Understanding what you need from your hotel broker is paramount to securing a smooth transaction at an optimal price. Essentially, your broker is the captain of your transaction ship, and finding the right one can make or break your deal. Of course, personality plays an important role, and no two brokers are the same: What may work for you, may not work for someone else. However, there are some key considerations that can help guide your decision-making. Here are a few of the most important ones:
1. Market knowledge and expertise
Before retaining a broker, you will need to ensure they have a deep understanding of the hotel market and industry. They should be able to provide insights into current market trends, occupancy rates, ADR, and RevPAR for your specific location. Their expertise should also extend to both local and broader regional or national markets if necessary.
2. Track record and background
Look for a broker who has a proven track record of successfully selling hotels similar to yours in terms of size, location, and market segment. Experience matters significantly in navigating negotiations, understanding legal complexities, and ensuring a smooth transaction process. It may also be helpful to ask for references and case studies of previous transactions. You should also do your own research by looking into their previous and current listings to see if they have experience selling similar properties in terms of brand and segment and assess their marketing strategies. There are hundreds of hotels for sale, but your broker should have the ability to present what is unique about your property. Additionally, look into the broker’s hotel-specific experience. Ask yourself whether they have ever worked for a franchise, have operational/management experience, or if they have been employed at a hotel. This extra layer of experience can set a broker apart, as hands-on experience is a testament to personal knowledge and can strengthen their ability to sell an asset.
3. Network and connections
Without question, a reputable hotel broker should have an extensive network of potential buyers, including investors, hotel chains, management companies, and high-net-worth individuals. Having third-party relationships with vendors and service providers such as lenders, appraisers, franchise reps, and commercial inspectors can help significantly expedite transactions. Ultimately, a broker’s connections can greatly influence the speed and success of the sale process. As a hotel owner and investor, it’s important to dig into how broad and deep your broker’s network of connections truly is. For example, ask yourself whether your broker is too limited by a certain asset type or class; the wider they cast their net, the better chances of finding buyers.
4. Legal and financial expertise
Your broker is by no means also your attorney or your accountant. However, they are your trusted advisor, and given that selling a hotel involves complex legal and financial considerations, including contracts, due diligence, financing arrangements, and tax implications, your broker needs to have a thorough understanding of these aspects so they can work closely with your legal and financial advisors to ensure compliance and protect your interests throughout the transaction process.
5. Honesty and integrity
Of course, you want your broker to zealously represent you, but that should never come at the cost of honesty and integrity. Get to know your broker on a personal level and create an authentic relationship through open communication and transparency. It’s critical to preserve each other’s trust through the process. Problems in a transaction can arise in many different forms, but being prompt and disclosing everything is the best policy.
Apart from seeking a broker with these qualities, it’s essential to clearly communicate your objectives. Not only will this help the broker tailor their approach accordingly, but this level of transparency and open dialogue is key to a successful partnership. Whether you’re looking to sell quickly, maximize sale price, or maintain confidentiality, your broker should have a solid understanding of your priorities.
