Our attorneys regularly work with real estate investors, developers, and business owners across Upstate New York. One area we frequently advise on is hotel ownership, which offers a unique intersection of commercial real estate, business operations, and hospitality management. Whether purchasing an existing hotel, or planning new construction, there are a number of legal and practical considerations to keep in mind:
- Start with a Solid Letter of Intent
A Letter of Intent sets the foundation for the transaction by outlining the primary deal terms before entering into a binding agreement. Involving a commercial real estate attorney early helps ensure your objectives are accurately captured, protected, and ultimately flow into the binding agreement. - Two Transactions in One
Hotel acquisitions typically involve two components: the purchase of the real estate (land and building) and the acquisition of the business assets (furniture, equipment, licenses, and franchise/brand affiliation). These should be addressed in separate agreements that clearly define the assets being transferred. - Conduct Thorough Due Diligence
Attorneys for the parties negotiate a Due Diligence Period whereby a purchaser is given a period of time to evaluate both the physical property and hotel operations. This Due Diligence Period should also include reviewing financial and other records related to the business, including employee records, franchise agreements, and future bookings. This Due Diligence Period is essential for identifying risks before finalizing a hotel investment. - Understand the Earnest Money Deposit
Most hotel purchase agreements require a deposit to demonstrate a purchaser’s intent. It is critical to define under what conditions the deposit may be refunded, or forfeited, if the deal doesn’t proceed to closing as planned. - Explore Creative Financing Options
When traditional financing isn’t available, some sellers may offer direct financing. We have also worked with clients on “management-to-owner” transitions, where operators become owners over time, according to set terms negotiated by the attorneys. - Review Representations and Warranties
A hotel purchase agreement will include representations and warranties, which include promises about the hotel’s condition and operations. These clauses should be negotiated and drafted carefully to consider legal exposure and rights after closing. - Plan for Additional Considerations
Hotel transactions can also involve employment agreements, service and maintenance contracts, franchise requirements, interim management, reserves for housekeeping or capital improvements, among many others. Each transaction is unique and should be customized accordingly.
Looking to Build?
If you can’t find the right property, developing a hotel may be the better option, particularly in growth markets like Central New York. New construction offers greater control over branding, design, and long-term investment strategy.
Trusted Legal Guidance for Hotel Real Estate Transactions
At Newman & Lickstein, LLP, our commercial real estate attorneys have extensive experience guiding clients through complex hotel transactions and development projects throughout Syracuse and Upstate New York. We provide legal support for the purchase, sale, financing, and restructuring of both commercial and residential real estate assets. Our diverse legal team brings strategic insight and practical solutions to every transaction, helping clients achieve their investment goals with confidence.