What Motel Buyers Really Want
- AquaTerra Brokers
- Sep 21, 2024
- 3 min read
Updated: Jul 17
Buying a motel is often a complex process, whether the buyer is an experienced investor or new to the industry. As a seller, having a clear understanding of your ideal buyer is crucial. This insight will help you effectively market your property and ensure a successful sale.
Below, we outline the main considerations that motel buyers typically evaluate when purchasing a property.
1. Price
In a previous article titled There’s No Business Like Motel Business, we discussed the different ways to sell a motel—whether as a leasehold, freehold, or going concern. The type of sale you choose significantly influences the price.
It’s highly recommended that you engage a professional business broker specialising in motel lease agreements and valuations. They will help you accurately calculate the value of your motel based on its unique characteristics and of course it’s Profit & Loss Statements.
2. Capital Expenditure
Buyers may be interested in putting their own touch on the property, especially if it requires refurbishment. If you’re considering renovating before selling, keep in mind not to overcapitalise. Sometimes, leaving room for improvement can be an attractive feature for buyers who want to customise the property to their liking.
3. Profit Potential
Motel buyers are often looking to generate income from the business. It's essential to consider whether the motel’s profit can sustain a family or if it’s better suited for a smaller team or couple. After deducting management and staff costs, will the income be sufficient to meet the buyer's expectations?
4. Location
Location plays a huge role in determining a motel’s value. Coastal motels are typically in higher demand and command higher prices compared to those located inland. Additionally, families with children may be willing to pay a premium for motels located near good schools or family-friendly amenities.
5. Management Requirements
The buyer’s management involvement is another key factor. Will they be managing full-time, part-time, or only during peak seasons? If they don't plan on working full-time, they’ll need to hire staff, which will impact profit margins. Understanding the buyer’s management intentions helps you better position your motel for sale.
6. Occupancy Rates
Buyers will want to know details about your motel’s occupancy rates, room availability, and how these fluctuate throughout the year. Do room rates vary seasonally to reflect demand? Smaller motels often appeal to owner-occupiers with families, as they allow for more flexibility with time management.
7. Seasonality
The popularity of your motel may be tied to specific times of the year, such as beach motels during summer holidays or mountain motels during the ski season. Potential buyers will want to know whether they can take advantage of the high season and plan accordingly during quieter periods.
8. Local Competition
How competitive is the local market, and where does your motel stand in comparison? Is there room for the business to grow? Providing buyers with insights about local competition and future growth opportunities can help paint a positive picture of your motel’s potential.
9. Local Attractions
What attractions, events and activities are nearby? Local hotspots can be key to increasing occupancy rates. Highlighting opportunities to generate additional revenue through partnerships with tour operators or equipment rentals will make your property more appealing to potential buyers.
10. Paperwork and Financials
Buyers will want full transparency, so it’s essential to have all necessary documents prepared. This includes certificates, licenses, warranties, and detailed financial records. Presenting your paperwork in an organised, professional manner not only instils confidence in the buyer but also showcases your property in the best light.
Ready to Learn More?
If you’re interested in learning more about selling a motel or viewing current motels for sale, we’re here to help. Contact the team at AquaTerra Brokers for more information and expert advice on your next steps.
