UNCOVERING THE BENEFITS OF HOTEL BUYING THROUGH HOTEL BROKERS

Are you interested in buying or investing in hotels? In this article, the Hotel Brokerage Team of Titans RE has compiled some information you do your first step into hotel real estate investments .

Introduction to Hotel Brokerage

Hotel brokerage is the process of buying or selling a hotel through a brokerage company specializing in hotel real estate sourcing. Buy-side hotel brokers are going one step further and focus on the needs of the investment companies and families interested in the hospitality industry. Buy-side brokers facilitate the sourcing and acquisition of hotel real estate with their industry network and insights.

When buying a hotel, a broker can help you find the right property at the right price. They can also provide you with market analysis and insights, and they can assist you in negotiating with the seller. On the other hand, when selling a hotel, a broker can help you market the property, find potential buyers, and negotiate the best deal on your behalf.

In short, hotel brokerage can provide you with a much more efficient, secure, and cost-effective way to buy or sell a hotel. There are many benefits to buying a hotel through a broker. Here are some of the top ones:

Market Insights

The first benefit of using a broker is that they will provide you with invaluable market insights. They will help you understand the hotel market in your area and the type of properties that are in demand. This will help you make a more informed decision about which hotel to buy.

Negotiations

Another benefit of using a broker is that they can help you negotiate the best deal with the seller. They are experienced in negotiating and they know the market, so they can ensure that you get the best possible price for the property.

Financing

A broker can also help you secure financing for the purchase. They will be able to provide you with access to lenders and financing options that you may not be aware of. This can help you save time and money when it comes to securing the funds to purchase the hotel. One service that is unique to Titans RE is the Joint Venture deal formations, which allow Hotel Operators to find capital partners through Titans RE.

Support

Finally, a broker can provide you with support throughout the process. From finding the right property to closing the deal, they can help ensure that everything goes smoothly. They can answer any questions you have, provide advice, and help you make the best decisions.

The Steps Involved in Hotel Buying Through a Broker

The process of buying a hotel can vary from region to region and seller to seller but here is an example of a process for hotel buying:

Step 1: Building the right Sourcing Channels

The first stop is to find the right brokers for your needs. You should do your research and find a specialized broker who is experienced in the hotel market you are interested in and who can provide you with the support you need. Titans RE is operating as hotel investment agency and is a choice if you prefer getting regular off-market opportunities that are matched against your profile.

Ensure also that you have a strong team and a business plan in place, investing and buying in the hotel space is not for the faint hearted and preparation is key for success. For more information on what you should consider for a business plan, read this article here.

Step 2: Assessing Your Needs

Once you have found a broker, the next step is to assess your needs. You should discuss your requirements with the broker and make sure that they understand what you are looking for. This will help them find the right property for their needs. At Titans RE, you can create a profile with parameters such as room numbers, strategy, location type, etc.

Step 3: Finding the Right Property

Once you have assessed your needs, the broker will start looking for the right property for you. They will use their market knowledge and resources to find suitable properties for you to consider. Some brokers might offer you also a service that allows you to choose any specific hotel to check if it’s for sale or not.

Step 4: Due Diligence

Once the broker has found some suitable properties, the next step is to assess and visit them. You should view the properties in person to get a better feel for them and to ensure that they meet your requirements. Before you can assess the full details of an off-market deal, you would need to sign most probably also NDAs, NCAs and term sheets. Depending on the standing of your company, or whether it is publicly listed or not, you might also need to provide a proof of funds in advance.

Step 5: Negotiating the Price & Finding Lenders

Once you have found the right property, the next step is to negotiate the purchase price. This is where the buy-side broker’s expertise comes into play. They will use their market knowledge and negotiating skills to make sure that you start the negotiation at the best position possible. With Titans RE you already get a detailed term sheet template that will help you to position yourself on the major terms and get our advice.

Another challenge will be to find a Lender that understands the business of hotel operations and do not categorize them as high-risk which will result in higher interest rates and frequency of the periodic reviews. Titans RE can help you with the entire capital brokerage and KYC process with the banks. Should you be an Operator that is not buying but rather teaming up with equity partners, consider also joint ventures.

Step 6: Closing the Deal

The final step is to close the deal. This is where the broker will help you with the paperwork and facilitate the exchanges with the sell-side and even the early steps after the deal closure to not lose any valuable time. Once the deal is closed, the property is yours!

Back to Finding the Right Broker for Buying Hotels

Finding the right broker for your needs can be a daunting task. Here are some tips for finding the right broker:

Research

The first step is to do your research. You should look for brokers who specialize in the hotel market and who have experience with buying and selling hotels.

Tips for Ensuring a Smooth Hotel Buying Process

The process of buying a hotel is a highly complex undertaking, so it’s important to make sure that everything goes as smoothly as possible. The most important steps would include the analysis of the sub-market of the property, working with professional advisors and structuring a solid negotiation process. Here are some tips for ensuring a successful hotel buying experience:

Understand the Sub-Market

It is important to understand the hotel market in your area. Research the demand generators, seasonal fluctuations, tourism and flight statistics. Check the competitors closeby and what the guests tell about the location - Titans RE has for all its properties a Location OTA Score which shows you how well the hotel is located from a guest’s view. This will help you make a more informed decision when it comes to buying a hotel.

Get Professional Advice

Titans RE considers more than 30 factors when sourcing properties and offering them to investors and operators. It’s also a good idea to get professional advice from a lawyer and an accountant. They can help you understand the legal and financial aspects of the process and make sure that everything is in order.

Negotiate

Finally, make sure to negotiate the best deal possible. The broker can help you with this, but it’s important to understand the market and be willing to negotiate. The term sheet you would get from your Broker as a template is already a strong fundament for thinking about the most important elements of your investment before entering the deals room.

Conclusion

In this guide, we have explored the world of hotel brokerage and its many benefits for both buyers and sellers. Hotel brokerage stays a complex project and should be considered by experienced hotel investors and buyers. However, if you wish to enter the domain of buying, operating or investing in hotels as a beginner, it is critical to work with facilitators like specialist brokers that hellp navigating through the complexities of buying or selling a hotel property.

From providing invaluable market insights to expert negotiation skills, brokers play a pivotal role in ensuring a successful transaction. The steps involved in the process, from finding the right broker to closing the deal, underscore the importance of thorough planning and diligent execution.

Finding the right broker and other sourcing channels is paramount, and diligent research, seeking references, and conducting interviews are key steps in this process. Additionally, understanding the market and seeking professional advice are crucial elements in ensuring a smooth hotel buying experience.

As you embark on your journey into the realm of hotel buying, armed with the knowledge and insights shared here, may you navigate the process with confidence and achieve your goals. Whether you're a seasoned investor or venturing into hotel ownership for the first time, hotel brokerage offers a strategic approach to realizing your aspirations in the hospitality industry.

If you are interested in taking the first step into hotel real estate investment creating a Search Profile at Titans RE might be a good idea.

Advantages of working with Buy-side Hotel Brokers