Selling a hotel: value drivers and timing

Value drivers in order of impact

First, the remaining term of the lease or management agreement. Below ten years the discount starts; below five most institutional buyers step away. Second, the operator covenant and whether a parent guarantee exists. Third, rent cover: a GOP-to-rent ratio comfortably above 1.3 signals the rent gets paid in weaker years too.

Location, key count and condition come after that. It surprises many owners, but it mirrors how every investment committee works through the file.

• Remaining term including extension options and their conditions
• GOP-to-rent ratio for the last three years
• Deferred CapEx quantified separately for structure and FF&E

Preparation: what twelve months can still change

Extending the operator agreement before a sale is the single strongest lever. Operators often agree in exchange for a committed refurbishment budget. It costs capital but usually lifts the multiple by more.

Second, quantify deferred CapEx instead of hiding it — a buyer who finds it himself prices it generously in his favour. Third, document the owner/operator responsibility split where practice differs from the contract.

Timing and process

The best moment is after two to three years of improving trading and before the next major refurbishment cycle. Waiting until after the works means funding the uplift yourself and rarely getting full value for it.

We run hotel sales discreetly almost without exception: limited buyer group, staged disclosure under NDA, no anonymous teaser with identifiable features. A broad process seldom adds price in hotels but reliably adds disruption.