Whether you are planning an exit, a 1031 exchange or your next acquisition, the value of a franchised hotel comes down to a handful of factors buyers and lenders look at first. Here is how the Hotel Brokers of America team walks owners through them.
1. Trailing performance
Buyers underwrite the trailing-twelve-month (T-12) net operating income, along with occupancy, ADR and RevPAR versus the competitive set in your STR report. Clean, monthly P&Ls and a consistent RevPAR index are the fastest way to build buyer confidence.
2. Brand, franchise term and PIP
The remaining franchise term and any Property Improvement Plan (PIP) required on sale directly affect price. We recommend requesting a change-of-ownership PIP early so buyers can price it in rather than discount for the unknown.
3. Financing availability
Most select-service hotels trade with SBA 7(a), SBA 504 or conventional bank financing. Debt-service coverage on the T-12 determines how much leverage a buyer can get, which sets the realistic price range.
4. Market and demand generators
Corporate, government, medical, university and highway demand all support value. New supply under construction in your submarket is one of the first things buyers ask about.
5. Timing and 1031 demand
Exchange buyers on deadlines often move faster and with fewer contingencies. Through 1031 Hotels, we match sellers with qualified exchange buyers.
Thinking about selling? Request a free valuation or contact Hotel Brokers of America.
