FAQs About Buying a Hospitality Business or Leisure Property
Buying a hospitality business, leisure property or tourism asset can be exciting, but it also requires careful review.
The right opportunity should suit your financial position, experience, lifestyle, risk tolerance and long-term objectives. Before making an offer, buyers should understand the business, the property, the lease, the numbers and the future potential.
Below are some common questions buyers ask before purchasing a hospitality business or leisure property.
What should I check before buying a hospitality business?
Before buying, you should review the financial records, lease terms, rent, staffing, systems, licences, equipment, customer base, supplier arrangements, property condition and any claims about future potential.
You should also consider whether the business relies heavily on the current owner and whether the opportunity suits your skills, capital and lifestyle.
Is it better to buy a leasehold business or a freehold property?
It depends on your objectives and financial position.
A leasehold business may require less capital upfront, but the lease terms are critical. A freehold property or freehold going concern may provide greater control and long-term property value, but usually requires more capital and a broader property assessment.
Each structure has different risks and opportunities.
Why is the lease so important when buying a hospitality business?
For leasehold hospitality businesses, the lease can have a major impact on value.
Buyers should review the remaining lease term, option periods, rent reviews, permitted use, assignment provisions, outgoings, demolition or redevelopment clauses, landlord consent requirements and any refurbishment obligations.
A profitable business can still be risky if the lease does not support the buyer’s plans.
Why is the lease so important when buying a hospitality business?
For leasehold hospitality businesses, the lease can have a major impact on value.
Buyers should review the remaining lease term, option periods, rent reviews, permitted use, assignment provisions, outgoings, demolition or redevelopment clauses, landlord consent requirements and any refurbishment obligations.
A profitable business can still be risky if the lease does not support the buyer’s plans.
Should I rely on the vendor’s claimed potential?
Many businesses are advertised with growth potential, but buyers should ask what evidence supports the claim. Is there room to grow sales? Are staffing and systems in place? Does the lease allow the proposed use? Is there market demand? Would additional capital, approvals or licences be required?
Unsupported potential should be treated carefully.
What professional advice should I obtain before buying?
Buyers should usually speak with their accountant, solicitor, finance broker and other relevant advisers before committing to a purchase.
Depending on the opportunity, you may also need advice about the lease, town planning, licences, building condition, equipment, employment obligations, tax, finance and business structure.
Can Australian Leisure Property help me find suitable opportunities?
Australian Leisure Property can help buyers register their buying requirements and consider suitable hospitality, tourism and leisure property opportunities.
Some opportunities may be publicly listed, while others may be handled more discreetly. Registering your requirements can help us understand what type of business or property you are looking for, your preferred location, price range, experience and timing.
What information should I provide when registering my buying requirements?
It is helpful to provide your preferred business or property type, location, price range, timing, finance position, previous experience and whether you are looking for a leasehold business, freehold property or going concern.
The clearer your requirements are, the easier it is to identify suitable opportunities.
Buyers Resources
Looking to Buy a Hospitality Business or Leisure Property?
If you are considering buying a hotel, motel, restaurant, café, resort, tourism asset, accommodation business or leisure property, the first step is to register your buying requirements.
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