Friday, June 13, 2014

Business Story: Failure of a Structure

Sometimes....I'll point out good and bad business ventures in Germany.  This is the short story of a bad venture....gone bad....and is about as deep as you can get.

For a hundred years in my village (to be unnamed).....they had this hotel-pub-restaurant existing along the main drag.  While we always had two or three restaurants in the village...this was the upscale one, and the only hotel in the village (small but adequate would be a good way to describe it...maybe in the classic sense of a Bed and Breakfast).

So this guy comes along in the early 1990s and sees it as a good business venture and buys it.  He'll ride the hotel....the restaurant which had excellent references.....and have his own little pub.  Life couldn't be any better.

He does a good line of business for a couple of years....putting some cash here and there on minor renovation and probably expected things to continue along this path of limited renovation.  Then one day.....some pipes burst, and some issues arise.

What can be quietly least via gossip in the that the renovation guys came to work on the pipes and found massive issues.  It's the type of problem where you'd be better off to tear down the whole structure and start fresh.  Normally, a guy would do that....but in this's a historical joint, and that got attention of the town leadership.  Yeah, it's on a protected property list, and you can't tear down anything.  What you can sink massive amounts of money into a renovation project to pretend it's still OK but you are gutting out the basic structure, then putting everything back with the same look.

Yeah, you can figure it's probably twice the amount of money that you'd do....if you tore down the site and started fresh.  This guy?  Well....he didn't have that kind of capital and knew it'd never pay itself back.

So for well over ten years.....the structure remains vacant.  The guy won't do anything with it....because there's no way of getting capital or a pay-back situation.  He can't sell the property because no one wants a place in this condition.  The town sits there....knowing the story but can't find a way to advance the mess.  A historical spot that ought to fall in or just collapse....but you can't wish that.

This guy will likely pass on the property one day to a relative who will be stuck with something that they can't do anything with.  I'm guessing the relative might be smart and just dump it back to the government, and maybe the town will come up with the million or more Euro to rebuild this structure the way that the law dictates.

So a hotel-restaurant-pub sitting there, and will never open least while in private hands.

No comments: