Buying A Hotel To Convert: 10 Questions To Help You Understand
You want to change your life and retrain? Buying a hotel is a good solution to become independent. Whether it is a seasonal hotel, an office hotel or a hotel-restaurant, here is a guide to help you make a first approach. If the taste for hospitality is the first engine of such a reconversion, the financial aspect remains determining for its realization.
Do I need a degree to buy a hotel?
No degree is required to practice this profession.
Nevertheless you will have to follow mandatory trainings on food hygiene or if your hotel has a license to sell alcohol.
What profile is recommended to be a hotelier?
Operating an independent hotel requires first and foremost a taste for hospitality and human contact.
You also need to feel the soul of a manager because you are above all at the head of a company.
Of course your chartered accountant is there to advise and support you.
Make no mistake, you can offer the most beautiful hotel with the most advanced equipment. The final impression of the customers will always be influenced by the welcome and the smile that you will be able to give them.
What are the different types of hotels?
For a conversion, the hotel without a restaurant, also known as an office hotel, is usually the simplest choice.
Then there are seasonal or year-round hotels. The seasonal hotel is located in a tourist area and makes its revenue over a few months. For example, a mountain hotel will open in winter for skiing and reopen for the summer season for hikers and cyclists. It can thus completely close for two months during the year. A welcome closure to go on vacation or to do some work yourself.
The hotel open all year round is often a hotel located in the city with a mixed clientele of professionals and individuals. Its frequentation can also know important differences according to the periods of the year.
A hotel-restaurant is generally not recommended as a starting point in the profession, except for those who already have experience in the restaurant business.
The management of a restaurant is generally more restrictive than that of a hotel.
Should I stay in a chain hotel?
A chain hotel is an establishment that is part of a group with a common brand. You remain independent but you have to apply certain constraints, more or less heavy, depending on the brand.
You can be in a chain of independent hoteliers such as The Originals, Akéna, FastHotel of the cooperative type. Or in a chain of franchisees like Accor, Kyriad or Balladin.
Joining a chain can be reassuring because of the power of the marketing network and the reputation, but the majority of hotels do not belong to a chain and have their own clientele.
How can I get advice on buying a hotel?
Several professionals can advise you independently: A certified public accountant will guide you on how to read and interpret a hotel's balance sheet.
The ideal is to be accompanied by a specialized firm like SmartLevel Hotels to validate your choice of hotel.
Not being a real estate agent, it is not interested in selling and can advise you in all transparency.
It will validate with you the location, the price, the general condition, the quality and the referencing of the website, will analyze with you the customer reviews...
Should I use an agency?
There is no obligation to go through a real estate agency. Nevertheless, using a specialized agency allows you to have contacts who know the market and the constraints of the profession.
In areas of high demand, many generalist agencies also sell hotels, but their knowledge remains basic, especially in the analysis of balance sheets.
Are the regulations for operating a hotel onerous?
A hotel is an establishment receiving the public, so the operation must meet many regulations.
In any purchase of a hotel, the regulatory document that must be consulted is the report of the safety commission.
This document can alert you to possible threats to the continuity of the operation for safety reasons. The safety commission passes every 5 years.
What is the typical day of an independent hotelier?
The answer to this question depends of course on the size of the hotel and the number of employees.
Generally, you start in the profession as a couple with about twenty rooms and one or two employees to prepare the rooms (which means to prepare the room entirely between each client in the profession).
In this case you have to get up before the first guests to prepare breakfast, a fundamental and privileged moment of exchange with your "guests".
Then comes the time of departure, the last moment of direct contact with your customers (they still have the possibility to leave a review on one or more websites).
Then, or at the same time, you have to manage the organization of the cleaning in the rooms according to the reservations.
It is generally between 12:30 and 15:30 that we can take a well-deserved break.
Then comes the other vital phase for your business: The reception of new arrivals and the first human impression you will give.
The independent hotelier must also know how to be versatile in case of need: unforeseen technical problems, absent employee...
Add to all this a list of tasks that concern any business: stock and supplier management, preparation of accounting elements, work management...
And of course the follow-up of reservations and customer reviews on his computer!
Which choice for your hotel ?
- A business (hotel or other) is all the property and rights that belong to a trader to carry on his profession.
In the case of a hotel:
The objects necessary for the profession: beds, furniture...
The rights: license to sell alcohol, terrace rights...
And the clientele: the notoriety that the establishment has built up over the years.
- The walls of a hotel are the property of the built, the building: land, buildings.
One can buy only the fund and pay rent to the owner of the walls, or buy "walls and fund" and be in complete ownership.
If you buy only the business, a fundamental point to check with your advisor is the nature and content of the lease.
How much money is needed to buy a hotel?
The price of a hotel depends on the location, the number of rooms, the general condition but above all on the balance sheet. There are no fixed or set prices, it is the law of supply and demand.
Nevertheless, any good hotel professional will take as a reference a determining element of the balance sheet: the EBIT (Gross Operating Surplus).
Then he will "restate" it to know concretely what you have left to pay yourself and the loan(s) you will have made.
It is from this element that you will know what minimum contribution will be necessary, because it is what your banker will look at first.
It is generally advised in the profession that the minimum contribution required does not exceed about 1/3 of the transfer price.
Be careful if you want your small hotel in a well-known seaside resort, do not expect to find these ratios!