Selling a hotel in Canada

A hotel sale differs from most small-business sales because two separate approval processes, not one, sit between a signed agreement and a closing that actually happens: the franchisor’s consent to assign the brand agreement, which commonly triggers a property improvement plan review, and the liquor licence application for any on-site bar, restaurant or banquet operation, which does not transfer automatically with the real estate. An owner who starts marketing the property before understanding how long each of these genuinely takes risks agreeing to a closing date neither the franchisor nor the provincial liquor authority was ever going to meet. Preparation for a hotel sale starts with these two approval tracks, works outward to the workforce and corporate-account relationships that support the price, and only then reaches the more familiar work of tidying financial statements.

Start the franchisor conversation before you list

Where the hotel carries a franchise brand, the agreement generally requires the franchisor’s consent before it can be assigned to a new owner, and that consent process routinely comes bundled with a property improvement plan review as a condition of approving the buyer. An owner is generally better served getting an informal read from the franchisor on what an incoming owner might face — and how long the franchisor’s own review realistically takes — before signing a listing agreement with a broker or advisor, rather than discovering the answer partway through a transaction that already has a closing date attached.

The liquor licence runs on its own calendar

Where a hotel operates a bar, restaurant or banquet service, the liquor licence for that operation is a separate approval from the real estate closing, and it does not transfer automatically with a share or asset sale. In Ontario, the Alcohol and Gaming Commission of Ontario runs its own process for transferring a liquor sales licence, and the incoming owner has to apply in its own name rather than inherit the seller’s licence. Every other province runs its own equivalent process on its own timeline — Alberta’s AGLC requires a change of ownership to be reported to and approved by its due diligence unit before closing, and British Columbia’s Liquor and Cannabis Regulation Branch runs a separate transfer process again. A seller should confirm which authority applies and what its current process looks like well before agreeing to a closing date, since this approval, not the purchase agreement, is often what actually paces the deal.

Confidentiality is harder with staff and corporate accounts on the books

Many urban Canadian hotels carry a unionized workforce and a book of standing corporate and group rate agreements, both of which make confidentiality harder to hold than at a typical small business. A rumour reaching front-line staff, or a corporate account contact noticing a change in who signs their rate agreement, can travel faster than an owner expects and can unsettle exactly the relationships the sale price depends on. Working through a controlled buyer list, gating financial detail behind a non-disclosure agreement, and deciding in advance when and how staff will be told protects the deal as much as it protects the seller.

Reservations, deposits and staff need a handover plan

The reservations and staff on the books need a plan, not just a mention in the purchase agreement. Group and corporate rate agreements, and individual reservations already booked past closing, do not simply carry over by virtue of a change of ownership — depending on how each is drafted, some can be assigned to the buyer as part of the deal while others may need to be renegotiated or reconfirmed with the client directly, and a seller who has not sorted out which is which before listing risks discovering mid-transaction that a marquee corporate account’s rate agreement does not survive the sale at all. Deposits held against future bookings become a liability the buyer typically assumes at closing and need to be reconciled precisely, not estimated. Staff present a related but separate continuity question: in Ontario, the Employment Standards Act treats a sale of business as not breaking the continuity of an employee’s service, so a purchaser generally inherits accrued seniority and entitlements rather than starting the workforce fresh, and other provinces apply broadly similar successor-employer principles under their own employment standards legislation. Confirming both before a term sheet is signed avoids two of the most common late-stage surprises in an otherwise smooth hotel sale.

What a buyer will ask for

Expect a buyer or their advisor to request, at minimum:

• RevPAR and competitive-set performance reports covering several years, not a single strong quarter
• The full franchise agreement, along with any correspondence about a property improvement plan
• The liquor licence file and confirmation it is in good standing with no open compliance issues
• The collective agreement and grievance history, where the property is unionized
• The corporate and group booking pipeline, and how concentrated it is in a small number of accounts

What commonly delays a hotel closing

The most frequent sources of delay in a Canadian hotel sale are not disagreements over price. They are the franchisor’s approval and PIP negotiation taking longer than either side hoped, the liquor licence application queuing behind the intended closing date, union notification or consultation obligations that were not built into the timeline, and a life-safety or building-systems issue surfacing during due diligence that neither side had priced into the deal.