Buying a hotel is certainly a heavy investment in terms of both resources and time.
Moreover, as the hotel industry is a highly competitive sector, a rigorous assessment of the risks and performance of the establishment is necessary in order to properly measure the return on investment. At the same time, the limited recourse to financing must be taken into account because, it has to be said, banks are still very cautious in their lending practices.
Choosing the right type of acquisition
When it comes to hotel investment, there are three possibilities:
The disposal of shares, which is the most common among investors and which consists of buying shares in a fund. In this case, the purchaser will act as a partner and will receive a percentage of the turnover and the amount of capital invested. The advantage of this option is that the risks and possible benefits will be shared.
The acquisition of the fund alone, as the name suggests, involves buying a whole part of the hotel’s business for sale. And by goodwill, we mean the assets, i.e. the tangible and intangible assets, not the real estate. The advantage here, on the other hand, is that the debts will remain registered in the name of the transferor.
The acquisition with the walls is in fact the purchase of a hotel in its entirety. In this case, the purchaser will recover the goodwill together with all the other balance sheet items including tangible fixed assets, equity, debts, cash at bank, guarantees, etc. The purchaser will be entitled to the entire business.
Many professional financing solutions are available today. Nevertheless, the most common one remains financing by commercial banks. Although obtaining an investment credit depends on several factors including, among others, the performance of the hotel for sale, its positioning, the profitability data of the operation, the personal contribution of the buyer, the nature and value of the guarantees, the respective motivations of the two parties, the development projects proposed by the buyer as well as the coherence of his financing plan.
Another possibility of financing is the crowdfunding method.
These are some of the determining factors for obtaining funding. And these conditions apply to all credit institutions. However, to build a solid file and to guide you towards the best acquisition solution, rely on acquisition-transfer professionals to buy a hotel and take the time to carefully examine your decision, because once you start, it will be difficult to go back.