A 21-Room Hotel Spends $5,000 a Year on Candles. Owners Say Protect That Line.

Cuyama Buckhorn, a 21-room hotel two hours north of Los Angeles, spends roughly $5,000 a year on candles. None of it was budgeted. "But it's a must," said Ferial Sadeghian, the architect and designer who owns the 1952 property. The bar stays candlelit and the fire pits burn until the last guest reaches their room.

That line item set the terms for a session at this year's Boutique Hotel Owners Conference, where Sadeghian moderated a conversation with Jayson Seidman, founder and managing partner of Sandstone, whose portfolio includes St. Vincent in New Orleans. Seidman came from finance. Sadeghian came from design. Both reached the same conclusion: the details guests remember are the hardest to justify to a lender, and an owner's job is to protect them anyway.

What does diligence look like before the spreadsheet?

Seidman traced his method to a mentor at Grupo Habita, the Mexico City hotel group. The assignment: "Go to a bar and talk to the bartenders, and go to the coffee shops and the baristas. Then you'll get a sense for where the energy is happening in that city." Once a property was under contract, his mentor stopped the number-crunching and told him to visit at 5 a.m., 6 p.m. and 2 a.m. over a week, and record how the site felt.

Sadeghian ran a parallel process at Cuyama Buckhorn, where successive owners had turned the property into things few of them good for the community. She also warned that site-responsive design is often just copy. "A lot of hotels, when you really go deep in it, it is a big marketing angle rather than actually making it work," she said.

How do you budget for theater?

"There's no real budget for the good ones," Seidman said of spectacular hotels, usually built by ultra-high-net-worth owners. "We're at the mercy of lenders. We're at the mercy of investors." The discipline, he argued, keeps teams aligned.

His spending test is simple: "We're in the hospitality space, so that means it's theatrical. What does the guest interact with?" On a current project combining new construction with historic preservation, contractor bids came back wildly apart. He weighs whether a signature staircase is worth what it displaces, and where back-of-house costs can drop without hurting staff. "Every project I've tackled, I can't comp," he said.

Why does per-key math mislead?

"When you use this per-key analysis that everyone loves to use, it's not apples to apples," Seidman said. "You're building a standalone restaurant. You're building a standalone spa." His fix: allocate every revenue stream and its capital cost to its own bucket, then defend each on its merits — because "time kills all deals."

On atmosphere, he keeps two budgets: the bank's, and a separate reserve he protects himself. "As soon as you put that in a budget, it's gone," he said. He has also seen lenders begin treating FF&E, OS&E and working capital as a separate line of credit alongside the senior loan. His low-light properties resist photography, which he welcomes: "I want people to show up."

Where does the revenue actually come from?

At Cuyama Buckhorn, food and beverage is the majority of revenue. "We didn't expect that," Sadeghian said. It meant more staff and higher cost of goods. "It just changes the whole operation."

Seidman's properties run further: food, beverage and events far outweigh rooms where space allows. "I set out on this mission to be a hotel guy... I couldn't have been more wrong," he said. He hires fewer, better-trained people — "less of them, but better" — and reads the economics either as F&B covering fixed costs with rooms as upside, or the reverse. "If we just break even, we're good," he tells his team; avoiding a capital call counts as success.

Where a full restaurant doesn't fit, he phased out day passes at motel conversions in favor of annual memberships paid upfront — hundreds of members a year — with some guest rooms converted to wellness spaces run through partnerships. Retail is deliberately scarce: his hats sell only on property, priced well past what his team thought reasonable, and they sell out. High-value pieces come on consignment, so the consignors carry the inventory cost.

How do you finance a decade-long project?

On debt, "hotels were taboo," Seidman said of lenders, many now over-allocated. Project life cycles have stretched from a few years to a decade or more, a horizon most banks won't underwrite. He has instead found long-term notes from credit unions and patient equity — while acknowledging "there are always strings attached." His sites are residential, not convention districts; St. Vincent, a former orphanage that had drifted toward a halfway house, required running the hostel for two years while zoning was confirmed. His next project, a historic hot springs in Lake County, Northern California, anchors on mineral-rich water, including magnesium, found in testing by a prospective Japanese partner. "This is our north star. We don't need to make up anything," he said.

His closing advice: "Start small, things that are easy to manage, and don't overthink it. You can always grow." Then, as Sadeghian put it, "you show people."