What influences the value of a hotel business for sale? 

If you are a hotel owner considering the sale of your business, our Business Valuation Guide will have given you your valuation band.  

When you are ready for a detailed business appraisal, it is worth understanding in more detail some of the particular factors that impact on the value of a hotel business and the price that can be achieved on sale.

The underlying valuation factors are the same as with any other business, but in particular for a hotel business an appraisal will be concerned with:

• Location:  Location is at the heart of the business, its market and its customer base.  City centre based, close to transport links, a rural retreat or a high footfall tourist spot – location a crucial aspect on the value of any hotel business.
• Number of rooms:  Number of rooms and occupancy levels are important.  Understanding average room rates, whether there is scope for increasing room numbers or whether a different pricing strategy could impact on occupancy levels will all be of interest to potential buyers.
• Facilities:  Amenities have a major impact on value, whether key facilities such as spas and restaurants but also practical considerations such as availability of parking.
• Property:  The property itself and how it might support future growth plans – is it suitable for reconfiguration or expansion?  
• Customers:  A well maintained customer database comprising regular returners will be a valuable asset to any new owner and therefore adds value.  
• Reputation:  A good reputation evidenced through customer feedback, online review  ratings and industry certifications and awards will be of real interest to potential buyers.

Clearly a well-run, profitable business within any industry will be of more interest to acquirers, but it’s worth hotel business owners understanding some of the very particular issues that will impact on the value of their business at sale time.