Latest News
HomeColumnsArticlesFive things to keep in mind before buying a hotel in the Middle East

Five things to keep in mind before buying a hotel in the Middle East

To all those investors who acknowledge the Middle East as the hotbed of activities, here is a short guide of things you need to keep in mind before you make an attempt to purchase the hotel in the region.

The wealthy, oil-rich Middle East region is among the top ones in hospitality. The locals and the foreigners enjoy the food here, socialize with each other and avail every possible hospitality service that they can. A huge number of investors always look forward to investing in this evergreen industry that is flourishing day by day in the Middle East. Buying and selling hotels have become a business that most of the businessmen love to run. Are you among those who are planning to buy a hotel in the Middle East?

Have you made a plan for buying a hotel? Do you know where you are going to invest the money? Are you going to buy a hotel in Dubai or considering investing in the Al Marjan RAK? Either way, both Dubai and Al Marjan hold exceptional benefits for your business but have you thought it through? Do you have a strategy in mind or do you know what things to check before buying a hotel? 

A short guide to buying a hotel in the Middle East
To all those investors who acknowledge the Middle East as the hotbed of activities, here is a short guide of things you need to keep in mind before you make an attempt to purchase the hotel in the region. 

The 5 things are as follows:

1. Establish your acquisition criterion
There are multiple reasons why one would like to acquire a hotel. Some people look at it as a short-term investment while for others it is a long-term business project. This is why it is necessary to have an acquisition criterion that can judge the pros and cons of the investment. Some of the main key factors included in the criterion are the purchase price, hotel location, management of the hotel, financial performance, whether it is Shariah compliant or not and is it a good fit for your investment or not?

2. Find out the right target and price for the purchase
The next thing to keep in mind is the selection of the right target of people like the asset managers, brokers, industry consultants and the brands to find out the progress opportunities of the hotel business you are interested in. Do not forget to visit the site if you succeed in picking one. Next is the price of the hotel. You can use the different hotel valuation methods and find the right price. Some of the methods are discounted cash flow analysis, surveyor valuations, comparable hotel sales and others. 

3. Look out for competition in the region
The hotel industry in the Middle East is one of the most successful ones. This is why when you buy a hotel, make sure you know about the competition around and how to manage the hotel accordingly. A good competition means you’ll have to work hard and overlook each and every part of your hotel’s management and service to make it the best one in the region

4. Give importance to due diligence
While purchasing a hotel, it is very important to carry out proper due diligence. Hire lawyers, property surveyors and financial advisors and request them to do their jobs. This way, any issue in the hotel deal will come up and you can solve them before the purchase is made. Also, make sure that the due diligence is conducted keeping in mind that the hotel is an operational business and not just a real estate property. 

5. Negotiate the SPA under an expert’s supervision
The sales and purchase agreement controls nearly everything when a business deal is made. You need to hire an expert to help you devise the SPA that is in your best interest. Adding warranties and indemnities in the agreement is a part of the job. The indemnities will help you deal with the material risks in the future while the warranties will cover all the key aspects of the hotel business. Few key aspects include the accuracy of accounts, hotel land’s title and the absence of litigation.

The five things discussed above form the foundation of the strategy that you need to take while buying a hotel in the Middle East. Keep them in mind and you’ll surely succeed in running a successful business.

Digital marketing specialist - ELABELZ - Bahria University | + Posts

Junaid Ali Qureshi is a digital marketing specialist who has helped several businesses gain traffic, outperform competition and generate profitable leads. His current ventures include Elephantation, eLabelz, Smart Leads.ae, Progos Tech and eCig.

Tags
28/03/2024
27/03/2024
26/03/2024
25/03/2024
22/03/2024
21/03/2024