In a market where trading headwinds have made the delivery of organic growth challenging, making sure your operations are sufficiently prepared for a process is critical in securing the right investment.
Below we highlight three themes for owners considering an exit or investment within the Hotel industry which assist in achieving the right partner at the right valuation.
Understand your revenue growth and the levers required to generate it
Much of the RevPAR growth in the market right now is coming from occupancy and ancillary revenue rather than headline rate — once inflation is stripped out, real room rates are actually flat to falling in most markets. Buyers will interrogate whether your performance reflects underlying volume improvement or alternative revenue streams that are a reflection of market tailwinds. Before going to market, be ready to show — asset by asset — where growth actually came from: rate, mix, cost control, or just a benign trading environment.
Targeted capex investment to deliver tangible ROI
There’s a widening split opening up between newly repositioned or branded stock and assets that haven’t reinvested — capex directly links to topline performance with consumers quick to identify those that are not reinvesting in their assets. For mid-market portfolios, this is often the single biggest value lever in a sale process: an unaddressed capex or PIP backlog gets discovered in diligence and priced out of your proceeds. Ensure a costed reinvestment plan is actively managed and aligned to commercial performance to monitor its effectiveness.
Structure in a simplistic commercial way
Joint ventures, co-investments, and in-house platforms are becoming increasingly common in an environment where trading conditions are challenging and capital is limited. Ensuring a legal and capital structure that can be easily adapted to alternative investment models is critical. A rigid structure will risk leaving you uncompetitive and unable to mobilise for sale efficiently.
None of these are last-minute fixes. Exit readiness — proving your growth, owning your reinvestment story, and having numbers a buyer can underwrite quickly — needs to start well before a process launches, not once one is live.
If you’re planning a move in the next 12–24 months and want a conversation about where your business stands against these three tests, please contact Jack Beard, Transaction Services Director.
