Hotel offering memorandum template for hotels, motels and resorts

Why a hotel OM is different

Most commercial property is valued on leases. A hotel is valued on its operating results, which change nightly, so the OM has to present a business as well as a building. The core of the document is a few years of performance, not a rent roll: rooms sold, occupancy, average daily rate (ADR) and revenue per available room (RevPAR), which equals ADR multiplied by occupancy.

Buyers also inherit contracts that other property types don’t have. A franchise agreement ties the hotel to a brand’s standards and fees, and a sale usually requires the brand’s approval and often a property improvement plan (PIP) with a cost the buyer will want to estimate. A management agreement may or may not survive the sale. Say clearly what is in place and when each agreement ends.

Presenting operating performance honestly

• Show each year’s occupancy, ADR and RevPAR with its period, and label any figure you calculated.
• Present the operating statement in the order buyers expect: departmental revenues and expenses, undistributed operating expenses, fixed charges and NOI. Many owners and lenders use the Uniform System of Accounts for the Lodging Industry (USALI) layout.
• State whether NOI is before or after a reserve for furniture, fixtures and equipment (FF&E), and the reserve rate used.
• Explain unusual years. A renovation closure, a one-off contract or a regional event affects the trend; a sentence of context is better than a buyer’s guess.
• If you have a competitive set report, say who prepared it and for what period, and quote it accurately.

Canada and US differences

Taxes and licences follow the property. Many Canadian municipalities levy a municipal accommodation tax, and US states, counties and cities charge hotel occupancy taxes, so say how room revenue is reported. Liquor licences are issued by provincial or state authorities and usually need a new application or transfer on sale.

Financing sources differ too. In the US, SBA loan programs are widely used for owner-operated hotels; in Canada, buyers usually work with banks and credit unions that specialise in hospitality. Leave financing advice to a mortgage broker and, if you show a loan, label it illustrative.

Rooms, amenities and photos

Buyers price the physical product against the brand standard and the competition. List the room types with counts (king, double queen, suites, accessible rooms), the amenities that drive rate (breakfast area, pool, fitness room, meeting rooms, restaurant or bar, parking and EV charging), and the dates of the last soft-goods and case-goods renovations.

Photograph what a guest sees, in the order they see it: the approach and signage, the porte-cochère or entrance, the lobby and front desk, a typical room of each main type, the bathroom, the breakfast area and each amenity. Add the back of house a buyer’s engineer will ask about, such as the laundry, boiler or mechanical room and the roof, and date every image.

Building it in OfferingStack

Enter the key count, occupancy, ADR and any operating years, the flag and franchise expiry, meeting space and the FF&E reserve, or upload the fact sheet and accept the extracted figures. When there is enough hotel data, OfferingStack adds a Hotel Performance page with the key figures, an operating history chart, RevPAR change across the years entered and nearby lodging found in the location data, with every calculated figure labelled. With too little hotel data the page is left out rather than shown half-empty.

The rest of the OM, from location and demographics to pricing and the offering process, is built from the same property file, and you approve every page before it is distributed.