Important Information for Lessees of Hotel and Restaurant Real Estate
"Hotel real estate is a precious commodity and thus any hotel or gastronomy property owner will look very closely at any potential renters or lessees"
You have decided to use ASP to obtain a certain hotel, inn or restaurant property via a lease / lease-purchase agreement. It's now about that all-important money!
You have spent a lot of time looking at hotel and restaurant real estate with your ASP hotel broker. You have scrutinized and compared the properties with your wishes and ideas, and checked that they are within your budget. Now you need to convince the property owner that you are the right partner, that you can look after his establishment and pay your monthly rent on time. We would like to give you some tips regarding this topic. These tips are not intended to "lecture," you in any way, but to serve as a practical guide for your reference.
Trust for Trust!
'The owner of the hotel or restaurant property is to entrust his property and business to you.' This requires a lot of trust in you, your professional skills and your financial capabilities. If you can convince him that you are the ideal tenant for his real estate, he will then give you access to the company’s financial figures and occupancy rates of recent years, as well as the personnel plan, grant distributions of F&B and accommodation, etc. Thereafter you can discuss and negotiate the conditions of the lease with him. This includes taking over existing stock, the demarcation of financial advanced payments, the acquisition of contracts from the ongoing operation, maintenance obligations, monthly lease rates including indexing, duration and extension possibilities, and other details, which are all summarized in a lease agreement. Upon request, your specialist broker for hotels and hospitality real estate at ASP Global hotel Brokers will assist and advise you concerning all these aspects right up to the takeover of the business. Even if disagreements / disputes arise during the term of the lease agreement between you and the owner, the ASPI Business and hospitality consultants are always ready to aid as trained, neutral mediators to resolve such disputes quickly and satisfactorily for all sides.
Common criteria for future tenants of a hotel real estate:
- Experience in managing a hotel, gastronomy property
- No entries in insolvency records and a stable financial situation
- Conclusion of a medium- to long-term lease
- Sufficient capital available for the replacement of the inventories, etc
- Deposit or a bank guarantee equivalent to 3 to 18 months' rent
- Presentation of the punctual payment of the monthly rent at the beginning of the month
- Careful treatment of his hotel property so that the owner of the hotel can have the hotel returned to him in its current state or even in better condition after the expiry of the lease term
If you fulfill these criteria and are willing, any owner would look forward to a long-term business relationship with you that is of mutual benefit.
Why will ASP hotel brokers enquire about your available equity when looking to lease a property?
Quite simply, property owners only want to negotiate with reputable and trusted prospective lessees, in whom they can entrust their real estate and its operation. The lease of a hotel or a restaurant property costs money. You need to be able to pay for the existing inventory. Additionally, a security deposit or a bank guarantee equivalent to 3, 6, 9, or 12 months’ lease needs to be deposited, or a bank guarantee provided.
In addition to the running costs of the business, the monthly lease payments also need to be paid. Documents detailing proof of capital / financing / etc. are not disclosed to the owner! But the owner receives confirmation that there is sufficient equity for the lease of the business, or that given the available equity financing should not pose a problem.
Trust and openness in dealing with each other is very important. The hotel brokers at ASP Global Hotel Brokers want to lease you your dream hotel or restaurant property. The hotel broker will offer you their competent and expert support in selecting the right property, compiling all necessary documentation for the due diligence examination, securing financing, drawing up the lease contract, and aid you right up to the date of the acquisition of the hotel real estate. The more information you can provide our hotel brokers with, the sooner they can find your dream hotel property.