What happens to a hotel’s brand when the hotel is sold?

When a branded hotel is sold, the sign on the building does not automatically go with it. The right to use the name usually sits in a franchise agreement between the owner and the brand. Buyers and sellers who treat the flag as part of the property can be surprised late in the process, so it helps to know the options before you make an offer.

Keeping the brand

Many agreements require the franchisor to approve a new owner, so check the franchise agreement. The brand will usually want to review the buyer’s experience, finances and plans, and may issue new agreement terms. Ask for the brand’s transfer steps in writing. Ask who in the brand’s office handles transfers, how long review usually takes, and whether the seller has any outstanding fees or standards reports that must be cleared first.

Required upgrades on transfer

A brand may ask a new owner to renovate rooms, public areas or technology to current standards as a condition of approval. Ask the brand for its most recent inspection report and any list of outstanding items. Get a contractor’s view of what the work involves and who would pay for it. That cost belongs in your thinking before you commit, and your lender will want to see it.

Changing brands or going independent

Some buyers prefer a different brand or none at all. Leaving a brand can involve notice, fees and a stretch of time without that brand’s reservation system and loyalty members. Ask what share of bookings arrives through the brand’s channels, and what a switch would take. Ask a franchise lawyer what applies to a switch. See buying a hotel in Canada for the wider picture.