How to Position a Hotel Property for Sale

By Andrew Glincher Office Managing Partner, Nixon Peabody LLP | October 28, 2008

Positioning a property for sale means getting into the mind of a potential buyer. Every potential buyer wants to believe that the property he is purchasing is vibrant and profitable - or at least potentially profitable. So prospective sellers should take whatever short-term steps they can to make the property's finances and condition as attractive as possible. In many cases, a little market research and a few renovations can have a significant impact on both the number and size of the offers received.

Many successful hotels routinely commit approximately 5% of annual revenues to renovations, but when trying to position a property for sale, it makes sense to take a good look around and see whether there are any relatively minor and inexpensive improvements that can be added to the list and done immediately, rather than deferred, that could add luster and value to the property. Focus on first impressions. A good positive initial impression can be worth a significant amount of money. The parking lots should be well lit and clear of litter, the lobby should be bright and well maintained. There should be fresh flowers and fresh newspapers, in addition to well-dressed, professional and courteous staff members.

There are several very substantive areas that a property owner should examine to determine whether or not the hotel is meeting the industry standard.

Reviewing your competition, both in terms of operations and comparable sales is essential to understanding your property's valuation. Also, you should consult with several brokers with hotel sales experience prior to choosing a broker and putting it on the market.

How do your room rates and occupancy compare with other local hotels? Are other hotels offering more amenities? Does the competition typically make conference rooms and ballrooms available for social and corporate functions or meetings? Income from professional meetings and conference rooms can significantly add to a property's value so it may be worthwhile to incorporate these into the hotel's package. Do you have space you could carve out for such uses? If the hotel currently accommodates corporate functions, determine whether or not the space is adequate or can be divided or expanded to accommodate the average sized corporate gathering.

Also, be sure all in-room and corporate amenities, from Internet connections to audiovisual systems, function properly. Sometimes increasing the size of an overhead screen or television can make all the difference between repeat guests and alarmingly negative experiences. The inability on one day for an executive to send or receive a fax, or check e-mail, probably translates into customers who will never return to that hotel.

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.