Buyer & Seller Advisory for Hospitality Businesses
In today’s challenging business environment, buyers and sellers of hotels, resorts, restaurants, bars, and mixed-use developments need expert knowledge and experience on their team.
Meet Our Buyer Seller Advisory Consultants
Charis Atwood
FF&E Project Planning and Management
Jay Landfair
Asset Management/PIP/Project Management
Shirley Whelan
F&B Concept Development & Management
Mandy Murry
Independent Hotel Coaching
Joseph Cozza
Catering Sales & Event Operations
Charles Oswald
Hotel & Asset Mgmt, Hotel Underwriting
Stewart Kiely
Design/Project Management/Sustainability
Perry Smith
Restaurant & Club Operations, PR, Branding
James Miles
Independent Resort Ops & Development
Ken Edwards
Receivership, Asset Management, Training
John Berndt
Operations & Asset Management
Preston Rideout
Nightclub and Dram Shop Expert
Sean Skellie
Hotel Development & Marketing Analysis
Eric Rubino
Acquisitions/Investment/Deal Structuring
Greg Riehle
Legal, Risk Management, Arbitration
Gary Isenberg
Hotel Stakeholder Advocacy & Development
Dan Voellm
Asset Management & Valuations
Simon Turner
Expert Witness, Asset Mgmt, Transactions
Jon Peck
Acquisition Advisory & Asset Management
Tom Lambrecht
Debt Restructuring, Loan Packaging
Donald Hoover
Casino Exec. Acquisition, HR, CBA Expert
Sean Flakelar
Luxury Boutique Resort & Restaurant Ops.
Camilla Jensen
CFO, AI, Strategy & Transformation
Cayuga Hospitality Consultants have decades of experience in leadership roles in virtually all segments of the hospitality industry including:
- Asset management
- Hotel investment advisory
- Property evaluation
- Advising on acquisitions and dispositions
- Site/location analysis
- Design and architecture
- Hotel Investment
- Advisory Consulting
Hotel Investment Advisory Consulting
Our professionals have a deep understanding of the issues that owners, financial institutions, and operators are facing. Whether you are seeking to invest in a single property or a multi-unit acquisition, our professionals are able to:
- Provide hotel evaluations
- Make recommendations on the market and location
- Review current branding and offer solutions for hotel brand conversion
- Advise up-branding or repositioning
- Assist with franchise negotiations and contract review work with land planners, architects and designers
- Evaluate hotel management company performance with recommendations for improvement or alternatives
Hotel Property Evaluation Consulting
When you evaluate whether to buy a project, rigorous due diligence is required. Our asset experts are fiscally and strategically focused. Even if you have no understanding of how to evaluate the purchase of a hotel project, our consultants are able to help you with:
- Analyzing opportunities for hotel revenue enhancement and maximizing returns
- Preparing property condition reports
- CapEx/PIP reviews and plans for replacement and renovations
- Project management
- Financial forecasting and revenue optimization
- Procurement, GPO, and vendor evaluations
- Assistance with closing due diligence and hotel opinions of value
- Trusted guidance from our advisors
How To Buy A Distressed Hotel
There are several operating costs to consider when buying a hotel.The distressed hotel deal: a property that is generally well-located, in good condition, well-managed, and expertly marketed that was over-financed and cannot meet its debt service requirements. While the tsunami of distressed properties that some expected may not develop, more high-leverage CMBS loans are coming due and lenders are becoming more aggressive about foreclosure, so more “distressed hotels” will become available. Prices will be well below replacement, cost and cap rates higher. The challenge is choosing the deal with the most significant upside potential and offering the best return.
Five Steps To Identify And Buy A Distressed Hotel
- Examine the Market for Distressed Hotel
- Review the property and its historical performance
- Perform an expert property condition assessment
- Identify revenue opportunities and net operating income
- Create a financial model
Questions To Ask When Buying A Hotel
How much does it cost to own a hotel?
There are several operating costs to consider when buying a hotel. The beginning stages of purchasing a hotel in the United States averages around $25,000,000. Luxury hotels are much higher priced. Staffing and utilities must also be considered. Maintenance fees are also an ongoing expense while running a hotel. All of these expenses could keep you from turning a profit for years if you are not ready for them.
How much does it cost to own a hotel franchise?
Starting a hotel franchise can be more costly than owning your own hotel brand. On top of normal hotel expenses mentioned above, you will also pay franchise fees. These can include initial franchise fees, ongoing franchise fees such as royalty fees, and advertising fees. Initial franchise fees average in the hundreds of thousands of dollars. Ongoing franchise costs vary widely. It is important to be aware of these costs before considering a hotel franchise.
Can I secure financing for a hotel?
Depending on your experience with operating a hotel, you may need an asset management company to manage your hotel before you can secure financing. Financing fees can add up so be mindful of these when considering how long it will take your hotel to become profitable.
How much is a down payment for purchasing a hotel?
In order to buy a hotel, you will need at least 20% of the purchase price. This percentage is similar to other real estate down payments, such as buying a home for example.
Is the hotel property complaint and up to code?
Compliance and being up to code are very important. The last thing you want to have happen after opening a new hotel is to have it be shut down while you prepare for inspections.
Frequently Asked Questions When Preparing Your Asset For Sale
What questions are sophisticated buyers asking?
Before you market your hotel or restaurant asset for sale, you should already know the answers to the most important questions. Questions that any sophisticated buyer will ask. Knowing the answers, and positioning your asset before listing will stop surprises during the buyer’s due diligence process. It will also provide for a smooth, trouble free transaction, and help you maximize the sales price and return on your investment.
Owners learn more about their hospitality business during the sale process than ever before. Don’t get surprised by your buyer’s due diligence. Prepare in advance.
Why are you selling this asset at this particular time?
You should know this answer even before starting work on answering any other questions.
- Is it time to cash out on a top performing asset?
- Do you need to adjust portfolio exposure in particular markets or brands?
- Are you focusing on other development opportunities?
- Do you lack the resources necessary to maintain the property?
- Are you looking for an investment or management partner?
Knowing your reasons to sell will make it easier to check sale offers, and to respond to due diligence questions from potential buyers.
How is your property maximizing its revenue potential in its market?
Hotel and restaurant asset pricing is all about value, and nothing drives asset value more than top line revenues.
- How is your property positioned in its competitive set?
- Is the property capturing more than its market share of rate, occupancy, and sales?
- Are there opportunities to improve market position or economics through improved selling, marketing, re-branding, renovation, or re-development?
- Are there barriers to entry in your property’s market?
- How stable is your property’s revenue stream?
It is critical to know both the opportunities and the risks that the property faces in its competitive market, and the associated impacts on revenues.
How is your property operated at peak efficiency and customer satisfaction?
Management and operations are the foundation that supports top line revenue. They are the engine that delivers product quality and profit through customer service delivery and efficient hotel and restaurant operations.
- Do you have the right Management Company operating your property?
- The right management team?
- Is product delivery and customer satisfaction at the high end of the scale?
- Are labor costs in line?
- Is the building operated and maintained?
- Are there cost savings opportunities?
Improving customer satisfaction, and operating at peak cost efficiency contribute to top line revenue, improve operating profit, and boost property value.
What is the condition of your property or asset?
Property condition is of equal importance to customer service in supporting hospitality product delivery. The friendliest staff in the world cannot make up for a broken down mattress, worn out carpet, or non-functional air-conditioning.
- Will the sale of the property trigger a Property Improvement Plan (“PIP”) rule by the brand?
- How extensive will the PIP be?
- Are there any deferred maintenance or deferred capital issues?
- Unmet regulatory or inspection requirements for elevators, fire and life safety systems, ADA, VGBA, EPA, OSHA, etc.?
- What will re-branding opportunities need in renovation and CapEx costs?
A well-maintained asset contributes to property reputation and repeat business, improves operational efficiency, and lowers the risk of equipment failures and service disruption. Well maintained properties also generally enjoy lower R&M and capital costs over the long term.
Why are you selling this asset at this particular time?
A sound exit strategy, put in place and then reset to current conditions, will greatly increase the likelihood that when you exit your hotel investment it will be on the most favorable terms available, and that your return during the holding period will be optimum for the circumstances. If you model the likely income and realistically project the amount of debt that can be supported for at least the next five years, you will quickly pinpoint opportunities and roadblocks.
Exit Strategy Consulting
Developing an objective and complete evaluation of property value can be a daunting task for even the most sophisticated owner.
Allow Cayuga Hospitality Consultants to put together a team of experts to help you answer these questions and more when it comes to selling your hotel or restaurant asset.
These guidelines were a cumulative effort by Cayuga Hospitality Consultant’s Asset Management and Owners Advisory Services consultants.
