Can you buy a hotel through a real estate agent?
September 13, 2019
In 2016, a record was set with the Tennyson Hotel, which is located in Sydney. It sold for $37.05 million. This was the highest amount ever paid for at an auction for a hotel. It capped off a solar year in terms of sale transactions for hotels in Australia. This shows the real estate sector is withholding its powerful stance, despite the industry’s bad reputation. Many people are now looking to invest in boutique hotels, especially in Tasmania.
Since the hotel sold for a record of $37.05 million, it’s easy to understand why investment sales executives think the industry will continue to grow and thrive.
The real estate business is historically quite resilient. The hotel industry, too, generally make a profit in both good and bad times. It often manages to keep its good cash flow, thanks to the many tourists that come to occupy the rooms, within the cities’ popular areas.
The investors’ appetite appears only to get stronger when it comes to property investments. The Boathouse Tavern (that went for $13.9 million) and The Chalk Hotel ($20 million) exceeded all their expectations, leading to even more sales in Australia.
Investors are now more sophisticated than they used to be, and we are not seeing the everyday trader as much anymore. They have now been attributed a more corporate status, and have teams and management companies backing them in operations.
Can you buy a hotel from a real estate agent?
While you can buy a hotel through an estate agent, it doesn’t work the same way as a house auction. You need a hotel specialist to handle this type of transaction. A specialist knows what they are doing, and they can add value. There needs to be plenty of knowledge surrounding the legislation and requirements with the process, such as contract negotiation. You need someone who knows what is required as part of these negotiations. You also need to be aware of the hotel buyer’s market and exactly what they are seeking.
You need an agent that can understand all of the marketing materials and negotiations in order to settle for a good price.
When you are buying through a real estate agent, an experienced hotel agent is the best one to choose. Your chosen agent needs to be competent in the area and the type of property and structure that you are interested in.
The best agents will usually work as a sole trader, which allows them to fully control the disposal structure and process which will increase the chances of a successful transaction.
Sometimes it can appear better to hire two agents when you buy or sell a hotel. The logic is simple; to approach more potential clients, twice as quickly. This allows you to buy or sell the hotel quicker. Unfortunately, it often doesn’t work that way.