What motel costs might the seller’s statements not show?

Buyers often ask whether a motel is a profitable business. Nobody can answer that for a building you have not seen the books of, and this page does not try. What it can do is show where a motel’s real costs tend to hide, so that when you read the seller’s statements you know which lines to rebuild yourself. The goal is to see what the motel costs to run under you, not under the current owner.

Spending that was put off

Mattresses, linen, furniture, carpets and bathroom fixtures wear out on a cycle. An owner who plans to sell may stretch that cycle, which flatters the statements for a few years. Ask for a room-by-room record of what was replaced and when. Then ask what you would need to replace soon after taking over. The same goes for roofs, heating and cooling units, walkways and the parking lot.

Commissions and fees netted out

Booking sites usually take a commission, and some pay the motel only after subtracting it. Revenue can then appear lower than guests actually paid, or the commission can sit somewhere unexpected in the statements. Ask to see statements from each booking site next to the bank deposits so you can tell where each dollar went. Card processing fees and software subscriptions deserve the same check.

Costs that follow the owner

Some owners pay for insurance, utilities or vehicles through another account, or do plumbing, painting and front-desk shifts themselves for no wage. Ask whether those costs would continue under a new owner, in your name or at a market wage. Your accountant can help you separate them. Our page on what to ask the owner before buying a motel covers the family-labour side in more detail.

Questions to put to the seller

• Which repairs or replacements were postponed, and why?
• Who paid for insurance and utilities, and from which account?
• What work did the owner or family do without pay?
• How are booking-site commissions shown in the statements?