How to find, analyze, and convert small boutique hotels? What are the systems and tools to use and the processes for hiring top people? Blake Dailey, a real estate investor, owner of 6 boutique hotels, and founder of BoutiqueHotelCon, shares his knowledge.

Tell us a little bit about yourself.
I do boutique hotels. I started with residential Airbnb, built up a portfolio of those, and then reached a point where I surpassed my W2 income with my cash flow. I ventured into commercial multifamily for a bit, syndicated an apartment complex, and learned about the commercial side, such as how to underwrite deals, find and talk to investors, and persuade them to invest in deals, and how to assemble and operate a commercial deal. From there, I pivoted because I had expertise in Airbnb and short-term rental operations as well as the commercial side. Combining those, I've been managing boutique hotels for the last three years. I currently own six of them, employing 28 staff members, operating in various markets across the country, and it's been quite enjoyable.

How long did it take you to surpass your W2 income after you started investing?
It took 13 months from the time of purchase. Short-term rentals helped me achieve that goal more quickly.

How do you find a small boutique hotel? How do you analyze it, considering that some may have issues with short-term rentals? How do you approach all that, including conversions if you undertake them?
Municipalities across the country are increasingly regulating short-term rentals in places like New York, Dallas, Atlanta, and Southern California. These regulations aim to protect the single-family housing market and the rental market. Hotels, classified as commercial properties, are designed for nightly rentals and thus aren't subjected to the same regulations. Authorities aren't shutting down major hotel chains like Marriott and Hilton due to the influence of hotel lobbyists. This lack of regulation provides an opportunity to invest in prime real estate in metropolitan areas or their suburbs.

To find these opportunities, I seek out tired hospitality assets typically owned by Mom-and-Pop operators who often reside on-site and handle all management tasks themselves. The inefficiencies of managing a business where you both live and work can be substantial. Many of these operators are slow to adopt technology, neglect online travel agencies (OTAs), and fail to engage in marketing efforts beyond word-of-mouth referrals or basic direct booking websites. By acquiring these properties, refreshing and renovating them, and listing them on OTAs such as Airbnb,, and Expedia, we can attract a wider range of guests. We also focus on collecting guest emails and contact information to facilitate direct marketing efforts, which can significantly increase margins by avoiding OTA fees.

We target markets such as destination markets, ski towns, and beach towns. For instance, Panama City Beach attracts 17 million visitors annually. However, similar opportunities exist in various markets nationwide, including metropolitan areas. I've found success in acquiring outdated properties owned by owner-operators, improving their efficiency, updating their design, and consequently increasing their average daily rates (ADRs). Since commercial properties are valued based on net operating incomes, these improvements can significantly boost property values.

Can you discuss your systems, processes, and approaches to hiring and developing your team?
Investing in this asset class requires a team effort. I couldn't manage all my hotels alone, although I did gain experience managing all my short-term rentals while still involved in residential properties. As our portfolio grew, I outsourced administrative tasks and guest communications to cope with increased demand. Boutique hotels generate revenue from the outset, enabling us to hire and outsource roles early on. For instance, with a property generating hundreds of thousands of dollars annually, we can afford a full property-level team, including a director of operations, operations manager, revenue manager, and guest relations team (E Concierge Team).

When building a team, it's essential to start by covering administrative tasks and then gradually scale up to property-level management and finally management-level positions, such as a director of operations, revenue management, marketing, and HR. Identifying bottlenecks and solving them is crucial to scaling a hotel business. Regarding guest check-in processes, we employ self-check-in systems for smaller properties, while larger properties with higher revenue may warrant on-site staff.

How do you recruit top talent, especially in different markets?
Recruiting top talent is a challenge faced by many small business owners. However, we've had success in sourcing quality employees. In locations with high turnover, such as rural markets, we employ strategic sourcing methods outlined in "Who: The A Method for Hiring" by Geoff Smart. We use screening questions in the application process to identify suitable candidates, conduct multiple interviews to assess skills, personality, and experience, and ultimately select the best candidates. Additionally, we utilize staffing agencies to attract quality applicants. Retaining good employees is equally important, emphasizing the importance of effective training and onboarding processes.

What tools do you use to manage your business?
We utilize Asana for project management, allowing us to organize tasks across different properties and locations. We also follow the EOS framework outlined in the book "Traction," conducting weekly L10 meetings to review key metrics and discuss issues. Our property management system (PMS) is Cloudbeds, while we use PriceLabs for revenue management. Additionally, we employ automated lock software to facilitate self-check-in processes and enhance the guest experience. Adaptability and continuous improvement are central to our approach, as we constantly refine our systems and processes to meet the evolving needs of our business.

What are the top lessons you've learned in your real estate investing career?
Two key lessons I've learned are the importance of investing in people and taking proactive steps to achieve goals. Surrounding yourself with the right team is crucial for success, as no one can achieve their dreams alone. Additionally, success requires proactive effort and a willingness to adapt and innovate. Overnight success stories often overlook the years of hard work and dedication required to achieve success. Visualizing goals and taking deliberate action steps are essential for realizing long-term success in real estate investing.

Blake Dailey