A hotel is an important piece of real estate. It can be put up for sale with a repurchase agreement if it is well valued and well marketed. The owner of the hotel will be able to continue his hotel business after the repurchase sale has been completed, but he must pay back his installments gradually. He must also pay rent to the buyer until the end of the repurchase agreement.
Techniques for selling a hotel under repurchase agreement
The sale of a hotel requires some preparation. It is not possible to improvise, either for the seller or the buyer. Indeed, the value is determined by the value of the real estate and the value of the business. Before putting the hotel up for sale, it is necessary to make an evaluation of the establishment, which is done by a multiple of the turnover, the EBITDA or Earnings before Interest, Tax, Depreciation and Amortization. In addition to these, location and site parameters contribute to modulating the price upwards or downwards. The state of the infrastructure, particularly in relation to standards, can also have an impact on the value of the product, especially if major work to bring it into compliance is to be considered.
Moreover, one of the techniques to sell a hotel is also to choose the best form between the sale in the form of assets or the sale of company shares. The first form consists in selling through a notary the real estate and the business at the real value of the real estate, according to a market value. On the other hand, the second form must be done in the presence of a lawyer or a chartered accountant. It is especially suitable for a hotel whose walls are part of a real estate company and whose operation is part of an operating company.
Selling a hotel under repurchase agreement: how to evaluate it?
When selling a hotel under a repurchase agreement, it is essential to make an estimate of the value of the business and the value of the property. Several factors are taken into account in this estimation such as the location, the staff, the clientele, the condition of the premises and the standards. For the location, if the hotel is located in the city center or near a tourist spot, this forms an added value in the evaluation. Then, for the staff, it is an advantage for the buyer to have a team of professionals who know the general operation and the clientele. As far as the latter is concerned, a clientele of regulars ensures a certain recurrence of turnover and gives value to the hotel. And finally, the standards, they concern the safety and accessibility of the establishment. One must also determine the deadlines to be paid during the periods of repayments.
Tips to consider when selling a hotel under a repurchase agreement
If you own a hotel, in order to be able to sell it successfully under a repurchase agreement, there are a few things to keep in mind. First of all, it is important to avoid making a decision at once. The sale of a business under a repurchase agreement must be carefully thought out. It is therefore essential to be well prepared psychologically and administratively. Then, it is recommended to adopt the right reflexes, that is to say to emphasize the property, to issue an advertisement with a lot of information and to respect the contractual rules. Then, one of the recommendations to take into consideration is to sell the hotel when it is working and profitable. You should not wait until you are tired, unmotivated or even bankrupt to sell it. You can collect money to be able to realize other projects.
In addition, when selling a hotel under a repurchase agreement, one must also prepare a complete presentation file, including the year of purchase, renovations undertaken during the years of operation, an inventory of the furniture and equipment, the average occupancy rate, the evolution of the turnover and simplified brochures of the last two balance sheets. Finally, it is recommended that you contact experts when you decide to sell your hotel. These professionals will be able to evaluate the business in a neutral way.