How to approach hotels for sale

December 18th, 2009 by Chris St Cartmail

Demand for hotels for sale in the UK has been stimulated by an influx of newcomers to the hospitality industry, with particular interest focused on the cheaper end of the market.

If you’re one of the many keen for a change of career, contemplating early retirement or worried about redundancy, there are annual profits of around £20,000 to be made from the average five-bedroom guesthouse, going up to £130,000 for a 20-bedroom hotel including a bar/restaurant.

Allow half of that to cover the costs of running the establishment, bearing in mind that business rates and compliance with fire regulations will apply if you acquire anything bigger than four letting bedrooms.

Brokers say anyone with equity of at least £100,000 in their home is in a healthy position to buy a small hotel – chances are you’ll need to take out a mortgage, but the lowest interest rates for fifty years mean any reasonable operator should be able to take home a decent profit.

Things to bear in mind when sizing up hotels for sale:

Why is a given outlet on the market and how long has the current owner been there? How much has been spent on improvements?

What kind of custom does it attract? Are there any other new hotels in the pipeline in the area?

What is and isn’t included in the hotel sale? Take a detailed look at the contract and accounts.

And finally, don’t underestimate the benefits to be gained from getting a hotel’s previous owners on side – their help and goodwill often prove invaluable to buyers.

For more resources on buying a hotel please visit our pages which list leisure businesses and hotels for sale and more advice on buying a hotel.

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