Selling a Hotels & Lodging Business

Hotels usually price off a blend of cash flow and real estate. Buyers look at EBITDA or NOI, then sanity-check it with cap rates, recent local sales, and what it would cost to replace the asset. Value moves most with RevPAR versus the comp set, distribution costs (brand fees and OTA commissions), and near-term capex or PIP exposure. For a starting point, use Rejigg’s free valuation calculator, then compare it to nearby hotel trades and your next 12–24 months of capital needs.

When the real estate is part of the deal, buyers underwrite the hotel as an operating business and as a physical asset. They model NOI/EBITDA based on occupancy, ADR, and distribution costs, then layer in building condition and remaining useful life for roofs, HVAC/PTACs, guestroom finishes, and life-safety systems. If major items are near end of life, price often drops or an escrow gets added. A clean capex history, bids, and inspections packaged like a due diligence checklist helps avoid late-stage renegotiation.

Sometimes. SBA loans can work for smaller hotels, but lenders tend to scrutinize condition, management depth, and cash flow stability more than they would for many other businesses. If the hotel is franchised, expect questions about the fee stack, transfer approval, and any PIP obligations. Experience in hospitality can also matter, depending on the lender and market. Run scenarios with Rejigg’s SBA loan calculator, then be ready with reconciled financials, a capex plan, and a realistic transition plan.

Most hotel sales take months, not weeks. Time goes to site visits, inspections (including life safety and major systems), lender underwriting if financed, and brand transfer approval for flagged properties. The process often slows down when a seller has to recreate monthly KPIs, capex history, or franchise documents midstream. Deals move faster when you can share 24–36 months of metrics, a clear capex or PIP plan, and organized diligence files in a secure data room. Rejigg supports buyer vetting, NDAs, and document sharing in one workflow.

No. A broker can help with pricing, buyer outreach, and managing diligence, but fees are often 5–10%, and the value depends on the asset and the broker’s hotel reach in your market. Many owners run a strong process themselves if they can market confidentially, qualify buyers, and stay organized through diligence. Rejigg is free for sellers and includes pre-vetted buyers, digital NDAs, a secure data room, messaging, and offer tracking. Start with the finding buyers guide and decide what you want to outsource.

You can, but it changes the buyer pool and the underwriting. Many hotel buyers prefer owning the real estate so they control capex timing, brand standards, and long-term repositioning. If you keep the property, the lease has to fit hotels, including who funds replacements, how FF&E reserves work, and who pays for big-ticket items like roofs and HVAC. A weak lease structure usually pushes price down. In Rejigg, you can present either structure clearly and share lease terms through the data room after NDA.

Common structures include an asset sale of the operating business plus the real estate, a real estate sale with an assumed franchise, or an operations sale paired with a new lease. Terms often include working capital targets, repair escrows for known issues, and sometimes seller financing when lenders require more equity or when capex needs are heavy. It helps to compare offers on total proceeds and risk, not just price. Rejigg’s deal tracking lets you line up purchase price, contingencies, escrows, financing, and timelines side-by-side.

Expect requests for three years of financials and tax returns, a trailing 12 months, payroll reports, OTA statements, merchant processing statements, and details on deposits and chargebacks. If you’re franchised, buyers will want the franchise agreement, PIP status, and QA or inspection reports. On the asset side, they’ll ask for capex logs, invoices, vendor contracts, and permits and inspections (fire and life safety, elevator, pool, health department, food service). A secure data room keeps this manageable. Rejigg’s data room lets you control access so only NDA-signed buyers see sensitive files.

Hotels have lumpy cash needs. Payroll, linen and supply orders, OTA payout schedules, and group deposits can create timing gaps even in profitable months. Buyers often negotiate a working capital target at closing, plus specific rules for advance deposits and prepaid reservations, especially when cancellation terms vary by channel or group. It helps to show how deposits are recorded in the PMS and how you recognize revenue. Rejigg’s diligence workflow helps you flag working capital and deposit treatment early and carry it into the LOI and purchase agreement.

FF&E is usually included in an asset sale, but buyers will separate what you own from what you lease. Laundry equipment, TVs, POS terminals, key systems, and even some kitchen equipment can be leased or financed, and buyers will look for liens or payoff requirements. They also focus on the “effective age” of guestrooms since mattresses, casegoods, flooring, and bathroom condition drive near-term capex. An FF&E inventory plus recent invoices and lease schedules speeds diligence. Rejigg’s data room makes it easy to share inventories and leases after NDA.

A flagged hotel can bring reservation engine demand and loyalty members, but the buyer underwrites the full fee stack, brand standards, and transfer approval. Many flags also come with vendor requirements and the risk of PIP work at transfer. An independent hotel avoids those fees, but the seller needs to show how demand is generated through direct bookings, reviews, local accounts, and marketing. Both can sell well, but they attract different buyer profiles. Rejigg helps you present flag status, fees, and supporting documents consistently so buyers are underwriting the same facts.

Earnouts are less common in stabilized hotel sales because performance can swing with market cycles, weather, new supply, and capex timing. They do show up when a seller claims a clear, near-term upside, like an ADR lift after a renovation or a new account ramping. If you use an earnout, tie it to measurable metrics (RevPAR index, EBITDA) and define the accounting rules and capex assumptions. Rejigg’s offer comparison tools help you model whether the earnout is achievable or just shifting risk back to you.

Most buyers include property condition contingencies (roof, HVAC/PTACs, rooms, life safety), plus title, survey, and environmental review when real estate is included. Flagged hotels typically add franchise transfer approval and confirmation of any PIP obligations. Financing contingencies are common for leveraged buyers, and hotels also see contingencies tied to out-of-order rooms or repair escrows for known defects. The practical question is which contingencies are reasonable for your asset and market. Rejigg’s deal tracking keeps contingencies explicit so you can compare certainty to close across offers.

Taxes depend on deal structure and how the purchase price gets allocated across real estate, FF&E, and goodwill. Real estate can trigger depreciation recapture and transfer taxes, and FF&E allocations can shift income between ordinary and capital gains treatment. The best structure depends on your entity, basis, and state rules, so it’s worth using a CPA who knows hospitality and real estate allocations. Rejigg helps you keep LOIs, drafts, and allocation proposals organized so your advisor can review quickly during negotiation. See the deal negotiation guide.

Many buyers ask for 2–6 weeks of seller support, especially around PMS and channel manager access, merchant processing, vendor ordering, and the weekly operating cadence. If the owner sets rates, handles chargebacks, or manages key accounts personally, buyers may ask for longer consulting or a structured handoff to the GM or revenue manager. Put the support scope in writing so expectations are clear. Rejigg’s checklists help you map systems, contacts, and routines into a handoff plan. See the transition planning guide.

Confidentiality can affect staffing, vendor relationships, and guest perception, so most sellers stage disclosure. Owners often market anonymously at first, then share location, brand, and detailed financials only after a buyer is qualified and has signed an NDA. Sensitive items like payroll detail, franchise documents, and vendor pricing usually come later in diligence. Rejigg supports this with pre-vetted buyers, digital NDAs, and a permissioned data room where you control who sees each folder. That helps you avoid rumors while still running a real process.

Deals usually break when diligence surfaces surprises that change the economics. Common issues include deferred maintenance discovered in inspections, unclear PIP scope or brand transfer friction, performance that trails the comp set with no clear explanation, recurring negative review themes that have not been addressed, and financials that do not reconcile to cash because of OTA remittances, deposits, or chargebacks. Buyers can price risks when they’re visible early. Rejigg’s prepare-to-sell guide and data room help you surface those items sooner and reduce late-stage retrades.