Outlook for 2011: Is Now a Good Time to Sell Your Hotel?

By Mike Handelsman Group General Manager, BizBuySell.com | March 20, 2011

These past few years have been tough on the business-for-sale market. This has put hotel owners ready to sell in a waiting game. Rather than sell for below market price, most smart hotel owners have simply been cutting unnecessary expenses, making ends meet and waiting for the market to rebound.

Since the recession hit in the fall of 2008, most hotels have seen a drop in revenues and profits. The ensuing fall in purchase-price valuations only made matters worse. But 2010 saw a slight improvement in the seller market and many experts expect that 2011 will be a break out year for the business-for-sale industry.

So is 2011 the year you should consider selling your hotel?

It appears that many owners are ready to find out. Those who have been waiting for the right time to exit have weathered the downturn and are now ready to begin the selling process. For prospective buyers, financing options are improving and banks are putting a new focus on lending. These signs all points to a rejuvenated industry and a more robust business-for-sale market in 2011. So if you're thinking of selling your hotel this year, here are some tips to maximize your return.

Get Finances Straight

As expected with any big purchase, buyers are going to investigate the ins and outs of your hotel before deciding to sign on the dotted line. Sellers need to be ready to demonstrate that their hotel is worth the listed asking price. The first step toward doing that is to make sure all your financial records are in order. Owners should be able to hand over a minimum of three years of documents, including tax returns, occupancy history, and expense records, to prospective buyers. These will be essential to establishing buyer trust in the economic stability of the hotel. Also, be sure to resolve any outstanding business issues that could hinder a sale. These can include short-term vendor or key employee agreements, over-reliance on one or a few key customers, conferences or events, and any outstanding legal issues.

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Mobile Technology: The Future is Now

Mobile Technology continues to advance at a relentless pace and the hotel industry continues to adapt. Hotel guests have shown a strong preference for mobile self-service - from checking-in/out at a hotel kiosk, to ordering room service, making dinner reservations, booking spa treatments, and managing laundry/dry cleaning services. And they also enjoy the convenience of paying for these services with smart phone mobile payments. In addition, some hotels have adopted a “concierge in your pocket” concept. Through a proprietary hotel app, guests can access useful information such as local entertainment venues, tourist attractions, event calendars, and medical facilities and services. In-room entertainment continues to be a key factor, as guests insist on the capacity to plug in their own mobile devices to customize their entertainment choices. Mobile technology also allows for greater marketing opportunities. For example, many hotels have adopted the use of “push notifications” - sending promotions, discounts and special event messages to guests based on their property location, purchase history, profiles, etc. Near field communication (NFC) technology is also being utilized to support applications such as opening room doors, earning loyalty points, renting a bike, accessing a rental car, and more. Finally, some hotels have adopted more futuristic technology. Robots are in use that have the ability to move between floors to deliver room service requests for all kinds of items - food, beverages, towels, toothbrushes, chargers and snacks. And infrared scanners are being used by housekeeping staff that can detect body heat within a room, alerting staff that the room is occupied and they should come back at a later time. The January Hotel Business Review will report on what some hotels are doing to maximize their opportunities in this exciting mobile technology space.