Whenever you make up your mind to exit your independent hotel, make sure you allow lots of time to prepare your hotel for a successful market listing. Your aim should be to present your would-be buyers with a well-run, profit-making business operation. Getting your business to a required exit standard requires careful planning and preparation in order to maximise its value.
Whether you’re considering selling the hotel or passing it on to new management, here are our essential tips to make your hotel ready for a successful exit:
1. Maximise Balance Sheet Value: One crucial step is to have your fixed assets revalued by a professional appraiser. As market conditions change, the value of your property and assets may have increased and getting an accurate valuation will help you negotiate a better deal during the exit process. Read more here.
2. Maintain Updated Management Information: To instill confidence in potential buyers or new management, ensure that all financial records and management information are up to date and meticulously organised. This includes profit and loss statements, cash flow reports, occupancy rates, KPI’s such as REVPAR/TREVPAR, guest review ratings and other key performance indicators. Read more about creating a solid MI foundation here.
3. Develop a Three-Stage Financial Model: Prepare a comprehensive three-stage financial model that showcases the hotel’s potential for growth. This model should outline revenue projections, expense forecasts, and potential return on investment. Having a well-structured financial model will help buyers or investors understand the hotel’s potential growth in line with its historical performance. Read more about a three-stage financial model.
4. Strong Management Team: A successful exit plan should involve building a strong and capable management team or hiring a reputable management company. Demonstrating a well-functioning team will reassure buyers that the hotel can continue thriving without the direct involvement of the current owner, this can lift the hotels capital value by as much as three multiples of profit. Learn more about developing your management team.
5. Build a Strong Brand and Website: A strong brand presence and a user-friendly website are essential for attracting direct bookings and reducing reliance on Online Travel Agencies (OTAs). Invest in branding, professional photography, and an optimised website that showcases the hotel’s unique offerings and amenities. Additionally, invest in digital marketing to reach potential guests effectively, lots of guests buy with their eyes in this digital age, so effective Instagram, ticktock Facebook and twitter advertising is key to driving traffic to your website for direct bookings. Be creative! Find out why marketing is the foundation to growth here.
6. Implement a Robust Revenue Management and Marketing Strategy: Your revenue management and marketing strategies should align completely to attract the right target audience of whom would want to stay at your hotel at the right price. Utilise customer data to drive analysis and insights that will help to make promotions successful across the best performing distrubution channel. Find out more here.
7. Compelling Food and Beverage Offerings: Enhance your hotel’s appeal by developing a compelling Food and Beverage (F&B) offering. Guests should have multiple reasons to visit your hotel, including outstanding dining experiences. Collaborate with experienced chefs and focus on creating unique dining concepts that set your hotel apart from competitors, consider guest chefs, pop up restaurants. You can read our blog on the power of hotel pop ups.
8. Keep Contracts Up to Date: Ensure that all contracts, including HR and commercial agreements, are up to date and legally compliant. This step will demonstrate professionalism and organisation to potential buyers and protect the business from potential legal issues in the future, this will form a crucial part of your data room when you are in exclusivity with a buyer. Read more here.
9. Focus on Guest Experience: A satisfied guest is more likely to become a repeat customer and leave positive reviews, which can help to boost the hotel’s reputation and increase direct bookings. Train your staff to provide exceptional service and constantly seek guest feedback to improve the overall guest experience. Find out ways in which you can offer a great customer experience here.
10. Have robust training: By analysing staff and your internal skills you will identify any skill gaps that could be hindering your growth through poor customer service. You may look to external training providers when you do find this gap in expertise. Not to fear though as the cost can often be fully funded by the levy or by a training provider adult skills budget. Find out why training staff to a great standard can unlock the key to growth here.
Bonus Tip ? Consider Your Sustainability Efforts: In today’s world, sustainability is becoming increasingly important to travelers. Investigate how you could implement eco-friendly practices where possible and when you do, promoting your hotel’s sustainable initiatives. This commitment to responsible tourism can attract environmentally conscious guests and enhance the hotel’s reputation.
Preparing your independent hotel for a successful exit requires strategic planning and meticulous attention to detail. By maximising balance sheet value, having up-to-date management information, building a strong management team, and focusing on branding, direct bookings, and guest experiences, you can attract potential buyers or management and ensure a smooth transition.
Remember that presenting a compelling financial model and aligning revenue management and marketing strategies will further enhance your hotel’s appeal. By following these top tips, you will increase the chances of a successful exit and leave a lasting legacy for your hotel’s future.
If you are thinking about exiting your hotel, why not get in touch. We have decades of experience of buying and selling hotels, and we have all operated hotels for many years, so we feel your pain!
