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How to sell a hotel

hotel bell

If you’ve been thinking about selling your hotel, this is the best time in the last seven years to do so.

2015 is forecast to be a record year for the UK hospitality industry, with spending from overseas expected to be £22 billion, according to VisitBritain.

London hotels in particular are expected to do well in the coming year, not least because the UK is playing host to the Rugby World Cup with a large number of matches taking place at Twickenham and the Olympic stadium.

Leeds, Newcastle, Birmingham and Manchester are among other locations that will host matches and benefit from increased occupancy rates.

In this positive climate, the value of your hotel could well increase, making it the perfect time to sell. Here's our advice on how to make the most of your sale…

Organise your finances

Planning and organising the finances of your hotel is an absolute must. The more organised you are, the more a potential buyer will be able to get a clear picture of the true value of your hotel.

These should include keeping a clear record of:

- Capital expenditure (capital spent to either buy fixed assets or add value to existing fixed assets)

- Salary costs and overheads

- Working capital

- Information regarding management: Are they longstanding? How essential are they to the hotel? Do they offer value for money?

- Room rates and occupancy

- Upcoming capital expenditure (are there any plans to buy fixed assets to improve the business?)

- Proof of future bookings

Do your best to ensure these factors are in top shape and working efficiently for you for the two years before you hope to sell, as they will be key to securing an offer.

Think about what exactly you want to sell

There can be many variations on ‘selling.’ For example, do you want to sell the business as a whole, or maintain the property and become part of a management contract? Or, alternatively, simply lease out the building?

Know your potential buyers

Research the types of people or organizations that you think would be interested in purchasing your hotel. What are they looking for? What prices, on average, are they willing to climb to? How does that compare with your own hotel estimation?

If you know your buyers you can prepare answers that they’ll like, meaning your pitch will be better and enable you to sell.

Create more value

There are ways to build more value onto your business without spending ridiculous amounts of money.

You need to make sure that you hit the market running. Put your hotel up for sale in its peak time for business, where occupancy is maximised and cash flow is high. As we said earlier, 2015 is forecast to be a record-high year for turnover, so this year holds great potential.

The hotel should also be pristine and as presentable as possible. Wear and tear should be fixed, and a new paint job should be prioritised.

Professional advice is essential

Before you put your hotel up for sale, make sure that you have a good advisory team in place.These should include:

- An accountant

- A corporate lawyer (ensuring the legality of the commercial transaction)

- A hotel valuer 

- A corporate finance advisor (general advice on what to expect on selling a business)

 

Limit the tax you’ll pay

You will need to do some upfront tax planning, so you won’t have to pay a fortune upon sale. Take note of Capital Gains tax, inheritance tax and dividends.

Committed to sell?

If you've read the above and feel it's the right time, visit Businessesforsale.com and see how we can help! 

Ready to sell? You are just 10 minutes away from advertising your business to 1.3 million prospective buyers. Sell your business today.


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