Hotel – Selling Process
Every hotel has a story. We’ll help you sell your story. Selling a hotel is a complex process. It requires a comprehensive and well-executed marketing strategy that is focused on the unique features of the hotel that will drive a successful transaction.
Drawing on years of experience as real estate brokers who work exclusively in the hotel industry, we have developed a results-oriented marketing approach that is powered by a proven four-step process.
Analyze Ownership’s objectives and determine accurate value
Right at the outset – before we begin a new assignment – our first task is to make sure we clearly understand the hotel owner’s objectives. This in turn allows us to determine the most effective marketing strategy for making those objectives a reality. Once comfortable that we have the right approach to meet or exceed Ownership’s objectives, the next step is to determine the best way to maximize market value for the hotel being considered for sale.
To accomplish this, we:
- Analyze the hotel for sale using the most prevalent valuation approaches: income (direct capitalization), sales comparison and room revenue multiplier. In the process we consider many “intangibles,” such as barriers to entry, availability of hotel financing, economic conditions and perceptions about the hotel for sale and market.
- Tour the hotel to examine its physical condition, obsolescence concerns, amenities, competitive advantages, location and many other factors.
- Review the competitive hotel market and the potential for new room supply, often working with our network of appraisers, consultants, franchise sales representatives, operators and city officials.
- Determine who are the most likely hotel buyer groups for the asset and understand their analysis process.
Prepare marketing materials and determine buyer groups
After providing a range of expected values and a recommended list price for the hotel being contemplated for sale, we determine the best possible positioning for the deal. We create diligently prepared marketing materials that are tailored to emphasize the most salient features and the areas of opportunity that will appeal to the most likely buyer groups. Each marketing piece is designed to concisely outline the various aspects of the opportunity, while communicating its appeal both visually and through relevant data.
Immediately after a property is listed with Hotel Source, Inc., we perform the following tasks:
- Select Hotel Buyers – From our proprietary database (which is among the most comprehensive and integrated in the industry), we select the individuals and groups who are the most likely hotel buyers based on their specific acquisition parameters. Acquisition criteria includes geographic location, franchise preferences, property type, financial indicators, market orientation, and countless others.
- Prepare Executive Summary – We prepare a concise document that outlines the salient points associated with the listing, summarizes the financial performance and sells the opportunity.
- Develop Offering Prospectus – This presentation provides detailed information about the physical attributes of the hotel, financial performance, market area, economy, and competitive hotel supply. We conduct extensive research by gathering information from the local economic development groups, assessor and area appraisers to provide a detailed overview of the market. The goal of this comprehensive collateral piece is to create and encourage well-informed hotel buyers to make strong initial offers – leading to the step in the process where we qualify, negotiate and close.
- Create Advertising Plan – Based on key parameters, we select the most effective media sources in which to place advertisements for the property, which includes both industry-specific and general media. The Hotel Source, Inc. website also serves as an advertising medium that allows us to reach a wide pool of buyers.
Market the property on a personal, one-to-one level
Professional, attractive marketing materials are important – but they are not enough to sell a hotel by themselves. The key to completing the sales process is personal contact.
We start by calling the most likely buyers and companies to stress the highlights of the deal, provide marketing materials, gauge interest, answer questions and encourage property showings. This initial feedback is key because it allows for strategic adjustments if necessary and enables the tracking of changing hotel buyer acquisition criteria.
We also contact franchisors, consultants, bankers, attorneys and others who often influence purchase decisions. Our personal contact includes presenting Marketing Updates to hotel owners to keep them informed of our sales progress. These tailored updates detail the number and type of materials distributed, specific comments from recipients, synopsis of conversations, placement of advertising and summaries of all offers received.
Qualify, Negotiate and Close
Qualify, negotiate and close
Keeping our clients well informed is critical to the next phase in the process, in which final hotel purchasers and their offers are identified, qualified, evaluated and acted upon. This is where our experience in sales assignments pays the greatest dividends.
We are keenly aware that closing deals is what matters, so we draw upon our decades of experience to foresee many of the common obstacles that accompany closings – a number of which are unique to buying a hotel business. We work closely with our clients to ensure that the final phase of the process – involving the letter of intent, counter-offer, purchase and sale agreement, due diligence and closing documents, produces the best price and terms based on the owner’s objectives.
Each step of the Hotel Source, Inc. process is important and each is performed with our full commitment, diligent attention to detail and impeccable follow-through. The process creates a result that is greater than the sum of its four parts.