A buyer's guide to hotels for sale in the UK

Newcomers to the hospitality industry are stimulating demand for hotels for sale in the UK, with the cheaper end of the market currently experiencing a notable boom. Specialist business brokers say a shortage of high-quality, family-run guesthouses and hotels in the south-east of England - where profits are higher - means buyers of hotels for sale in that region in particular could net turnovers from £50,000 to £100,000.

"Anyone with equity of £100,000 or more in their home could buy a small hotel," suggests one broker. "They would probably need to take out a mortgage, but with the lowest interest rates for half a century, any reasonable operator should be able to make a decent profit."

Now could be the time to avail of the range of smaller guesthouses and hotels for sale around the country. Prices are beginning to creep up on the back of the aforementioned demand, often from individuals in their thirties and forties facing redundancy from middle management careers, taking early retirement or simply seeking a lifestyle change.

UK hotels for sale: The numbers

Profits of around £20,000 per year can be expected from a five-bedroom guesthouse, going up to £130,000 for a 20-bedroom hotel including a bar/restaurant. About half of that will go towards the cost of running the outlet, while business rates and compliance with fire regulations apply to anything bigger than four letting bedrooms.

Hotels for sale: Raising finance to buy

Up to 75% of the value of hotels for sale can be lent by banks and building societies, over periods of five to 25 years and usually at 1.5 to 2% over the Bank of England's base interest rate. Lenders will want to see a business plan, with evidence that a hotel's existing profit will cover twice the annual interest bill.

Final tips on approaching hotels for sale

• Research particular hotels for sale that grab your interest: why is a given hotel on the market? How long has the current owner been there and how much have they spent on improvements?
• Location: what type of custom does the hotel attract? Could you improve the business with a bar, restaurant or gym, for example? Checking with the local authority about other new budget hotels in the pipeline, planned bypasses or similar ventures that could affect trade is advised.
• Take a close look at the accounts, contract and details of what is – and isn't - included in a sale. Consider start-up costs – refurbishing/equipping the hotel, stocking the bar and restaurant. Look into business rates, fire regulations and insurance costs.

When it comes to hotels for sale, getting the previous owners of an establishment on side will go a long way – their help and goodwill could prove invaluable.

View our latest listings of hotels for sale and leisure businesses for sale.