Buying a hotel – existing customers
When you are buying a hotel, it is usual for the ‘goodwill’ to be included in the sale price. That means that the current existing bookings, regular customers details etc. will be passed onto the new owners. You might think that this would make perfect sense but there are some aspects of this to consider.
The integrity of the current owner – I have heard this at least a dozen times. A offer on a hotel has been accepted with the goodwill included. Whilst the conveyancing is taking the usual eight weeks, the owner has had a chinwag with guests who are with them in the interim period and said something along the lines of “We know that part of the reason you stay here is because you get on so well with us. Don’t tell anyone, but we are selling up and we don’t know what the new owners are like. But you know Margaret next door, don’t you? Before you re book here, why don’t you go and have a look round her hotel – see if you like it…”
This is firmly NOT in line with the selling contract. But there’s no way to prove it.
Secondly – the current owner may have an established clientele… but do you want them? What if the hotel itself is in the perfect location with a layout which works for you but has a dedicated regular booking with an organisation or group which you don’t have any desire to continue with?
For instance, one of my friends regularly has several bookings per year from a children’s sports club. They book the whole hotel, which sounds great. But personally, I wouldn’t want to take this booking on. Not only does it mean an entire weekend of boisterous, over excited kids who are on holiday without their parents, but they don’t expect to pay full rate. Now this is acceptable on family bookings as the cheap kids rates are counterbalanced by the fact that there are usually at least two full price adults. With any kids ‘club’ booking, it’s more likely to be four kids per one full price adult. And if these kids are old enough to go on holiday without their parents, they will usually expect the same size breakfast as the supervising adults.
Stag and hen parties – not everyone’s cup of tea. If this type of booking is on your list of ‘never in a million years’ bookings, you should ask the vendor if they have any groups like this booked in. If there are, you need to contact the organiser. It may well be that a group booking of ten males is actually a group who are in their fifties and here to attend the Matchplay Darts Tournament. On the other hand, it could be a group of 18 year olds.
If the hotel you are buying has the majority of advance bookings from one particular type of customer, you need to know about this BEFORE you get to the nitty gritty of placing an offer. A vendor will be reluctant to tell you where their customer base lies unless they know that you are serious about purchasing. On your second viewing, make it clear that you are interested but would like further information about advance bookings.
At the very least, if there are a few bookings you really don’t want to honour you could speak to the organiser and cancel if there is enough time. But think very carefully before you do this – not all stag/hen parties are a nightmare. Cancelling a group could cause a complete headache for the organiser. On my very first weekend in my hotel, the hotel was booked out to a hen party. I was dreading their arrival. Couldn’t have been more wrong if I had tried! All twelve were between 19 and 30 years old. Lovely ladies who had a fantastic time in Blackpool, recommended my hotel to their friends and rebooked short breaks with their own families.
Check out our ‘Buying a Hotel’ category! Here’s some of the mistakes you can make when buying a hotel https://ownahotel.co.uk/buying-a-hotel-our-top-four-mistakes/