Buying a Hotel or Guesthouse 

The hospitality business is one of the easiest sectors to enter without any formal qualifications.

Running a hotel or guesthouse can be a hugely satisfying and rewarding career if approached in the right way. One of the first things to decide is whether you intend to operate a small, possibly family run, business or a larger business employing staff with other facilities such as a restaurant, conference centre or spa.

If you are a husband-and-wife team, do you both want to work in the business or does one of you intend to run it as a low key lifestyle business providing a secondary income?

Are you confident about employing, managing and training staff?

It is therefore important to decide in advance on your level of commitment.

Once you have decided on this, you'll need to think about the type of hotel or guesthouse you intend to run:

• Substantial or deluxe hotel (often determined by star rating or number of bedrooms and facilities on offer)
• Country house hotel (often leisure based in picturesque locations such as the Lake District)
• Corporate or conference hotel (often close to towns and cities and well served by road and rail)
• Budget hotel (often in chains with basic accommodation and limited service)
• Boutique or townhouse hotel (often character properties in town and city centres with luxury bedrooms and notable stand-alone restaurants)  
• Small proprietor-run hotel (10 - 20 bedrooms)
• Large guesthouse (10 - 12 rooms)
• Small guesthouse (usually less than 10 rooms)

As hotels and guesthouses are often freehold properties, a proportion of the value of the business is underpinned by the value of the "bricks and mortar". This explains why hotels have a close relationship with house prices. However, that is not that say that a hotel with 20 bedrooms is necessarily worth the price of a nearby 5 bedroom house multiplied by 4 times. Hotels are also valued by their net turnover, net profit or EBITDA (Earnings before interest, taxes, depreciation and amortization) and the number of ensuite letting bedrooms multiplied by the value of a hotel bedroom depending on the location. For example, in London, the value of one hotel bedroom could easily be £100,000 upwards. Furthermore, a property with 20 bedrooms is only likely to appeal to a hotelier not a residential buyer, so the bricks and mortar value, whilst still important, plays less of an integral role when valuing a hotel of size.