Write the investment mandate before discussing a bid ceiling. Start with the economic and legal perimeter, not the hotel’s design story.
Create a one-page mandate
Record:
- Target location and demand profile: urban business, drive-to leisure, destination resort or mixed demand.
- Room count, food-and-beverage complexity and desired service level.
- Existing trading hotel, repositioning or adaptive reuse.
- Freehold, ground lease, operating lease or another ownership structure.
- Real-estate acquisition, business/assets acquisition or entity acquisition; counsel should explain the implications of the proposed structure.
- Maximum total equity, including transaction costs, renovation, reserves and downside support.
- Intended hold period and whether returns are assessed before or after financing and tax.
- Required owner involvement and who will operate the hotel.
- Non-negotiable exclusions: for example, unquantifiable contamination, unresolved legal use or an unfunded major capital project.
Then create a sources-and-uses schedule:
Purchase price + transaction costs + initial capital works + pre-opening/transition costs + restricted reserves + unrestricted opening liquidity = total uses
Total uses − usable debt proceeds − other committed funding = required equity
Distinguish committed funding from money that remains conditional. Do not count a lender’s unfunded future renovation facility as unrestricted closing cash.
Who should you contact first?
| Contact | Initial request | Evidence of a useful response |
|---|---|---|
| Hotel transaction lawyer | Scope covering acquisition structure, agreements, licenses, labor interfaces and closing | Named lead, local coverage, exclusions and deadline plan |
| Hospitality lender or debt adviser | Preliminary appetite for the asset, borrower and business plan | Written information requirements and indicative structure |
| Hotel accountant or financial-diligence specialist | Review of earnings quality and account reconciliation | A defined reconciliation scope, not only a tax-return review |
| Building/environmental specialists | Availability, report scope, reliance parties and delivery dates | Site-specific proposal accepted by the lender where relevant |
| Insurance broker | Indicative coverage feasibility and underwriting information needed | Required surveys, loss history and quotation milestones |
| Potential operator or experienced operating lead | Day-one operating feasibility | Staffing, systems and transition requirements |
Ask every adviser about seller, broker, operator and brand relationships, referral compensation and other conflicts. A disclosed relationship is not automatically disqualifying, but it belongs in the decision file.
Gate 1: stop if the maximum plausible equity requirement already exceeds your authority, before spending heavily on detailed design or affiliation negotiations.