Letter of Intent for Hotel Acquisitions

Summary

This practice note discusses the key provisions of a letter of intent for a hotel transaction. A hotel acquisition raises unique issues not typically found in other commercial real estate transactions. A letter of intent for a hotel transaction must be drafted to reflect the sale of an operating business that delivers services and amenities to guests on a daily basis. Unlike other commercial real estate letters of intent, a letter of intent for a hotel transaction must account for diligence and transfer of assets related to operational concerns such as employee transitions, food and beverage operations (including licenses and permits), inventory and guest baggage turnover, as well as, franchise relationships (in many instances). Although the letter of intent is not intended to provide all of the details concerning these matters, it should briefly address these unique aspects of a hotel transaction.