Crucial Guidelines to Remember When Buying an Accommodation Business

2 September 2017
 Categories: , Blog


The process of purchasing a hotel or other accommodation establishment can be complicated. In general, this complexity can be attributed to the fact that each hotel or motel is unique in various ways. Also, the business-for-sale commercial scene is quite dynamic. Whether you are a novice in the industry or a pro, you should be diligent in your research before making any decision. If you have the right information on your potential purchase, you can make a deal with peace of mind. Here are the most important guidelines to help during your hotel purchase process:

Establish Your Parameters

It is not uncommon for people to acquire an accommodation business before considering how it will affect their lives. Hotels and motels are often romanticised, so buyers tend to rush in without evaluating the consequences. You should be careful to know your parameters before making a decision. Consider how a hotel will affect your lifestyle; this will help you choose a business which matches your expectations in terms of work input. Inquire about the number of employees required to run the establishment smoothly. You should also think about factors such as the size of the hotel, potential client base, and operation style.

Evaluate the Financials

When you identify a hotel that matches your parameters, you should evaluate the financial aspects of your potential business. You will need to acquire a loan from a reliable lender. You should identify multiple banks which have good commercial loan plans. It is important to note that obtaining a loan for hotel purchase might be difficult if you approach alternative lenders such as credit unions. You should also make certain that the future cash flow from the business can cover the payments for the loan. Obtain detailed financial records from the seller and study the specific information. This should help you get a good estimate on the monthly expenses and returns expected from the hotel. Also, review other business financial metrics such as the general occupancy of the hotel and the room rates.

Know the Market

If you have a poor understanding of the hotel industry, you could end up with an unprofitable business. Therefore, you should not rush to make a deal when you find a good establishment. Instead, study the market and find alternatives. By exploring other opportunities, you will not feel trapped and forced to take a specific deal. Consider consulting an expert in the hotel-for-sale platform for advice. For example, hotel brokers will have information on good local or regional accommodation businesses on sale.