Hotel Business for Sale Key Terms

Understand the terminology you'll encounter before you seek a hotel to buy

Many of the terms surrounding the purchase of a hotel business can sound familiar--"franchise," "turn key operation" and "operating results" are all terms that are used in business fields outside of the hospitality industry, so you're likely to have encountered them if you're a business owner. Happily, in the hospitality industry, they generally retain the basic meaning that you're familiar with. However, if you're buying a hotel business, you need to ensure that you understand these terms in the right context.

Hotel broker

A hotel broker specializes in assisting both buyers and sellers with their hotel or motel transaction. With specialty in the hospitality field, a hotel broker can advise you of the special problems that come with buying a hotel or motel, determine the price you can afford and locate hotels and motels that match your business desires.

Hotel franchise

A hotel franchise is a business that has a brand name, an existing business plan, support from the franchise company and a clearly defined approach you must take to the hotel, which generally covers everything from business practices to customer service to décor. Buying a franchise hotel can provide you with support, but you lose some control over your business-so if you choose a franchise, be sure that you agree with its overall approach to the hospitality industry.

Independent hotel

An independent hotel is one that does not operate under a brand name, and the owner has full control over its business plan and operations. An independent hotel may be a small and quaint beachfront property, or it may be a large, full-service hotel in the heart of downtown. Buying an independent hotel allows you to create the business you want, though you won't have the support offered by a franchise.

Turnkey operation

With regards to hotels, a turnkey operation is one that is sold to the buyer in full, including tangible assets, an existing staff and often management. The buyer is able to step into the business immediately, with little to no disruption of the hotel's business. Franchises are generally turnkey operations, and independent hotels and motels may be.

Franchise agreement

If you buy a franchise, you will need to abide by the franchise agreement, which lists all of the expectations the franchise owner has of an owner of a hotel under the franchise brand. Before you purchase a franchise hotel, you need to review the franchise agreement.

Operating results

The operating results for a hotel include the business' costs and the income that the business generated. Before you buy a hotel, you need to have a strong understanding of its operating results so you can understand its present position in the market.

Copyright © 2013 Business.com, Inc. All Rights Reserved.

---