For most hoteliers the last couple of years have been more than a struggle. Indeed for some, including a number of high profile operators and suppliers, the pressures on the sector have proved too much and they have gone to the wall.
For those that have survived, particularly in the “independent” sector, the combined effects of a global recession, huge expansion by the national “budget” and “mid-market” chains, VAT rises, falling room and yield rates, increased labour and supplier costs and tightening bank controls have seen many wanting to try and get out of the sector before it is too late.
Unfortunately, the banking crisis and lack of confidence in the sector has seen sales hard to come by. Lending, despite what the banks may say, is still hard to come by for many potential buyers and so, if you are looking to sell, you need to maximise the chances of not only finding a purchaser but also getting the whole deal through as quickly as possible.
Decorators always say that the quality of the eventual finish is directly proportionate to the time spent on preparation. The same is true if you are looking to sell any business, not just in the hotel sector.
The first thing to do is to set yourself a realistic timetable. Allow yourself plenty of time to prepare for the sale before even looking to go to the market. There is nothing worse than seeing a hotel gradually decline whilst it sits endlessly on the market. Everyone eventually knows its for sale, the seller gets more desperate, its asking price steadily falls and eventually, as losses mount up, the doors are locked and the windows boarded up. This will put off almost all potential purchasers other than those who simply see the property as a “development site”
Start to think about some of the following – Is the hotel looking presentable? Are management accounts up to date? Are all your policies in written form and up to date? Does the website look sensible? Are all your supply contracts in place and up to date? Have you got written contracts and policies for all your employees? Is title to the bricks and mortar “clean” and any property related information ready to be presented to a purchaser?
Above all, choose any agents carefully. Do they properly recognise that they are acting for you and not some bank of “clients” who regularly buy hotels? Check out what they have on the market. Is it similar to the type of establishment that you are looking to sell? How interested are they in the state of your business and whether you are properly prepared for the sale process? What deals have they done in your area recently? Ask to be put in touch with some of their previous clients. Those professional agents with a knowledge of the sector and the market place may not be the cheapest but a few extra pounds spent on the right agents will pay dividends in the long run.
It’s a tough market out there but preparing the business for sale is absolutely key and the sooner advice is sought from those who can assist in the process the better.
Good Luck !!
By David Gordon
