What motel buyers ‘really want’

Buying a motel can be a complex process, whether the buyer is experienced or just entering the industry. If you’re selling a motel, you need a clear idea of who your ideal buyer is. This insight will be key in determining how to market your property and the ultimate success of the sale.

Here we set out the main considerations that buyers take into account when purchasing a motel.

1. Price

In a previous article of ours, called there’s no business like motel business, we discussed the different ways you can sell a motel: as a leasehold, freehold or going concern. The type of sale will have an impact on the price.

You should engage a professional business broker specialising in motel lease agreements and valuations who will be able to show you how to calculate the value of your motel.

2. Capital expenditure

If a motel buyer wants to put their own stamp on the property, they may be happy to purchase a motel that needs refurbishment. Keep this in mind if you are considering giving your motel an overhaul before selling, and don’t overcapitalise.

3. Profit

Your buyers may be running a motel as an income stream. If so, will there be enough profit to support a whole family once managers and staff have been paid? Or would your motel be better suited to a couple without dependent children?

4. Location

The location of your motel has a significant impact on the price. There is more demand for motels near the coast so they are more expensive than those located inland. Additionally, if a family with children is buying your motel, they may be prepared to pay a higher price if it is located near good schools.

5. Management options

Will the buyer’s involvement be full-time, part-time or seasonal management? If they don’t want to work at the motel full-time, will they need to employ a manager and staff? This will impact the amount of profit they can make.

6. Occupancy rates

How many rooms does your motel have? Are occupancy levels different at different times of year? Do your room rates change to reflect this?

A potential buyer will want to know all these things. It’s also worth noting that owner-occupiers with children often favour smaller motels due to family commitments giving them time constraints.

7. Seasonality

Some locations are more popular at specific times of year, such as beach locations over the Christmas holiday or during school holidays. Others cater to different activities at different times, such as mountain locations offering skiing in the winter and cycling in the summer.

If your motel is more popular at certain times of year, will the new buyers need to take their vacations during quieter periods?

8. Local competition

How much competition is there locally and how does your motel compare? Is there scope for the business to grow? It is important to share all this information with the new buyers and to paint a positive picture.

9. Local attractions

What local attractions and activities are in the area? These can provide an opportunity for new business revenue, such as organising tours or equipment hire.

10. Paperwork and calculations

Your buyer will need as much information as possible. You need to have all the numbers prepared and paperwork to hand, including certificates, licenses and warranties. This will demonstrate transparency and present your motel in the best light.

Find out more about selling a motel

If you want to find out more about motels for sale, we are always happy to help. Please contact our team for more information.