Visitations and Dealings with Prospective Buyers
“Negotiations should always take place on a level playing field; courtesy, politeness
and mutual respect are essential. As a seller or lessor you and your property only
have one chance to make a first impression!”
The time has come! Prospective buyers, investors and potential lessees have sifted through lots of hotel properties, looked carefully at the available details and data, and have decided to visit and look into your hotel or gastronomy property more closely. Without intending to be patronising, the following tips on how to treat and communicate with prospective buyers and lessees are designed to familiarise you with the most frequent problems, conflict situations, questions, mistakes and misunderstandings which may arise and provide you with some helpful tips and guidance.
What information will a prospective buyer, lessee or investor already have about me and my hotel?
After completing identity and solvency checks, your ASP broker will provide prospective investors, buyers and lessees with documents about your property as agreed so as enable them to prepare for visitations or sales negotiations. Please be aware that most prospective buyers and lessees will also conduct their own detailed research about your property online: reading online reviews, looking at booking platforms and perusing your website.
In some cases prospective buyers or lessees with a real interest in a property may also book into your hotel anonymously for one or two nights, so as to see how the hotel or business operates on a daily basis. You would do exactly the same if you were in their shoes!
Serious prospective buyers or lessees will always be well-prepared when coming to visit your property or to discuss matters with you and will probably already be aware of the particular strengths or weaknesses of your business. This means you should be prepared for honest, matter-of-fact discussions with prospective buyers or lessees.
What information will I have about prospective hotel buyers or lessees?
Your hotel broker at ASP Global Hotel Brokers will normally have carried out checks on any prospective buyer/lessee in accordance with the provisions of the Money Laundering Act, including verifying their identity. The prospective buyer or lessee will also have signed a confidentiality agreement and a binding agreement confirming that they either have the necessary equity to buy the property outright or access to sufficient finding. In accordance with data protection regulations, if a prospective buyer has provided us with bank statements / confirmations these will not be passed on to you directly without the prospective buyer’s explicit consent. Failing this you will receive confirmation from your hotel broker that the prospective buyer either has enough equity to buy your business outright or to take out a bank loan.
This is ensures that the prospective investor, buyer or lessee is not at a disadvantage and negotiations take place on a level playing field.
No hotel is perfect – not even yours
ASP sells hotel and gastronomy properties in any condition; be that hotel ruins on the banks of Lake Garda, a comfortable family hotel in Zillertal, a wonderfully beautiful and successful wellness hotel in the Allgäu, a luxury beach hotel resort in Zanzibar, or a newly built luxury hotel in a European capital city. The hotel or gastronomy property is what it is and its condition will be reflected in the asking price. As property owner you will have put a lot of money and effort into the hotel building, facilities, furnishings, expansion and constant property development. Now it is time for your ASP hotel broker to bring the prospective buyer or lessee to visit your property.
The ASPI AG hotel broker will already have informed serious prospective buyers and lessees of any flaws or shortcomings in your property. This is advisable as it means there can then be no disagreements about these aspects as they will already have been factored into the asking price. You should ideally accompany your broker and prospective buyer/lessee for most of their visit, so as to answer any questions as they arise and because after all, nobody knows your property as well as you do. If so wished your ASP broker can also carry out the visitation themselves making note of any questions, comments, etc. that may arise. They will then go through these with you and answer the prospective buyer’s questions either in person or in writing.
It is only natural that potential buyers/lessees notice aspects during their visit that they may not like or would perhaps do differently themselves. The green carpet, yellow tiles, red curtains, the whitewashed wooden ceiling in the dining room, a broken lamp and many other aspects. This is solely a question of different tastes. There might be a crack in the wall here or there, some dodgy painting, a worn or stained part of the carpet. If a prospective buyer/lessee raises an issure during the visitation do not react emotionally or indignantly, comment on it briefly and objectively, do not feel offended by it. Never forget: you would ask exactly the same questions in their position! Leave it to your hotel broker to discuss these aspects and win the prospective buyer/lessee round to them after the visitation.
What is a prospective buyer/lessee allowed to ask during a visitation?
The simple answer is: ANYTHING and EVERYTHING. There should be no issues that a serious prospective buyer cannot debate and discuss with you and/or your hotel broker, no areas of your hotel that they shouldn’t be able to visit and see for themselves. That being said, in the interest of a positive atmosphere and constructive meetings and negotiations we do remind prospective buyers/lessees to pose questions in a polite and respectful manner and to address any particularly sensitive aspects with our hotel brokers. We kindly request that you would do the same..
What documents and information do verified serious prospective investors, buyers, lessees usually have access to from the negotiation phase through to the ultimate handover?
- Fully disclosed hotel marketing material with all hard facts and descriptions
- Recent financial statements, business assessments and occupancy rates
- Staff levels, staff planning and contracts
- Cost structure
- List of deficiencies
- Land Register entries and building layout plans
- Energy performance certificate (if applicable)
- Expansion plans and possibilities if applicable
- All required technical data for equipment, etc. for due diligence tests
- Estimated valuations and valuation reports if available
- Drafts of rental/lease contracts in the case of properties for rent or lease
- Underlying rental or lease contracts with all attachments for investors
- During the final negotiations an inventory and copies of all active contracts and liabilities
This list is not exhaustive!
Honesty is the best policy!
You have a good hotel or a gastronomy property. Now do not be shy to show it, with all its strengths, and possible shortcomings and weaknesses. When showing prospective buyers around be confident but not too overbearing. Remain friendly and professional even if there are aspects of your property that the prospective buyer/lessee dislikes or if they confront you with uncomfortable questions about damages, decreases in revenue, etc. Answer these in an objective and honest manner. Do not exaggerate or present your property in an unjustifiably positive light, but at the same time there is no need to point out every flaw which the prospective buyer might have overlooked!
Always bear in mind: you would think exactly the same things and ask exactly the same questions if you were looking to buy a hotel!
The prospective buyer or lessee has to get a feel for your property, they have to be able to identify with it and have to be certain that they can make a living from it and earn enough money to run the business, meet debt repayments and provide for their family. If we can impart this sense of certainty then their stands a good chance that they will choose your property.
Lay your cards on the table!
Being honest and forthright with your prospective buyer or lessee will increase their sense that they can trust you. In this branch there is no tale that has not been told before; modest understatement is always preferable to unrealistic exaggerations and imposture. A respectable and well-groomed appearance will help to win people’s confidence. You may be faced with a professional hotel buyer or lessee who has already experienced similar personal and financial difficulties as you have done with this property on a number of occasions. They will understand your worries, problems, questions and concerns. The more honest and forthcoming you are as hotel/gastronomy business owner, the more helpful, honest, forthright and forthcoming the prospective buyer or lessee is likely to be.
Always be frank with your hotel broker and prospective buyer or lessee
After over 30 years of experience as tourism consultants and hotel brokers that is one of the most important pieces of advice we can give you. Frankness and reliability on your part, even when it comes to the small things, quickly instils prospective buyers or lessees with a sense of trust giving you an advantage over other owners.
- Request time for consideration and stick to.
- Grant prospective buyers/lessees time for consideration if requested.
- Provide requested documents and other information as soon as possible.
- Always keep appointments as arranged.
- Always share your impression of prospective lessees or buyers with your hotel broker as soon as possible.
- If a prospective lessee definitely does not meet your requirements and expectations, please turn them down as soon as possible stating both the objective and subjective reasons for your decision in detail.
- Treat all information about prospective buyers and lessees with the utmost confidentiality and do not pass any information on to third parties.
- Do not react indignantly if a prospective buyer or lessee puts in an offer which is considerably lower than your expectations. Work with your ASP hotel broker to react in an objective and considered manner. Continue to take your opposite number seriously, even if you consider the offer to be impertinent.
- Do not mention other prospective buyers/lessees to potential buyers/lessees and do not make any insinuations about the intentions of other prospective buyers/lessees.
- Do not flatter prospective buyers or lessees unnecessarily and do not make any insinuations regarding the sale or lease which could be misinterpreted or raise false hopes.
- Forthcomingness and reliability on all fronts will create a positive atmosphere for forthcoming negotiations.
Are potential buyers/lessees allowed to visit your hotel/gastronomy property anonymously?
Yes, of course they can, unless you have strictly prohibited it. You are running an accommodation facility, a restaurant, or other similar hospitality business. You would do exactly the same! If you had to choose between a number of similar hotel properties, would you not secretly book a night and try to find out more about the business from a guest’s perspective? If you then decided you liked what you had seen, would you not also try to organise an official visitation to see the parts of a hotel that guests do not generally get to see and to discuss your impressions with the owner?
Expert broker mediation
Should negotiations with your prospective buyer or lessee reach a head at any point as a result of certain differences in opinion, do not hesitate to make use of your experienced ASP hotel broker or tourism consultant’s mediation skills. They are trained to act as an impartial mediator and to find a happy medium that is satisfactory to both parties. There is almost no problem that they have not already been able to solve at least once, if not several times. Put your trust in their professionalism and experience in dealing with prospective buyers/lessees, authorities, lawyers, tax advisors and banks.
Your expertly trained hotel broker is on your side and will go to great lengths to ensure that you find and keep a suitable buyer or lessee for your property, they will help prospective buyers set up their financing and help you obtain the selling price you envisage, support you in negotiations, drawing up contracts, dealings with authorities, exchanging contracts and handing over your hotel or gastronomy property. ASP hotel brokers will support you every step of the way and can work wonders in their dealings with buyers, lessees, authorities and banks. With mutual trust and the right chemistry anything is possible.