When buying or leasing hospitality property, such as hotels, resorts, or other accommodations, several critical considerations must be carefully evaluated to ensure the success of the investment and operations.
For hospitality properties, location is paramount. Properties should be easily accessible and ideally located near major attractions, business districts, airports, or scenic areas. Accessibility to public transportation, parking availability, and visibility are also important factors that can impact guest satisfaction and property value.
REGULATORY COMPLIANCE
Regulations - Ensure the property complies with all local, state, and federal regulations, including zoning laws, health and safety codes, and accessibility requirements.
Licensing - Licenses for operating restaurants, bars, and other on-site facilities must be in order and transferable where applicable.
CONDITION OF PROPERTY
Assessing the physical state of the property is essential. This includes the condition of guest rooms, public areas, amenities (like pools, gyms, restaurants), and meeting spaces. Consider the costs of necessary renovations or upgrades to meet current market expectations and safety standards.
OPERATIONAL COSTS
Running a hospitality property involves various ongoing expenses including utilities, staffing, maintenance, marketing, and insurance. Understanding these costs is vital for projecting profitability. When leasing, it’s important to clarify what expenses are covered by the landlord and which are the responsibility of the tenant.
BRAND ALIGNMENT
If the property is or will be part of a franchise or hotel chain, consider how brand standards and management agreements align with your business goals. Brand affiliation can significantly impact operational guidelines, marketing support, and revenue potentials but may also involve franchise fees and operational restrictions.
TECHNOLOGY
Modern travelers often expect a high level of technology integration and amenities. This includes free Wi-Fi, online booking systems, smart room features, and contemporary amenities. Assessing the cost and feasibility of implementing these features is crucial for remaining competitive.