What a Buyer Wants to Know in the First Ten Minutes
When a serious buyer looks at a hotel I’ve listed, the first call goes the same way almost every time.
Before anything else, they ask four things.
What’s the PIP?
What are the property taxes?
What’s the insurance?
What’s the ADR?
Three of the four are costs the owner can’t do much about. The fourth is the lever that can outrun them.
That’s the shift since COVID. Buyers used to underwrite the top line and assume the margin. Now they underwrite the margin and work backward. Insurance in CBRE’s national sample rose nearly 20% in 2023 and another 17% in 2024, with property taxes climbing on top of that. Those costs come out of the same NOI whether you ran 55% or 75%.
Here’s the part that stings. You can’t cut your way out of it. Housekeeping is already lean and labor is what it is. Rate is the lever that moves the bottom line, and in several markets I work in, rate is harder to get than it used to be, and supply is the reason. Some pockets that added a lot of rooms over the last five years have seen rate go down, even at hotels that renovated.
So buyers treat a PIP as an investment they’re being asked to make, and their conviction comes from the STR report. If your ADR index is at 90 and the renovated hotels in your set are at 110, they see the runway and underwrite the PIP as a path to it. If you’re already at 105 and the PIP is mostly about matching the newest prototype, they see a cost. Same PIP, same dollars, two very different values.
If you’re thinking about selling in the next couple of years, it’s worth knowing those four answers before a buyer asks. Get a real read on your PIP scope, look at your tax assessment and insurance renewal, and pull your STR report. Owners who walk in with those numbers tend to have a better first conversation, and usually a better outcome.
If it would help to run those four on your property, I’m glad to do it with you.
