Buying a Hotel or B&B

Two assets in one

A freehold hotel sale prices two things at once: the property and the trade. Learn to separate them. The surveyor values the bricks; the business is read through occupancy, average daily rate and RevPAR — revenue per available room — across at least a full trading year.

Read the booking data

Booking platform statements are the modern till roll. Reconcile them against banked income, and pay attention to the shape of the year: a house that survives its winters is worth more than one that only shines in August.

• —Twelve months of occupancy, ADR and RevPAR reports
• —Channel statements reconciled to the bank account
• —Forward bookings — future income you can actually see

The building decides the terms

Fire compliance, the maintenance backlog and the state of roofs and boilers all feed directly into what a lender will offer. A tired property with strong trade is financeable; a pretty property with a failing roof is a negotiation. Commission the full survey early.

Structuring the finance

The classic structure is a commercial mortgage over fifteen to twenty-five years with deposits ranging from 5% to 30%, with interest-only options often available on strong freeholds. Where timing is tight, bridging secures the keys while the long-term mortgage completes — and retiring owners regularly accept a vendor deferral for part of the price.

Hotel and guest house acquisitions range from small B&Bs in coastal towns asking from £200,000 to established independent hotels in market towns asking several million. Most hotel acquisitions involve a commercial mortgage against the property, with the trading performance assessed to confirm the debt can be serviced from occupancy income.

If you are ready to look at funding for a specific purchase, read more about Hotels acquisition finance and loans, including how lenders assess these deals and the areas we cover.