Magic Hot Springs

Location: Southern Idaho

Company Website:

For Sale Website:

Description:

Magic Hot Springs is a 160-acre recreational property priced at $849,000. The hot springs includes the following: 

• Five geothermal sources
• Trout stream
• 49,000 sq. ft. lodge 
• Gymnasium
• Pump/power house
• Self-contained utilities

It is located in Shoshone Creek Canyon, 37 miles south of Twin Falls and 9 miles northeast of Jackpot, Nevada. 

The attached spreadsheet is a forecast that incudes a future look at admissions for one-day visits, campground sales, and lodge rentals.  It also includes a pro forma income statement and balance sheet based on the list of assumptions that were made. We took into account the remote place of Magic Hot Springs. We researched the surrounding populations of Jackpot and Twin Falls and the number of potential tourists traveling from California and Boise to Jackpot. We concluded that an estimated 150,000 people will come and visit the hot springs.  We then organized the occupancy by campground lots, weekend and weekday visit, and also seasonal adjustments. 

For financing, we looked for bank rates of similar recreational resorts. We concluded with an average 10 percent interest rate. For property tax rate, we assumed that this would be a simple 1 percent of the land and building which we would own. For more information on cost and rates, see the forecast under the tab labeled “Assumption” which will have a list of data with given reasoning and research for our suppositions. 

After creating the forecast and calculating a breakeven, weighted average cost of capital (WACC) and a internal rate of return (IRR), we concluded that Magic Hot Springs would not be a profitable business. However, we believe that if the amount of customers increased by having the hot springs be more exposed to the public, it can be profitable.