The 15-question boutique hotel readiness quiz

1. Can you state the decision, the person authorized to make it and the conditions for saying no?

A — 0: We like the property or concept, but have not defined the decision.
B — 1: We know the decision and approximate budget, but approval authority or timing is unclear.
C — 2: We have a written decision brief identifying authority, deadline, available capital and owner objectives.
D — 3: We also have approved alternatives, return or cash-flow requirements, and explicit conditions for renegotiating or stopping.

Evidence to attach: a one-page mandate. State whether the task is setting a bid ceiling, replacing an operator, choosing an affiliation, establishing feasibility or refinancing—not simply researching the hotel market.

2. Can someone reproduce your financial starting point?

A — 0: We have marketing material or an unsupported forecast.
B — 1: We have annual accounts or a development budget, but have not checked the supporting detail.
C — 2: Available monthly operating records reconcile to source systems; for a conversion, demand and operating assumptions have dated supporting evidence.
D — 3: A reviewer has challenged the baseline, documented one-off and owner-specific adjustments, and separated actual results from forecasts and unresolved assumptions.

Evidence to attach: monthly financials, room statistics, reconciliation notes and an adjustment schedule—or the equivalent sourced pre-opening model.

Research basis: HVS’s July 27, 2026 transaction guidance calls for organized financials, benchmarking information, franchise documents, tax records, insurance history and capital-improvement summaries. HVS: preparing credible transaction evidence. (publications.hvs.com)

3. Does your boutique hotel competitive set support the demand forecast?

A — 0: Our rate assumption comes mainly from attractive hotels’ advertised prices.
B — 1: We have a broker or operator comp set, but have not tested why the properties belong together.
C — 2: We have documented location, service level, amenities, affiliation, customer mix and seasonality differences, with dated performance evidence where available.
D — 3: We have challenged achievable rate and occupancy, examined relevant demand generators and competing supply, and made data-coverage limitations explicit.

Evidence to attach: a comp-set matrix, source periods and a demand narrative explaining who will book, when and why.

Metric check: CoStar defines RevPAR using room revenue and available rooms. For this quiz, advertised booking prices alone do not substantiate achieved ADR or RevPAR. CoStar/STR metric definitions. (costar.com)

4. Can you bridge hotel revenue to cash available to the owner?

A — 0: We mainly judge performance through occupancy, ADR or RevPAR.
B — 1: We have a profit figure, but cannot explain which fees and owner costs it includes.
C — 2: Our model separately identifies departmental costs, overheads, distribution costs, management and affiliation charges, property costs, debt service and capital requirements.
D — 3: The bridge reconciles to the accounts and cash forecast, including working-capital movements and restricted reserves, without deducting the same cost twice.

Evidence to attach: a revenue-to-owner-cash waterfall with definitions and account mappings. Show restaurant and other ancillary operations separately rather than assuming their revenue is incremental profit.

Research basis: Kalibri’s underwriting discussion emphasizes customer-acquisition costs and business mix alongside top-line performance. Kalibri: looking beyond headline hotel metrics. (kalibrilabs.com)

5. Do you know the lowest cash balance—not just the annual profit?

A — 0: We have no monthly cash forecast.
B — 1: We divide annual results into months or use an untested seasonal pattern.
C — 2: We model monthly receipts, operating payments, debt service, capital spending and reserve movements through a complete seasonal cycle and any opening or renovation period.
D — 3: We identify the lowest unrestricted cash balance in base and downside cases, with an agreed cash floor and documented funding for any shortfall.

Evidence to attach: a monthly liquidity calendar showing opening cash, movements, restrictions and funding availability. Do not count the same reserve as both renovation funding and operating liquidity.

Research basis: the OCC expressly identifies revenue seasonality as a hotel-specific underwriting consideration. OCC Commercial Real Estate Lending handbook, hospitality section. (occ.treas.gov)

6. Have you stress-tested the assumptions that change the decision?

A — 0: We rely on the seller’s or operator’s base case.
B — 1: We have an upside and downside case, but the changes are broad percentages without explanations.
C — 2: We test specific changes to achieved room revenue, labor, capital costs, opening timing and financing assumptions, avoiding overlapping revenue shocks.
D — 3: We also test a combined downside and show which assumptions change the bid ceiling, funding need, operator choice or decision to proceed; any exit assumption is explicit and challenged.

Evidence to attach: an assumption register and sensitivity table. For acquisitions, label a hurdle-based bid ceiling as the buyer’s conditional threshold—not a formal market valuation.

Research basis: Pinnacle describes acquisition underwriting that combines market research, capital-expenditure review and return sensitivity testing. Pinnacle: acquisition due diligence. (pinnacle-advisory.com)

7. Is the capital plan based on the building and operating requirements?

A — 0: The renovation allowance is a round number or cosmetic estimate.
B — 1: We have a scope or property improvement plan, but incomplete technical review or costing.
C — 2: Appropriate specialists have assessed condition and necessary works, with budgets, exclusions, timing and contingency identified.
D — 3: The capital schedule connects repairs, replacement needs, applicable brand works, pre-opening expenses, downtime and payment timing to identified funding sources.

Evidence to attach: condition reports, costed scope, contractor or cost-consultant assumptions and a funding schedule. If major works are not needed, document why and retain a replacement plan.

Research basis: HVS’s technical-diligence framework distinguishes immediate repairs, future capital, conversion costs, opening expenses, contingency and schedule. This is an enduring diligence framework, not a current construction-cost benchmark. HVS technical due-diligence paper. (hvs.com)

8. Can you compare operating options on the same economic basis?

A — 0: We favor an operator because of its brand name, relationship or promised revenue.
B — 1: We compare headline fees, but proposals use different staffing, revenue or service assumptions.
C — 2: We compare total charges and staffing on a common operating case, while separately retaining each operator’s own forecast.
D — 3: We also assess relevant property experience, owner references, commercial capability, reporting, transition costs and execution responsibility.

Evidence to attach: an operator comparison table covering base fees, incentives, central services, systems and other owner-funded obligations. For self-management, substitute a fully costed internal operating plan and capability assessment.

Research basis: Pinnacle’s owner-side selection service evaluates brand and operator fit rather than treating selection as a fee-only exercise. Pinnacle: brand and operator selection. (pinnacle-advisory.com)

9. Do the actual contracts support your control, transition and exit assumptions?

A — 0: We rely on verbal assurances or a proposal summary.
B — 1: We have the agreements, but have not mapped approvals, renewal, termination and transfer provisions.
C — 2: Hospitality counsel has identified material obligations, notice deadlines, performance tests, cure rights and required consents.
D — 3: We have incorporated the costs and timing into the decision model and assigned each unresolved contractual condition to an accountable person.

Evidence to attach: a contract issue matrix with clause references—not just a list of headline fees.

Why clause-level review matters: one publicly filed Sonesta management-agreement form combines profit and RevPAR performance tests with cure payments and notice requirements. It is an example of contractual mechanics, not a market-wide standard. SEC-filed agreement, section 16.2. (sec.gov)

10. Have you tested independent versus soft-brand economics—or justified retaining the current model?

A — 0: We assume a brand automatically creates value, or independence automatically saves money.
B — 1: We know headline charges, but have not assessed total obligations or incremental demand.
C — 2: The selected model is costed, with a documented rationale; where affiliation is proposed, the comparison includes fees, required works, distribution costs and transition effects.
D — 3: We test net owner cash under alternative demand outcomes, distinguishing genuinely additional business from existing bookings shifting channels, and document the basis for the choice.

Evidence to attach: a status-quo comparison and, if relevant, a soft-brand break-even analysis. Do not award points merely because a loyalty program is large.

Research basis: HVS explicitly cautions that its franchise-fee comparison alone does not establish a brand’s effect on an individual hotel’s profitability. Only the public guide description is used here. HVS U.S. Franchise Fee Guide, 2025 edition. (hvs.com)

11. Has the intended use and operating plan passed a property-specific compliance review?

A — 0: We assume existing operation or an attractive conversion concept establishes compliance.
B — 1: We have a generic checklist but no property-specific responsibilities or findings.
C — 2: Appropriate specialists have reviewed applicable use permissions, title/access issues, life safety, accessibility, environmental conditions, employment obligations and operating licenses.
D — 3: Required approvals, remediation costs and operating controls are documented, assigned and scheduled before the relevant commitment or opening milestone.

Evidence to attach: a jurisdiction-specific register, including booking-price disclosures, relevant privacy/payment obligations and license-transfer questions. A national checklist is not clearance.

Official starting points: DOJ distinguishes accessibility obligations for existing facilities from construction and alterations; EPA explains environmental inquiry and potential liability; DOL provides hotel-specific employment guidance. DOJ lodging guidance, EPA All Appropriate Inquiries, and DOL hotel employment toolkit. (ada.gov)

12. Does the funding plan work under the actual terms and repayment timetable?

A — 0: We assume financing or equity will be available when needed.
B — 1: We have indicative funding, but material terms or capital commitments remain untested.
C — 2: Written financing assumptions or equity commitments cover the modeled uses, with conditions, fees and draw timing identified.
D — 3: We also test downside funding, covenant calculations, amortization and maturity/refinancing exposure—or document sufficient all-equity capacity without relying on an uncommitted cash-out refinance.

Evidence to attach: sources and uses, funding conditions and a debt or equity schedule. Use the proposed lender’s definition of debt-service coverage ratio, or DSCR; this quiz supplies no universal minimum.

Research basis: the OCC emphasizes clear income/expense definitions for coverage covenants and the repayment risks associated with interest-only structures. OCC handbook, covenant and repayment analysis. (occ.treas.gov)

13. Have you replaced inherited tax and insurance assumptions with property-specific evidence?

A — 0: We carry forward the seller’s expense figures.
B — 1: We apply generic increases without checking the basis.
C — 2: We have specialist-supported post-transaction tax assumptions and a current insurance indication appropriate to the intended ownership and operation.
D — 3: We also understand deductibles, exclusions, interruption protection, binding conditions and renewal exposure, with material retained risks reflected in the cash plan.

Evidence to attach: a tax memorandum and insurance quotation or broker analysis. Address relevant catastrophe exposures rather than treating a premium estimate as a complete risk assessment.

Research basis: HVS advises buyers to investigate their own insurance cost early; the OCC calls for property-tax assumptions reflecting likely reassessment. Neither supports automatically reusing a seller’s expenses. HVS closing-risk guidance and OCC hotel expense analysis. (hvs.com)

14. Can you trace important claims and control how confidential information is used?

A — 0: We rely on presentation claims or AI summaries without checking underlying sources.
B — 1: Some sources are recorded, but important calculations, permissions or provenance are missing.
C — 2: Material inputs are labeled as verified, supplied, assumed or missing; calculations are checked and data-use permissions documented.
D — 3: A reviewer has tested material claims against original documents, with agreed access, retention and AI-processing controls for confidential information.

Evidence to attach: a source register and document-handling protocol. For this diagnostic, exclude guest-level personal information and do not assume an NDA authorizes unrestricted use of licensed datasets.

Research basis: NIST identifies confidently incorrect AI outputs, including fabricated supporting logic and citations, as a consequential risk. NIST Generative AI Profile. (nvlpubs.nist.gov)

15. Is there an accountable decision and execution plan?

A — 0: We have a presentation, but no consolidated recommendation or responsibility map.
B — 1: We have a task list, but gaps lack owners, deadlines or consequences.
C — 2: A decision memo records assumptions, unresolved issues, alternatives, required approvals and assigned responsibilities.
D — 3: The memo has been challenged by someone other than its principal author and connects the decision to transition, reporting, capital control and an initial operating-review plan; adviser conflicts are disclosed.

Evidence to attach: a decision memo, diligence tracker and initial 100-day oversight plan. For a targeted independent review, specify the uncertainty to resolve, required evidence and acceptance criteria before commissioning work.

Practice check: an employer-posted First Hospitality asset-management role includes cash-flow models, debt/covenant tracking, capital planning and ownership reporting. This corroborates the workflow, not the quiz’s scoring thresholds. First Hospitality job description, posted May 6, 2026. (hospitalityonline.com)