Hotel/B&B Turnover

[Stevehoward]

We are currently investigating the possibility of buying an established hotel/chambre d'hote/B&B in the south west of France and have found several possibilities on estate agents websites.

Estate agents have been pretty good at getting answers to our preliminary questions regarding the various properties, but the one thing they more or less universally do not seen to be able to get from the vendors is an indication of the turnover of the business!

What is it that is so secretive about this. How am I able to put together any sort of business plan and cash flow forecast without this information. My immediate reaction is that they either a, have something to hide or b, the turnover is so bad and that is why they are selling and they do not want people to know.

Some have said that this info will be made available once an offer has been put in for the business (like that's going to happen !) and others have stated that the info will be made available should I visit the property. Thing is I do not know whether I want to visit the property unless the figures initally stack up.

Any thoughts?

[Autismuk]

Some and some.

It is perfectly reasonable to request details on the business if you are buying it ; as a going concern, not just a property.

However, I can sympathise with the sellers as well. If people could ask for their business details without having a confirmed interest in the property then this could be abused by competitors in a weak market (as we have now).

So, what to do ? Well, there are various options. One is to make a list of the possible sites, visit them and see the turnover afterwards. It'll give you an overview of the area.

Two, to inquire about a confidentiality clause in seeing the accounts.

Three, if you have a specific place in mind as opposed to just nosing around, make some sort of intent to purchase contract which gives you the option to buy and them to sell subject to the accounts.

The reality is that tourism is down over the last two years and people do not sell businesses because they are making a bomb - usually they sell them to get out.

[Janiner]

we are in the process of buying a small hotel as a going concern. We have been able to see annual accounts (in French) and we've discussed turnover with the current owners who were very willing to show us their books. This was based on us visiting and showing a keen interest to buy. The estate agents hold the annual audited accounts but don't usually share these until you have visited and shown a keen interest - for obvious reasons.

Having said that, the figures don't mean a great deal anyway. Most hotels run with a certain percentage of 'cash' - which is never accounted for. Also, you must bear in mind the amount of work and effort that individuals are prepared to put into a business and the quality of life / income that they are happy to accept.
For example, the hotel that we are purchasing has been run for the past few years on a basis that it was / is full for three months of the year. The current owners make a living from this and are happy to have 9 months holiday. we believe that with some effort and marketing we can fill it for a longer period of time and therefore increase the turnover.

What is more important when considering a purchase is the potential that you believe the business has and unfortunately, no amount of figures or accountancy can guarantee this!

Good Luck!