By Chase Keller, CCIM
We’ve written before about the quiet cost of putting off the sale of your hotel. Risk, competition, and costs all trend inevitably upward, and many owners wake up one day and realize that the best time to sell was two years ago.
Here are some of the patterns we see in owners who delay the sale of a business:
They’re waiting for the mythical perfect market. There are always factors that could improve over the next couple of years: consumers might be spending more on travel, your destination may become a hotspot, or the surrounding community might experience a renaissance. Meanwhile, the cost of PIPS, labor, and materials keeps rising.
Business owners are optimists; that’s why they take on the risk of buying a hotel. But every factor that might improve over the next couple of years is equally at risk of decline. No one can predict the future with any accuracy. If you’re thinking about listing your hotel for sale, running the numbers now gives you a realistic idea of what you can expect to earn. If that number isn’t enough for you to retire or move on, you can start developing a specific, time-limited plan to grow the business until it is.
They’re letting PIP and CapEx become background noise. Buyers, lenders, and brands don’t see property improvements and CapEx (capital expenditures) needs as background; they see them as major line items. They’ll factor it into the price they’re willing to pay for your property, because they’ll have to make the investments after the sale. We recommend applying the 80/20 rule to make your property more competitive. Ask yourself, “which 20 percent of these needed expenditures will raise the perceived value (or at least improve the first impression) of my property by 80 percent?”
They’re thinking only in terms of top-line price. The best headline price can actually result in less profit if it comes with more years of work and greater capital demand. If you’re holding a seller’s note or basing some of your profit on earnouts, you’re putting your investment—and your retirement—at risk. Terms matter as much as the top line; that’s why you need a process that lets you compare and contrast offers and terms.
You might need help determining which offer is best for you. That’s why we always recommend working with an experienced business intermediary. You’ll likely be negotiating with professional buyers who know exactly how to get the best terms for themselves. It pays to have someone on your team who represents you and protects your interests in the deal.
They’re getting comfortable staying in limbo. I’ve seen owners who find making the final decision to stay or go very stressful. They wind up not fully leaning into holding, not fully preparing for a sale…just drifting. It’s easy to do, no matter how committed you are to making a decision eventually. It’s what happens when you’re busy running a hotel and “someday” feels like a reasonable plan.
Here’s what a better approach looks like: The owners who feel most at peace—whether they sell now or years from now—usually do a few things:
- Get crystal clear on their real goals. Retirement, de-risking, buying another asset, spending more time with family—whatever it is.
- Lay out 2–3 concrete paths. Not just “hold or sell,” but determining what several options look like in terms of dollars, years, and risk.
- Look beyond price. They focus on net proceeds, time, and stress level.
- Decide intentionally, not reactively. If they hold, it’s on purpose. If they sell, it’s on purpose.
Once you do those things, you might still choose to keep the hotel. But you’re not just hoping the future will be kinder—you know what you’re trading off. If you’ve been telling yourself, “I’ll think about selling in a couple of years,” it might be worth seeing what that really means on paper.
If we can help you understand the value of your hotel, click here for a complimentary and confidential opinion of value.
