Requesting Suggestions for Location of Tourism Business

Hello!

I'm planning a move to Nicaragua at the end of 2013 to start a small business. Between now and then I'm planning on doing some traveling and extended stays to research different areas and would love some help, suggestions, feedback, criticisms, etc., regarding location and market to help narrow down the search. I'm a new user and hopefully my profile has some helpful information regarding my background and experience in business ownership.

The goal is to run a simple Bed and Breakfast similar to the types I've stayed in while traveling Central America. Ideally, it'd be comprised of a central community lodge, where breakfast (and probably dinner) is served to guests, maybe a few private hotel rooms within that structure, a few nicer, private casitas on the property, and perhaps a few really simple dorms for budget travelers. Additionally, I'd like to operate the central structure as a public cafe, bakery and bar open to non guests.

The key, I think, is finding the perfect location. We're partial to less touristy areas with fewer gringos, but for obvious reasons that sort of location isn't ideal for a tourism-based business. :) That being said, I'd prefer to cater to folks who are not looking for American-style accommodations, soy lattes or whirlpool tubs. In my mind, we'll be providing basic accommodations with great food in a beautiful environment, great service and (hopefully) a fun, social(-but-local) atmosphere. Ideally, the area I'd like to be in will feel remote, adventuresome and "exotic" for the traveler, but will be reasonably accessible to touristy areas to draw some of the more adventurous folks our way.

I've been scouring the forums for the past few days and I know this location question is asked a lot. Here are a few qualifiers, to get them out of the way:

- Location: Would prefer something with beach/lake access. Ocean is preferable, as my business partner is a diver, but it's not a deal-breaker. Jungle is great.From reading and research, it sounds like the Pacific coast would probably be the best way to go, though the Atlantic Coast holds a lot more appeal to me from an adventure/minimally gringo'd area. Services and attracting clients would be the issue. Are there any areas on the Atlantic - aside from the Corn Islands, as it seems that property there is hard to come by- that attract more adventuresome tourists? Would prefer something "out of the way" or "off the beaten path", but with drivable/bus access to services.

- Budget: the lower the better. :) We'd like to invest more money in providing services that can't necessarily be found at nearby establishments rather than in the land itself.

-Language: Our Spanish is basic, but we're planning on enrolling in lessons during extended stays prior to moving.

Obviously, location is just one part of the equation, and all other feedback is welcome, as well. In the future I hope to get some feedback about other specifics of the business plan, but first things first!

Thanks!

Jerrica

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Whatever Happened To

our Aussie? friends who wanted to do some food centered business in Granada? Did they pursue the idea?

I'll chime in here too...

Greetings Jerrica:

Best of luck and feel free to come and stay with us to ask a bunch of questions! I would agree that location is really important. Billy Bob and the others have some good comments for you here. The best advice I was given before opening up our B&B was to make sure and offer things to do on-site and in the local area so that people would want to stay here (and increase their average daily spend) with us.

Offering food is just a must-have for our guests, but does not really add to our bottom line. We of course offer breakfast included with the room, and lunch and/or dinner is available upon request. But it is just for the convenience of our guests as we are on a farm in a rural area even though by vehicle we are ten minutes from the Galerias mall, so there aren't a lot of offsite dining options within walking distance.

We now offer on-site spa services like massage, facials, etc., in addition to horseback rides, and farm tours. We also offer local tours: Managua 1/2 day, Masaya Market, Masaya Volcano, Chocoyero - El Brujo Natural Reserve, etc. that are all nearby offerings that our guests enjoy.

As far as locations for your B&B, you might consider the Laguna de Apoyo area as it is lakefront; you can dive there, and it is motorboat free in a nature reserve. I'm not that familiar with all the details, but MARENA (Ministerio del Ambiente y los Recursos Naturales) has some rules that must be followed to develop there, so you would ideally want to buy something that has already approved plans or better yet, someone who has developed their infrastructure, wants to get their investment out and has a real need to sell. The area is also located in-between Granada and Masaya, so it is definitely on the tourist route.

I would love to tell you to go and do something really great up in Lake Apanas outside of Jinotega, but I don't think they are on the radar of the typical mochilero/adventure traveler as yet. But that would be another possibility for you.

Pacific Ocean locations that are intriguing to me are: Playa San Diego next to Gran Pacifica, and the beach areas of Chinandega between Aposentillo and Jiquilillo.

My Nicaraguan bride and I opened Farmstay El Portón Verde here in the hills south of Managua about three months ago now and we have been pleased by the number of bookings and excellent reviews we have received so far.

What we offer is unique primarily due to our location; it feels like you are in the mountains in a fresh climate even though we are still in the Managua city limits. Even though we are a bit out of the way, our guests appreciate that they can stay near the city yet not have all the noise, heat and dust of the capital.

There is room for growth in our area, but the land costs are much higher then areas up in say, Lake Apanas or other more remote areas.

Okay, good luck out there!

Doors of hope fly open when doors of promise shut. -Thomas D'Arcy McGee

Problem with Apanas

It's a Ramseur site -- protected area for migratory waterfowl. Mirena controls access points to it and just as with Laguna Apoyo. At Apoyo, docks are illegal. Talk to Marena (the environmental protection people for Nicaragua) as to what sort of permanent docks you can or can't build. My understanding is you can't build legal docks out into the water -- and the water levels fluctuate wildly. At times, you're walking through mud to get to a boat. A friend who went out in one had knee high rubber boots with her. As for Apoyo, Marena is really cracking down on docks and development there. It's relatively small and has one and perhaps two dive operations already, plus a number of hotels. There are two quite literally dueling (blows exchanged) nature touring and research institutions on the lake. Until that's calmed down, I'd avoid it, and as a person who'd like to see it preserved for the very unique fish in it, I'd like to see people stop destroying it. Some clowns tried to do a big US resort style development and I believe Marena stopped them cold.

Figure out what you and your partner offer that the average wannabe bed and breakfast owner doesn't have -- and make something around that and something Nicaragua has that every other country in the world doesn't have. I believe that Nicaragua has the tail end of the second largest coral reef in the world. Your partner is a diver. This is something you can work with that is not an option for everyone else. It's also something that at least some Nicaraguans know how to do, so you can get people certified easier than if you had to start from scratch, and I suspect it's a lot more alluring to them than diving for lobster, which is illegal now anyway.

The Corns have most of the dive business because they're accessible by air from Managua for around $160 round trip. Anywhere else, you have to figure out how to get your clients in. The Pacific may not be clear enough for first rate diving (that's what the guide books say; ask).

What can you do that nobody else with a checkbook can do? Then is it something people will travel great distances to do here? Diving in coral reefs supports Roatan's tourist industry (a friend worked in that) and a portion of the Corn's. Australia's Great Barrier Reef is quite expensive and time-consuming to get to for people from North America. If someone ran a reef diving operation in Nicaragua, the regional competition is the Yucatan coast, Belize, Guatemala, Honduras, and the Corns. The reef doesn't go south of Nicaragua. Are there enough divers and potential divers to support another dive resort? Is your partner a qualified open water instructor or can he get that easily? Is he patient with newbies? Can you get former lobster divers up to speed as guides and insructors? Where's the nearest decompression chamber? Can you afford to build one?

If the Corns have room for one more dive operation and you can afford to buy in, then you've got infrastructure and a way to get there solved (some places are more expensive for very good reasons). If you go to a lot of other places on the Atlantic side that aren't easy of access, you have to solve that problem, but the reefs and clear Caribbean water are on the Atlantic side. All the problems that make setting up there difficult (title issues, access, infrastructure support) mean that if you can solve those problems, you'd have less competition.

The current owners of Apanas Estates have two crops -- money from people buying lots on time and cattle. They cut down most or all of the coffee trees. If they sell 20 more lots at the current asking prices, they've paid for the land ($600K more or less for the unsold lots and the common land), and the cattle are close to all profit. In something like six years, nobody has build a single house there.

Suzanne Wopperer runs a back packers lodge near Jinotega, very attractive land. If you come up as far north as Jinotega, her website is http://www.hijuela.com/labiosferaretreat.html

Rebecca Brown

replying to my own comment...

just posted on my blog a cross-post of a hostel for sale in Las Peñitas:

http://www.elportonverde.com/2012/09/21/beachfront-homes-and-lots-leon-v...

and I also found this website that has other people looking to open hostels in Nicaragua:

http://www.hostelmanagement.com

Doors of hope fly open when doors of promise shut. -Thomas D'Arcy McGee

Webtrainer and Oncidiumfan-

Webtrainer and Oncidiumfan- thank you both SO much for such thoughtful input! I'm a little late in the game here, as I've been doing some unforeseen traveling here in the states.

Webtrainer- I've been interested in the beaches around Chinandega you mentioned. How are existing services out there? I'm planning on visiting in March, though most of the properties I'll be looking at are a little further south. I would definitely carve out some time around Chinandega if it seemed like a good fit. I'll do some more research- thanks for the lead!

Rebecca, we would love to include diving as part of the services we offer. My partner is a certified instructor and loves, loves, loves diving Corn. I've been met with a bunch of dead ends when it comes to property out there, though. I've had a lot more luck finding leads on the northern pacific coast, but my partner seems to have less enthusiasm about the diving in that area. Do you know much about that?

And thank you, both, for the links! Checking them out now.

Jerrica

All I know is what I've read

The Pacific coast doesn't have the reefs and is more turgid, but the Pacific side of Nicaragua is more developed and more highly populated.

Someone in Jinotega suggested Puerto Cabeza in RAAN, and taking people out by boat to the reef and Miskito Keys, but getting people to Puerto is likely going to be harder than getting them to the Corn Islands or anything on the Pacific side. Puerto Cabeza (http://en.wikipedia.org/wiki/Puerto_Cabezas) is indigenous land, so you basically get a long term lease rather than freehold if anyone is willing to work with you. There does appear to be an airport there. Given that nothing is freehold, it might be harder to sell on than something with more conventional land holdings.

Flights with http://www.lacostena.com.ni/eng/res/Default.aspx -- around $74.40 one way from Managua, $163.80 round trip.

What the Pacific Coast of Nicaragua is known for is surfing. Two of my relatives have been here for that (before I moved here). You might see how saturated the market for that might be. Best if your staff enjoys doing what your guests do so they can talk up the local breaks and stuff.

Rebecca Brown

This is a must read link for you

http://www.nicaliving.com/node/17740

Dave at Playa Roca may enlighten you a little about being off the beaten track.

I would go see him when you are here.

Talk to Intur

they ain`t much, but they are in charge of such things.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

Thanks, Billy Bob. I'm sure

Thanks, Billy Bob. I'm sure I'll become very well acquainted with them in the year to come. ;)

Jerrica

Intur

I would suggest you make an appointment with them and lay out your plans and budget. Beforehand, if you do not speak perfect Spanish, find out if you need to take an interpreter. If your startup capital is less than $1,000,000, you are small potatoes, but if you look at the investment laws, Nic. is wide open to small investers, so give them a real estimate and talk turkey.

If your project is less than 1 mil, you cannot build infrastructure, so you will have to go where others have gone. Not necessarily bad, but costs and competition will be tougher. What can you do different/better than local, national, and expat entrepreneurs? Not to mention competeting with the money laundering crowd. I think good taste and good customer service help alot. Stop at Barco de Oro in Las peñitas for lunch or something. They have good taste in decoration and in food.

Like a comment I posted on somebodies post about starting a restaurant, I suggest you go to at least a dozen B and Bs like the one you are proposing and SNOOP. Be a paying guest. chat with the employees, chat with the owners, SNOOP, go with your gut.

I see one of your possibilities is in flipping business startups. that might be your in: get something running and sell it to somebody with more money than time or skill. A B and B seems like a plan for a retired person. I would think somebody young would get bored and want to move on after 2 to 4 years, but to each his own.

Do a search on this site on tourism. Skip the posts about how tourism is bad for poor people who don`t have anything else to do. Poor people are pretty much irrelevant: your business plan and skills are what count. Hire and train good people and let the porch sitters rot.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

We're definitely "small

We're definitely "small potatoes". I'm very interested in the idea of partnering or buying an existing business, provided I can find something close enough to what we're looking for. I'm trying to narrow that search a little bit, and have had some good leads in different directions as far as geography is concerned.

You're also right on the money about flipping business startups. My business partner is a retiree and will be going in this as a silent partner and investor. I'll be managing, marketing, etc., with the intent of building a profitable-enough business to later sell it/lease it and move on to another.

Thanks for the info about INTUR. I'll be sure to bring an interpreter with me when I head down. Don't think I could keep up with legalese in Spanish. :)

Jerrica

INTUR Stats

http://www.intur.gob.ni/DOCS/ESTADISTICAS/Boletin_Estadisticas_2011.pdfh...

Page 115 to 129 is on the INTUR investment stats

A tad confusing but something may leap out the page at you.

Whatever you do will be copied...if its a good idea

So, as far as "providing services that can't necessarily be found at nearby establishments", expect that to give you an edge to start, but have a plan for when all your competition copies you.

Casa Oro here had the right idea. They used to cop $7 a head for a bed. They realized that they could double that by selling other services and products and became a full service adventure center, not just a reseller of bed space. They probably average $20 a head income or more now and provide laundry, water, booze, transport, board rental, board repair, turtle trips, volunteer opportunities etc etc. It was a smart business decision but was copied by a lot of hostels.

Great for the tourists, lots of choice and options but prices tumbled, competition was fierce and the result is revenues and operating profits spiraled down.

Room/Bed rates are about same as they were 6 years ago....electricity has gone up by a zillion %

On the other hand, my feasibility study said loud and clear not to start a community beach rag....but I did it anyway!!

You're absolutely right and

You're absolutely right and bring up a good point- being flexible and quick to acclimate to changing markets is tough and important. That goes hand-in-hand with the location part of the equation; knowing who/where the competition is and how to stand apart from them will take some in-person snooping, as Billy Bob said.

Would you say Casa Oro was successful in staying ahead of the curve? Or did the changing market permanently ruin their advantage? What do you think you had going for you in your business that helped you beat the odds?

Jerrica

Casa Oro was well established in the guide books

That was important although I think web sites are taking over.

Word of mouth is big among the back packer crowd.

I would say that Pacha Mama, Naked Tiger and Esperanza have given Casa Oro a run for their money. (Casa Oro has also been for sale for as long as I can remember!). The new space that Pacha Mama just snagged is nice. It has a pool, bar, nice restaurant and a lot of common area space to hang...and it is right downtown.

CO have kept competitive by may not be number one anymore. Harder and harder to make a buck and when you have made easy ones, its difficult to accept that.

Us...hard work, doggedness and we found away of getting locals to advertise. That was key and the reason that the report said we may fail. We did the "if you cant beat em join em approach" and go round with little cards and an elastic band taking a payment of sorts and a promise for tomorrow. Up side is that we always have cash out there and if we need money the hound dogs go out. It cost more to collect but the collectors (my wife and daughters) like shopping and chatting and they do both at the same time. We get burned now and again but our bad dept % is low, usually people that go out of business and leave town before we know.

If I Were Starting

out again, I would talk to Rob at El Gato Negro about a "franchise". Capture his look, success, menu, employee training secrets, and all the rest of the wheel he and KAT invented, and move it to, say, Granada. Pay him fairly for his name and the effort and money they expended to get where they are. It will be cheaper than trying to learn it all yourself.

There might be enough business in Estelí or Matagalpa; I'm not sure, but it's not by the water.. That beach stretch around Pochomil, maybe, Leon for sure but you'd probably need A/C. The Pellas development will attract a steady flow of tourists; their marketing efforts will save you some money and guarantee some traffic.

Most of the rest of Nicaragua still doesn't get enough tourists.

You have to have the brass to invest in your belief that Nicaragua is on the cusp of a growth spurt. Risk is always part of the equation. You have to choose a spot that at least supports your operating expenses, until the word gets out that "there's another El Gato Negro in Leon (Matagalpa, Granada, etc)" and the people start searching you out.

KeyWest, do you have Rob's

KeyWest, do you have Rob's contact info? Or is he on these forums? While I don't necessarily know that I'm into a franchise idea (been there, done that :) I'd potentially be interested in paying him for his time and advice while I'm in the area.

Jerrica

I Don't

La Dalia

I recently made a day trip there and it seemed to be short on hotels. Beautiful coffee country served by an new asphalt road. As easy to get to from Managua and low country as Selva Negra. The fancy eco-resorts in the area have high prices and poor access-- it would be nice if somebody would do a good budget hotel there.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

There's A Place

in Venezia, La Estancia El Naranjo for sale. Place looks rough in the pic (link below) but it has a well landscaped pond, three cabins I believe, with modern plumbing, lots and lots of plantings of all kinds, including quite a bit of very healthy coffee, citrus and avocados. I'd guess it was 2-3 Mz total. Electricity. Venezia does not show up on Google Earth, go north of Condega, follow the well defined road over the Rio Estelí to the east. The picture really doesn't do it justice.

http://www.nicaliving.com/node/18194

The problem is the road. A paved road is in the works (every year, in the works). I can dig out the owner's contact information if anyone is interested.

Salto Estanzuela

near Esteli is also for sale. currently not developed, just an entry gate and parking area and trails to the falls.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand