Guide to Buying Hotels in France: Six key Issues

First question that arises: is it necessary to have a diploma to purchase a hotel?

No formal education is required to work in this field. However, if your hotel has an alcoholic beverage license, you must attend some mandatory food hygiene trainings.

Are you just getting started? A solid business strategy is requested to better define the foundations of your entrepreneurial project.

Build your business strategy:

This first stage is required to determine the specifics of your project. Here are a few criteria we like to consider, to objectively assess the viability of a sale offer:

• Geographical sector and economic attractiveness.
• The revenue for the three most recent years of operation, as well as its evolution.
• The balance of supply and demand.
• The services offered and the establishment’s specifics like operating hours, catering services.
• The hotel’s visibility.
• Nearby hotels, etc…

Plan your Hotel Finances:

Because the hotel industry necessitates significant financial resources, it is critical that you focus on hotel financing. The personal contribution, or the total amount of capital that you bring to the creation of your hotel, whether alone or with your partners, is usually required to obtain any hotel financing. It is preferable to have a personal contribution that covers at least 30% of the cost of establishing the hotel. You may also start a crowdfunding campaign for your hotel. Crowdfunding entails making an appeal to the group savings to finalize your project.

For example, a professional credit, from your bank, of 5 to 15 years, can be given for the purchase of business assets. Other financement options can be found for the equipments, the stock, TVA, or real estate projects and so it goes. The options being wild, yet risky at Delcade, help you set a personalized financing plan that is the best suited and proficient for your case.

The operational declaration or “déclaration d’exploitation” :

Unlike other businesses, establishing a hotel necessitates several formalities. The future establishment must be declared to the prefecture of the department in which it will be located. It must be completed prior to the hotel’s opening. Few departments need, as well, a health declaration as a precautionary measure, against health risks.

Required hotel-specific insurance:

Prior to opening, it is also necessary to consider hotel-specific insurance. Professional liability insurance is required (mandatory insurances for your hotel’s employees or your professional vehicles), and additional coverage is recommended for certain risks like: “perte d’exploitation” (very useful in the event of damages), “Home-clé” insurance (an insurance that compensates for business losses caused by the absence of a decisive man in the operation of the establishment), and “ALEA” warranty (an insurance that protects the hotel owner against any sinister or a natural disaster results in a significant decrease in hotel attendance).

Legal due diligence:

Because a hotel is a public establishment, its operation must adhere to several regulations as previously mentioned. So in each hotel purchase, there is a mandatory regulatory document to review : the security commission report.

In addition, you must comply with the regulations that allow you to implement security and accessibility in your future hotel. Taxation (stay tax, TVA) must be applied to comply current fiscal regulations. Remember that as a property owner, you will be subject to local income tax. It is also necessary to understand and comply with labor law regulations.

Moreover, when buying a business, one of the most important things to check with your advisor is the type and content of the lease. Buying business assets, means buying the collection of assets and rights that belong to a merchant for him to practice his trade.

Business hotels include occupational necessities like beds, furniture, the rights like a liquor license, a terrace right and the clientele also known as the notoriety that the establishment has gained through time.

Only few professionals like us, can advise you completely independently: at Delcade we help you through the reading and interpretation of your hotel’s financial report.

For this reason, and to validate your hotel selections, the ideal situation is to be accompanied by a specialized firm, such as Delcade. Because we are not a real estate agency, we are neutral and hence we can provide you with sincere, third-party, and honest advice. So yes, we will validate the location, price, general state, quality, as well as analyze customer feedback. But furthermore, we will guarantee you a safe and profitable investment.

Contact us at FRELA, to operate a radical change in your vision and idea of hotel investments. And see how a “refuge from home life” can turn into a next level upgrade in your home life.