Normalise operating performance
Start with at least 24 months of monthly data: available and sold rooms, occupancy, ADR, RevPAR and revenue mix. Remove exceptional items and reinstate realistic staffing, management and maintenance costs to derive representative GOP and EBITDA figures.
- Compare monthly performance with the market
- Test dependence on OTAs and key accounts
- Verify payroll and transferable contracts
Capture the full investment requirement
The price is only one part of the investment. Transaction costs, working capital, furniture, systems, immediate works and deferred maintenance must be budgeted. Separate compliance CAPEX, asset-preservation CAPEX and value-creation CAPEX.
Stress-test several scenarios
Use downside, base and repositioning cases to test price, ADR, occupancy, debt costs and the works programme. Compare cash flow, DSCR, equity returns and a prudent exit value before reaching a decision.