The end of lockdown is expected to see the start of increased activity in the hotels sector, as owners and prospective buyers decide to make a move after months of sitting on their hands.
So what should hotel owners be doing to achieve a successful sale in the post-COVID market?
Julian Troup, Head of UK Hotels Agency at Colliers, has a wealth of experience in selling UK corporate and private hotels. Here he shares his Top Ten Tips for selling your hotel.
It goes without saying that selling your hotel in the current market is a very different experience to that of a year ago. Nevertheless, we are still seeing a steady flow of domestic and overseas buyers looking to invest into UK hotels and hospitality.
Quality and location are the main drivers in the market at present, and already this year our volume of UK sales are well ahead of where we expected to be, with deals being agreed close to and ahead of guide prices in some cases.
If you do decide to consider selling your hotel asset, here are my Top Ten Tips for achieving a successful result:
1) Exit Plan
Make sure an ‘Exit Plan’ is put in place early in the process – prepare diligently as this will speed up the process when selling and reduce the risk of delay and attempted offer reductions. Take early advice from a specialist and experienced hotel agent/broker, as they will be able to provide you with some extremely valuable guidance on how to prepare your asset for the impending marketing.
2) Marketing Strategy
Have a carefully planned Marketing Strategy that is agreed with your agent. A well-considered and structured strategy will always help a smooth and successful process and will demonstrate to buyers you are a serious seller.
3) Trading Figures
Have up-to-date comprehensive trading figures as these will be requested by a buyer, their advisors, and their lender. Anyone who requires any funding to secure a purchase will rely on this information so having it in place and professionally presented will save time and complications.
4) Business Presentation
Ensure sure your business is presented in the best possible light; from trading figures, paperwork and planning right through to decoration. Your property and business should be “dressed for sale” so that buyers see it at its best, which will assist in achieving the best price. Missing information and paperwork will only raise questions and doubts in a buyer’s mind, so having clearly presented and comprehensive information will assist the process. It will also protect against attempted offer reductions and potential delays.
5) Tell a story
When in dialogue with interested parties ‘paint the picture’ and show them what potential there is, as well as providing the legitimate reason for selling. In the current market, the “upside” for a new owner can be the difference in achieving a sale following a viewing.
6) Make a good first impression
Present the hotel to the market so that it creates an outstanding first impression and ask your agent to prepare high quality sales particulars. The aim is to entice buyers through the door to view the property, and extensive particulars and attractive images are the key to that. Having high quality images can make a huge difference in the outcome of the marketing campaign.
7) Choose the right agent
Always ask your agent what experience they have and what they have personally sold which is similar to your business, both in terms of location and price range. Don’t be swayed by an agent who tells you something without foundation. It is vital you have an expert on your team to achieve the best result.
In the current climate look to be flexible when structuring a deal. You stand a better chance in achieving a deal if you are able to consider a range of options in addition to freehold purchase, including lease purchase, deferred payments and/or vendor loans. Not all offers involve matters such as this and it is worth bearing in mind that your agent should fully explain what these options mean to you. Your agent should also conduct proper background checks on the potential buyers. This applies on any deal, whatever its form.
9) Hotel Trade
During the marketing do not take your eye off the ball in terms of trading your hotel; doing this may affect the quality of the offers you receive. A reduction in trade, for example, will affect value and buyers may use that to justify a reduction in offer level. Similarly, should you stop maintaining the property this will be picked up by buyers and again that may be used against you when parties offer.
10) Good advice
Most importantly, take sound professional advice from an agent and company specialising in the sale of hotels. Not only this, but ensure your accountant and solicitor are experienced in this type of going concern transaction. Having an experienced advisory team can really make the difference and help to conclude a smoother and stress free transaction.
Colliers consistently has around 200 hotels for sale across the UK; and has sold in excess of 350 hotels since 2016. During 2020 we transacted on 40 small, medium and large UK hotels and hospitality business assets, which proves there is a market out there.
Please do not hesitate to contact me should you require any confidential advice on any hotel related matter.
About the Author
Julian Troup handles large private and corporate hotel transactions throughout the UK on behalf of his clients, with asking prices ranging from £1.2m to in excess of £20m. To get in touch, contact Julian.Troup@colliers.com.