I once saved a man over a million dollars in – Cold. Hard. Cash. That’s real money. So…how’d I do it?
Here’s the deal.
The client inherited from his son’s estate a number of inland hotels on the Mississippi Gulf Coast. The Internal Revenue Service asserted that the value of his motels was based on the market price of corporately owned stock for the same brand of hotel and the number of shares in his privately held corporation. Using this method, the Internal Revenue Service estimated a value for his interest of over $30 million dollars.
What the IRS didn’t know (or chose to ignore) was that, at the time, casino hotels on the Mississippi Gulf Coast had cannibalized the business of inland hotels, depeleting their occupancy rates and average daily rates. The Grand Biloxi or Beau Rivage had no qualms about dropping $80,000 per room in construction costs to build a lush hotel room which they knew would be a nice comp for those hoping to beat the odds. Even for the more frugal, who wouldn’t rather stay in a $80,000 room at a reasonable price and feast at a buffet featuring a cornucopia of prime rib, lobster, and boiled shrimp for ten bucks a head?
Honestly, most people don’t care how good the broccoli casserole in your restaurant tastes or how many towels you supply them with in your $30,000 inland hotel room, they’re heading for the casino.
What I was able to do is provide a graph, based on historical trends, that reflected this reality. The result? A value of less than half that estimated by the Internal Revenue Service and a savings of over a million dollars for the client. Again, that’s real money. But it’s real money based on an honest appraisal that reflected reality – not reality as someone simply hopes to portray it. What’s it worth to save a million bucks? I don’t know. You tell me. If you have a legitimate case, give me a call.