Numbers upon numbers upon love
Updated: 16 hours ago
One might suppose that higher prices no longer shock, but at the start of this year I sensed deep dismay from a former guest who had emailed me to book Le Rose for a week in August, only to bristle at the 36% increase in our rates relative to 2022. Understandable. I tried to explain that Poggiosole's (intentional) steep upward trajectory in quality ran parallel to that of inflation (beyond our control) and that the two factors combined had, over the course of the previous year, pushed rates up considerably. It was to no avail; the gentleman replied that he would happily return when our rates "came back to earth".
Alas, our rates are headed higher still for 2024, with Le Rose priced at just under €500 per day as a two-bedroom lodging and €670 per day as a three-bedroom lodging May through October. Begonia is of course cheaper, €350 per day with both bedrooms open and €300 per day as a one-bedroom, two-bath lodging. Viewed in terms of price-per-guest (€85 - €175 depending on the lodging and the size of your party), these rates are perhaps less off-putting, but they are still amongst the highest in our area.
What gives? Well, our electric bill (€3464 for July and August) was close to TRIPLE the amount for the same period last year. That's partly due to higher costs per kilowatt-hour, partly to our aging photovoltaic inverter misbehaving during peak demand and partly to otherwise very charming guests running the AC full-tilt all night, night after night while sleeping under comforters (this baffles us, but surely there are parts of the world where it's normal). The inverter will cost about €3500 to replace. The outsized use of AC we just have to accept, while perforce building it into our rates.
Rising energy bills aside, my pursuit of quality has known few bounds. We've been investing heavily in amenities and infrastructure since our 2021 post-covid re-opening, and we expect to continue to do so well into 2025. I finally ran some numbers the other day (see hero image) and noted that of our total 5-year CAPEX budget of €350K around €230K has already been spent on landscaping, outdoor lighting, a ground-up rebuild of our pool, a tear-down of ugly utility poles and phone wires, a new motorized front gate and a fancy bug-repelling nebulizing system (which dispenses pricey essential oils). These expenditures filter through to rates for our lodgings, and more are in the pipeline. This month I'm purchasing and configuring two new streaming-capable audio components (Poggiosole's music systems are built around brands familiar to audiophiles: ATC, B&O, Primaire, ProAc, REL, TEAC, W4S). Next I'll be comparing Lavazza's A Modo Mio coffee machines and pods with the Nespresso Zenius system we've offered guests for the past two years (Lavazza's system uses compostable – vs aluminum – pods). Earlier this year I replaced the five plain but serviceable Rowenta hair dryers in Begonia and Le Rose's bathrooms with Dyson Supersonics. We recently engaged a geologist to evaluate our underperforming wells, and it's likely we'll need to drill a new one to front on-going summer water shortages. And don't even get me started on the Ventrac mower I'm eyeing to better maintain our enlarged olive grove in 2024 and beyond.
Then there's OPEX, the lion's share of which is cleaning and consumables (amongst which, from 2023, high thread-count combed cotton linens and the above-mentioned essential oils), the occasional repair or light fixture replacement, minor but annoying instances of theft, and costs for regular maintenance. Gardeners are on-site twice monthly to tend to our roses and dry garden plants. When I personally can't keep up with cutting grass, whacking weeds, trimming hedges and watering young trees and potted plants in summer, I call in still more help. Our Wüsthof Classic kitchen knives are professionally sharpened twice yearly. Our Alessi stainless steel cookware is polished by hand at each guest change-over to remove burn marks and salt residue. Dishwasher tabs, coffee and laundry pods, fresh microfiber cloths and Scotchbrite pads, salt, sugar, hand-made soaps and sustainably produced toilet paper are all provided (and topped up) free of charge. And we welcome each group with the gift of a small decanter of olive oil produced from the hundreds of trees in our grove.
All this investment and attention to detail has helped us earn a 9.9 rating on Booking.com and has attracted the attention of so-called "premium" vacation rental agencies like Plum Guide (who have inexplicably re-named Le Rose "A Midsummer's Daydream"). It has also made for humbling business results. Despite having enjoyed an 80% occupancy rate this year, when a 5-year amortization of our CAPEX is factored in, we're set to end 2023 about €16K in the red. Our second double-digit rate hike in as many years still has us looking at a €10K loss in each of 2024 and 2025. Things won't start looking up again until 2026, when we expect to finally turn a small profit. Not awful if you consider 2021 as a total reboot, but far from spectacular.
Sometimes I'll do a double take on these numbers. Back in 2021 one of our first post-covid guests said I seemed "a good businessman". I'm not at all sure. I'm guided first by the feeling of comfort I want to create, the sense of understated quality I want to convey and the delight a particular fountain pen or chef's knife or music streamer might elicit, well before I consider the cost of these items. True, I can't print money and I'm not independently wealthy (for all the support our guests have provided by booking our lodgings, were it not for a second source of income Poggiosole as it exists today would not be possible). But I can't imagine caring for our guests, our lodgings, and our land any other way.
Bottom line: within limits, if there's a high-end solution I'll opt for it. "The quality will remain long after the price is forgotten" (Henry Royce and Aldo Gucci each more or less plagiarising Ben Franklin).
Beautiful and thoughtfully designed and appointed spaces are not only a pleasure to regard and use, they're a pleasure (for me) to maintain. And I don't just work at Poggiosole, I spend a good chunk of personal time here. As the head of our cleaning crew said to me at the start of this year, "It's clear to us that you love this place." True.