Creating a bidding contestHotel for Sale: Baymont Inn
Market: Lafayette, Indiana

This hotel was built in 1999, and was owned and operated by its original developer prior to its sale. Located 125 miles from Chicago and 65 miles from Indianapolis, the hotel also benefited from excellent interstate visibility and its close proximity to Purdue University.

*NOI expressed after deductions for FF&E Reserve and Management Fees.

Hotel Owner Objective
The hotel owner's desired outcome was to dispose of the hotel as part of an amicable partnership dissolution at a maximized value. Since the hotel had performed consistently since its opening, the owner was not under any pressure to sell.

From a hotel buyer's perspective, the hotel faced numerous future challenges. The property's excellent location was offset because of the significant competition at its exit, which included more than ten other hotel properties. In addition to being in close proximity with its direct competition, the property also suffered from being located in a market that was generally overbuilt. The brand was also widely considered to be one of the weaker franchises for the area. Lastly, the hotel‘s NOI was just enough to cover debt service at list price, making some buyers skeptical of their ability to obtain financing for the project.

Hotel Sales/Marketing Process
Through a hotel marketing approach that targeted Midwestern limited-service hotel owner-operators with mid-tier or economy franchises, and regional management companies, Hotel Source, Inc. was able to attract significant buyer interest through the initial marketing materials. Hotel Source used personal contact and weekly showings to procure offers from more than fifteen hotel buyer groups.

Hotel Negotiations
Hotel Source then spent significant time qualifying the different hotel buyers through contact with their lenders, and review of previous hotel ownership experience. Upon execution of the contract, Hotel Source assisted the buyer in transfer of the licensing agreement with the franchise.

Conclusion
The hotel sold at 93% of the list price and a 5.8% cap rate. The seller received a price that satisfied the sellers and the buyer received a well-located property, in excellent condition, with upside potential.

Back to top