Before You Buy a Hotel: Perfect Condition vs. Fixer Upper

When you are looking to buy a hotel, you should consider what condition you want the property to be in when you make your purchase. You may think that the obvious decision is to buy a hotel in perfect condition, but there are benefits to purchasing a fixer-upper. There are pros and cons for both business ready and fixer-upper hotels. Today, Southeast International Hotel Brokers will be breaking down some of these cost-benefit situations so you can make a more informed decision.

Benefits of Buying a Hotel in Perfect Condition

The most obvious benefit of buying a hotel in perfect condition is the fact that you’ll be ready to do business right away. The transition process is minimal, and you’ll have little to no costs for updates or repairs. Also, a hotel that is in perfect condition most likely had recent updates and has implemented the latest technology. Of course with this convenience comes cost. A hotel in great condition will be listed for a price that reflects that condition. There’s always room for negotiation, but a brand new hotel with nothing wrong gives you less wiggle room on price. Especially since other buyers will most likely be interested in the property. Which is one of the other cons of buying a new hotel – the potential for competition. A bidding war can increase the price quickly.

Benefits of Buying a Fixer-Upper

If you buy a hotel that’s a fixer-upper, it’s going to be more of a project, but it’s not without its benefits. The biggest benefit will definitely be price and the negotiating possibilities it allows you. You may be able to get a hotel in a fantastic location that you may not have been able to afford otherwise. Also, since there will be a question mark on hidden repairs that may need to be done, you have more room for negotiation, so you can get an even better price. Another benefit is it will allow you to create the hotel from a blank slate, if you buy an independent property. The cost of a fixer-upper is a bit of a double-edged sword though. Yes, you will get the property for much cheaper than a brand new property, but if the cost of repairs is high, you may end up paying the same price anyway. That’s why it’s important to look at the hotel in person and try to get a good idea of what will need to be done so you can make an educated bid. If you’re buying a franchised property, PIPs will come into play here as well. If the previous owner has an incomplete PIP, or property improvement plan, you may be in for a lot of extra spending when you take ownership of the property.

Buy a Hotel with Southeast International Hotel Brokers

When you buy a hotel through Southeast International Hotel Brokers, you’ll have plenty of properties to choose from. Our expert hotel brokers can help you through every step of the buying process. If you’re looking to buy a hotel soon, contact Southeast International today, or view our website for more information.