The client, an international company in the field of real estate investment and project development, has examined the acquisition of a congress hotel in an excellent location in a major German city. At the time of purchase, the hotel had already been in operation for 20 years and the end of the duration of lease was foreseeable. The customer required a plausibility check of the purchase by a neutral hotel consultancy, which was used as an internal basis for decision-making to evaluate commercial success of the existing hotel.
The objective of the commercial DD was a holistic evaluation of the general conditions, the existing hotel product as well as the hotel concept to determine the hotel’s sustainable earning power and thus its lease ability. In this context, the client also asked for options after expiry of the lease.
As part of the commercial DD, HOTOUR carried out a detailed evaluation of the macro and micro location, the development of the accommodation market and the existing and future competitive environment. This served as a basis for a detailed analysis of the operating concept as well as the existing hotel product (including maintenance condition, functionality and third-party usability). Based on this preliminary work and a commercial evaluation of the hotel lease agreement, HOTOUR evaluated a profitability forecast including the lease amount sustainably achievable. In this context, options for the future use of the hotel as well as lease amount ranges after expiry of the lease agreement – both in a renovated and non-renovated condition of the hotel product – were derived.
The Commercial DD provided to our client not only served as a basis for the economic evaluation of the hotel’s sustainable earning power, but also as a model for the hotel’s future re-positioning.