Operator search for hotels in the DACH region

Two starting positions, two calculations

Owners who need an operator arrive from one of two directions. The question sounds the same, the figures behind it are not.

The hotel has been run by the owner so far

Here the answer sits in your own accounts. We look at what the business has earned over recent years and derive from that the rent it can actually carry.

One point is regularly overlooked. In an owner-operated business the owner's own working time appears in no profit and loss account, and the same is often true for family members. A tenant has to pay for those positions. A rent calculated from the unadjusted result comes out too high, and the lease holds until the first weak season.

The hotel is already let and the operator is leaving

Here there is a running lease and the figures of a third party. The rent paid so far is an indication but not proof. That it was paid for years does not mean it was sustainable.

From an incoming operator we therefore ask for their own projection for your hotel, not only an offer. We test two things against it. First, whether the rent offered can be paid out of the planned result at all. Second, the rent cover ratio, meaning the relationship between the operating result before rent and the rent itself. Where that ratio sits close to one, nothing is left for a weak year, and that is where renegotiations begin.

What the rent has to cover

We calculate from the business upwards. The starting point is the adjusted result before rent. An operator needs a commercial margin out of it. Replacement of furniture and equipment does not disappear because a higher rent would be convenient, and neither do the costs the lease allocates to the tenant.

What remains shows the order of magnitude the business can carry. That figure has to be calculated independently of what an owner hopes for or an operator initially offers.

Where leases fail

Most problems are already in the contract. The most common dispute is not the rent itself but the question of who pays for what.

Settling the structure and the roof is not enough. Before signing, the full schedule of responsibilities belongs in the contract, meaning the split between owner and tenant for every position. That includes the technical installations from heating and ventilation to the lift and the fire alarm, the maintenance agreements, repairs with a value threshold per case, the replacement of furniture and equipment, insurance, public charges, and the question of who carries an investment and who owns it at the end of the term.

What is left open there is not forgotten. It comes back with the first major repair.

Questions and answers