A Simple Guide On How To Buy A Hotel

Buying hotels for sale is not an easy task. Hotels are very costly investments and a small mistake can lead you to bankruptcy. This guide will help you out when buying a hotel.
 

Determine your acquisition criteria

Different people have different reasons for buying a hotel. Some buyers may buy it as a short time investment with the intention of selling it at a higher price. Other investors may have a long term view based on the potential of the hotel to generate income. The criteria for buying a hotel will be unique for every investor.

Identify the right target

After settling on your acquisition criteria, you should contact the right people in your industry to see potential opportunities. This may be asset managers, brokers, industry consultants or brands. You should arrange a site visit for those properties that are in line with your acquisition criteria. If you found the property on a commercial real estate app, you can get contacts from there and call the owner.

Manage the bid process

Some hotels are sold by an auction process. The processes vary but as a buyer, you will need to submit an indicative offer. If it is successful then a final bid will be required. Offering the highest price isn’t always a guarantee of success because other factors such as the ability to complete quickly, evidence of funds and acceptance of key SPA terms come into play. This process is resource-intensive.

Determine the right price

One of the most important factors to consider when buying hotels for sale is the price you pay. Different hotel valuation methods exist. There is the discounted cash flow analysis, comparable hotel sales, EBITDA multiples, surveyor evaluations and so on. You should determine which one is appropriate for you. Where you may be one of the bidders, the price may be an important factor.

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