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Valuing a Motel:
Collectively, the lodging business is worth more than $500 billion, and motels comprise a healthy portion of this by capturing the frugal traveler demographic. What this business venture lacks in glamour it makes up for in profitability.
Motels are up against many unique operational roadblocks that other lodging options don’t have to contend with. Chief among these challenges is providing customers with a hospitable stay on a shoestring budget.
Here are some Rules of Thumb for valuing Motels:
* 2.25-3,5 times annual sales, up to 5 times for resort properties
* 10-12.5 percent Cap Rate
* Location, age, structure, franchise or independent effect value
Limited service operating expenses - 50-65% of Gross Revenue
Questions to ask Seller: