Ways to sell
Hotel broker, auction or direct buyer: how to choose
We are a direct buyer, so we have a stake in your answer. This page is written to be useful even if you decide a hotel broker is the better route.
What hotel brokers do
A hotel broker is a licensed real estate professional, usually a specialist, who represents the seller. The broker advises on price, prepares an offering memorandum, markets the property to buyers, manages inquiries and tours, and negotiates offers. You sign a listing agreement, typically exclusive for a set term, and pay a commission from the proceeds when the sale closes.
What a good broker adds
- Knowledge of what comparable hotels have sold for
- A database of buyers and the means to reach them
- Competition among buyers, which is what moves price
- Someone to run the process while you run the hotel
- A duty to act in your interest under the listing agreement and state license law, which a buyer does not have
What a listing costs
The commission rate and the term are set in the listing agreement and are negotiable. Beyond the fee, a marketed sale takes time to prepare and run, and it puts your financials in front of many parties, each under an NDA but each a possible leak.
Choosing one
Ask how many hotels like yours the broker has sold, how the property would be marketed, whether a confidential or limited process is possible and what happens if you find a buyer yourself. Read the listing agreement, or have your attorney read it, before signing.
How hotel auctions work
An auction sells the property on a set date to the highest bidder, in person or online. The auction firm markets the sale for several weeks beforehand. Sellers may set a reserve, a minimum below which the property will not sell, or sell absolute, with no minimum.
Strengths
A fixed date, a compressed timeline, and bidders who have usually done their homework and put up a deposit before bidding.
Weaknesses
The sale is public by design. The price is whatever the bidding produces on the day. Fees, often including a premium charged to the buyer, affect what bidders will offer. And a failed auction is a visible one.
Auctions are used most for properties that need a certain end date, which is one reason they come up for hotels that are closed or in distress.
Selling a hotel yourself, for sale by owner
Some owners advertise the property themselves, on commercial listing websites or by word of mouth. It avoids a listing commission. It also means you field every inquiry, sort serious buyers from curious ones, manage your own confidentiality and negotiate without representation. If you take this route, pay an attorney to prepare the documents and an appraiser to tell you what the hotel is worth before you name a price.
What a direct sale is, and what it is not
In a direct sale you deal with a single buyer from start to finish. With us, that means no listing, no marketing and no broker on our side. The steps of our process are a confidential call, an NDA, a review of your financials, a letter of intent, a purchase agreement, due diligence and a closing through title or escrow.
What you gain
Privacy, one set of conversations, and no listing commission on our account. You can keep the matter among a handful of people, as described in selling a hotel in confidence.
What you give up
Competition. One buyer's offer has not been tested against others, and a buyer's interest is to pay a fair price, not the highest one. We are not your agent or advisor and we do not represent you. You should have your own attorney, and you may want an appraisal.
What does not change
Due diligence, lender payoffs, franchisor approval and closing mechanics are much the same whoever the buyer is. A direct sale is not automatically faster. In every route, timing depends on diligence, financing and third-party approvals.
Side-by-side comparison
| Hotel broker | Auction | For sale by owner | Direct buyer | |
|---|---|---|---|---|
| Exposure to buyers | Wide | Wide, for a short period | Depends on your effort | One buyer |
| Confidentiality | Moderate; many parties see the details | Low; the sale is public | Up to you to manage | High |
| Seller's selling costs | Commission set in the listing agreement | Auction fees and marketing costs | Your time, advertising and advisors | No listing commission on our account; your own advisors |
| Who represents you | The broker | The auction firm acts for the seller | Nobody, unless you hire advisors | Nobody, unless you hire advisors |
| How price is found | Competing offers | Bidding on the day | Whatever offers arrive | Negotiation with one party |
| Timing | Preparation and marketing, then a normal closing | Fixed sale date, then closing | Unpredictable | No marketing period; closing depends on diligence and approvals |
Every seller, in every route, also pays their own attorney and the customary seller's closing costs.
Which route suits which seller
A broker tends to suit
Owners of well-performing, well-documented hotels who want the highest price the market will pay, have time, and accept that the sale will be known in the industry.
An auction tends to suit
Owners, lenders or estates who need a certain date more than a certain price.
A direct sale tends to suit
Owners who put privacy and simplicity first, properties with complications that make a broad marketing campaign awkward, and sellers who already have a figure in mind and want to know whether a buyer will meet it. Typical cases are set out among the reasons owners sell, from a loan nearing its maturity date to retirement.
Nothing stops you doing more than one. You can speak with us and with a broker, compare what you hear, and choose. Tell each side the truth about the other, and check any listing agreement for how it treats buyers you have already spoken to.
Before you choose any route
Know your numbers. The guide to hotel valuation terms and formulas explains the language every broker and buyer will use, so that you can test what you are told. Know what you are selling: the property types we buy are described with the issues particular to each. And know who you are dealing with. We set out who is behind this site and what it does not do on its own page, and the questions and answers page covers the common ones, including who the purchasing entity may be.
Start with a confidential conversation
Tell us where the property is, how many keys it has and whether it carries a brand. We read every submission ourselves and call you back at the number you give.
Nothing you send is passed to a listing service, and sending it does not commit you to anything.
Tell us about the property
Read by the buyers. Never listed, never advertised.