Which contracts should I review when buying a hotel?
Review the everyday operating contracts you would inherit or have to replace: booking-site and channel-manager accounts, property management and key-card systems, laundry and linen, television and internet, equipment leases, vending, waste, maintenance and signage. For each, ask whose name it is in, its term, renewal, exit cost and whether it can be assigned.
A hotel runs on a stack of small agreements that rarely appear on a listing. They matter because some come with the sale, some end at closing and some can only be moved with the other side’s consent. Asking for the full list early helps you plan costs and avoid surprises in your first month. The guides cover the franchise file and group bookings, so this page sticks to the everyday ones.
Systems and accounts
Start with the accounts that bring in guests and run the front desk: booking sites, any channel manager, the property management system, payment processing and the key-card system. Find out whose name each account is in, since many sit in the owner’s personal name. Ask what happens to reviews, history and saved guest records when the account moves. Your lawyer can advise on guest data.
Services and supplies
Next come the contracts for laundry and linen, television and internet, vending, waste removal, pest control and routine maintenance. Some run month to month and some lock you in. Read the term, the renewal wording and what it costs to leave early. A good supplier is an asset you may want to keep, so ask the seller how well each one performs.
Leases and equipment
Look for leased equipment such as kitchen gear, vehicles, signage and fitness machines. Check who owns each item at the end of the term. Whether any of these can be assigned to you, and on what conditions, is a question for your lawyer. See what to check in a hotel and motel purchase for the wider list.
Questions for every contract
- Whose name is on it?
- What is the term, and does it renew on its own?
- What does it cost to end it early?
- Can it be assigned to a buyer, and does the other side need to agree?
Related reading
15 pages on the same subject, grouped by topic.
Buying
- GuideBuying a hotel in Canada
- Expert answerWhat happens to a hotel’s brand when the hotel is sold?
- Expert answerWhat should I ask about the owner’s role before buying a motel?
- Expert answerHow do I check a hotel’s occupancy and room revenue records?
- Expert answerWhat should I check before buying a country inn?
- Expert answerWhat should a boutique hotel owner weigh before joining a brand collection?
- Expert answerWhat comes out of a hotel’s room revenue before the owner is paid?
- Expert answerWhat should I check in a property maintenance company’s service contracts before buying?
Due diligence
Selling
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 CanadaGovernmentBuying a business? How to protect yourself from potential liabilities
- 03Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
- 04Canada Revenue AgencyGovernmentBuying a business
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.