Selling a hospitality property: the complete guide

Selling a restaurant, an inn or a café is no easy matter. Supply has exceeded demand for years, many businesses close for want of a successor, and banks lend more cautiously than they once did. Anyone who still wants to achieve a good price needs to know where the obstacles lie – and how to clear them in advance. This guide takes you through the entire sales process.

Who buys a hospitality property today?

The buyer side consists of three very different groups, and each responds to different arguments:

• Operators who intend to run the business themselves – they are buying a workplace and a life decision. What matters to them is earning power, the state of the kitchen, and whether the business works without being completely reinvented.
• Investors and private buyers – they are buying an investment and will lease it on. What matters to them is yield, substance, and how easily a tenant can be found.
• Buyers with a change of use in mind – they are less interested in the business than in the site and what planning law would permit there.

Anyone trying to address all three groups with the same set of documents convinces none of them properly. The question of who realistically comes into consideration therefore belongs at the beginning of the process, not the end.

Why the buyer pool has narrowed

Three developments work together here, and it is worth knowing them before setting a price.

Succession is missing. In many family businesses the next generation does not want to take over. The work falls precisely when others have time off – evenings, weekends, public holidays. Those who grew up seeing what that means for family life often decide against it deliberately. An entire group of buyers that used to be taken for granted has fallen away.

Staff are scarce. Many skilled and service staff left the sector and have not returned. For a buyer this means not only financing the purchase price but also answering the question of who will be in the kitchen. A business with a settled team that intends to stay is therefore worth considerably more than the same business without staff.

Financing is more demanding. Banks assess hospitality cautiously. Where around twenty per cent equity once sufficed, some institutions now require considerably more, and a few will not lend to the sector at all. This noticeably narrows the field of solvent candidates.

Your buyer's financing is your concern too

This may not sound like your job, but it frequently decides whether a sale happens at all. An enthusiastic candidate who cannot secure lending does not move you forward – he costs you weeks.

The bank wants to see that the buyer can service the debt and still make a living from the business. For that it needs a solid business plan. Many buyers, particularly first-time ones, cannot produce that unaided because they lack the property's figures.

This is where preparation on the seller's side pays off: providing reliable management accounts for the past two to three years makes the buyer's financing possible. Where needed, we draw up the business plan together with the buyer or entirely on his behalf – which regularly produces a positive lending decision that would otherwise not have come.

What carries the value

Location remains the first criterion. Fittings can be renewed, a concept changed, a team built. Location cannot. A property in an established setting, by a lake or with a view retains that advantage regardless of market conditions – and therefore finds buyers even in weaker phases.

History counts. A business established locally for decades with a good reputation brings something no new build can buy: regular guests, recognition, and the region's expectation that it will continue.

A possible change of use doubles the pool of interested parties. Before selling, establish what planning law would permit – residential use, senior housing, multi-generational living. Where that option exists, the property can be offered on two tracks. This makes the decision considerably easier for investors, because they are buying a fallback plan along with it.

An adaptable concept is an argument. Businesses with a second pillar – takeaway and delivery, events, catering, staff canteen contracts – demonstrably fare better. If your property offers something along those lines, it belongs in the documents.

How the value is composed in detail and which methods apply is set out here: What is my hospitality property worth?

The right price – you only get one attempt

Knowing the value does not yet mean having found the right asking price. The price you take to market is a strategic decision: too ambitious and the property sits for months without serious enquiries; too low and you are giving money away.

What matters is that the opening figure is right. Reducing the price during an active campaign is always a poor signal – the market reads it as an admission that the price was wrong from the outset, and then waits for the next reduction.

Another common mistake concerns the argument itself: put the qualities of the property in the foreground, not your personal situation. Whether you are selling because of age, illness or financial pressure is no concern of any buyer – and emphasising the reason for sale is an invitation to negotiate the price down.

Open or discreet marketing?

This is the first strategic decision, and it has to be taken before the first advertisement.

Open marketing reaches the largest number of possible buyers and works wherever a sale is already known about, or where you have no difficulty with it becoming known.

Discreet marketing is the route where staff, regular guests, suppliers or competitors should learn nothing for the time being. The property is then presented anonymously and placed exclusively through direct approach of vetted candidates, secured by confidentiality agreements.

The two can also be combined in sequence: quietly through the network first, and only publicly if nothing emerges. Which route is right is your decision – we align the marketing accordingly.

Which channels actually work

The large general property portals no longer play the role for hospitality properties that they once did. They generate reach, but the operators who are searching are hardly to be found there. What does work is a combination:

• Direct approach from an established network – by far the most effective channel, because a basis of trust already exists and the approach is targeted.
• Specialist portals for hospitality property – where the people who genuinely intend to buy are looking.
• Trade media – industry publications and their associated websites.
• Social networks and operator databases – effective when you know how to steer them.

The sector is closely networked. A message placed at the right points travels remarkably quickly – an advantage when you use it, and a risk when discretion is required.

Documents to prepare

• Management accounts for the past two to three years
• Land register extract and cadastral map
• Floor plans of all areas, including any owner's apartment
• Complete inventory list of major equipment with manufacturer and year
• Existing lease, tenancy and supply agreements
• Summary of investments made in recent years
• Licences and permits
• Professional photographs, ideally a virtual tour

The effort pays off twice over: complete documentation speeds up the review by buyer and bank – and it signals that someone here is taking the sale seriously.

The most common mistakes

• An over-ambitious opening price followed by a reduction
• Incomplete or entirely absent figures
• Foregrounding the reason for sale instead of the property's qualities
• Failing to check planning alternatives and thereby overlooking an entire buyer group
• Inviting candidates to view without any credit check, losing weeks on people who could never finance
• Promising discretion and then undermining it with a public listing naming the property

Frequently asked questions

How long does a sale take?

That depends heavily on property, price and location. Several months is realistic; well-prepared properties in good locations move faster, overpriced ones sit indefinitely.

Do I have to keep operating until the sale?

Where possible, yes. With the business running you are also selling its going-concern value. If the property stands empty that falls away, and buyers additionally price in a start-up phase.

Who pays the agency commission?

This is agreed individually and discussed at the initial consultation.

Can I sell without an agent?

In principle yes. The question is whether you can find the time for marketing, candidate selection, credit checks and negotiation alongside daily operations – and whether you can reach the buyers who are not searching on portals.

How we support you

We deal exclusively in hospitality property in southern Germany and handle the entire process: valuation, preparation of documents, marketing through the appropriate channels, pre-selection and credit checking of candidates, negotiation, and support through to completion. Entirely discreetly on request.

That leaves you free to concentrate on what preserves the value of your business until handover – running it. The initial consultation is free of charge and confidential.