In a few months, when Casa Sol opens its doors as Old San Juan’s first Bed & Breakfast, it will join a growing list of small hostelries in the old city that are benefiting from increased tourist demand for cozy alternatives to traditional, large hotels.
Visitors to the island “want the experience of living in the country,” said Eddie Ramírez, who is betting on this evolving tourist profile, 25 years of experience in the hotel business, and extensive industry connections to succeed as the proprietor of a small B&B to be based in a large home on Sol Street, hence the name Casa Sol. It is scheduled to open in May.
With only five guest rooms, Casa Sol is sure to provide that homey environment sought by some travelers, especially visitors from Europe. Yet this long held dream of Ramírez is one that will come at a considerably high price tag: $1 million, most of which is coming from his own private resources because of difficulties in securing bank financing.
Moreover, government incentives that could help lower his operational costs are off limits because lodgings as small as his B&B are disqualified from receiving these benefits under the Puerto Rico Tourism Development Act of 2010, he said.
“No bank is providing financing,” said Ramírez, noting that he went to three banks and all three refused to bankroll him. To raise money for his project he was forced to liquidate some real estate, tap into his 401K, dig into his savings, and borrow from a relative.
He’s still missing the full amount, which is why he is currently in the process of selling his family residence, also located in old San Juan.
Owner: ‘Anxious but optimistic’
“The hardest part has been getting all the money together,” he said.
While admittedly “anxious” that money is running out, Ramírez is optimistic the sale of his home will raise the remaining capital needed for the project. Some lucky breaks have helped along the way.
He counts with a “flexible” contractor and his architect brother Billy Ramírez, who drew up the plans, is an expert in Old San Juan renovations so that helped expedite the permitting process at the Puerto Rican Institute of Culture. Reusing and recycling materials is also helping to keep costs down.
For example, bricks left over from the roof will be grounded for use in paving the patio and the entrance hallway.
Some of the teak beams installed on the ground floor were salvaged from a contraband ship seized by the government and put on the selling block. Excess wood from these beams will be used to build room doors.
A B&B, which typically has from four to six rooms, is a type of entrepreneurship that would seem ideally suited to generate self-employment and new economic activity at a time when Puerto Rico sorely needs more jobs. But the very same quality that makes them attractive, a small number of rooms, works against them when it comes to receiving financial breaks from the government.
The Puerto Rico Tourism Development Act offers incentives to lodgings but they must have at least seven rooms. Thus, Ramírez can’t take advantage of an exemption from paying the Puerto Rico Sales and Use Tax (known by its Spanish acronym as IVU) on any business-related purchase. This 7 percent excise tax applied on practically everything consumers buy in Puerto Rico can add up to quite a chunk of money, especially on large purchases.
Another exemption he misses out on is an 11 percent tax credit on energy, typically one of the highest expenditures for any business operating on the island. Ramírez plans to hold his power costs down by using energy-efficient equipment (air conditioners, for example, will be equipped with cooling inverter technology) and installing 26 solar panels on the rooftop, enough to meet 80 percent of daily power needs.
Pulling out all the stops
Based at 316 Calle Sol, three blocks from Fort San Cristobal, Casa Sol will operate out of a 5,000-square-foot house currently undergoing a full-scale renovation. The ground floor will accommodate the five guest rooms (including one that is handicapped accessible), an office, laundry room, and a small kitchen opening onto a large interior patio.
Ramírez is turning the second floor into his family quarters, thus fulfilling the requirement that a B&B owner live on the premises.
A former purchasing manager at the Caribe Hilton, a company he continues to be associated with in an advisory capacity, Ramírez is pulling all the stops to make Casa Sol a special place to visit. Rooms are being assigned evocative names and will be furnished with antique wardrobes and night tables handcrafted by a family of Ciales artisans.
Guests will be treated to a full breakfast: Ramírez already has made arrangements with local farmers to supply him with fresh fruits and a chef friend has promised to concoct a special carambola (star fruit) maple syrup to serve over pancakes.
Pulling off Casa Sol is especially important for Ramírez in light of a previous effort that fizzled. In September of 2001 he was negotiating to buy the Hotel Toro in Miramar. Then came Sept. 11.
“Tourism fell through and what did the bank tell me? We can’t,” he said.
Still, the dream of hotel entrepreneurship lingered on. Last January, his wife Margarita noticed a home on Sol street with a for sale sign. Within days, the couple had bought the building and set the wheels in motion for a second try.
Today, as he visualizes the future, Ramírez is confident of his chances of success. Financially, he said, an operation of his size can generate revenue of between $350,000 and $500,000 a year. Daily room rates will probably range between $125 and $145, he said.
Beyond assuring his family’s financial well being, Ramírez finds that the hospitality business can offer great personal rewards, such as meeting new people and learning from them.
He described himself as the type of person who will rush to the assistance of any tourist on the street who is struggling with map directions: “I love tourists.”