Hotel

Hotel real estate has been a fascinating investment for project developers, real property owners, investors and hotel operators ever since. Nonetheless, an investment in hotel real estate also entails considerable risks for all persons involved. For example, the classical fixed lease agreement is more and more replaced by more modern contract types, in which the operator operates the hotel in the name and on account of the owner. In the light of this, the economic success of a hotel does not only depend on the property and its location, but is influenced – as is typical for operator real estate – by the quality of the operator and its hotel concept. Moreover, the underlying contracts as a rule have long terms, so that despite the forward-thinking structure of the contracts individual provisions will have to be adjusted to changing framework conditions.

Accordingly, the complex dependencies of real properties not only require a comprehensive expertise in the business sector, but also individual consulting, taking the particularities of a hotel life cycle into account and making full use of the tax and legal options. This does not only apply to the development of hotel projects, but also to the current operation of a hotel, to the implementation of new concepts and the acquisition of existing properties.

In the beginning was the idea …

As soon as an idea for the development of a hotel project appears to be economically feasible, a large number of aspects must be considered, as decisions, once passed, are difficult to adjust at a later stage.

Basic legal and tax approach

Together with our clients we find out whether a suitable property should be acquired by way of an asset deal or whether - in particular from a tax perspective - the acquisition of shares in a property-owning company (share deal) is preferable. In this connection not only structures avoiding real estate transfer tax (RETT) and optimizing the income tax burden are imaginable, but also structures allowing, for example, the legal succession of contracts entered into previously and/or granted subsidies. Another important factor is the best legal form for the implementation of our clients’ goals.

Contract structuring

Furthermore, it is very decisive how the chances and risks of operating the hotel are to be distributed among the owner of the hotel and its operator. There is a broad variety of options for drafting the contacts, ranging from classical fixed leases and hybrid contracts to management contracts with variable remuneration or is directed solely to the use of a successful hotel concept through a franchise agreement. In most cases the preferable solution is to enter into a contract including elements of a lease contract and of a management contract and can therefore be adjusted to our client’s individual needs.

Financing and public subsidies

In addition to providing equity and borrowed capital, public subsidies always have been an important building block for financing hotel projects. It is important to keep in mind, however, that both the investment subsidies and the current EU structural funding are expected to expire in 2013, and already now federal states such as Mecklenburg-Western Pomerania grant public subsidies only for season-extending measures (for example wellness specials) and for particularly innovative tourist facilities. In view of this situation all possibilities should be used to apply for public subsidies for the remaining time.

… which has to prove itself in practise!

After the opening of a hotel it will turn out quickly in the course of its current operation whether the interaction between all involved parties is running smoothly.

Accounting and bookkeeping

We support our clients in setting up an efficient bookkeeping, which does not only meet the requirements of commercial and tax law but is also in compliance with the Uniform System of Accounts for the Lodging Industry (USALI) and takes the contractual provisions between owner and hotel operator into account in a custom-tailored solution. Frequently different accounting areas (such as owner and operator bookkeeping) must be synchronized and future demands such as deriving an e-balance sheet have to be considered. If required we can also provide complete bookkeeping services.

Tax consulting and preparing financial statements

We offer advice for our clients in all questions of taxation; we prepare your tax returns and represent your interests to the tax authorities, both during current tax assessments and during field tax audits as well as in appeal proceedings and legal actions. Furthermore, we offer support in connection with all questions around accounting and valuation according to the national and international accounting standards (German GAAP, IFRS, US GAAP) and prepare financial statements and/or consolidated financial statements.

Audit and valuation of hotel real estate

Our services include statutory or voluntary audits of financial statements or consolidated financial statements. In this connection we cooperate closely with our real estate and business valuation experts, so as to not only provide our clients but also all other parties involved with a solid valuation and create mutual trust.

… which needs to be adapted to current developments!

For existing hotels their owners and particularly their operators are forced to respond even faster and adapt the structures, as competition in the hotel sector has intensified within the last few years and the market environment is permanently developing further.

Under the heading of ‘MICE’ and wellness

One possibility for increasing the attractiveness of a hotel and stabilize occupancy rates are the specialization for certain target groups and additional offers, such as organizing and carrying out meetings and events (for example ‘MICE’ – Meetings, Incentives, Conventions, Events) or integrating wellness specials. Involving external specialists we support our clients to implement new concepts and agree them with all involved parties.

IFRS reform

Particularly for internationally acting companies drawing up their accounts according to IFRS, the upcoming IFRS reform might result in lease agreements with long terms reducing the equity ratio significantly. This could make borrowing more difficult, if covenants in existing agreements are not adhered to. We analyze the resulting risks and support our clients in amending existing contracts accordingly.

Restructuring and recapitalization

Also in times of crises of a company or threatening insolvency we offer our advice and support to our clients so as to ensure the restructuring and recapitalization of the hotel together with all involved parties. Our goal is to show opportunities for action promising success in the long term, helping our clients to implement their plans.

… which is the source of a new idea!

Sometimes there are opportunities to take over an existing property for implementing new ideas and reaching the economic goals.

As early as in the preparatory stage of the first talks with potential contractual partners we prepare the acquisition or sale of the hotel real estate for our clients, draft the necessary contracts and support our clients actively during the contractual negotiations.

We examine the target company for the buyer or the seller under financial, tax and legal aspects (financial, tax and legal due diligence) and enable our clients to perform a better risk assessment.

Also without any connection to auditing, we provide our clients with our experience and competence for the valuation of hotel real estate and create the basis for a successful transaction.

We support you to put your ideas into practise

For fifty years now not only project developers, property owners, investors and closed-end real estate funds but also well-known national and international hotel operators trust in the competence of our Auditors, Tax Consultants and Lawyers.

Overview of our services:

  • Contract structuring
  • Legal and tax planning
  • Tax consulting, particularly in the fields of value-added tax and real estate transfer tax
  • Bookkeeping and preparing financial statements
  • Audit of financial statements and consolidated financial statements
  • Transactions services
  • Valuation of hotel real estate
  • Business valuation 

Auditors, Tax Consultants, Lawyers -
We focus on real estate.