How to Scale to 4 Hospitality Properties Without Raising Millions in Capital | Sam Degenhard E70

Michael Russell 0:00

Raising millions in equity to buy hotel properties can feel overwhelming, especially if you don't have a massive network or years of syndication experience. But what if you could scale a hospitality brand without that entire capital raising process? Today's guest built a for-property outdoor hospitality portfolio across three states in just three years, without taking on a single mortgage or doing a traditional capital raise. In this episode, you'll learn how leasing properties instead of owning them may be the unlock to growing a hospitality brand faster without having to rely on investors or having millions tied up in down payments. On this podcast, we talk story about everything you need to know to make money investing in hotels and in hospitality assets. Today's guest is Sam Dagenhard, founder and CEO of Campfire Ranch, which is uh an outdoor hospitality brand that operates campgrounds, lodges, all across Colorado, Arkansas, and California. So, Sam, welcome to the show. Thanks, Mike. Great stuff to be here. Yeah. So let's start off. I want to have you paint a picture for our listeners who may not be familiar with what Campfire Ranch is. So let's start with that. What is Campfire Ranch? And when someone books a stay with you, what are they actually getting?

Sam Degenhard 1:40

Yeah, great, great question. In general, we are an outdoor hospitality company. We focus on subscale assets. So stuff smaller than 30 keys. We like categories and asset types that are kind of funky. So we look at campgrounds, particularly ones that are car camp, van camp, or tent camp focused. So not RB parks. We look at micro hotels, motels, BBs, hostels, lodges. And probably the most fun part of what we do is like full backcountry lodges. And so that's like the most obscure version of what we do. But we look at all those types of pieces and we position our locations centered around recreation. So we're kind of a recreation force, you know, outdoor experience first company where we pair primitive lodging into like a luxury experience in that outdoor setting, if that makes sense.

Michael Russell 2:28

Yeah, no, absolutely. And I've I've heard in preparing for this that your goal is to be able to offer folks sort of the experience of the outdoors, but they don't necessarily need to be expert campers. You know, they don't have to have all their gear to start. So can you walk me through what a typical guest experience looks like at Campfire Ranch in that regard?

Sam Degenhard 2:45

Yeah. So I mean, across our properties, depending on where you're staying, what playground you're in, we are trying to both cater to the beginner or the novice in the outdoors, as well as maybe that more expert, experienced person. When we think of novice or really think that word applies to kind of everybody in the outdoor space, like you would come out to Arkansas and maybe you're an expert mountain biker, but you haven't ridden bikes in Arkansas, makes you a novice here for your first trip, just in a different way. So we kind of frame all of our guests in that mindset of like novice to some extent. And when we get guests in, it's a it's the basic amenities that are helping make them comfortable, whether you're a beginner or a pro in the sport, but it's also like the little things that we can do to make that trip planning process easier. At our campgrounds, we provide on-site rental gear so you can actually go and use a quality tent and sleeping bag and stay warm and dry without having to go to REI and do the pool ticket buyout of gear, you know, get all the stuff to try something you're not sure you like. And then the same thing goes for more lodge-based properties where we create the basics in the experience, like food service, good linens, those types of things that you typically wouldn't see in those settings, so that both a pro can spend more time outside and that beginner can have a better baseline to get out and try something new that's maybe out of their comfort zone. So I'd really say it's like our amenity set, our staff, and how we position those properties. And then what we actually physically offer is add-ons that make that novice experience, depending where you sit in that, a great one if you're visiting the place for the first time.

Michael Russell 4:15

Yeah, I mean, that makes sense. So walk me through this. I show up, like, is my tent already set up? Is this kind of like a glamping type of experience where I don't need to know how to do anything? I've got a sleeping bag, a tent, like everything is already prepared, and I just kind of roll into camp and just go have fun.

Sam Degenhard 4:29

Yeah, so our campground property, very much so. You can select at checkout if you want a tent, sleeping bag, camp chair, camp cooler, stove, whatever it is you might need, then we'll have it set up in your campsite when you arrive. And then we'll actually take it down for you so you have a little bit better departure day. We can also show you how to do that. And often we find ourselves filming an Instagram reel of someone setting up their first tent and showing them how to do it, then actually setting up the tent for them before they get there. So it's definitely an experiential piece. I like to say, like, we're sort of starkly anti-clamping. We want you to get their hands dirty and do the DIY part, but we'll help you in every step of the way. So if I can show you how to start your first campfire or set up your first tent in the campground, that's that's the fun part for me. But I do want you to do the work and experience what that's like so you can have, you know, the real thing.

Michael Russell 5:16

Yeah, you know, I've got so many questions here, but I imagine some like some regular campers, like diehard campers, are kind of scoffing at this. Like, what do you mean you don't know how to set up a tent? Like, what are you talking about? Like, but for me, honestly, I didn't really grow up camping. Like, I I stay in relatively nice places now. And so, like, the idea of camping to me, I'm like, ah, it's a little intimidating. I like the idea of not having to go buy a bunch of gear for something that I'm gonna try. Oh, I may not even like camping. So to go and spend, who knows, a thousand bucks on gear for possibly a one-time thing. This feels like, wow, that's kind of a neat idea to be able to go try this out before I start buying all this stuff. That seems novel to me. I don't, I don't know of too many other folks that are out there doing this. Do you have competitors in the space?

Sam Degenhard 5:57

Good question. Ours we know, we're the only like full um campground in Colorado that rents camping gear. I mean, everything you need we have on site, which makes it fun. It's also great for big groups, right? You bring 20 people and you're like, I want to go camping with 20 people from my team. Where do I get all the stuff? We just come to camp our ranch and like we can deck out 20 people's work of camping gear and it's there when you ride. So we're one of the only people that that do that, particularly in Colorado. I haven't really dug dug in too much more across the country, but Campfire Ranch on the Taylor, that's our campground property, our first location. It's kind of the bread and butter operating there. And to your point, like that what we would call the outdoor guru customer might initially scoff at the rental camping gear and be like, who needs a rent a tent? That's crazy. What's fun is we see a lot of the outdoor guru hanging out with the urban explorer type customer.

Michael Russell 6:47

Yeah.

Sam Degenhard 6:47

Who, you know, maybe they're dating, maybe they're friends. But imagine going on a trip and you get to play host, but as the expert, you don't have to do all the work. And so the tent's set up for your friends when you get there, you don't have to set it up. That makes a better trip for both sides of that party. And I think is a cool way to get people in the outdoors as a as a team or as a group, beyond just the you know, show up and try and figure it all out in weeks of planning in advance. So we see that a lot. And then while it's good for people who don't have the gear and maybe are new, it's also a huge convenience for folks who might be flying. So if you want to come to Crestview, Colorado and you are a camper and you want to camp, get on a plane, bring all your camping stuff and your camp stuff. Like that's a nightmare. If you've ever tried to do that, it's just it's just not fun. But you can show up at Campfire Ranch, stay in the same high dollar tent that you own at home, good sleeping bag, all the stuff that you love and you want to have an experience for, but you don't have to bring it all with you. So we see kind of all customer segments using the rental gear. It's about it's about 25, 30% of our customers are renting something from us.

Michael Russell 7:46

Yeah. Okay. Well, I'm following along with the logic here, but you said something that kind of struck me. You said we don't allow RVs at the properties. That's a big departure from traditional campgrounds. So why that decision?

Sam Degenhard 7:59

Yeah, and it's funny because I grew up RVing actually, because like most of my childhood camping was R Ving outside of Voice Scouts. So I'm a big RV guy, I guess, in general. But what we we've noticed and what we see out there in options is typically the RV park model will almost like discount the experience for a tent camper or even a band camper. You don't want to sit in a tent next to a bunch of RVs. You don't have a view. You're staring at a you know colorful side camper with some crazy name on it, and it's just not a great camping experience if you're in tent. So then you're kind of forced to go into, you know, forest service or national park campgrounds where you still have RVs, but maybe you have a little bit better of a campsite, but in that setting, you have almost no amenities and no support. And that is if you can find a site. And so in the campground side of our business, we like the RV-free model because it honors that tent camper in in the best way possible. Like we are for tent campers. Not only it's not that we allow tent campers, it's like we are for tent campers. And I think it's important just if you're gonna create a brand specifically around something in an experience, you have to be core to that experience. And for me, in if we're gonna do tent camping, we gotta do the best tent camping. And that means there aren't RVs.

Michael Russell 9:09

Yeah. So let's talk a little bit more then about this adventure concierge type service. You know, you talked about how there's someone there to kind of walk you through it to kind of hold your hand to a degree. What does this actually entail? Is someone there that's helping to, let's say, plan adventure trips or go hiking or round, you know, ride mountain bikes? Like what is the campground host providing in terms of service?

Sam Degenhard 9:32

Yeah. So first note I would say is like if someone calls us a campground host or calls my staff campground host, we didn't do our job, right? That's association of like a no-amenity campground that you would find yourself in. We actually call off our staff that's front of house stoke managers. No idea of that is just we are actually people in the experience with you, and we want to be referenced by first name, right? So if I can build a relationship with that customer and they go, hey, Sam, what should I do today? Checkbox in terms of how our team operates. So it's that mindset that really forms up our venture concierge offering. It is being a local, it is sharing the intel. Whether you're going to make money or commission from a booking or not, it's being that conduit between the community and the visitor. And I really encourage our crew, wherever they're at at any property, that they're that ambassador, right? Might you come to our property and it's like you're communicating with me or someone from my team before you arrive. You already kind of know us when you get there. It's a friendly hello, welcome, and then all weekend long of a resource. And so I'm going to be recommending where to go hike based on your skills and experience. I'm also going to be telling you where not to park. That might piss off my buddies who live up valley in that drainage. And I'm also telling you where my favorite spot is to get a margarita in town afterwards. Now, it doesn't sound like mind-blowing, probably in the realm of hospitality, but when you're that one-on-one with customers and you have staff run and center in the outdoor experience, it's like having a guide that you don't have to pay for. And that allows us to provide value and essentially increase ADR across the portfolio because we have a built-in kind of guide in the experience. Now we also offer the chance to go with a guided hiker or a guided mountain biker in a market, but those are almost like secondary add-ons, and it's not a money-making driver for us to value add that allows us to charge a more premium price for the experience.

Michael Russell 11:24

Yeah. Really, this is drilling down to connectivity. Humans, we're devoid now so much of social connectivity. And this is the thread that links everything together. Whatever you're operating, there's a trend these days where people are wanting to be more connected with either the party that they're visiting with, so their own friends and family, or even strangers. They just want to connect with people. And with social media and so much of the traditional hotel kind of value being driven on privacy and exclusivity, you're leading a brand of hospitality across actually multiple asset classes, which we'll get into next. But the central thread there is it's all about connecting people, making people feel comfortable providing above and beyond just like a level of hospitality where people feel welcomed. I think that this really starts with the leadership and how you communicate to your personnel what you're trying to accomplish. I want to talk, though, a little bit about some of your other properties because you started what by introducing the brand here, Campfire Ranch, which is more than just campgrounds. You've got like a backcountry hut and you've also got a renovated lodge. And these are in different parts of the country. So walk us through what these other assets are like.

Sam Degenhard 12:34

Yeah, good question. I would say in general, we almost start like asset agnostic when we look at searching for a campfire ranch location. We'll start with the first question like, where's the good place to play? So, like, what's the access to outdoor recreation and where is that locale? Then we'll ask ourselves, okay, like is this within a weekend distance of a major metro or a quasi major metro that we can pull on for that weekend traffic? So we don't we don't want to necessarily be a destination brand. We want to be the best option in a great place. So we don't want to have to pull people for from too far. Then we look at like land availability and pricing, blank land, or like what's for sale, what's sold in the last few years in that market. You know, how ridiculous is it? Often it is in destination communities. And then we'll look at competition and just see like what is where do you stay if you go there, right? You put your consumer hat on and just say, if I want to go to this market, where am I going to stay? What looks cool, what looks interesting? And then we try and identify those gaps. That's kind of the first step before we choose like what asset it is that makes sense in that market. We'll then we generally do a site visit to the market, play consumer, we'll go ride bikes, we'll go hike, we'll go fish, we'll go to the bars, we'll go check it out like as a crew and as a team and kind of find what the gaps feel like. We also obviously have a network of people we can talk to to get appeal for this. But all of those things will inform the question that we're trying to answer is what is the best way to stay in this place and experience it as if you were a local. And some cases that might be an Airbnb and it's not for us. And it's just like, yeah, you can get a great Airbnb here and it's rad. That's the answer. Keep an eye on it, but like put that market in the backseat. In other cases, we'll get to a location and it's like, oh man, there's a need for community. Oh man, like there's no camping. All the hotels are super corporate and you know, kind of kitschy, like there's something there in terms of a unique operator, and that will help us form what we search for and then also what's available. And so that's that's kind of our process to define like what asset makes sense in a market. And if you look at our portfolio or like I like to call a little bit more like our collection of properties, you'll kind of see that answered through that that asset type in that market. For example, our Red Mountain Pass location is our first backcountry hut in the portfolio. It's just between Silverton and Uray, Colorado. We like the San Juan Mountains in Colorado. It's pretty remote. It's like six, seven hours from Denver, far end of the state. By far the biggest, coolest, Raddest Mountains in the state of Colorado. Go down there. What's the coolest way to stay here? Well, it's either backcountry camping because you can be up on top of some mountain, or it's a backcountry hut where you can sit, have all the amenities, and it'll have your own kind of hosted valley of the San Juans. That'll let us start searching for a backcountry hut. Found one, found the right bit, brought that to light. Now, arguably, we have kind of the best backcountry hut experience in that region because that's the number one way to experience the San Juan Mountains, in our opinion.

Michael Russell 15:25

Hey guys, people have been hitting me up asking if I have a mastermind or a course. I don't run one right now, but I do know the legit operators in this space. If you're thinking about paid education and you want my honest take on who I'd talk to for your situation, just email me info at hotelinvestorplaybook.com. I read every email and I'm happy to point you in the right direction. Yeah, so I'm listening to this, and at first, my my first reaction is, yeah, I want to go find the coolest places my mind travels to. Well, okay, but so what if I go build it and they don't come? Like it's neat to have a cool spot in a really beautiful place, but I mean, how do you know that it's gonna be successful?

Sam Degenhard 16:09

Yeah, I that that kind of lends into the competitive side, right? Like what's around, like who else is doing this? Can you help answer that question? In some cases, we do look at blank land and developing from scratch or like turning something on that maybe was a private home into a commercial experience in some markets. And but in general, I would say we are looking at assets that are either previously distressed or maybe inefficiently operated. So we are looking particularly for stuff that that maybe was under the radar and could be turned on, but you know the market could be good or they're it got some performance. But in other cases, you are taking a flyer and then you're looking at other indicators, other businesses beyond hospitality or beyond lodging hospitality, restaurants, dining outfits, et cetera. Like if you had a million dollars, what would you do, right? And talking to those people to try and get a gut check. Arkansas is an interesting example. I'm sitting here in Campfire Ranch Little Sugar, which is our third property. This is an old bed and breakfast that we converted and kind of renovated in what we claim as a trailside lodge. It was run as a very traditional bed and breakfast focused around golf, and there's seven golf courses around us. There's also 160 miles of mountain bike trail that's been built in the last 10 years. And when we came to this market, we liked the mountain biking. We liked that scene where like, let's lean into this. But what is the right asset for this market? We originally thought it was camping because it was just not that much camping here. But when we spent some time in the summer, we realized how hot it was. Like, okay, we need something that has AC that has the same vibe of camping. You know, people walking around, hanging up by a bark bit, all those aspects. When we found the inn at Bella Vista, which is the previous name for this property, it had all of the signals of being a cool communal place to stay in like a B style, but it was talking to, you know, like my parents instead of my generation. And so in flipping the way the property looked and felt and slightly how it was operated, we've been able to create what we call as kind of like the clubhouse of the trails up here because you can have that same communal aspect of a B and B, but if it wasn't talking to mountain bikers, you would never have seen a mountain biker in here. And they really rarely did before we took over. So it's yeah, a little bit of that game trying to find that asset you would want and then take a little bit of a flyer. We still are early in this market. We're about 10 miles from downtown Bentonville, where all the hype is around the mountain biking here. We're right on trails, but the momentum is kind of downtown. So it's a little bit of a flyer to build something up here. But you know, you're taking a bet, and you know, we just found out they're opening a lip service mountain bike park a mile away, right? I mean, it's it's just kind of like taking the bets and you know like feeling good about what what you think will work and what your gut tells you, and then you know, which you stay there is obviously one of the probably the most the most powerful questions you can ask if you're looking for for new assets and kind of the game we play when we're looking.

Michael Russell 18:56

Yeah, well, let's expand on that because I've heard you mention you use a scavenger hunt type method for due diligence, right? Where I think you send your team into a market and they kind of act out as your customer avatar or persona. So how does that actually work?

Sam Degenhard 19:11

Yeah. So we'll we'll either like maybe we found an asset, you know, on Corexie or something, and we're like, this looks interesting, and we'll start kind of exploring that market. Maybe we just like the market, either way. We try and get a site visit organized and we we try and pick the best place to stay in that market that we think is the fit for us or for our customer demographic. Largely my team is our customer demographic. You know, we're all in our 20s and 30s, outdoor guys trying to trying to just do as much of that as we possibly can. So when we go into market, we are our consumer. We just got to put that hat on a little bit more. And what we end up doing is like the normal trip planning process that we would do for friends. Don't plan six months in advance and like search everything you can find. Think about okay, it's Monday. Someone texted me and said, let's go here on Friday. You got maybe 48 hours to plan a little bit. You search some stuff on the drive, you search some stuff when you wake up, what trailhead should I go to today? Just hit it like a customer in all the behavior ways and then see how it feels at the end of the weekend. I mean, often divide and conquer, like one guy will go trail run, one guy go mountain bike, one guy will go fish. And if you're out doing those things, you you quickly find all the barriers to entry. How easy is it to find trailheads? What bar is cool? Are the Google reviews accurate to what the experiences at this restaurant? All those games that you would play just as a take a real trip and try to like keep a hospitality operator out of your mindset when you're on the trip and then bring that back in once you have the consumer-based insights, if that makes sense. So it sounds silly, but have fun and try and make the most of the weekend. And if it's hard to do that, those are all your signals for what you should be creating or offering in your experience if you do open something.

Michael Russell 20:48

Well, walk me through like the timeline of when you would commit the resources to go and visit a town. Because what you just described sounds pretty time intensive and could be potentially relatively costly. If you're repeating this process over and over, do you do those boots on the ground due diligence once you already have a property under contract, or is this part of your sourcing new properties?

Sam Degenhard 21:07

Certainly the sourcing part. I don't think we've we've never done a site visit after being under contract. It's always prior, maybe like even prior to finding that asset is when we'll do that at site visit sourcing. So it happens pretty early in the process. If we need to do subsequent visits, we'll go back and try and answer further questions or maybe just get more into like the deal and then the due diligence items. But in terms of like gut fit and vibe, it's all about trying to just get that, get that experience out early and so you have a good understanding of the market. If you have to do repeat visits here in Arkansas, we came out in 2021 and looked at Arkansas. It wasn't until 2024 that we signed a lease on our on the property here and started renovation. It was a you know solid few years of like visiting this place as a consumer just to go ride bikes and feel it out before we decided where we wanted to be, what that asset was going to be, and how we wanted to position it. So you have to be kind of patient if you want to have a really good footprint. Sometimes you get lucky and you find stuff fast and it's rad and you're just like, let's go. This is a fit. But I would often say like being patient with that process is the best way to do it. And if you like the market from an operator and an investor, chances are you probably like the market as a consumer. And so maybe just plan your next vacation there, right? Don't look at it as a budget spend in due diligence and sourcing. Look at it as I gotta go on a mountain bike trip this year anyways. Like, why don't I go to some place that I think might be a fit for my business and try and just frame up that personal trip into a business trip. But if you get to play consumer, you don't really have to work all that much. And so you can kind of make make most make the most of those those searches by having fun too.

Michael Russell 22:40

Yeah. Well, I think it's relevant for the particular niche of independent or boutique hotel investings. If you're if you're trying to buy a Ramada hotel and it's just a box hotel, whether it's in Texas or California or Nevada, you're just like, okay, well, what are the numbers? This thing is gonna look and operate pretty much the same. But if you're trying to build an experience to the degree you've described, I think that the boots on the ground intelligence is gonna be valuable. On that note, though, can you give me an example of I don't know, a market or maybe even a specific property where this scavenger hunt saved you from making a mistake?

Sam Degenhard 23:14

Yeah. Oh man. So I would say the biggest learning that we've found, and and people are probably listening, like thinking about our brand, maybe not knowing it super well, is the signal that probably pops up is national parks. Like go to national parks. It's got all the answers that you're saying, Sam. Okay, sounds good, right? But if you actually go to a national park entrance market and you'll see a lot of outdoor hospitality players popping up in those markets, frankly, like they can have it. That's my take. When you get into those national park battlegrounds, this is just, you know, this is the learning that we experienced looking at an asset in a national park front door. You're battling on land price that is super inflated. You're battling in a competitive market where there's so many options that price is really the only game you can play and promotion is the only game you can play. Building a brand is twice as expensive as you're trying to cut against multiple people trying to build a plant brand while you're also paying out to OTAs, probably plus 30% because of the game in that market. And those factors for me, like while it's in a recreational mecca, national park entrances are just like something we've learned really quick that is that's just not our cup of tea. We want to be a one-on-one operating, we want to be a unique spot. And so if if we find ourselves curiously or like excitedly looking at a national park offering after those first few sourcing visits a couple years ago, it's like total red flag for us. And it's just like, guys, are we sure this is different or it makes sense? Like, and then and go back and ask those questions that we learned early on. And I think in general, like that's helped us set a goal to look at secondary and tertiary markets in the outdoors because that's where our product is actually more desired. It's probably more available, there's less competition, we can be one of one. It's frankly, it's easier, right? I we don't have any properties like front and center in national park. And I'm like really thankful because of those first site visits of just getting out there and feeling it and doing that process on the ground, and you quickly realize you're like, this isn't a fit, and nor nor can we make the numbers work.

Michael Russell 25:16

Yeah, that's an that's interesting. That's a contrarian opinion. You know, a lot of people would check the box that, oh, a national park is somewhere where we want to go because you've got demand. How do I stay competitive if I don't have tons of money? How do I go find those secondary or tertiary markets? What am I looking for that would distinguish this place from somewhere else?

Sam Degenhard 25:34

Yeah, a couple of factors I think that are important. One, it depends on what kind of brand you're trying to build, right? If you're trying to have demand, but you don't care as much about, you know, lifetime value from a customer, the repeat side, no worries, national park all day. We're coming with you. If you are trying to build a brand and that repeat customer volume, and if you are, in our case, the consumer that is also going to the product, going to a national park, it's a no-brainer for anyone you ask an outdoors. How often do they go to that national park? The most avid visitors, once or twice a year, maybe. What they want to do is go to other national parks. They want to hit all of the national parks. And so you actually have like a lower, a lower return customer base in those markets. And if you're a consumer of that same segment like I am, I actually avoid national parks kind of like McClag as a consumer because they're overcrowded. It's not that authentic. They're beautiful, don't get me wrong, but I'm going to try and go on like a Tuesday morning at sunrise and get the heck out of there by noon. Um, just because the experience is so different than being at that secondary or tertiary market. So we see that by doing these site visits, by being in that customer segment, by being really clear that we're trying to build a long-term customer value at Campfire at any camp branch location. And if that's the case, we find ourselves going personally going to the secondary and tertiary markets because like the recreation is good, but it's less crowded. There's things to be discovered. You, you know, people are asking you when you post on social, where is that? Like, I haven't heard of that about that place. Those are all the signals that we're getting as consumers looking for hospitality assets when we go stay and play in those places. So it just depends on what kind of brand you're looking and like where those indicators of success sit for you. And for a brand like us, it's very brand heavy. It's like, what does it feel like to go to a campfire ranch? That's the red thread that we want to carry across our locations. Is these guys did the did the homework, they got the best spot in the best place, they know the ins and outs. This is my new go-to. And now I want to go here multiple times a year or every single season, and I'm waiting to click the button to get a reservation. So those are the those are the things that I think have worked well for us at Campfire. But for some folks, you I think it just goes back uh, what do you want to be and how do you want your brand to feel? And what are those indicators? Because you would answer the question differently if they were different.

Michael Russell 27:44

You're operating in Colorado, Arkansas, and in California. So those are three states that aren't even next to each other. How do you manage operations? When you can't just drive over to check on one property and then the next. I mean, do you have like regional managers? Are you flying back and forth constantly? Walk us through how you handle that.

Sam Degenhard 28:02

Yeah. I would say most people would wouldn't likely advise like stay close to home, expand from there, and try not to overextend yourself. I've heard the same things. I've also tried to do that. However, you have to be opportunistic when you find the right signals, maybe from a site visit or an experience where there's the certain asset is available in a market. And at Campfire, we're trying to build a brand that spans, you know, 30 plus locations across the country in the next 10 years, all in these great markets. And so I know I'm going to be in more places at some point. And then the question is why now versus later. Sometimes at the trade-off, we've said no to plenty of spots. We did a huge tour in the Northeast this year, loved it, had so many good spots, so many on the radar. Frankly, just too far, just too difficult. California popped on our radar, and it was like, man, I don't know if we want to jump into California from a regulatory standpoint, from a HR standpoint, from a you know physical distance standpoint. But then you go look at the asset and you're like, this is the coolest one of one asset you could possibly own in this market. Like we have to have it. And you can just see the customers walking through the door, you're having that experience, you're on that site visit, and you're like, I can't ignore my gut. We've got to pull the trigger and figure out how to make this work. And the better the best way that we do that as a team, we're we're a small team, we've got six guys is our crew across four locations. That's it. Like that's all the head count we have is bring everybody into the fold and let them be a part of the decision. Hey guys, we saw this. It looks cool. Tyler's going on a visit. Tyler went and saw it. He came back. He's like, guys, it's next level, right? Here's what I learned. Ask me questions. Let's beat this thing up. Who else needs to go look at it? And if you just open up the door and you get everybody from front of house to back house to weigh in on why we should or shouldn't do something, you're gonna get a pretty good collective buy-in, but also support for saying yes to a decision. That's where we start. The nitty-gritty of it is building really good SOPs and communications and a lot of ownership at our front of house level. So our stoke managers, like our guys that are running point for a property, be it a lodge or backcountry hut or uh campground, you got to give them as much authority as you possibly can. So they treat that business like a small business owner. They feel responsible for its wins, they feel responsible for its losses. And if you can get that buying, you know, truly on their shoulders, you will see a lot more involvement, a lot more commitment around delivering the experience that you expect for your customers, as well as just like making it work from a distance. And that's what I think we've been really good, good in doing. Spent a ton of time hiring too, not like in general volume, but finding the right people is for a front desk job at Campfire Ranch, it's a four-month hiring process for one person. That's how serious we take it to find the right person that's gonna sit at that front desk, cook the meals, shovel the snow, be the ambassador, be that small business owner. But that time is totally worth it. If you can find those people, you know, then invest in them as much as you can to keep them around and give them that opportunity to help you grow what you're building. I want all of my front house guys to be regional managers and GMs one day. That's my number one goal. This is just one part of their career that I'm helping them with to get them to that. And I think that mindset as a leader is important to remember when you get really busy and you got a ton of stuff going on in properties and tons of different locations. So that's those are the indicators that I look for in the team side of things, being able to pull it off from three different states, four different locations.

Michael Russell 31:25

Yeah. So you talk a little bit about how giving them the autonomy to make decisions and giving them, lifting them up to be able to feel like they're they're really part of the decision-making process. I guess what I want to know is beyond that, like, well, what is if someone is listening to this and thinking, you know, that all sounds great, but in this day and age, people are just they're coming and they're going. And it it costs a lot of time and energy and money often to train people up. How do you retain staff loyalty? Like, how do you prevent turnover? What is secret sauce to get your personnel, which is so important to your business, to not only stick around, but to really thrive and excel at what they do?

Sam Degenhard 32:03

So I already hit in the first part, which is find the right person in the first place, spend the time up front to find the right person. Like every bit of time that you're investing there is is probably going to pay off in the long run. Once you find the right person, you get them in, it's that autonomy piece. Like if you give people the opportunity to both win and lose in a challenge, I think just about any person that's decently motivated will want to win. And if you continue to move that goalpost when they feel like it's ready or with that manager, you are then just giving them another reason to stay at it and keep working and keep building a better product, more customers, higher revenue, whatever that goalpost is for you and your business. It gets that buy-in. And no longer are you trying to retain an employer, you're trying to just give them the tools for them to win. And it kind of cycles in a way that you're not really worried about turnover, you're worried about fulfillment for that, you know, in a career for a person. So I think of it in that sense, like instead of avoid turnover or avoid burnout, I'm looking at it from a lens of how do I challenge this person? How do I give them that goalpost? How do I move that with them so that they're just each year more and more engaged with that next challenge? We have a guy on our team who's worked with us for the last almost two years at one of our properties in Colorado. He just moved out to Tahoe to run point at our newest location, Truckee. He's a great example where he wasn't a property manager level when you first started. We hired him the day he graduated college, but now he's 24 and he's running a lodge by himself because we've given him those little goalposts with him, thinking about what he wants to get to those spaces where he's qualified to go run a lodge. And then when we open the lodges, in what do we need to get this place open? You know best. You've shown us you know best. You build the checklists, you build the marks, you build the budget, and Ian's mapped that whole property out. As a 24-year-old that we hired right out of college, he's gonna be an incredible asset for us 10 years from now and running multiple properties because we've given those opportunities. So I look at it as like almost you're worried about retention or worried about burnout, you're kind of looking at it from the wrong angle as a leader. And so I try and position it that way for my guys and myself. Too. If I'm motivated to keep working, I'm gonna be around.

Michael Russell 34:16

Yeah, it's contagious. Yeah, absolutely. No, good leadership. I I love all that. I want to talk a little bit because you said you said the word lease, and I I kind of perked up like, whoa, lease. Like that's not often something we talk about here. And hospitality, at least from my my perspective, my my frame of view of as a real estate investor, when I go and look at the hospitality asset, I look at purchasing it. But you're you've got a leasing model. So can you break down the what what you could describe as the opco versus propco split? How you're kind of separating operations from the real estate investing side. Walk me through how this works and why you've structured it this way.

Sam Degenhard 34:55

Yeah. You know, back in the day when I first started, I didn't know what structure made the most sense. I kind of went at it from the real estate side and said, look, we're gonna buy properties and operate them. I had trouble raising capital back then to do that without a lot of track record. And so I shifted it to, hey, I'm gonna try and find people who own Lane currently and lease back from them and do my operational thing. And so that's kind of framed how we do stuff today, but I would also say it leaves a lot on the table for how we structure future deals. In general, the reason we did it is it's less capital up front for us. We don't have to steer the risk of a mortgage or financing. We aren't real estate guys at our heart as our team. Our core competency is amazing guest experience. We're outdoor guys, so let's do that and focus on that and then find good partners that can help us win on the real estate side. And so we bring in essentially what we call land partners for any of our deals. They purchase the real estate, lease back to us on a long-term basis. We'll generally manage the renovation or rebrand of the property if necessary or the build from scratch side of things within our team because we're building it to a experience level that's really important. So we'll actually handle that and you know, fees kind of play back and forth between those two sides. But then when it gets into operation, we have really clear leases or management agreements that allow us to make the decisions about what that experience looks like from pricing to budget. We have total control. And so we almost act and look like we're the property owners, but we don't have to have all the real estate risk behind the scenes, nor have we had to raise a ton of capital and delete our capital stack in a brand startup that we're trying to grow long term and ultimately build a really good portfolio around. Now, do we want the real estate in the future? Maybe, which is why all of our leases have first red refusal and first red offer built into them. So should we want to sell campfire and roll up the real estate, we have some mechanisms to pull that trigger in the future, you know, all negotiable and stuff, but it just sets us up to be able to scale a little bit quicker, find assets that maybe aren't for sale, and open more campfire ranches without having to have that real estate stickiness that a lot of people are really good at. But I would say rare you find really good operators and really good real estate investors in the same boat. They typically have a really strong GM or a really good operational partner that sit underneath of them to mix stuff work on the ground. We just we're that we're that partner, particularly on these weird asset classes like Bs and micro hotels and lodges, et cetera.

Michael Russell 37:23

All right, just so I'm clear though, are you looking to partner with people that already own the real estate that maybe it's underperforming? Or are you looking to partner with real estate investors where they will go out and purchase the land on your behalf and then lease it to you?

Sam Degenhard 37:37

Oh, yeah. So we're like, okay, so we'll play, we'll find assets that are for sale and qualify then do our operational due diligence as well as purchase due diligence, bring a partner in, they buy the land, we lease it back, we get underway. Other cases we'll find properties that are underperforming, approach them and say, look, I think we can help you bets. Here's how we'd want the relationship to work. And sometimes those those work, sometimes they those don't. There's not enough control. But it it definitely depends. I'd say right now, deal-wise, steel flow, or it's probably 50-50, what we're seeing out there.

Michael Russell 38:09

Yeah.

Sam Degenhard 38:09

But a lot of these assets that we plan are they're just stumping on the market right now. And then there's 17,000 butt and breakfasts in the United States, and most of them are owned by people over over 70 years old. Stuff just kind of falling into the market left and right. We're seeing a lot of volume.

Michael Russell 38:23

Wow. Okay. So you've chosen your lane. I've heard this time and time again in this conversation that look, there's different ways to do this. But what's unique about hospitality is it's a business. Well, first of all, it's it's a real estate investment that's wrapped together with a business. And you've chosen to compartmentalize, to focus on the business aspect with the optionality at some point to get into the ownership of the real estate. But for right now, what I hear you saying is scale. You're looking for a mechanism to where you can scale your model as fast as possible. And so from the other side of this equation as an investor, you don't need necessarily as much capital to be able to go and purchase assets requires a lot of upfront capital. But if you are looking at a scale and you need capital and you're going to go and solicit an investor who wants to invest in the operational side of the business, the opco, you know, what does that look like from an investor's perspective? What kind of profit split or equity split would they get by financially contributing to your business?

Sam Degenhard 39:25

Yeah, it's very different than a real estate investment. So where you know you mentioned like profit split, for example. So like our capital stack on the opco side doesn't get a profit split. Like you would see in like a prep payment or something around around real estate. What they are getting is a percent ownership and equity, the brand that we are trying to scale and exit. Our goal as a as a brand or a collection is whether we own the real estate or not, we in theory could hold and want to hold the space of these unique lodging asset class classes across the country centered on recreation. That is extremely valuable as an operations company to a bigger player. I laugh thinking about like Marriott trying to run backcountry huts in the United States. Like it's it's hilarious, frankly. That would be really fun to watch from a distance. But if we can build the portfolio of those and the operations of those, now they can expand their customer offering. Not to say we're going to sell the Marriott, but as an example, without the operations, this asset class doesn't work from a real estate perspective. So we're trying to build the value in the operations company, and our investors get the upside of that exit down the road. Now, from our land partners, they sometimes do or do not want to have uh participation in the success of the operations company. Really just depends on the risk appetite. You could be a real estate investor and be like, look, campfire, you guys do your thing. Like, I don't want any rev share. I just want like a really consistent lease payment, pay it every month. And like I'm just gonna sit back, maybe I'll take a trip once a year, but that's it. In other cases, we have land partners that want to participate in that upside. Usually that comes in the form of kind of a rep share component, either in the lease or a management agreement, depending on how the deal is structured. But that's gonna lower our base ramp. And maybe at a property that's more unique that we need more ramp up time, we'll use that structure to kind of get things started with a lower base rent or the rep share that kicks up once we reach stabilization. So there's a lot we can play with there, but the way we look at it is opco proper is to kind of keep the two lanes separate, right? Operations, brand, experience, what something feels like, memories, all Camp Fryer Ranch, real estate portfolio, great partners, consistent, want to deploy capital, want security and trust while building a collection of asset classes that otherwise they couldn't invest in.

Michael Russell 41:40

Yeah. Okay, so you got the three properties right now, and you've mentioned that you're actively oh, four properties. Okay. So walk me through. You've got you've got the campground, you've got the backcountry hut, you've got a lodge in Arkansas. Where what's the other one?

Sam Degenhard 41:54

Yeah, so we got we got one more backcountry hut. Yeah, Campfire Ranch on the Taylor Campground, Gennison Crested Butte, southwest part of the state, Campfire Ranch, Red Mountain Pass, backcountry hut between Silver Chin and Ureg, San Juan Mountains of Colorado. We got Little Sugar in Arkansas, inverted Ed and Breakfast Trailside Lodge, right in front of us out of Bentonville, Arkansas. And then you've got Campfire Ranch Lost Trail, which is in Truckee, California, full backcountry lodge. It's uh right off Donner Pass near Topho.

Michael Russell 42:21

All right. Well, here's here's ultimately what I want to get I want to drill down to because how do I put this? So with hospitality, it's a passion business, and it sounds like you've got the passion. No doubt about it. This is fulfilling, leading a team, operating in incredibly beautiful places. But at the end of the day, does this business make money? That's what I want to know. Like, I I'm thinking about the economics of high-touch labor where you've got your staff, your leadership team that are like helping people with camping. But how much can you be charging per night for a campground? Right. Like you're not gonna charge $500 a night the the revenue amount. I'm scratching my head going, how does this thing pencil? Like, can you walk us through from a high level? Like, is this thing profitable and how?

Sam Degenhard 43:06

That's a good question. I mean, we've been, I'd say we've been in like business scaling for about three years, like been in business for about six, but it's just me, one property for the first few years. And now we're in kind of that like scale mode of add properties portfolio, get to salization of each property and roll those up. Easy answer is at scale, yes, it works. But you you need enough assets that because you're you're getting smaller portions of NOI under this structure as the operator or as the real estate investor, that just it's just not a big as big of a cookie at the end of the day. And so you do need to have more of them to get that kind of sizable piece. Now, what is unique about what we do is while you hear the words like high touch or luxury and probably for operators or investors, you're thinking high staff count, expensive staff count, like skilled labor. If you look at what we're doing in the subscale realm. I can run a eight-bedroom lodge in Arkansas with one guy, full time, lives on site, owner operator model, just like we would see mom and pop style, but I then get to remove the costs of all the individual marketing of that property, all of those like kind of solo operator constraints and bring in brand level experience, brand website, brand booking platform, brand messaging, brand social media, all of that to that market to that owner operated model. And now you have lower staffing costs than you typically have as a normal operator. You have less marketing costs because we're sharing that across the portfolio. And you've got a more committed staff base that wants to operate and bring that customer experience to light. So you can actually get to better returns on the property level that then allow you to go and get more and look at it as a collection. So where we're headed, like I'm excited because I think there's a lot of these assets out there. We found the way to operate them well profitably and get them to the point where you get a bunch of them. Now you have a really cool, valuable collection that has a brand feeling about the demand. You have an operating lien. And to me, it's like you get to have fun along the whole way, as you mentioned. But I think, you know, when I look at the metrics up the subscale is unique if you run it the right way. That's why you have so many owner operators uh operators out there in that subscale class. It is fun, it is a lifestyle, and you can make it work at that level. But if you try and go too heavy, you've got to command ADRs that are out of this world. Probably you're gonna have likely you're gonna have a lot of trouble trying to do that in like an eight.

Michael Russell 45:34

Can we talk about that? I want to talk about ADRs. I want to talk about camping ADRs. So you got three different products, I guess. For each one, what's the ADR?

Sam Degenhard 45:43

Yeah, so campground ER sits around $90 a night for tent camping, which is four to five X anything in the state of Colorado. So we are really high ADRs in the camping space. Now that does not, that's just ADR. It doesn't include rental gear like we talked about, or camping sites, campsite equipment. That's all additional on top of that. But 90 bucks ADR is about our blend from the last six years at that property. We're slowly bringing that up. Over time, as we have more, more of an established presence and the demand is high. So that's the campground piece. It's I would say from a customer perspective, while we can talk ADR from an investor perspective, I think it's important to note the customer like what does that mean to them? That's some nights, it's 150 bucks for a tent campsite. That's expensive. Uh that's crazy from a camping camping standpoint. Down to 50 bucks a night on a weekday in maybe September, right? So the customer side is really important to consider. But yeah, about 90 bucks is where it sits now. Down at Red Mountain Pass, that's backcountry hut in Silverton. Our ADR is around 800, 850 a night, depending on the season.

Michael Russell 46:46

I'm sorry, what 850 a night? For where is this?

Sam Degenhard 46:51

This is our backcountry hut in Silverton.

Michael Russell 46:53

Oh my goodness. Like, is this thing like luxury or what? Well, what who is paying $850 a night for a backcountry hut?

Sam Degenhard 46:59

Pretty sweet. Running water, flushing toilets, surrounded by national forests, your own little paradise. It's it's sick. And that doesn't include your food service, which we charge on top of it at 90 bucks per person per night. So that's about half of our revenue comes from ADR. The rest comes from the food service that we're providing and cooking for guests. Okay, you got my interest now. So that's a little bit stronger, right? And now you're limited, and it's it's one unit, right? It's one hut that you can stay in. So you have one ADR to play with. Same with Tahoe and Truckee, our ADR there is $1,400 a night for that property. Same deal. That doesn't include feed service on top of it, but that's just our lodging. Again, whole booking. So you have one unit. So the ADR is higher, but it's you know it's important to consider. And then here in Arkansas, we've only been open for about four months. Data still is coming in, but our ADR looks like it will be somewhere around like $180 to $220 for 2026, is my guess. For the customer, that ranges from about $400 a night during peak season primo for a room in a hostel style lodging environment with your own bathroom, all the way down to maybe $99 a night in the off-season when it's super chill and quiet and maybe it's snowy and you can't mount a bike. Give an example.

Michael Russell 48:08

Wow. Okay, so that's that's surprising. I wasn't expecting that. What what are the what are the big expense buckets? You don't have a mortgage. So when I am underwriting these deals, I mean, golly, mortgage is such a huge debt service, such a huge part of the equation. You don't have a mortgage per se. So I would assume you have lower lease cost. Can you walk, like I said, walk me through where the majority of the margin gets eaten up in your model?

Sam Degenhard 48:34

Yeah, lease is gonna be you know up front and staffing still, even under a lean staffing model, you know, just headcount is always gonna pull that. As any any business owner knows, employer costs on top of that are always just like a hard one, right? It's it's what you gotta be, you gotta legally do it, right? But employer costs is easily 20, 30% of your staffing costs. Quickly between those two pieces, that's the bulk of our expense side of our business. Marketing is actually quite a bit lower than market. We're probably spending maybe two to three percent of gross revenue across the portfolio on marketing. Most of what we do is all organic. We try and stay away from paid, focus on SEO, focus on those customer behaviors, focus on partnerships and relationships, and try not to just spend a whole bunch battling in in kind of paid advertising. We are very light on OTAs. Really, we have one property we utilize OTAs on, and that's a little sugar here. It's about 20%. But we're, you know, we're getting we're making our commissions in the ADR from those bookings as well. So it's no loss of cost to us, it's just loss of customer data, which we used to address on site. So we're pretty, a pretty like OTA thing, like we're not anti-OTA, but you you know your podcast last week, like a great example, you know, talking through you should be using AD OTAs as a as a distribution tool, as a visibility tool, as an awareness part of the funnel. If you can OTA booking and you're not turning it into a direct booking, like you're something that's just wrong. They should never want to book on Xpedia ever again once they meet you. That's really easy to win. So we try and just avoid that stuff. We'll be really smart with how we use it in the expense side of the business. So those are our big buckets outside of that. You know, you got some utility stuff, some maintenance in these properties is unique because we're in but let's dive into the labor though.

Michael Russell 50:15

This is the part that I think I'm I'm curious about because you've got these four different locations and you've got personnel that have to operate, you know, the the business there. But if these are remote locations, many times housing costs are either limited or extremely expensive. So are your staff are they living on site in every situation, or is that part of their compensation package? This is the part that I feel like I struggle with with more remote markets is housing.

Sam Degenhard 50:43

Great question. Yes. All of our properties have staff living on site. So we've got we've got lodging kind of in the property for the employee. Again, we look at these owner-operated type assets in the first place, and so it allows us to kind of play with them. Now, not everything we've ever looked at has a manager's quarters, but it is a signal that we're looking for is like, could we put someone there that is the property lead that we can pay salary for? What we try and look at is not paying them a salary and then reducing it by the savings of uh housing. Housing is free, and we're gonna pay you a normal salary too. That's the value add that we're trying to get with use rent a house, guys, that we have on our crew. It's like, yeah, you don't pay rent, dude. You don't need to have a house in town. You can live on site. We understand that means you kind of have to work all the time, but like let's work through the schedule and figure it out, but you don't have to pay rent and you're still making a normal salary. So you're there's really a decent amount of cost savings for those guys. And then there's a little bit more buy-in, right? They want their house to be clean. Okay, well, they're cleaning a lot more often as a result. So it's just it's that kind of training when they look at costs, but that means a lot of people are on salary at those property levels, which is kind of more of a fixed cost on an annual basis, but it reduces some of that part-time type expense that you could have in hospitality.

Michael Russell 52:00

Yeah. Well, I really like your approach. You've picked your lane. Definitely scalability is important, but I think what I'm recognizing is there's less competition in the property types that you're going after. And there's a lot of potential turnover with what is it, 75 million baby boomers or something are going to be retiring in the next five to 10 years, whatever the statistic is, we know that there's gonna be major turnover here. And a lot of these mom and pop operators are not taking advantage of economies of scale to the same degree you've described. So if you're an independent operator looking to find a niche and you want to carve out some profitability without so much competition, then this definitely resonates well with me, at least. I can see your vision. I am curious about more of if we looked into the future, your long-term goal. If you looked, let's say, 10 years into the future, what is Campfire Ranch?

Sam Degenhard 52:54

Yeah, I'd say with a known household brand that's centered around outdoor recreation. You're gonna go play somewhere and you're gonna bring hiking boots or a fishing rod or hair skis or mountain bike. You are actively trying to stay at a campfire ranch, or you already have a reservation, or you're on the wait list. That's where we want this brand to sit across the country. If you like to play outside, there should be a campfire ranch in that market. It should have that feeling that you you need to be there. And if you can't get there, you're bummed. And maybe even to the point that you change where you go on your trip to go stay at a campfire. That's the brand I'm trying to build. And to do that, I could it's somewhere in the 20 to 30 properties across the country in the best, best markets. Do we need to be everywhere? Nope. Do we need to get there as fast as possible? Nope. Do we need to do it right and stick to our brand and make sure that experience is top notch? Absolutely. And I think I'll I'll take all day getting there if that is held together over just scaling fast and putting a bunch of our, you know, putting camp by ranch on a bunch of buildings. It's doing it right in the right places. And you're a consumer like I am. I I know what that feels like when it goes south. I'm sure you do, Mike. You've been to hotels where they they tried to make it fit and you're just like giving it a break. Like this isn't even it's not even fun to stay at, let alone I feel like you have regret spending your money there. And so in the outdoors, that outdoor consumer is super picky. You mentioned you were a surfer before we started. You know, you probably have brands that you love in surfing and you tell all your friends they should be using. And if they're not using them, you think a little bit less of their choices and gear. It's the same way in the outdoors in general. So people are brand loyalists, they're really picky, they're brand ambassadors for the stuff they love. We want to be that lodging brand in the outdoors.

Michael Russell 54:35

Okay, cool. If someone wanted to partner with Campfire Ranch, maybe they're a real estate investor who owns land, or maybe they're just someone who wants to just invest in the operations of your business. What should they know and and how could they reach out to you?

Sam Degenhard 54:47

Yeah, they're more than welcome to. A best way to probably connect is on LinkedIn or jump on our website, Campfire Ranch.co, like Colorado. All my infos are in there, email as well. So always, always soaked to connect. We're always looking for good land partners across markets and places. If you got a piece of property or you're looking to make investments in a certain area, but you want to do some weird fun stuff and you need a good operator, we're a good pick. And then if you just want to follow along or come check out a Campfire Ranch property, we'd love to have you. You can find us on Instagram. It's probably the best place if you want to see and feel what Campfire Ranch is all about. That's Campfire underscore ranch on Instagram.

Michael Russell 55:22

Awesome. Cool. Sam, dude, this has been great. I really appreciate you being transparent about your business and the things that you're doing, some of the challenges that you're you're facing, you know, everything that you've learned along the way. For our listeners, thanks for tuning in. I am Michael Russell. He is Sam Dagenhard, and this has been another episode of the Hotel Investor Playbook. We'll catch you again next week. Aloha.