Due Diligence and Value of a Hotel Property for Sale

Whether you are an experienced investor or new to hotel ownership, the purchase of a hotel is a big investment. As with any investment, you want to get the most for your money initially, as well as receive a good return on that investment. How can you avoid extra costs, and what red flags should you watch for when you are looking for a hotel property for sale?

Due Diligence

Due diligence is a term that’s bandied about in the business world, which simply means doing your homework. Just as your teachers threatened doom and gloom for those whose homework was not completed and handed in on time, insufficient due diligence can spell disaster in the business world.

Conversely, a world of opportunity for additional income can arise from a property as the result of due diligence – particularly in the hotel industry. An underutilized aspect of a hotel property for sale can be discovered through due diligence just as easily as an expensive problem.

But what does this mean, specifically, if your intention is to buy a hotel?

Valuation

When looking at a hotel property for sale, one of the first things a potential hotel owner must be sure of is whether the property has been valued accurately and that the asset is not over-priced. Some important questions to consider include:

• Have the proper inspections been done with regard to structure and engineering, as well as environmental issues, reducing the chances of any expensive surprises after closing?
• Have the financials of the hotel, as well as the operational details, been thoroughly vetted before closing?
• Are there any contracts in place that may constrict operations after you have taken ownership?

These are all key issues to be addressed while performing due diligence as you prepare to buy a hotel.

Asking the Hard Questions

As with any major purchase in life, it is important to be thoughtful with the information presented to you and to be prepared to go beyond the obvious. This means fearlessly asking the tough questions to learn as much as possible about a given hotel property. Due diligence can reveal hidden income potential in a hotel property for sale just as easily as it can reveal major problems.

This is where the assistance of an experienced hotel broker like Southeast International can be invaluable. Brokerages specializing in hotel sales will guide you through the complicated and somewhat lengthy process of finding, vetting and choosing a suitable investment property.

Choosing the Ideal Hotel Property for Sale

Southeast International is prepared to assist you in buying a hotel property for sale, avoiding hidden costs and uncovering hidden potential.

From initial sales contract to closing, Southeast International Hotel Brokers stands ready to assist you by providing premier services as you enter the exciting and profitable world of hotel ownership. Call us today for more information.