Dealing with the Owner

"Negotiations should be carried always at eye level, politely and with respect for the person across from you. This too applies to the buyer, investor, or tenant, you have only one chance to make a first impression!"

This is it - the first viewings are now at hand!

You have looked at many hotel and gastronomy property details, checked the corresponding parameters and data, and have now decided to view one of more ASP hotel properties with your ASPI hotel broker. We want to you give you a few tips for dealing and communicating with hotel owners. These tips are not meant to "lecture," you in any manner, but to point out some common problems, conflict situations, issues, errors and misunderstandings as a reference for all prospective clients.

Taking cultures and traditions into account

Please do not forget that the hotel you are visiting with your hotel broker may have been in the possession of the owner’s family for many generations. Each generation will have contributed to the development of the hotel property to the best of their knowledge. For decades many family-run traditional hotels will have been reinvesting every euro they earn back into the hotel. The owner is proud of his property that he can now present to you and your hotel broker.

The reason for selling

There are many reasons why an owner may decide to sell or lease his hotel property. The most common reasons are a lack of successor, family problems, divorces, health problems, changes in interests, lack of prospects, investment delays, but also personal or economic problems and pressure from banks. In exceptional cases even impending or already initiated insolvencies can be the reason. Whatever the reason for the sale mutual respect is a must.

No hotel property is ever perfect

ASP sells hotel and restaurant real estate in all conditions. Whether it is a completely dilapidated hotel ruin on the beach of Lake Garda, a comfortable family hotel in the Zillertal valley, a beautiful and successful spa Hotel in the Allgäu, a luxury beach resort hotel on the beach of Zanzibar, an international hotel chain, or a newly built luxury hotel in a European capital, the condition of the hotel and restaurant properties is what it is and this is reflected in the asking price for the property. The hotel owners have invested a lot of capital, and love in the construction, equipment, facilities, expansion and constant development of their hotel. Now you can come with your hotel broker to visit.

In the preliminary stage, your hotel broker will have informed you about the condition of the hotel including any existing flaws and defects, etc. There may be many things you notice during the visit that do not appeal to you or that you would do differently. The green carpet, the yellow tiles, the red curtains, the white limed-wooden ceiling in the dining room, a broken lamp and many other things. Be sure not to openly criticize these aspects in front of the hotel owner during your first visit for risk of offending him. Remember them and write them down, and then discuss them calmly with your hotel broker following the viewing.

What information does the property owner have about prospective buyers or lessees?

The documents submitted by you as a prospective buyer or lessee containing information about financial history, collateral, account balance, guarantees, banking details, funding sources, etc. are treated with the utmost confidentiality and no details are disclosed to the owner of the real estate.

Before providing any confidential documentation or any viewing, the real estate owner will receive binding confirmation from the ASP property specialist agent / consultant that the confidential documents are in their possession and can confirm that equity, securities, financing commitments, etc. have been examined and are sufficient to buy or lease the property outright, or that financing can be obtained for the object in question. In this manner the negotiating position of investors, buyers or lease tenants is not compromised and both parties can meet on equal footing.

As a prospective buyer or lessee what questions may I ask a hotel owner during my viewing?

There is a simple answer to this: there is no question that you are not allowed to pose. There is no issue that you may not discuss with the hotel owner and broker. In addition, there is no area that you are not allowed to visit and check in the hotel. However, in the interests of a positive atmosphere and constructive discussions, we kindly request that all prospective buyers and lease tenants pose questions in a polite and respectful manner. Moreover, in the case of particularly sensitive issues, we request that they be handled via mediation from your hotel broker.

What documents and information will be normally provided to me as a serious prospective investor, buyer or lease tenant?

• An open hotel report containing all hard facts and a description
• Balance sheets, business analysis and occupancy rates of the last years
• Staff levels and staffing plans, personnel contracts
• Cost structure
• List of defects
• Land registry excerpts and building plans
• Energy performance certificate (if available)
• Expansion plans and options if available
• All necessary technical data about facilities, etc. for 'due diligence' tests
• Appraisal reports and valuation reports if available
• Draft of rental / lease agreement for rental or lease objects
• For investors the underlying rental or lease agreements with all attachments
• In the final negotiations an inventory and inventory lists plus a folder with all contracts and obligations

List not complete!

Honesty is the best policy! Lay your cards on the table!

In this branch there is no tale that has not already been told; modest understatement is always preferable to unrealistic exaggerations and imposture. A respectable and well-groomed appearance will give you a confidence boost. As a prospective investor, buyer or lessee you are likely to be faced with a hotel owner who has encountered his own personal and economic ups and downs at least once. So he will also understand your worries, problems, your questions and concerns. The more honest and forthcoming a prospective buyer or lease tenant presents themselves, the more honest, more open, more helpful and more forthcoming the owner is likely to be.

Always be frank with your hotel broker and the owner of the hotel

That is one of the most important pieces of advice from over 30 years of experience as a tourism consultant and hotel broker. Frankness and reliability on your part, even when it comes to the small things, quickly instils property owners with a sense of trust which can give you an advantage over other interested parties.

• Request a period of time to think things over but keep to that time period.
• Provide requested documents and information in a timely manner as agreed.
• Always keep appointments as arranged.
• Promptly disclose your impression of the hotel real estate to the hotel brokers and owners.
• Do not feel guilty if a property does not meet your requirements and expectations. Turn the property down as soon as possible stating in detail both the objective and subjective reasons for your decision.
• Keep all information confidential and do not pass any information on to third parties.
• Do not make a purchase or lease offer that could be regarded as an insult since it is so far from the price expectations of the owner.
• Do not mention to the owner that you have visited other hotel properties. Moreover, please do not make comparisons between his hotel property and other hotel properties.
• Do not flatter hotel owners unnecessarily and please do not make any insinuations regarding a purchase or lease which could be misinterpreted and create false hopes.
• Frankness and reliability in all areas will create a good atmosphere for forthcoming negotiations.

Can I view a selected hotel real estate anonymously?

In most cases this isn’t a problem. If you have a number of similar properties to choose from, your hotel broker will even suggest that you check in anonymously as a guest. What is the best way to find out what a hotel is really like? As a guest, of course! Book one or two nights in your chosen hotel and get to know the hotel from a guest’s perspective. If this second impression is a positive one, arrange an official viewing with your hotel broker to see the parts of the hotel property which are not usually accessible to guests.

Expert broker mediation

Should the discussions between you and the owner reach a head at any point due to certain differences in opinion, do not hesitate to turn to the experienced ASP hotel broker or tourism consultant as a mediator. He is trained to act as an impartial mediator to establish a common denominator between the contracting parties, resolving any differences of opinion. There is almost no problem that ASP hotel agents and tourism experts have not already resolved at least once, if not several times. Rely on our professionalism and experience in dealing with hotel owners, authorities, institutions, lawyers, accountants and banks. 

The hotel brokers of ASPI AG are always at your side

Your specialist broker is on your side and will strive to help you obtain the hotel or restaurant property that suits you. He will help you organise financing, help you get the property at the price you want in purchase price negotiations, assist you in drawing up a contract, in dealings with authorities, in the final contract conclusion and in the handover. Your ASP hotel real estate broker will be at your side in any situation, often making the impossible possible with real estate owners, authorities and banks. The prerequisite is mutual trust and the right chemistry.