To the Limited Partners of Ziggy Resorts River Cabins, LLC
We hope you’re enjoying summer somewhere beautiful with your families.
In this letter, you’ll find details on revenue, operations, and upgrades, as well as our plans for the coming months. If you haven’t had the chance to visit the cabins, please see the policy and availability here.
We appreciate your continued support.
Regards,
Ziggy Team
Operations & Property Improvements
Recent Improvements
As a reminder, we spent the majority of the late winter and early spring working through a punch list of cosmetic and functional improvements to all six cabins. Since then we have:
Added hot tubs to three cabins
Cleaned and improved access to the river enabling fishing and relaxation near the water
Rebuilt driveway drainage
Added water treatment on-site to ensure quality water from the well
Hired a dedicated landscape team for the property
Hired an exterminator team
Added outdoor lights and string lighting to enable outdoor activities at night
Partial renovations on two cabins
Upcoming Improvements
As soon as we achieve steady profitable cash flow we will begin renovations on the property. The plans include the following for 1-2 cabins at a time:
New kitchens and bathrooms
Painting inside and out
Upgraded roofing and other necessary outdoor weathering and cosmetic improvements
New furniture
Welcome lighting and a new sign for the entrance to the property
KPIs
Revenue
Revenue growth has been slower than expected but is progressing steadily. We are currently tracking below pro forma projections for the summer. To meet our targets, we need to hit $20,077 per month and are currently 25% short. We largely attribute this to overestimated revenue as a new property listing and unforeseen margin issues with our property manager which resulted in a near 50% reduction in net revenue. We have plans to change operations immediately to address these risks.
Monthly Gross Revenue
Occupancy
Occupancy rates have been climbing into the high sixties. This is healthy but approximately 10% below where we’d like to be for a vacation property. The more significant impact on revenue has been depressed Average Daily Rates as a result of poor marketing and exorbitant hidden fees from our property manager which raise the customer-facing cost significantly.
Occupancy Rates by Cabin
There are two major themes for these results. One is cyclical, the other fixable.
Cyclical Decline in Local Tourism. 2021 and 2022 were both record years for the North Carolina High Country due to Covid and tourist proclivity to travel locally. Demand has receded as guests travel to destinations further away. We expect these cycles to return to normal next year and continue growing due to North Carolina’s growing population and the historically dependable popularity of the Blue Ridge area.
Outsourced Property Management. Over five months of operations, we have concluded that the pitfalls of outsourced property management are not worth the promised marketing exposure. The combination of high fees, lack of complete control over pricing, and hands-off care of the cabins has resulted in lower-than-expected and lower-than-possible revenue. The opportunity for improvement is significant. For instance, if the property management company diverted just half their hidden fees to us as revenue, we’d already be profitable and hitting our pro forma goals. The good news is that we run a successful property management business that is already preparing to take over operations.
Q3 Next Steps
Property Management In House. We currently manage over a dozen homes ourselves. Despite the positive reputation of Carolina Cabins, we have uncovered numerous fees and a less-than-stellar experience for our guests. We are confident we can more than double margins, increase daily rates, and provide a cleaner more hospitable experience too. We plan to make this change in September and have already begun solicitation of guests and preparations on Airbnb, VRBO, and our own website.
Fall Marketing & Partnerships. We are preparing to accelerate demand via our own booking website and marketing activities. Marketing is an area of expertise of the team. Etienne Turner, Jason Mahoney, and our partners at DigitalJ2 are preparing to drive awareness and direct bookings via our new website blowingrockcabins.com.
Begin the Next Wave of Property Upgrades. Our construction crews are preparing to begin upgrades as soon as revenue has stabilized. See above for a shortlist of planned improvements.
Conclusion
Over the first few months of operations, we have made numerous physical improvements to the property and learned a lot. We were able to A/B test online conversion rates, photos, property titles, and descriptions. We learned from guests what they liked and didn’t like. And we learned that our property manager is not the partner we want. Finally, we learned that customers are willing to pay a lot for these cabins and we should bring property management in-house to capture higher margins.
We appreciate your continued support and belief in Ziggy Cabins. The guest reviews from our first summer give us immense confidence in the potential of this property. We plan to be one of the notable and prominent lodgings in the High Country.
Please send us any questions or concerns. If you haven’t already, please book some time at the cabins. We’ve received some invaluable feedback from investors and look forward to more.
