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Selling A Small Hotel Or Other Tourist Business

The owners of this website owned and ran a tourist ski and mountain hotel after which they bought and ran a large campsite which they also sold, both through BuyMyDreamHotel I am proud to say.

This article really is a collection of tips and bits of advice accumulated through the sale of both our hotel and campsite business but more importantly its also based on feedback we hear from buyers and sellers all the time.

BuyMyDreamHotel and the authors take no responsibility for advice offered below, it is based on experience and personal opinion but you are responsible for your own decisions.

Before You Sell Your Hotel

The single point I really want to include straight away is this piece of advice. Don't close your business down before you try and sell ! A business is an activity not a thing - as soon as you stop trading it is no longer a business. The value of a business both in money terms but also in terms of desirability depends on things like revenue, market place presence and an established clientelle. The instant the business is closed these items immediately start to lose value. Of course a business also have value in terms of the land and the buildings but a good business is worth more than just that so the advice is do not close the business, keep on trading and hand over a "live" business to your buyer.


Personally I feel that leasing as opposed to selling a small hotel is a risky business for the owner. If you take on board the fact that a significant part of the value of a good business is the average of the last three years revenue then you are not only trusting a tenant with maintenance (how motivated will they be to spend money on your property?) but in addition their actions may significantly alter the value of your business. If hotels are worth five times revenue in your region and revenues drop by 30% then your loss may actually be 150% of your current revenue.

Three Years Accounts / Disclosure Of Financials

Most buyers will want to see the last three years accounts. Traditionally some hoteliers have been remarkably secretive about this for reasons I do not understand. I think times are changing and people are becoming more open about this.

I feel that it is reasonable for a buyer to ask and to expect to receive a brief overview of finanicals before making a visit especially if they have to travel a long distance, don't make life hard for your buyer by being unnecessarily formal. Hotel financial overviews are not state secrets, if you are not ashamed of your figures then why not offer some form of minimal disclosure so the buyer knows its worth a visit.

Valuing A Tourist Business

You will most likely need at least one professional valuation, you will probably need to pay an agent who has experience selling hotels to help you. In brief there are two ways of looking at the value of a hotel. The first way of valuing a hotel is to ask what is the value of the buildings and land? (we are assuming a freehold sale here). The second uses a multiplier often between 3 and 7 times the average revenue of the last three years, to find out what the multiplier is in your country and region you will need to ask an agent or try to find out more about other hotels for sale in your area. Often the valuation may be a blend of the value of the land and buildings and the value based on revenue. The last word lies with the market, its a matter of what the market will pay.

Writing An Advert

I would advise against adverts that read "it would also make a large and luxurious residential home", people trying to sell a business often seem to think that they can implant ideas in a buyers mind. If your main buildings would also lend themselves to a large luxury home then let the reader decide from your photos.

In my view offering alternative uses for your hotel says to an attentive buyer "it might not be a very good business" or "if I do want to buy it for a house then I am probably paying a premium for a business I do not intend to run". If you are selling a genuinely good tourist business then your buyer will want to run it as a business so the advice is to describe it as just that - don't use your imagination to state what other uses it could also be used for, you are sending the wrong signal to serious hotel buyers

In my years of running BuyMyDreamHotel I have observed professional agents make this mistake more often than private sellers.

Writing An Advert Part II

There is one thing that I still don't get about some hotel owners, take a look on this website and you will see some adverts that have about three lines of text.

Something like...

Hotel for sale
30 rooms, fully functional kitchen
good revenue.

Ok to put this in context...

The owner of this hotel is selling what is probably their greatest asset, one that took ten years to build up and they seem to be unable to spend more than two minutes on creating a good impression on a potential buyer, they probably spent more time and care over their advert on ebay selling their childs old bicycle!

The advice is to try to do your best with the first draft but then to review your advert text in the light of what potential buyers keep on asking.

Why do people come and stay with you and at your location? What are the attractions? How many rooms do you have, generous size? ensuite? ocean views? How far is the beach/mountain/lake? Is it in a village? Are there good restaurants nearby? (no-one wants to eat at the same place for two weeks!). Are there bars nearby - remember people want to relax, a bar within walking distance means that person who usually does the driving can also enjoy a drink, and the list goes on.

Slightly better than the curt description cited above some adverts are simply 'copy-pastes' of text on the hotel website. This is better than the curt description but the problem is that it was written for guests not a buyer and so is still only really half of whats really needed. Again you risk alienating the buyer who might conclude that you felt unprepared to sit down and compose a good useful description that satifies a buyers needs.

What you really need is actually a blend of what you would write for a guest detailing what a great place your hotel is situated in and how good the hotel is but also details about the business, the health of the business and what its like to run it.

When you finally have a draft you are pleased with then publish it with us on BuyMyDreamHotel but keep on revising the text in the light of what buyers ask.

When I first started BuyMyDreamHotel people who were serious about buying a hotel expected to do a lot of travelling, things have changed a lot since, people now expect to short list online and will often just not bother to reply to a stale, old or badly presented listing.

Writing An Advert Part III

Don't forget that small hotels are usually run by families, they are not just businesses.

Men in particular often forget to include the details about the nearest schools, doctors pharmacies and so on. Don't go overboard focus on the business but do remember the phrase 'lifestyle business' does hint at what's going on in the lives of the owners besides the running of the hotel.

Replies To Your Advert

Be psychologically prepared for low bids, some sellers will try and undermine your confidence in this way, of course it may be that your price is a little high but keep your calm and refuse to be panicked. If I recall the lowest bid we received when we sold our hotel was 50% of asking price, we did actually achieve asking price but it took nearly two years, hotels do not sell fast its a specialist market and a slow sale is not necessarily an indication that your price is too high, hotels simply do not sell that fast.

Is This Buyer Serious? Frustration Management Tips

Politely be as demanding of your buyer as they are of you, if they want to take your time showing them around and want to see your accounts then its perfectly acceptable if in turn you ask a few questions about their ability to buy. In the first year of selling our campsite we spent a considerable amount of time with potential buyers who later on turned out not to have loans approved and indeed had unrealistic ideas about what a bank would lend.

Our policy was adjusted, anyone could have a quick one hour tour without us asking them too many probing questions but after that, if they wanted more time and detail then they had to offer information about their own financial position in return, be prepared for "well as soon as we can sell our house" and so on, its a matter of judgment.

I think it makes a lot of sense to decide in advance what level of 'timewasting' you are willing to incur without complaint and without appearing too stiff and formal to your buyers, its easier to avoid showing your frustration and getting annoyed if you have a policy in place and stick to it.

Do remember you are selling what is probably your most valuable asset if you want a sense of perspective then divide the value of your hotel by the total number of hours that you consider time totally wasted and compare with an estimate of your usual hourly wage! Also do consider that frustrations encountered with one buyer should not be allowed to predujice your disposition when you meet the next buyer, you need to be able to offer the same level of friendliness to all buyers without appearning jaded.

Spam Scam And People Trying To Sell You Something

I would advise caution when any potential buyer starts suggesting that they have the money ready and waiting and want to buy your hotel before coming out and seeing it. Anyone who makes offers or suggestions of offers before a viewing is probably up to no good. On BuyMyDreamHotel we use sophisticated measures to reduce this problem considerably but we cannot eliminate it. Use common sense and do not engage deeply with a potential buyer until they have shown they are serioud by making a personal visit. My approach is to draw up a list of information I do not mind making public to anyone, a buyer who wants more than that needs to come and visit.

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Please note: This document is a work in progress, we will add to it from time to time so please return again. Also it will not be a complete list, what we hope to achieve here is to help others start asking themselves the right questions.


All information is offered in good faith but no responsibility is accepted for the accuracy of information presented here or any situation or eventuality arising from its use. All suggestions and recommendations are no more than that and should not be considered an alternative to professional legal advice.


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