Hotel Brokers America is often surprised by owners’ decisions to list their hotels with firms who do not specialize in hotel sales, or brokers who have little experience. We are often asked ‘how do I select a broker to sell my hotel’? Below is some information that may help.

Specialization

Hotel sales are a very specialized business, and the success of a sale will depend on who you hire. Commercial brokerages that do not ‘exclusively’ specialize in hotel sales, just don’t have the deal experience to close a hotel that a specialized hotel broker does.

Neville was a Top Ten Hotel Broker with a large hotel brokerage company that claimed to sell more hotels than any other brokerage. The simple fact is, the more brokers you hire, the more hotels you will sell. It is just a matter of numbers, not expertise. The reality is that the average number of sales per broker in these large firms is about two a year. It is the Top Ten hotel brokers within a firm that close the majority of the deals. It’s not the company or ‘platform’, but the talents and marketing skill of each individual broker that counts. Their marketing flyers may show pretty pictures and graphs with claims that multiple brokers and office locations leads to a higher probability of a sale. This is a myth! The fact is, there is little to no cooperation within most large hotel brokerage firms, or between these larger brokerages. This is why Hotel Brokers America was founded to be a ‘Boutique’ hotel brokerage company, where you are not one of 100’s of clients . We treat each unique Buyer or Seller professionally, and devote the time and expertise of a Top Broker with proven results.

Not all brokers are created equal. The number of ‘listings’ a broker has for sale means nothing. Larger companies call this ‘controlling inventory’. Any company can generate more listings by falsely claiming they can sell a hotel for a higher price. Often unsuspecting owners fall for this strategy of large firms acquiring more listings to promote having ‘market share’. Inexperienced brokers with limited ‘sold’ hotels experience, will take overpriced listings just to get their name out in the market place. They promote their names by using the listing to get owners to talk with them, rather than achieving the Seller’s objectives. Brokers will promote their large company; fancy marketing brochures; and the teams they belong to; rather than their ‘own’ accomplishments of proven hotel sales success. When such brokers are unable to sell the overpriced hotel, they begin to ‘pressure’ the Seller to ‘meet the market’ and to accept lower offers. This is ‘overpromising and under delivering’. Hotel Brokers America is not in the business to waste an owner’s time, and provide false expectations. Do you want to waste time, expend energy, and be put under pressure to sell for less?

Hotel Brokers America takes the time to fully understand the market and the asset. We price a hotel correctly right from the start, so it will actually sell. Honesty is the best policy, and ‘sold’ hotels demonstrate a broker’s abilities. Even if an inexperienced broker gets a buyer willing to pay a bit of a premium, it is the lender that provides 70% or more of the acquisition price. The lender will have an experienced hotel appraiser evaluate the investment, and an overpriced hotel will not get financed and the deal will die. In the meantime, the owner will have spent a lot of time, energy, and misled hope on a sale that had a low probability of closing right from the start.

An experience hotel broker will have a strong understanding of the local market, current investor sentiment, and the debt markets. At Hotel Brokers America, we stay abreast with local, regional, and national news, especially as it pertains to hospitality. We spend a lot of time reading articles about the industry, so we are aware of changing trends, and understand the micro and macro-economic environment. A successful hotel broker will have a track record of their ‘completed’ hotel sales. Each sale brings a wealth of deal knowledge, because different circumstances and issues arise. There are no short cuts to learn this, it comes from deal experience and years in the business. This will ensure a smooth transaction to closing, because an experienced hotel broker will have encountered similar issues that he has learned to solve.

Hotel Brokers America has proven sales demonstrating that we will market your hotel in a unique manner, that separates your listing from hundreds of others on the market. We represent you in a hotel sale, and commit to be honest and work with integrity so you will refer us to friends, family, and industry acquaintances. You want a broker who is tough and will ask the right and often hard questions. If you get a meek ‘yes man’, who will do whatever you say, how do you expect them to stand up and vigorously negotiate with prospective buyers on your behalf? Ultimately, we want to work with an owner as an equal partner, so we can freely express our recommendations honestly, and develop the trust and working relationship necessary for a successful sale.

Some brokers will tell the owner they will list the hotel without a price, and maybe they will get a price higher than the owner expected. This is another myth and fallacy. Buyers are not stupid, including first time hoteliers, who seek the advice of their friends or family in the business. As a hotelier, you are constantly getting sales flyers of hotels on the market. Some of these may be overpriced and will probably not sell. The ones that sell, dictate the current market metrics in terms of Revenue Multiplier; Cap Rate; and Price/Room. Most Buyers have a general idea of the metrics in the particular market they are interested in. The first thing a Buyer asks is, ‘what is the price?’

For ‘Call for Offers’, the listing the Broker will reveal the ‘Pricing Guidance’ to prospective buyers. Buyers don’t like this methodology, because there is not a listed price (no transparency), and they feel a broker may tell them one price, and a different price to another buyer. If you have an experienced hotel broker, they should be able to determine what a hotel is likely to sell for. Buyers are more likely to contact them, since they can see the price, and know if they are qualified to make that purchase. They know that other buyers have seen the same information, which is disclosed. There is likely to be more activity on a disclosed price hotel than an undisclosed price. Your hotel will also appear in buyer ‘price range’ searches on third party sales sites, whereas an undisclosed price hotel may not display. At Hotel Brokers America, we know the market, and will price the hotel to give your hotel more visibility and inquiries from prospective buyers.

Often owners ask us to sell their hotel on an ‘off market’ basis. We don’t recommend this process because it seldom yields the highest price and best terms. This is why we receive calls from Buyers asking if there is anything ‘off-market’. They are trying to get a ‘deal’ without having to compete with the broader market. There is only so much time any broker can devote to an off-market deal, because the probability of a sale with minimal time commitment is very low. An owner may think working with multiple brokers will result in a sale, however, the opposite is true. An ‘exclusive listing’ allows a broker to spend the time to analyze the financials in great detail, and ask the necessary questions to attain the highest possible NOI. They prepare a detailed Offering Memorandum that is used by prospective buyers to evaluate the feasibility of a deal. Lastly, a broker will expose your hotel to their entire database and on third party websites, generating national and international exposure. Listing ‘exclusively’ with Hotel Brokers America, sends a message to the market. Experienced hoteliers know who we are, and our track record of selling hotels. They know that the hotel is being actively marketed by a professional, and it is likely to sell with us. This makes them compete with the broader market, to present the highest price and best terms.

Hotel sales are an extremely complicated and specialized business. We have often listed hotels where the owner tried to sell their hotel directly (For Sale by Owner) without much success. They are trying to save on the cost of the commission, but often are doing themselves a disservice. Either they price the hotel too high and get little market activity, or they price the hotel lower than they should. Even experienced hoteliers don’t know how to accurately price a hotel, because market demand is constantly changing. We speak with hotel buyers and sellers on a daily basis, and understand the pulse of a market at any given point in time. Even if a Seller lists their hotel on a third-party website, they will not get the same exposure that a firm like ours will. An owner will not know how to speak with buyers, and communicate the true potential of a hotel. Even if they successfully present the upside, a Buyer will not believe the Seller, because why didn’t the Seller do what they are suggesting. A Seller wants to sell high, and the buyer wants to purchase low, so their positions are diametrically opposite. A hotel broker skilled in negotiations from experience learned over many transactions, is able to bridge the difference. We do this for a living, and understand the craft of such conversations, and how to avoid the tricks some Buyers will play. A broker is a professional third party, and provides a buffer between the Buyer & the Seller. This helps both parties to speak frankly with the broker, and the emotional content is screened, with just the essential content communicated. This often can be the difference between a deal falling apart due to personalities, and it going all the way to closing. Buyers are more likely to be convinced on a sale by an experienced hotel broker, because of their reputation and manner in presenting the information. Getting an offer is only a starting point in a deal. From there, pressure is constantly to reduce the price based on inspections, appraisal, financing terms, and a myriad of other reasons. An experienced and strong hotel broker will do their best to defend the price at each stage of the process, so that the initial offer price is the final closing price.

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