An investment in the lodging industry for the purpose of acquiring an existing facility requires, as does any investment, a certain amount of research regarding both the industry as a whole and the investment itself.

The lodging industry generally reflects the vitality of the local and national economies.  Prosperous times for the nation generally means increased room and occupancy rates for the owners and the advent of new construction of lodging facilities.  During an economic downturn, the lodging market absorbs a related decline in tourism and commercial travel, choosing not to travel for economic or safety reasons.

Considerations and Decisions, when Buying a lodging property.

Property preference will vary with each investor based on a number of factors, including operating experience and investment equity.  Proper planning and due diligence are essential for one’s success.

Strategic Planning Inclusions:

Region or location preference
Cities and/or market areas
Reliable business generators
Search available properties
Know competitive environment
Be comfortable and knowledgeable with the economic, political and community characteristics

Transaction:

Submit a Letter of Interest or Purchase Offer
Negotiate terms and price
Finalize Purchase Contract
Perform due diligence
Develop a comprehensive operations and marketing plan
Confirm investment equity
Determine financing source with best rate and termsbr /> Determine operating structure
Determine most beneficial franchise or will it be an independent with other affiliations, ie. AAA
Lender will order an appraisal and environmental study
Determine licensing and permit requirements
Determine upgrades or product improvement
Close transaction

The above buying steps are basic and are not to be considered all inclusive, rather as a guide to your next successful lodging investment.

Needless to say, a buyer needs to connect with a qualified, experienced and professional hotel broker.  This professional will guide you through the purchase transaction while referring you to other industry professionals including lenders, franchisors, insurance companies, attorneys, CPAs, management firms and appraisers.

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