TIPS FOR SELLING MOTELS
Starting out strong Prep, plan, be ready, lay the groundwork, whatever you want to call it. Why is it that taking the time to prepare and present a product well, that is being offered to the market, is often not a priority? Cars, motorbikes, houses, businesses, it does not discriminate. Giving a car a good clean inside and out and making sure it is running well before offering it for sale has got to help achieve a higher price in a shorter period of time. Opposed to it being filthy and the engine winding and winding before it finally kicks over and starts. The price the buyer was prepared to pay has all of a sudden taken a major blow. We often see the same thing happen with houses that are available for sale, but in the photos the lawn has not been recently manicured. Motels are no different, however having customers through the doors daily and staying in the rooms nightly with the added assistance of a good booking system with quality reporting should not really allow the opportunity for a major effort being required prior to offering to the market. Preparing for the sale of a motel should be happening every day, not just when it is time to sell. Once the decision is made to sell, if the ongoing preparation has been done over time, it will be a simple process of putting all that prepared information together and being able to hand it over to the relevant party. It really is one or the other, organised and ready to hit the market, or not. Providing a professional presentation of a motel business or property to a prospective party carries a lot of weight. It brings credibility and assists to create a smooth process, opposed to one of angst and
Andrew Morgan,
Motel Broker, Qld Tourism & Hospitality Brokers
distrust. It confirms that the business is being operated well and a seamless transition for the new owner will make their life easier, opposed to purchasing someone else’s problem. Any seller wants to achieve the highest price they can, in the shortest time, with the least amount of hassle. This is only achieved through solid preparation leading up to the business or property going on the market. It requires the preparation of not only the physical asset but also the business asset and what relates to it. The preparation of the buildings will include completing any renovation works or repair and maintenance issues. Keeping the lawns and gardens manicured and renewing old painted surfaces. The preparation of the business will include a lot of different matters; however the main area will be the financial side of the business. Those who have all their financial statements up to date and have occupancy and accommodation data available at the tap of a key, will present professionally in the eyes of potential buyers. The other will be compliance and everything that goes with it. Items such as an asbestos report, pool safety certificate, signage agreements, customer contracts/ agreements, telecommunication agreements, food licence, liquor licence, and so on…
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A seller of a motel business should always put themselves in the shoes of a buyer. Prior to offering a motel to the market preparing the information that you (as a buyer) would require or expect to see is easy to do. Look at the sale process from the buyer’s point of view, opposed to being fixed on the result. Identify the important items that any prudent buyer will require and present these in a professional manner. A potential sale will often be ruined upon the initial enquiry or five minutes before the contract of sale is due to settle without the seller being fully prepared. The latter is a very expensive exercise for all concerned if a contract of sale collapses at the last hurdle simply due to poor preparation. There is no excuse not to be fully prepared for the questions one knows will be asked, opposed to trying to avoid them. The entire sale process is an up and down one. Good management of the sale process from start to finish (especially preparation) will ensure a successful settlement. Upon deciding to sell a motel one can focus on the most important matters that will influence the buying decision of the market. There is no benefit in spending time or money on areas that are not going to draw the interest of a potential buyer or satisfy their buying motives (again, putting yourself in the buyer’s shoes). What is the information that will influence a buyer to take action which a seller has a level of control over?
Documentation Having all the documentation/ information prepared, available in an accurate and wellpresented format that a buyer acting reasonably should expect is paramount. Attend to the following prior to offering a motel to the market: Monthly income should be split
by department, accommodation, restaurant, bar, tours, and so on. Current tariff schedule should include the last time they were increased and by how much. Council property rates notice: The last two received. Online status: Social media presence as well as online booking options. Accountant’s profit and loss statements: The last three years, will be requested, all other items aside a motel’s value is a direct reflection of its profitability. Plant and equipment list: Detailed list of all chattels sold with the business, for instance beds, televisions, fridges, kitchen equipment, all tangible assets seen as holding a high value. Lease or rental agreements: Chattels under lease, road signage agreements... Lease document: If the business is a leasehold tenure, not inclusive of the land and buildings.
Occupancy rates, per month. List of recent property improvements: Refurbishment and large maintenance items should always be documented and available. External party agreements: Copies of any agreements with external parties such as chain affiliations, service providers, booking agencies… General information: On the daily operations, such as the booking system, social media, office hours, employee details...
Physical asset presentation Cleanliness: Important in the day to day running, but it is also very important upon inspection. Cleanliness goes a long way, whether the motel is five years old or 50 years old. A clean and tidy motel will impress. RESORT NEWS - JUNE 2022