The hotel industry is a sector that attracts many creators or buyers of businesses, even if it requires significant resources. Whether to create or take over an independent hotel or franchise, to renovate to meet the latest standards, we have solutions tailored to your needs.
The valuation of a hotel business
The valuation range of a hotel business is wide. Indeed the rate applied on the annual turnover is between 80 and 300%. For example, a hotel that generates USD 200,000 in annual sales will be valued between USD 160,000 and USD 600,000.
The important criteria to take into account are the quality of the location (center or periphery of the city, …), but also the quality of the rooms and other interior fittings. The occupancy rate is also a key factor in correctly estimating the fund.
Finally, do not confuse business and walls. Indeed, the company operating the hotel can be tenant of the walls and the amount of the rent enters therefore in the calculations. Similarly if the company is also owner of the walls it is appropriate to value real estate in addition to the value of the business.
Financing a hotel: adapted solutions
In the end, because of expensive investments, financial health is essential. Only establishments capable of renovating and modernizing will be sustainable. In a difficult environment, joining a group is an advantage.
The amount to be financed when creating or taking over a hotel is important. The project leader must therefore have a personal contribution (30%) or a substantial wealth. For people who do not have a significant contribution, it may be interesting to be interested in renting management that requires less investment because it is supported by the owner of the business.