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Is NOW a good time to sell my hotel?

August 24, 2021 11:11 am

Is NOW a good time to sell my hotel?

Over the course of the last 18 months, our answer to the above question was changed several times, from YES, to NO, and then to YES again

Early in the pandemic (2020), we misread the virus, the pundits, and history itself, thinking the we could emerge from the effects of the downturn by the end of the summer 2020.  That approach was simply a product of an overly positive attitude and wishful thinking.    However, we were still partly accurate in our approach in that deals were still getting done, especially in the 3rd and 4th quarters.  We closed a number of deals that were placed under contract in the 1st and 2nd quarters of 2020, but delayed (on purpose) as a “wait and see” tactic.  If a hotel had cash flow, and was relatively unaffected by Covid 19, we could get deals to the finish line.

By mid-year, though, we had realized that emergence from the virus would take longer than we thought, and recovery would be directly correlated to an effective vaccine.   During that time, (3rd & 4th quarters) owners who inquired about selling, and had declining revenues, were advised to “hold” their assets, especially if their property had experienced significant declines in revenue.  It became quite obvious that we could not sell properties based on their 2019 revenues, and the values were being affected by Covid, and in some cases dramatically.   In those rare cases where revenues compared favorably to 2019, then there was certainly a market for these assets, but not at pre-Covid price points.  Buyers still expected some level of risk adjusted discount…………..and the more stable the revenue, the less the discount.

Today, we are seeing more of the same.   That is, most markets and asset types are demonstrating pre-Covid revenue levels, or nearly so, when comparing month over month 2021 to 2019.   We believe that the month over month comparisons will be key to showing the path to recovery, both in revenue and in the associated values of the assets.

So, what is the answer to the lead question above?………like always, it depends.  However, no matter the economic climate,  there has always been a market for cash flow deals and now is no exception.   That is the beauty of hospitality business……..it is an operating business with real estate to shelter the income.  Also, if your property cash flowed prior to Covid, and it is showing steady revenue increases toward 2019 levels, then you have a great story to tell.

For additional discussion on the affects to the pandemic on revenue and value, and to discuss a possible exit strategy, please give any of our experienced brokers a call.    We will consider it a privilege to discuss your property and your situation.  The following is a link to our TEAM tab on our website:  https://www.leisurerealestate.com/broker/

Also, for additional articles on the effects of the pandemic on your business, check out our Blog posts:  https://www.leisurerealestate.com/blog/