We hear that question frequently.
In the world of residential real estate, it’s not only common, it’s often relevant to the deal. But not in the lodging industry. Why? It’s simple. Because buying a lodging business (or any type, really) is a discretionary purchase. Most people don’t have to buy a lodging property. Many people have to buy (or rent) a house.
If the average days on market (DOM) in a residential transaction is 60 (let’s just use that as a hypothetical), the average DOM for a bed and breakfast or lodging property could be 2-3 years. Big difference! But this is not a negative thing. One purchase comes from necessity, the other, desire.
Besides, there are so many things taken into consideration when buying a business, far more than buying a house. There’s location, size, style, number of rooms, owner’s quarters, how much work is required to make it your own, etc. Then there’s the business: the financials, projections, a business plan, researching the area (if you don’t already know it) understanding your competition and your demographic. Where are your guests coming from and how are you going to get more of them? There are licensing requirements, often municipal and state. There are corporate entities to form with an attorney. There are documents to review with your accountant and attorney. This process takes time. Then there’s the logistics of leaving your current job, possibly selling your current home, moving out of state (often in this industry) and transitioning into your new job and new home, which now, are one in the same.
And when you look at how many inns or lodging properties are on the market at any given time, there are enough to choose from and you may just be waiting to find the ideal one that meets the majority of your criteria check boxes. And although most do not meet those needs perfectly, some come very close, and some buyers choose what they can live with or live without.