A Guide to Buying a hotel? How to choose the right one.

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Buying a hotel? How to choose the right one.

Published on: 2011-09-03

Why buy a hotel?

When buying a hotel for the first time, it’s worth examining your motivations for wanting to join the ranks of Hoteliers up and down the country. Whether you secretly wish to be the next Conrad Hilton, or you’re just looking for a change in lifestyle, purchasing and successfully running your very own hotel can be an incredibly rewarding undertaking. First time buyers often find that pre-conceived ideas can be a long way from the true reality. Experience will most certainly lead you closer to success, whether it is hard earned or paid for, the trick is to acquire as much as you can before you make that all important purchase.

Buying a hotel may well be the most exciting and challenging thing you have ever do. If you have worked for a hotel for many years, saved or aspired to buy a hotel of your own, then you’ll be glad to know that many have stood where you are know and gone on to own incredibly successful hospitality businesses.

If you have no experience in the hotel industry don’t be put off either, as many successful hotels were started by people who had no experience of the trade. You can make it happen if you research the industry, see what it entails and speak to as many experience people as possible. Those in the hospitality industry are passionate about what they do and as a result many will freely give you valuable advice, provided you don’t plan on setting up as direct competition. Listen carefully for pearls of wisdom, they are sure to present themselves.


Due to the capital intensive nature of hotel ownership, most people will need finance to purchase a hotel. Knowing what you can afford before you start looking will help you avoid wasted viewings on hotels that are out of your price range and just serve to cloud the decision making process. There are a number of online calculators to help you get a rough idea of what you could borrow but the basic rule of thumb is that most high street banks will not want to loan you more than 60% of the businesses value.

That leaves you to raise the remaining 40%. Many successful owners have sold their family homes or put them up as security for a loan, so be prepared to be flexible if you want to secure the finance needed.


Once you know how much you can afford, your next step is deciding where to buy? Like thousands of potential owners out there, you probably already know precisely where you want to buy, or at the very least you have a rough idea.

Remember that the more popular the destination is, the more competitors you’re likely to have. This means you’ll need to keep a close eye on the reasons why guest should choose your hotel over your competitors.

Buying a hotel near regular events, annual shows, conferences and attractions will almost always provide better potential when it comes to keeping your hotels occupancy rate as high as possible throughout the year.

Hotels in holiday destinations are seasonal by nature, meaning they’re extremely busy in season but very quite out of season. This may suit some owners, as true satisfaction lies in striking a balance between profit, lifestyle and work load.


An important aspect is deciding what size of hotel would suit you best. You may want a small intimate hotel that will be a home away from home for your guests or you may want the challenge of having a big hotel, perhaps you have aspirations of becoming the hotel magnate.

Always choose the option that plays to your strengths and would keep you enthusiastic about your venture, which intern will result in great service to your guests.

Where to look

Once you know what your budget is, which area you want to buy in and what size of hotel you require, where do you look? The internet allows you to access hundreds of potential hotels with the click of a button. Free websites like Business4Sale.co.uk aggregate listings from sellers across the country and allow them to be viewed in one place.

These websites allow you to contact sellers, free of charge, to request information about a particular business. Armed with your set of criteria, use these sites to create a shortlist of the businesses that match your search and contact sellers to satisfy any queries you may have.

Choosing the one

The next step is to go and view the hotels that best suit your needs. A few things to check are:

· Why is the owner selling?

· What is the occupancy rate at different times of the year and what is the average occupancy rate?

· Does the property need any repairs? If so find out what the repair work would cost.

· How much local competition is there and how does the hotel compare with its competitors?

· Find out what locals think of the hotel?

· Are there any planned changes from the council which may reduce the amount of guests or the value of your business?

Once you are satisfied that you’ve found a real winner then put in an offer, complete due diligence and take ownership of your very own hotel.

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