Most sales packs are built to sell a building. They tell you what the property did, not what it will do under different ownership with a different rate strategy and a different cost base. The question worth answering is narrower than the brochure: what will this realistically trade at, and what has to be spent before it can?

Questions worth answering before you commit

• What does it trade at in year one under active management — not in the year-three column of the projection.
• What is the cost base once it is staffed to standard, and how much of the current payroll is a previous owner’s habit?
• Which part of the current revenue is durable, and which walks out of the door with the seller?
• What has to be spent on the building before it can charge what the plan assumes?
• What does the market immediately around it actually support — rate, occupancy, segment?
• Is the operating model right for the building, or is changing it the opportunity?

What I look at

• Trading history read properly — departmental P&L rather than headline revenue, and where the margin genuinely sits.
• Rate, occupancy and channel mix against what the location and the competitive set support.
• The staffing model and what it truly costs to run the property to the standard the plan assumes.
• Condition and CapEx — separating deferred maintenance from repositioning spend, because they are different arguments.
• Operating model options, including uses other than the current one.
• A trading view you can put next to the seller’s.

Refurbishment and CapEx planning

Where the plan involves spend, the useful work is sequencing it: what has to happen before the property can charge more, what can wait a year without costing you bookings, and what will never pay back however good it looks. Rooms, public areas, back of house and plant all pay back at different speeds, and in a hotel that is trading while you work, the order matters as much as the budget.

Why an operator’s read is different

Feasibility written by someone who will never run the hotel tends to be optimistic about staffing and vague about housekeeping. I look at a deal the way I would look at a hotel I was about to be responsible for on the Monday: who is on shift, what the rooms cost to clean, what the plant is going to do in January, and whether the revenue assumption survives a normal February.

Where this has been done

Seventy-five vacant student apartments in Liverpool were assessed and moved into short-term rental, taking the return from a projected 11% to roughly 15%. Read the case study →

A 140-bedroom student development in North West Ireland was empty every summer. Run as a pop-up hotel for three seasons it reached 86% occupancy and over €1m in annual sales. Read the case study →

How to start

Start with a free consultation. Send the sales pack, or simply describe what you are looking at — a trading hotel, a conversion, a building with no hospitality history. The first conversation is usually about whether the deal is worth the work of a full appraisal.

Acquisition work is one of eight areas I cover. See all hotel advisory services →