deals Actually Pencil | Ben Wolff E72

Fear of making the wrong move is why most aspiring hotel investors never get started. And ironically, that hesitation is costing them more than any mistake ever would.

In this episode, you'll learn how one developer went from zero hotel experience to 50% NOI margins, a REIT acquisition, and a second brand now scaling to 10+ locations across the US.

A former McKinsey consultant turned landscape resort developer who built two properties from scratch, sold 90% to a REIT, and is now pioneering a land lease model that cuts carrying costs by two-thirds, joins us to break down exactly how he did it. Ben Wolff's direct booking strategy drives 80-85% of revenue without relying on OTAs, and his marketing firm OASI exists because traditional hotel agencies simply couldn't keep up.

In this episode, you'll discover:

• Why a $300K procurement mistake early in development didn't sink the project and what it taught him about vetting manufacturers
• The land lease structure that makes a $7M property deal actually pencil when outright ownership never would
• How 50% NOI margins are achievable when most traditional hotels average half that
• Why direct bookings command higher ADRs than OTA guests, and the exact content strategy behind it
• The lean staffing modelis  running 63 keys across two properties without bloated overhead
• The one mindset shift that separates developers who survive ground-up builds from those who quit

If you've been waiting until you know enough, have enough, or feel ready enough to get into boutique hospitality, this episode is your sign to stop waiting. The most expensive mistake in this business isn't the one you make. It's the deal you never took a shot at.

About Ben Wolff

Ben Wolff is the Co-Founder of Onera, a luxury landscape hotel brand that achieved a historic milestone with the sector’s first public REIT acquisition by Summit Hotel Properties. As the Founder and CEO of Oasi, he leverages data-driven social storytelling to help experiential properties drive over 80% of bookings directly and achieve 50%+ NOI margins. A former McKinsey consultant turned hospitality innovator, Ben is currently developing Baya, a tropical agritourism resort in South Florida, while redefining the economics of unique stays for the modern traveler.

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Transcript

Michael Russell 0:00

Fear of making the wrong move is why most aspiring hotel investors never get started. And ironically, that hesitation cost them more than any mistake ever would. Today's guest lost 300K on a procurement error during his first ground up resort build, but he kept going anyway. He hit 50% NOI margins once open and then sold 90% of the project to a REE, a real estate investment trust. And now he's building his second brand on a landlease structure that makes $7 million deals actually pencil. In this episode, we get into the mind of someone who proves that success in this business isn't about being ready. It's about outworking the doubt, showing up before sunrise, and refusing to quit when things get hard. Let's dive in. The Hotel Investor Playbook, your guide to building wealth and freedom through hotel and hospitality ownership. Today's guest built something that a lot of people in this space talk about, but very few actually pull off. Ben Wolf is the co-founder of Onera, which is a landscape hotel brand in the Texas Hill Country. And he is also the CEO of Owasi, which is a hospitality marketing firm that helps people drive bookings. You know, independent hotels drive bookings directly. So, Ben, welcome to the show. Great to be here, Michael. Thanks for having me on. Yeah, no, I'm glad we're able to do this. You know, in fact, we crossed paths when I stayed at the Onera in Wimberley, that property. Um, you hosted this event, the uh Unique State Summit. Beautiful property. I really enjoyed that. I got to meet a lot of other people in the space. And so I appreciate that. But it's great to have you on the show. I really want to dig into your business and what's made you successful and a lot of different avenues. Before we go down that route, maybe you can just give us, for someone who's not familiar with who you are, maybe give us a quick version of your career arc. Like, how did your roots really connect you to where you are now in this point in your career?

Ben Wolff 2:18

Yeah, I mean, I think that it's important to acknowledge that I didn't know Jack either when I started my hotel development journey, which hotel ground up development for me started in during COVID, 2020. Started looking for my first piece of property, found that first one that was actually a go in December, started looking in May, had a couple that I whiffed on in the meanwhile. Some cost me a bit of money, other ones just cost me a bit of time. But uh, yeah, then we built in a whirlwind in 21. So I did not know much. It was like drinking from a fire hose. I had a lot of expensive lessons, both in time and money, that I had to learn. But I mean, that was the cost of admission. And I think that for me, part of the question I've asked myself ever since I quit my W 2, and I've always been pretty entrepreneurial, but like when I quit my my last W-2 in 2018, the question was what's the worst that's gonna happen, right? I'm gonna fall on my butt and then I'm gonna go have to get another job. So it's kind of like, okay, I'm just gonna be able to potentially, with some work, um, get back to what I was already doing that wasn't necessarily fulfilling. And I know it would always gnaw at me if I didn't go for it and try to do something on my own in a bigger way. So that I think that's ultimately what motivated me. And yeah, I guess to back up a little bit, I knew I want to do something entrepreneurial, but maybe I should like learn a bit more about business, refine my skill set. And that led ultimately to deciding to get into strategy consulting. I worked at Deloitte first as an intern, and then the following year I took the full-time offer at McKinsey that I got. So, and that job was actually my introduction to offshoring. So hiring people overseas, it was starting to become bigger in in the sort of early 2010s. Did a big project for a bank that was trying to figure out where to do their offshore facility. And they were looking at Manila, they were looking at Kuala Lumpur. And fast forward 10, 10 plus years, I have 20 people working working in the Philippines on my short-term rental management company. So it's like everything that I learned along the way. I mean, it doesn't, it doesn't look like a straight line at all, right? There's a lot of like ups and downs and curves and whatnot, but everything that I learned has influenced what I've done, right? And I've pulled from stuff I learned at McKinsey, I pulled from stuff I learned at my my software sales job before I quit to build my short-term rental management company full-time. I pulled stuff that I learned being a nightclub promoter in my early to mid-20s, right? So the career arc has moved around quite a bit. And I've certainly fallen on my landed on my ass quite a bit, but I've always been able to pick myself back up and learn from that and take those experiences and and use them in the next endeavor.

Michael Russell 4:55

It's the pursuit of doing something that may feel a little bit uncomfortable, that has a little bit of risk. I think that's where people get hung up. And what I believe you've done consistently with each one of these endeavors, we don't have to go into the whole background, but you you built this, I don't know, yeah, over 200 units of short-term rental properties that you you built up a portfolio of managing these in in a year and a half. Like that's incredible speed. But there's this bit of a risk that you've seem to just kind of push past. Like there's like a psychological barrier for most people that they what you know, they're they're fearful of taking on those risks. And so I really want to focus on that. Like, what makes you feel like you can take on something where you, to your words, you don't know jack shit? Right. What makes you think that, like, hey, you can take this off and not know everything and be able to do it?

Ben Wolff 5:47

Yeah. So a couple things. I think that some of it is there's an optimism that's required as an entrepreneur, right? If you are going to take that risk, like you have to be somewhat optimistic or you have to cultivate optimism in some way. Because like the odds are stacked against you as an entrepreneur, as somebody starting something new. Now, they're stacked against you when you look at it from like a single venture and single opportunity. But if you keep trying things over and over again, those odds shift quite a bit. So it might not hit on your first endeavor or your fifth. But if you keep trying by your eighth, the likelihood that you fail every time goes way down, right? Because it's like you have to multiply that likelihood of failure. Like it's like whatever it is, 0.8 times 0.8 times 0.8, right? That number starts to go down quite a bit the more things that you try and the more times you fail and then learn from it. So I think that that is that's one thing that people don't think about when they're thinking about taking that first step on that first venture. It's really a commitment. For me, it was a commitment like, do I want to try this way of life of an entrepreneur until I constantly be trying new ventures, testing things until I ultimately find something that works? And for me, I just knew I didn't want to be a W-2 employee for the rest of my life. So that that was the path that made sense. And there was one other thing, I think the thing that has influenced my success more than anything else is that I default to action, right? I don't default to thinking and planning more and mental masturbation, if you will, right? Of whether it's gonna work, whether it's not gonna work. Like I default to action. And so I'm gonna try it, see if it works. If it doesn't work, okay, I'll iterate and fix it or try something else. And I think way too many people get too caught up in the thought when they could have exerted as much or less energy just doing the thing and trying it. It's doing the thing, right? It's it's taking the action, it's defaulting to action.

Michael Russell 7:40

Yeah. The people get hung up in analysis, paralysis. And oftentimes they will talk themselves out of something, they'll say the words, easy for you to say, because someone else has success and they're thinking about, well, well, how can I do this? But as you're speaking, you know, I want to speak when I say this, I'm speaking directly to the audience that maybe doesn't have experience and doesn't, you know, doesn't know how to do everything, and maybe you doesn't have a lot of like they haven't built up a huge financial security nest just yet. There's actually a huge advantage of being in that position, which if you reflect back on your early in your career, that's exactly where you were. The reason I say this is because the higher you climb, the farther you have to fall, and that creates hesitancy. But if you're starting in a position where you're like, I'm scrappy, I'll do whatever it takes, and it fails and you go back to where you were, no big deal. So those that are starting out right now have such a huge advantage. I want to talk though, that how you were able to hop into resort development without a ton of experience here. You you chose to build a landscape hotel. What was the genesis of that idea? Like, why did you decide, hey, this is the right fit for me to build a landscape resort?

Ben Wolff 8:49

So I think it was a combination of a few different factors. I mean, I had been running short-term rentals for a few years at that point. And so I understood the short-term rental world, hospitality real estate to some extent. And I could see the writing on the wall that like differentiated, different, unique was what was winning. We were winning with just interior design, but our properties were still pretty basic, right? Still pretty like commodity style. And I saw that like this like unique stays idea was picking up steam and that people really wanted something differentiated, one of one. Like we saw in the numbers, our most sort of unique properties that popped off the page, even from a design standpoint, were the ones that did the best. So I'm like, okay, how can I kind of take this to the limit? And that was designing tree houses and container homes and some of the stuff that was like still pretty early days. It was early days for AutoCamp. It was early days for under canvas. I had a buddy who's actually a business partner of mine who had this compound in Joshua Tree, and he had like a converted bus and an airstream, right? And it was sort of more of this like mid-level, more mass market mid-level products, like I would call an under canvas or an autocamp, right? It's not luxury. And they were doing quite well. And I looked on the other side of it, and you had like the Amongiri's, the post-ranch-ins, like these like super luxury, multi-thousand dollar a night places, but there wasn't anything in the middle. So there wasn't anything in the middle of like auto camp and under canvas and amongiri post-ranchin. And to me, that was kind of crazy. I was like, I believe that we can create this upscale, more luxurious experience that's a little more STR-like in terms of service. So remote check-in and COVID really made the perfect environment for this, right? Like having separate units, remote check-in, staff light. But I want to blow people away with my designs and architecture and all the rest and really be a step way above the under canvases and autocamps of the world. And that's kind of what led to the genesis of the idea for One Era. In the background, my commodity STR portfolio was doing terribly because of COVID, right? So during when COVID hit, a lot of our properties were in cities. That business just wasn't interesting anymore. And we were barely scraping by because of because travel to urban environments, you know, screeched to a halt, at least for a period of time. So it was all of that. And then I think like the icing on the cake that really pushed me in the direction of like outdoor experiential travel was an RV road trip that I did with my wife actually pre-COVID for our honeymoon. We hopped in an RV and our honeymoon was driving all around the southwestern U.S. We hit like a dozen national parks over 10 weeks and had a blast. I mean, we were city kids, right? Coming from New York City over a decade and re-fallen in love with the great outdoors. So I think there was a passion there that further drew me into doing something more nature immersive.

Michael Russell 11:35

So you were describing basically that this idea of producing unique stays was novel at the time. And the timing of was fortunate that a lot of people were looking to escape from urban locations and go have an experience and immerse themselves in nature, away from others. And so, from a timing perspective, you brought something new, a new product that others were not doing en masse. But contrast that with what you were describing about how Airbnbs have become commoditized, where there's more supply of them, and this causes more difficulty to stand out and command ADRs. Where I'm going with this is it's one thing for you to be first to market and offer a product that is sensational because people haven't seen it before from a marketing perspective, from just the uniqueness of the product design, micro resort. But now that this has become more common and many others are entering this niche of short-term rentalslash landscape resort, how easy is it? Or how how much opportunity would there be for someone else who wanted to replicate what you've done to enter this market? How competitive is it? Is it can someone still enter this market now and have the type of success that you had when you launched?

Ben Wolff 12:52

Unequivocally, yes. But it definitely comes down to picking the right market. And there's a number of factors that go into that, just like is always the case in real estate, right? You got to pick the right market and it's got to be the right product for that market. If you're in a market like Fredericksburg was for me five, six years ago, when there was basically nothing, I mean, there was a couple like cool treehouse individual Airbnbs, but no micro resorts, no landscape hotels, no like true unique stays resorts, then if you do something cool, differentiated, and there's a novel product in a market that has disposable income and people have a willingness to pay, then you'll do really well. If you're in a market that has more, right, has more supply, has more unique stays already, then you need to do something exceptionally differentiated, right? So you have to to have some component that creates a story and an intrigue for the modern traveler that isn't like what everybody else is doing. So that could be, could be a farm hotel. Those are kind of blowing up right now. I've been talking up, talking a lot about those. It could be a very robust wellness offering. It could be just super uniquely designed units that nobody's ever seen before, right? So you need to have some sort of hook. And depending on the market that you're in, it's going to dictate like how far, how differentiated, how one of a kind you have to be.

Michael Russell 14:12

Okay. Well, let's talk about this a little bit because you're in a market, Fredericksburg, where you created this novel product, but there's relatively very low restrictions for others to replicate what you've done in that area. And what we've seen, at least with the short-term rentals, in that market, revenues have declined, right? There's been more supply. Everyone got the idea after COVID. Oh, wow, let's let's start a short-term rental in Wimberley or Fredericksburg. And so now there's an abundance of supply. Short-term rental operators are not able to actually even make profit. In fact, many of them are losing and selling their properties at a discount. I mean, there's, you know, I read an article about this just in that particular market. And so how does that affect you? Are you concerned not only that there's declining revenues, more supply, but that someone could come and just build another unique resort in your market? What barrier to entry is there that you have to protect that?

Ben Wolff 15:03

So I think that picking a market that has low barrier to entry is actually good early on, especially with a if you have a low unit count as like one of your first projects, because it allows you to get up and running, right? Like if I was trying to build in California or maybe Hawaii, I probably might still not have a property open, you know, and I had a property open inside of a year. So the reputational benefit and track record benefit and all the rest of getting something out the door quickly, I think is super valuable. Now, if you do do it right from a product perspective, and then now for us from marketing, branding, and operations perspective, you can still be market leader. It's just harder, right? So it is harder for us today than it was when we opened our doors. When we opened our doors, we threw our listings up on Airbnb and we were booked up overnight, right? Yeah. Then we got better at social. We were doing influencer marketing. Then we're doing 35% direct through influencers. We're not fully reliant on OTAs and we're saving money on OTA fees. We're paying influencers something, but we're still better off than we would have been. And then in that next year, we doubled down on producing, creating our own content. So we won't weren't as reliant on influencers. So we're, so we're really like expanding, refining, and becoming best in class marketers and brand builders, in addition to having this super unique one-of-a-kind product. So 100%, like we've had to get better and evolve in order to maintain market leading ADRs and RevPars and to maintain those metrics that we had coming out the gate. And we've been able to, but no denying that it's been harder, especially as we've expanded. We've added units, right? So there's more inventory then that you have to fill. So it certainly has gotten harder, but we've just gotten that much better at social media marketing, meta ads. Like we we hadn't touched a meta ad until about a year and a half ago. And now we're spending tens of thousands of dollars a month at a 10X ROS, right? Which is extremely high for Hotel World at that spend. So we've just had to continue to build out our arsenal to make sure that we can get the distribution that we need.

Michael Russell 17:00

Yeah. So for someone looking to enter this in a nutshell, marketing is more critical than it was previously. And I think this applies to any asset, hospitality, asset class, short-term rentals, hotels, unique stays, you name it, it's just become more important to focus on using the tools and resources for marketing purposes to distinguish yourself. And I really want to dig into the marketing side. I think that that's what you bring a skill set that is going to be very valuable. I want to dig into what you're doing in marketing. But before we get there, I want to continue on this train of thought with if someone says, Hey, I love this idea, this concept, this lifestyle. I want to build it. You talked about the market, picking the right market, identifying functionally where this could provide value, but also you got to look at scouting land. And that is tricky, right? Like when you went through this process, what were you actually looking for? Walk me through the specific criteria, like criteria. Like, is there a certain amount of acreage or topography or price per acre? What were your kind of buy box parameters for scouting out land?

Ben Wolff 18:02

Yeah. So the number one was really trying to identify a property that had these like irreplaceable landscape features that were very aesthetic and beautiful and would create inherent differentiation and demand. So whether that was like incredible views, like the Wimberley property had, right? These rolling hill views across the Wimberley Valley, or more of this enchanted forest vibe, like Fredericksburg had along a creek, right? Some topography changed there as well, but a very different vibe than Wimberley had. So something about the land that's interesting that's going to draw people in, I think is probably the most important. Then, you know, proximity of the property, both to major markets, so your drive-to destinations, as well as if you're not going to offer FB in a big way, like food and beverage, restaurants, et cetera, you have to be very close. So certainly within 20 minutes, and I love being within five minutes of major FB offering. And we are for Wimberley and Fredericksburg. We're like within, you know, a mile or two from the main street of both of those towns that have a bunch of different restaurant bar options. So that's super important. And then within a couple hours of a major market, ideally multiple major markets that are going to be your drive-to-feeder destinations. So that's super critical. I love water features or or the ability to create water features. So whether that's a creek or a lake, or you can create like a natural pool with some of the rock features and topography that you have, waterfalls. I think that there's something very attractive and in demand about water features. And so if you have one or the ability to enhance one, then I think that's huge.

Michael Russell 19:38

Were there any mistakes that you made? I've made a ton of mistakes. And the good thing about mistakes is I learn from them. And so I think you mentioned I've heard you talk about how there were some procurement mistakes. Because you got these beautiful these days, right? Didn't you get your wasn't it that you got them from China or something originally? And then you had to pivot and you said, Oh, that was a terrible mistake. Can you walk us through what went wrong in this project?

Ben Wolff 19:59

100%. Yeah. So procuring a bunch of our unique stays structures from Chinese manufacturers that were not well vetted. We didn't have boots on the ground. I was using like a broker who I came to find out was much more knowledgeable in consumer electronics products than he was in unique stays structures. So all that to say we got pretty burned on those China structures. Stuff was parts were missing, glass shattered, wrong sizes to the footings we had already poured. I mean, it was just disaster after disaster. So never ended up doing that again of sourcing from China. If I ever were to source from China or Mexico or a country outside of the US, I would want boots on the ground, extensive due diligence of the factories. I have a great co-development partner in GC now that would help in that due diligence exercise because, like, frankly, I'm not qualified to do that. So we could potentially do something closer to that now. But for my future projects, we're actually using US-based modular manufacturers, is what we're doing as of today. So yeah, we we probably dusted at least a few hundred grand on that project. Yep. Yeah, on a $4 million project. I mean, it was not a massive project. So that was a big hit. And that was between lost time and cost of retrofitting units and having to replace the unit. So all in, that was that was probably the impact. And with all that said, I mean, we got up and running. I mean, we our total build time was 11 months. So we still we still got up and running very fast and I think did well in terms of getting open. And then we had amazing numbers out the gate. So it it sort of washed over a lot of those mistakes.

Michael Russell 21:34

So lesson learned, right? If I paraphrase is like offshoring may seem cheaper, but in the end it's gonna it it's more complicated and may cause more problems. So moving forward, if you were to advise anyone on what you would recommend they do, would you say just build, build your own or or source it from local suppliers, at least domestic suppliers?

Ben Wolff 21:54

Yeah, I mean, I would say you get what you pay for in a lot of cases, right? If if you're gonna try to cut corners and Go with a very cheap offering, you're probably going to have operational issues. You're probably going to pay for it down the line. So whoever you go with, just do extensive due diligence, walk the factory, talk to references, like just make sure that you've really fully vetted that manufacturer because your manufacturer and your GC are by far your two biggest failure points, right? If you screw either of those two up, it can totally turn your project upside down.

Michael Russell 22:25

What did it cost to build these projects? I know Fredericksburg and O'Neill are two different products, but can you walk us through high level? What was the cost, total project cost for each of these?

Ben Wolff 22:34

I think the easiest way to think about it is cost per key. So our cost per key runs anywhere from mid-400s to mid-700s per key. So mid-400k. Oh, it's expensive. Yes. Not a hustle. Yeah, yeah.

Michael Russell 22:47

No, but still, I mean, you're you know, you get your average key for just like a typical boutique hotel, whatever, independent hotel. And it's gonna be somewhere between 80 to 130,000 on average for most places per key. If you're looking at your average independent hotel, I what markets and what products are we talking about? I don't know if the board, man. Anyone. I mean, that's just what things cost these days to buy an independent hotel. It's you know, on the low end 65,000, on the high end, 150,000 for an independent hotel, somewhere in the 40 to 50 key mark. What kind of ADR? Well, nowhere near what you're charging, right? Yeah, so you're looking at ADRs close to, you know, 150 bucks a night on average. I mean, obviously depends on it's location based, but okay, got it.

Ben Wolff 23:36

Like a two-star product or something, maybe.

Michael Russell 23:38

Yeah, you know, just a traditional independent hotel. And so very different products. Look, you're just under the Almangiri and you're above the under canvas. And I don't know too much about the nuances of this, but I do know that you've advertised like your margins are huge and you're making like, I mean, some of your ADRs are north of $600 a night. Is that accurate? So it's it's a more quality product. So when you say, hey, it's $600, $700 per key, I uh my butt puckers a little bit because I'm like, holy crap, it's a lot of money. But when you put it in relative terms, you're able to charge a much higher nightly rate.

Ben Wolff 24:12

Yeah, yeah. I mean, I it's it's anywhere between $450 and $750 a key. And then we're getting ADRs anywhere from five to 700, 750 with occupancies, you know, 75, 80 percent plus.

Michael Russell 24:29

That's incredible. And that's the key right there is the occupancy. Because yeah, a lot of times you look online and on social media and there's a lot of splash on like these different resorts and the ADRs that they're commanding. But when you peel back the onion a little bit on the you know, you reverse engineer the financials, they they don't all make money. I mean, I want to know did quite honestly, did you do your do your resorts make money?

Ben Wolff 24:53

Like, are you profitable? We're quite profitable, yeah. I mean, our our operating margin is usually around 50%. So it's it's pretty high for hospitality. Our GOP is 60, 65, sometimes even 70%. NOI is is usually 50%.

Michael Russell 25:09

Yeah. So put that in perspective, get some context. Like your average hotel that I was referencing might be 25, maybe 30%, really, realistically. And yeah, and that's that's NOI. That's not inclusive of CapEx. So if you're buying a hundred thousand dollar per key hotel, you can expect that your capex is gonna be $30,000 to $70,000 a year. You probably want to start putting away. That that's gonna come off your your your bottom line NOI. A lot of times people forget that. And you're building these, these are new resorts, so there's presumably less ongoing CapEx initially. So we're kind of getting in the weeds here, but 50% NOI margins is really unique. Like I said, that's roughly double what a traditional hotel achieves. So walk me through how that's actually possible. Like, what are you doing that a standard unit is is not doing? Like, how are you able to achieve those high NOI margins?

Ben Wolff 26:01

Well, we're building a very compelling product, right? So we're spending more on the the upfront CapEx, like we talked about. We're not spending 100 grand a key, 150 grand a key, right? We're we're doing world-class architecture, beautiful finishes. It's very Instagrammable and aesthetic. We have amenities that are attractive. So there's all of those things that that help drive rate, drive occupancy. We're really good at marketing, right? We do about 80 to 85% direct bookings at high rates through our primarily Instagram and social media marketing strategies and viral video content. So that helps quite a bit. At the O'Nero properties, we have a pretty lean staffing model. So 28 keys in Wimberley and 35 keys in Fredericksburg. And we have a regional manager. We have two uh, you know, a manager at each property under that regional manager. And then we have two ops associates at each property and uh, you know, handful of cleaners. And that that's pretty much the the team for both sites.

Michael Russell 26:59

That's pretty lean. You're using economy of scale. You've got a you know, regional manager who's overseeing both properties. So when you add, I think you said 28 and was it 30?

Ben Wolff 27:09

35, so 63 total.

Michael Russell 27:11

Okay. What about offshoring personnel? Are you are you do you have people in the Philippines? I know you have that for your STRs, but is that how you're you're operating with your hotels?

Ben Wolff 27:20

We do, yeah. So um, we do have a team in the Philippines, and that's all through my company, OASI. So OWASI handles guest communications, and we have half a dozen people in the Philippines that are handling all of that communication with the guest that's digital.

Michael Russell 27:34

So you've got this high NOI margin, presumably you've got debt, and I don't know exactly what this pencils down to, but you obviously had enough appeal to have a REIT invest in you. I think you were the first of your kind, right? Where a real estate investment trust, you know, one of these big Wall Street type entities invested in Fredericksburg, right? And do I have this correct? They purchased like 90% of your project. Is that right? They did, yep. 90%. What are the advantages? I mean, is this something that you would explore again? Like from an exit strategy, like when we go in to buy an investment, where we we oftentimes feel like, ah, well, we'll worry about that down the line. You know, how are we gonna sell this? Who's gonna buy this? But is there a real opportunity to set these things up for REITs to continue to purchase your assets?

Ben Wolff 28:20

There is. There's definitely an appetite from REITs to expand in terms of the types of hotels and and asset classes that they're in. I wouldn't sell them, I don't think I would sell or keep a minority interest again. I think if I was gonna sell it institutional, I would want to sell it institutional, potentially keep us on as a manager, not, you know, having a minor minority position where you don't have a ton of say isn't necessarily the best place to be, right? So in in hindsight, I'd probably fully sell or at least have a very defined liquidity mechanism. But yeah, I mean, I think selling to institutional ultimately, if you have multiple properties, if you have a roadmap, um, you're gonna get the best cap rate across a portfolio of properties. So that's our goal with Baya, the next brand that we're building right now, first location 45 minutes from Miami. The goal is to build seven to 10 properties, and ultimately down the line, we'll have a pretty attractive asset to sell to institutional the brand as well as the assets themselves.

Michael Russell 29:12

I got you. Okay. So you'll sell the opco and the propco. Let's talk about this. Baya. So this is a property in Florida. What is first locations in Florida, yep. Yep. Oh, okay. So Baya, you're planning on building out multiple locations independent of Onera.

Ben Wolff 29:28

That's my main focus right now. So Onera, I built the first two properties. I have a my original business partner in Onera is building some more Onero locations, one coming up in Zion. My full focus is now on Baya, which is the second brand that I'm building.

Michael Russell 29:41

So walk us through what is Baya. It's got sort of a unique kind of Balinese style to it. Is that correct?

Ben Wolff 29:47

The first location has kind of these Bali-inspired villas. It's on a 25-acre exotic fruit farm. It's kind of this like tropical landscape resort meets the US, which is new. And it's this fruit forest vibe. There's a fruit farm component, like it's an existing working 25-acre fruit farm. So we'll have the farm to table cafe and juicery. We'll have these grotto style pools, different wellness amenities. Um, and the the tenants and sort of principles of Baya, if you will, are outdoor experiential, nature immersive is one, which is similar to O'Nera, but the differentiators are farm hospitality and wellness. So there's those three pillars, and we are we're building out a roadmap now. We have a likely property outside of Asheville that'll be location two, and we have about half a dozen other properties that we're evaluating right now. So in 2026, the goal is to really build out our full roadmap for the next seven plus years.

Michael Russell 30:44

So you've got this property that you're developing in Florida, and we were talking about initially like site selection. What is it about this location that made you feel confident it would be successful?

Ben Wolff 30:55

Proximity to Miami. So 45 minutes to downtown Miami, a growing and really robust agritourism hub, like tons of nurseries, amazing farms, some wineries, distilleries, things of that nature. And it's it's very close to the Everglades. It's on the way to the Keys. Um, and it just had rows and rows and rows of these beautiful, exotic, mature fruit trees, which made for a great starting point for the vibe that we were going for. And frankly, we got a very attractive uh relationship with the landowner. So one of the most, I think, innovative aspects of what we're doing with Maya is that we're actually operating on 99-year land leases instead of buying the dirt outright, which I know I think is actually pretty common in Hawaii, right? It's not common in a lot of places, but in like dense urban core and certain areas, it is common. And so we're doing a revenue share with the owner. It's a percentage of net revenue. And our carrying cost of the land is about a third of what it would be if we had to buy the property and mortgage it. Frankly, if we had to buy the property, this 25-acre farm is worth about six, seven million bucks, believe it or not, just given proximity to Miami and how the land values have gone through the roof. So our carrying cost is a third of what it would be to buy it. So the property project wouldn't even pencil if we had to buy it outright.

Michael Russell 32:11

All right. Well, look, if I put on my investor lens, when I hear land lease, I get a little skeptical, only because I'm unfamiliar with it. Now, I I flash forward, I will say that I'm more optimistic about this type of situation. But if I'm an investor and I am feeling a little squeamish about this, you know, some of the main concerns will be like, well, as you own this for longer, there's less lease time. Like, doesn't that diminish the resale value over time? I'm just playing devil's advocate here from an investor's perspective. How do you answer those questions? Like, how can you provide comfort for an investor that is maybe uncomfortable with a land lease deal?

Ben Wolff 32:47

I was too. I get it. I was uncomfortable at first as well. We've always owned the dirt outright at my Texas properties, but I've come to see it as a competitive advantage on a couple fronts. Our carrying cost is way lower, right? We're paying a third of what we would pay to buy the property. It's a barrier to entry. The fact that we have this unique land lease relationship, like somebody who wanted to replicate what we were doing would have to have this unique land lease relationship. It wouldn't pencil to do 20 boutique upscale keys on a 25-acre fruit farm. So it's hard to replicate. So those are two aspects to it. And in terms of getting comfortable with the 99-year land lease idea in general, I talked to lenders, institutional investors, the fact that we can get traditional debt on the property, and the fact that when I talk to institutional asset managers and hotel portfolio investors and folks like that, they value these properties on cap on a cap rate basis, similarly, similarly to an owned asset because the term of lease is so long. So that's what got me comfortable.

Michael Russell 33:44

Yeah. As an investor, if you sell the business, because you don't own the land, but you sell the business, do the investors get to partake in the upside of selling that that brand and that business?

Ben Wolff 33:55

They definitely get the the upside of that location's business. So currently our investors don't own a piece of the bio brand. We have toyed with the idea of raising a fund that was for multiple bio locations, at which point I think we would give people the option to buy into the brand if they wanted to. But no, for this location, for the value of that hotel and the cash flow stream there, they would certainly participate in the upside of selling that, but not the bio brand specifically.

Michael Russell 34:23

Gotcha. All right. Well, for our listeners' key takeaway here is what Ben is describing is that the upfront cost in order to acquire real estate can sometimes prevent folks from being able to carry the debt, to be able to be profitable enough to service that debt. But this revenue share model, there's a lot of upside. And what's unique about hospitality is that oftentimes it is a real estate investment, but it's also investing in a business. And what you're doing here essentially is kind of segmenting that this is an investment, it's a business, not necessarily investment in the real estate because of the land lease. And initially, when when I learned about this opportunity, I had some skepticism. Since then, I've been approached by another hostel operator, a large one, who has a lease on a property in a key market, a market that we want to invest in. And it's in a location that is very cost prohibitive to purchase the real estate. And so it doesn't pencil from a real estate investment. But when I run the numbers on operating our business, house at hostels within a lease arrangement and a revenue share with the landlord, similar to what you've described. I can't help but go, wow, there's a lot of cash that could be generated. Sure, I don't get the upside necessarily of selling the real estate in the future, the equity, it's just not there. Let's just call it what it is. But the initial cash flow return makes it very attractive. So in this case, we're just separating the business from the real estate and it's still a great investment. That's the beauty of hospitality. So if you're listening to this and you're going, God, I don't have millions of dollars to invest into a hotel, there may be opportunities right there in your backyard where you could take over a lease or work out an arrangement with a landowner who is not operating the property as efficiently as possible and just be an excellent operator and make a ton of cash flow, build a brand that is scalable, and then like what Ben is doing, scale to multiple locations with that brand without having to put down, let's say, 30% down. You know, if you've got a five seven million dollar property and you got to put down three million dollars, let's say, and then do capex, that's not feasible for most places. So this could be a way for someone who doesn't have a lot of capital resources to be able to enter the space, gain the experience, run a hospitality business with not a lot of capital investment and make it more feasible, much to what you're doing with Baya and possibly soon to be in North Carolina.

Ben Wolff 36:51

Yeah, and one word to the why is is try to structure those leases as variable, like fully variable as possible, and if if not as as low of a base rent as you can, because having high fixed cost rent, if the market changes, if something changes, can really put you in a world to hurt. And that's what you know, Sonder, Domeo, a bunch of these like lease arbitrage players are dealing with, right? They have these big fixed loss, big fixed lease cost expenses that that ate them alive. So ours is variable. I would highly recommend variable pricing.

Michael Russell 37:22

And when you say variable, that's just revenue share. So the better you perform, the better.

Ben Wolff 37:26

Percentage percentage of revenue or income or based on performance and not just a flat fee, regardless of market conditions.

Michael Russell 37:34

Yeah. No, that that's a really good takeaway. Cool. All right. Well, look, I want to pivot to talk a little bit about your marketing strategy. Um, you've had a lot of success. I've heard you talk about how important it is to have a direct booking strategy. Maybe walk me through your experience with marketing and maybe you could speak a little bit about Awassi and how that came to be and what you guys actually do.

Ben Wolff 37:55

Sure. Yeah, happy to. I mean, I I believe that we are still undergoing this content revolution that started a few years ago and and hotels are still not, they're still not like going all in when it comes to content. I mean, that they still have a social media page that kind of looks like a magazine article or an advertisement, right? It's not, it's not really driving awareness. It's it's not driving engagement. They're not really putting out short form video content that has high engagement, that has like virality potential. And neither are the agencies that that work for them, right? The agencies, the digital marketing groups, the PR firms, like they're not content first. They're certainly not social media content first. And we found this out the hard way, trying to find agencies to run O'Nera social media before we built out OASI, our marketing and and revenue management firm. So it came from the lumps of trying to hire a more traditional hotel PR firm or you know, marketing agency and realizing that they're sending a junior employee once a quarter with an iPhone to capture content, to realize that, like, oh, we maybe we actually have to build this team and this capability out ourselves. And so that's what we did back in 2023. So we brought in full-time videographers, editors, copywriters, creative associates, built out this whole creative content team. And we started seeing amazing results for our properties. So we got to 80 to 85% direct bookings almost exclusively through organic social media marketing. And then we started having other hotels and resorts asking us to run theirs as well because they saw the effectiveness of the content that we were putting out. So that's kind of the story of how Owasi came to be. And we've continued to grow that team. We're about 25 people deep. We have specialists in every seat now. We've expanded the content formats that that we can effectively produce and put out and drive engagement and awareness for hotels.

Michael Russell 39:50

Why do you feel that direct booking is so important?

Ben Wolff 39:52

You own the customer from beginning to end. You also are saving, call it, let's say 15% plus on average on OTA fees. So there's a big benefit there. And maybe the most important one is you're reaching a less price-sensitive guest. So you're reaching a guest that sees your content on social and they're not anchored to a price. They're not price shopping like they would be on an OTA. On the OTA, it's it's basically a it's a value analysis for the guest, right? They're seeing you stacked and it's it's more perfect information, right? They're seeing you against 10 other options and they're weighing the value of your property versus the price. Whereas if I just see this reel on Instagram and I really want to stay at this property, I'm not anchored to a price. If I can afford it, whether it's 600 bucks or 750, I'm probably gonna pay if I have the ability to pay.

Michael Russell 40:41

Yeah, that's an important point. I don't think I've ever really thought of. I just want to hone in on that. That last point you made is so good. What you're describing is the value of something is whatever someone is willing to pay for it, right? And you could have the same product as someone else, but if it's packaged much better, then people are gonna say, oh, it's more valuable to me because I want to stay at the place that I saw on the internet that looks really cool. That's gonna provide value to me because it's eliciting a sense of feeling of people pay, for example, like a Lou de Vuitton purse, right? Functionally speaking, there's not much that a purse from Louis de Vuitton offers that a purse from Target can't offer. But the associated value of the quality really is not anything to do with its function, it's just how does it make you feel from a branding perspective? And so when people are looking at your Instagram reels, that branding, that feel, that sensationalism, that is what's driving up higher ADRs. And the reason why I was kind of surprised by that answer is because I was fully prepared to, you know, talk about some of the benefits of the OTAs. And then the reason because I think the OTAs get a bad rap in many regards. Like, I'm no, look, I'm not trying to promote OTAs, but I think there is a stigma that it's like you're just you're gonna go and you're gonna lose money and pay commissions to an OTA. So try not to book with, you know, try to get all of your listings off of an OTA so you don't have to pay for commissions. I want to push back on that thought a little bit because sure you're paying for commissions for OTAs, but you're also paying to have a direct booking strategy. Whether you hire an in-house team or you hire an agency, there's a cost for that. So on that like equal playing field, one can make the case the OTA, which requires no bandwidth, no real thinking, it just let them do it, could be advantageous. But your point was, yeah, but then you're competing on price versus being able to drive up ADRs to a much higher amount. So I think that there's advantages of both. And uh you really hit the nail on the head with the the driving up the value piece.

Ben Wolff 42:46

And we distribute on all the above, right? I fully believe in distribution. And sometimes we want those more price sensitive guests to fill up our weekdays, right? Where we're lower occupancy and and we want to fill those up too. So I think it's having a balanced strategy. We found 8020, 80% direct, just with our products. I think if you have maybe a less differentiated, more commodity product, you spend less on marketing and you're more just competing on price and value. And then the OTAs make a lot of sense. But if you have a highly differentiated, um, and I would even say more like upscale luxury price, upscale luxury product, then you're going to be better served, spending more money on marketing, branding, driving that ADR up and booking direct and paying less OTA fees. That's generally what we've seen.

Michael Russell 43:28

Yeah. I mean, in a perfect world, if there was a way to segment your guest where you could collect 100% direct bookings from those that already know you. Like if they've seen you on Instagram, like they only book through your website direct. And then the people that have never heard from you, it's kind of like additional advertising for someone that didn't see your Instagram reel that is just price shopping to have you on the OTA, that's just added value. That's added revenue that you wouldn't otherwise have received had you not been advertising on an OTA. But it doesn't always work like that. The pain points are sometimes someone sees your Instagram reel and then Still goes to the darn OTA and you're like, what the heck?

Ben Wolff 44:03

Yeah, yep, yep. And well, then that comes down to how professional your website, right? How good your website, how like what what are the good feels and authority that you build once they land on your page, how good your conversion. So there's a number of things after the initial getting high from the Instagram reel that matter.

Michael Russell 44:18

Yeah. I've heard you say that you've got you have a nauseating sense of urgency, right? Or maybe that was someone in your organization that described you as that. How do you build urgency into your culture without burning out the people on the ground or dealing with you and dealing with guests face to face every day?

Ben Wolff 44:38

So I would say I I've dialed back in in my career and sort of as I've evolved as a leader. Like I don't think I'm naggy at this point, right? I think that one way to engender urgency in a culture, I'm extremely urgent with my people, right? If they need something from me, I'm getting it to them as fast as I possibly can because I don't want to be the bottleneck ever. And so I think when they see that, it engenders this sort of reciprocity that, like, this is how we do things. And oh, the CEO who might be the busiest person in our organization, right, is taking the time to get back to me as fast as he possibly can. I should do the same for him and everybody else in our org, our customers, all the rest. So I think it's building a culture around urgency, probably, you know, is what sort of perpetuates that. And I'm not being hypocritical, right? It's like it's I'm if I'm asking for something back from you as fast as possible, you know that you're gonna get the same from me.

Michael Russell 45:36

Yeah. To be that responsive takes an enormous amount of bandwidth. And I've heard you mention that you wake up at 4 a.m. to get some work done before you've got two kids, they wake up and you got to be a dad as well. You got to balance that. But I'm wondering like this waking up at 4 a.m. and just putting in these hours and working as hard as you are, is this sustainable long tour long term, or is this just like a season of life thing for you?

Ben Wolff 46:00

I've been working pretty hard for a long time. It does ebb and flow. I mean, as an entrepreneur, there's seasons where, you know, I'm working 80 hours a week and it's really rough. And there's seasons where I'm working probably 40, 50 hours a week, which it's those seasons. I'd say the 80 hours and the 40 hours are probably equally rare. And it's usually more in that 60 range. And I kind of like it there. I don't know. I I like to produce. I'm sort of energized and stimulated by work, but there's things that I've had to do and set up in my daily life that support my health and wellness and energy optimization and making sure I'm giving enough to my family life and my kids. So there's things that I've had to sort of architect around to make sure that I can work as much as I like to work and produce as much as I like to produce, but not neglect these other aspects of my life. So I it's I'm very intentional about my time.

Michael Russell 46:51

Well, give us an example. Like, what do you mean by that?

Ben Wolff 46:54

Sure. Yeah. So I go do not disturb mode. It's 6 p.m. And I'm actually maybe moving that up to 5 30 because I'm trying to eat earlier so that I get better sleep. So I'm trying to make sure I eat three, three hours plus before bed. So that's hard to do. Shut it off, do not disturb, you know, 5 30, 6 p.m. But I've been doing it now for over a year. So people know that I'm offline then. So when it comes to responsive, like I'll get back to you first thing in the morning. And if it's actually an emergency, double call me and it'll go through. But people very, very rarely do that, right? So I'm able to shut off, to be with my family, to spend time at the end of the day every day. One other thing that I've I've implemented with my family is I work from home in the morning and we go, we go for a walk when they get up a few hours after me. So we go for a walk at 8 a.m. We all get some of our morning light exposure, reset the circadian rhythm and get some exercise and some time together before, you know, I go off for 10, 11 hours and don't see them, right? So I think it's not that much, I guess, eight, nine hours. So I think that's another thing that's been really helpful. And then in the middle of my day, um, I'm typically taking some sort of break, whether that's going to work out, hit the sauna, plunge, hit some balls at the driving range, something that allows me to kind of reset and almost feel like I have two days in one. So, and it's it's it's almost more than that. Right. I have my deep work for a few hours before my kids get up. Then we go for a walk, then I go off to the office. I'm often like shooting content, doing some more sort of intensive work. And then I stack most of my meetings in the afternoon after I have that break of fitness or golf or something like that.

Michael Russell 48:31

Gotcha.

unknown 48:32

Yeah.

Michael Russell 48:33

All right, last one. So looking at everything you've built, if you had to give one honest piece of advice to someone who maybe is already sitting on a portfolio of short-term rentals or otherwise is looking to scale and take the leap into petite hotels or even landscape resorts, what would you actually tell them?

Ben Wolff 48:50

One piece of advice. If you want to go ground up and build something exceptional, it's gonna be extraordinarily hard. So don't delude yourself into thinking that it's gonna be easy. You know, every project that I go into now, me and my team know it's gonna be excruciatingly hard, it's at least at certain points. And if we do it anyway, then it means it was like a worthwhile project for us to pursue. And that's what we thought about Florida. That's what we feel about this Ashefield project. So if you go in thinking it's gonna be easy and you can set yourself up for a real rough spot. And if you don't have people around you that you think can like dive into the trenches, problem solve, deal with the issues that come up when they come up, then you're gonna be set up for a real rough situation. So it's knowing that it's gonna be challenging and doing it anyway, if you think the project's worth it. And then I would say surrounding myself with those people that are willing to roll up their sleeves. You know, when the gun gets tough, we get tougher as a group and sort of work through that collaboratively. It's not about ego, it's about getting to the right answer. I think that's what's most important when it comes to development, because it's never going to go 100% according to plan. There's always gonna be issues. So you need people that are adaptable, problem solving oriented, and collaborative. For our listeners, anything else you want to share before before we wrap up? You can find me on Instagram. I am Ben Wolf2Fs on LinkedIn. I post a lot on both of those platforms, have a newsletter, have a Substack, and likely going to be releasing a modern hotel marketing and also modern hotel development and investing course, as well as potentially mastermind accompanying both. So if you're interested in either of those or both products, you know, please hit me up and I'll add you the wait list.

Michael Russell 50:34

Okay, excellent. Yeah, well, we'll put your contact information in the show notes. So, Ben, this has been great. I really appreciate you taking time to be on the show. I love following your journey, and I would encourage all the listeners to follow Ben as well. He puts some amazing content out there, definitely inspiring. So, once again, this has been another episode of the Hotel Investor Playbook, and we will catch you again next week. Aloha!