What should I ask about the owner’s role before buying a motel?
Ask the owner to walk you through a full week: who staffs the desk by day and overnight, who cleans rooms, who handles repairs, and who is paid versus unpaid. Many motels run on family labour that never reaches the books, so replacing that work is part of reading the earnings honestly.
A small motel is often a job as much as a property. The owners may live on site, answer the desk at all hours and fix what breaks. The financial statements show the rooms, but they rarely show how many hours of unpaid work hold the whole operation together. Before you read the earnings, learn what the owner’s role really is.
Ask for a typical week, hour by hour
Ask the seller to describe an ordinary week in busy season and in the quiet months. Who opens, who closes, who answers the phone at night, and who covers when someone is sick? Ask for the written schedule if there is one. If the answer is that the owners do all of it, you have learned what you would be signing up for.
Separate paid staff from family labour
List every task: housekeeping, laundry, grounds, repairs, bookkeeping, online listings and guest complaints. Next to each one, write who does it and whether they are on payroll. Spouses, children and relatives who work without wages are common in small lodging. Their time still has a cost once you take over, so ask your accountant how to show it in the numbers.
Decide whether you will live on site
Some motels include an owner’s residence and expect someone to be present. Ask how often the desk is attended overnight and what happens in an emergency. If you plan to hire a manager instead, ask what a manager would need to be paid and whether the property can carry that cost. Talk with the current staff, with the seller’s permission, about how they see the work. Keeping key people matters here too.
Related reading
15 pages on the same subject, grouped by topic.
Due diligence
Buying
- GuideBuying a hotel in Canada
- Expert answerHow do I keep key employees after I buy a business?
- Expert answerWhat should I change first after buying a motel?
- Expert answerWhat motel costs might the seller’s statements not show?
- Expert answerFranchised or independent hotel: what should a buyer weigh?
- Expert answerWhich contracts should I review when buying a hotel?
- Expert answerHow do I check a motel’s rooms and building before buying?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentAfter buying a business, what is the next step?
- 04Canada Revenue AgencyGovernmentBuying a business
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