Commercial Sales · the broker's view
A Hotel Sale Must Explain the Real Estate and the Operating Business
Room count is visible from the road. The economics behind those rooms take closer work. Occupancy, average daily rate, the condition of the property, staffing, franchise rights and the capital the hotel will need all shape how a buyer evaluates both the property and the business run inside it. A seller should be able to explain each one from records.
Discuss My Hotel or Motel Sale
The Short Answer
A hotel is real estate with an operating business inside it, and a buyer prices both. The seller needs two records: how the rooms perform, taken from the hotel's own reports, and what the property is, from title to roof. Franchise or management agreements can limit who may buy and on what terms. At BreakThru Realty a licensed commercial agent runs the sale, with Tyson E. Sam accountable as broker of record.
Two Things Are Being Sold at Once
An office building keeps earning rent if the owner goes on vacation. A hotel does not. Its income is made one night at a time by staff, a reservation system, a brand or the lack of one, and decisions about rate. A buyer is taking over that operation on the day of closing.
So the buyer asks two sets of questions. About the business: how full are the rooms, at what rate, in which months, and what does it cost to produce that revenue? About the real estate: what condition is it in, what must be spent on it, and what is the land worth by itself?
A third party often has a say as well. If the hotel carries a franchise, the franchisor usually decides whether a new owner may keep the name and what improvements come with that approval. If a management company runs it, that contract may or may not end at a sale. An attorney should read both documents before the hotel is marketed.
A Seller Preparation Matrix
Each row is an item a buyer will request. The figures come from the hotel's own reports and are never estimated for a listing.
| Item | What it tells a buyer | Where it comes from | Who reads it with you |
|---|---|---|---|
| Occupancy | How many of the available room nights were sold | The property management system, by month | Your accountant |
| Average daily rate | What a sold room earned on average | Room revenue and rooms sold, from those reports | Your accountant |
| RevPAR | Revenue earned across every available room, sold or not | Room revenue and rooms available | Your accountant |
| Room mix | How many rooms of each type, and any out of service | The room inventory | The commercial agent |
| Seasonality | Which months carry the year | Monthly reports for at least three years | Your accountant |
| Profit and loss statements | What it costs to produce the revenue | The books, reconciled to the tax returns | Your accountant |
| Franchise or management agreement | Whether the name and the operator can stay, and on what conditions | The signed agreements | Your attorney |
| Property improvement plan | Work the franchisor requires, and by when | The franchisor's written plan, if one has been issued | Your attorney and a contractor |
| Condition | What a new owner must repair or replace | Inspection and maintenance records | An inspector or engineer |
| Land and title | What is owned, any ground lease, easements and zoning | Survey, title policy and the local zoning office | Your attorney and a surveyor |
A buyer and its lender will test the summary against the source records, so the two should match.
ADR and RevPAR, Worked Once
Take a hypothetical 60-room motel over a 30-day month. It has 1,800 room nights available. It sells 1,260 of them and takes in $163,800 in room revenue.
Occupancy is rooms sold divided by rooms available: 1,260 ÷ 1,800, or 70%. Average daily rate is room revenue divided by rooms sold: $163,800 ÷ 1,260, or $130. Revenue per available room, RevPAR, is room revenue divided by rooms available: $163,800 ÷ 1,800, or $91. Multiply the rate by the occupancy and you reach the same $91.
The two measures answer different questions. Average daily rate says what guests paid. RevPAR says how well the whole building was used. A hotel can lift its rate and lose enough occupancy that RevPAR goes down, which is why a buyer reads them together, month by month.
A hypothetical month. The figures are not benchmarks for any Florida hotel or market.
The Real Estate and the Business, Side by Side
The real estate
- The land, its zoning and what else could be built there
- Building condition: roof, plumbing, electrical, elevators, pool and life-safety systems
- Flood zone, insurance and any building inspections the local government requires
- Title, survey and any ground lease
- Furniture, fixtures and equipment, and whether they are owned or leased
The operating business
- Room revenue by month and the reports behind it
- Payroll, staffing and who stays after the sale
- Reservation channels and what each one costs
- Licenses to operate, issued by state and local agencies: an attorney confirms what transfers and what a buyer must apply for
- Franchise or management terms, including approval of the buyer
Before the Hotel Is Shown to Anyone
A hotel sale is usually kept quiet so that staff, guests and competitors do not hear of it early.
- Read the agreements. An attorney reviews the franchise and management agreements for transfer terms, charges and any improvement plan a sale would bring.
- Reconcile the numbers. Monthly operating reports are tied to the financial statements and the tax returns, so all three agree.
- Document the property. Condition, capital work done and capital work pending, with dates and invoices.
- Decide what stays private. The owner agrees what may be said without naming the hotel and what a buyer sees only after signing a confidentiality agreement.
- Qualify before disclosing. A buyer shows it can complete a purchase before detailed records are released. A buyer who needs a loan should consult a lender before making an offer.
Questions Worth Asking First
- What documents matter in a Florida hotel sale?
- Two groups. For the operation: monthly occupancy, average daily rate and room revenue for at least three years, profit and loss statements that agree with the tax returns, payroll records, the franchise agreement or management contract, and any property improvement plan. For the real estate: the survey, the title policy, any ground lease, zoning confirmation, insurance, and records for the roof and building systems. Operating licenses are issued by state and local agencies, including the Department of Business and Professional Regulation for lodging, and an attorney should confirm which ones a buyer must obtain in its own name.
- How are ADR and RevPAR different?
- Average daily rate, or ADR, is room revenue divided by the number of rooms sold. It tells you what a sold room earned. Revenue per available room, or RevPAR, is room revenue divided by all the rooms available, sold or empty, so it combines rate and occupancy in one figure. A hotel with a high rate and many empty rooms can have a lower RevPAR than a cheaper hotel that is nearly full. Buyers look at both, by month and over several years, and at what it cost to earn the revenue. Both should be calculated from the hotel's own reports.
- What is a property improvement plan in a franchised hotel?
- A written list of renovations and upgrades a franchisor requires so the hotel meets the brand's current standards, with a schedule for completing them. One is commonly issued when a hotel changes owners or a franchise is renewed, though the franchise agreement and the franchisor decide when and what. For a sale it matters twice. The cost of the work affects what a buyer will pay, and the franchisor's approval of the buyer may depend on accepting the plan. Ask the franchisor early whether a plan would be issued, and have an attorney read the transfer terms.
Who Does What
- A licensed BreakThru Realty commercial agent does the day-to-day work and is your main point of contact.
- Tyson is the broker of record: the licensed Florida broker accountable for the brokerage and every agent under it. He reviews the offers, contracts and closing statements that move through the company.
- Which agent works with you, and how the brokerage will represent you, is set out in writing before any work begins.
| Broker of record | Tyson E. Sam, Founder and Broker of Record, BreakThru Realty |
|---|---|
| Florida real estate license | 3565210 |
| Also listed as | Tyson Sam, the spelling in MLS records and on the listing sites they feed |
| Brokerage | BreakThru Realty LLC, a licensed Florida real estate brokerage |
Brokerage compensation is negotiable and is agreed in writing before any work is marketed. No fee or rate on this page is a standard one.
BreakThru Realty is a real estate brokerage. It does not give legal, tax, lending, engineering or appraisal advice: an attorney, a CPA, a lender, an inspector or an appraiser answers those questions, and a broker's opinion of value is not an appraisal.
This Page Explains the Thinking. The Service Page Does the Work.
What the brokerage does for you, step by step, and how to start is on its own page: Florida hotel brokerage.
Every figure on this page is an illustration: arithmetic on assumed inputs, shown so the reasoning can be followed. None is market data, a comparable sale, an appraisal, a forecast or the result of a BreakThru Realty transaction.
Review Your Commercial Property Options
Tell us what you own and whether you are weighing a sale, a lease or both. A licensed BreakThru Realty commercial agent replies within one business day to go through the income, the leases and the questions a buyer or tenant will ask. No documents are needed to start.
The form asks for: I want to; Property type; City or county; Approximate building size or acreage (optional); Occupancy; Asking range, if you have one; then your name, an email address or a phone number, and your consent to be contacted about the request. It asks for no documents.
Your request is with BreakThru Realty. A licensed commercial agent replies within one business day to talk through the property, its income and your options. Nothing is marketed or signed unless you decide to go ahead.
Prefer to talk? (786) 914-1017 · sales@breakthrurealty.com
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- Mixed-Use Property Sales: Storefronts, offices and apartments carry different risks. Separate the income by use before a buyer does it for you.
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