The market for hotel transactions has come to a noticeable standstill in the last 24 months. So how hard is it to sell a hotel these days?
As a special broker for gastronomy and hotels, we receive significantly more inquiries from clients for the sale of their hotel. 2 years ago we jumped out of our chairs for joy, today the situation is different. The transaction volume on the hotel market has never been as low as in 2021. If a sale of the ensemble on Kennedy Allee in Frankfurt can be named individually, one knows how little activity was offered on the "hotel sale" market. However, a trend that was already apparent before the pandemic, perhaps not so clearly, was that hotels outside the metropolises of Germany and houses designed as holiday resorts were in demand and there is more and more demand today.
Resort hotels in greater demand than business hotels - why is that?
Due to the pandemic, the demand for holiday hotels was and is more stable and higher than the demand for business hotels. Many companies have not only discovered and established the previously frowned upon "working from home", but also experienced through the pandemic that not every meeting has to be held on site and in person. Certainly nothing replaces personal contact, but today - also thanks to the improved infrastructure and improved technical equipment in the companies - this can be guaranteed via video conferences. In the long run, this also leads to a reduced need for overnight stays in the business segment. Therefore, the demand for leisure travel is more stable than that for business trips and as a result, the attractiveness of resort hotels as an investment or as part of their own brand is also increasing.
So what does this mean for selling a hotel? It won't get any easier - but it won't be impossible either! You have to examine the situation very carefully. Because one rule is also valid today in times of the pandemic:
A 1A-location is not reproducible!
By acquiring an existing building, investors gain access to locations for which building permits for the construction of a new building would no longer exist today. This must be used in the sales process! Today, more than ever, investors want to see finished concepts. Especially in the case of leisure resorts, it is important when selling the hotel to have opened up the catering trade for the guests, and accommodation for the staff must also be planned. The offers for the guests are also an important factor.
It can also be seen that hotel investors are increasingly adapting their acquisition profiles to the market situation. There is definitely movement here. So one can say: There is definitely movement in the hotel market again and the year 2022 will definitely record more transactions than 2021. A decisive factor that unfortunately always presents us with challenges: the risk departments of the banks. Here both feet are on the brakes when it comes to financing hotel properties. As a special broker, we work here alternatively with partners in order to enable buyers to obtain financing outside of the local banks.
Conclusion:
There is movement again in the hotel transaction market and the challenges that arise when selling a hotel are not insurmountable hurdles. However, when bidding on potential buyers/investors, the location, concept and development of the region is even more important than before the pandemic