Highly Profitable Budget Mini Hotel with Potential Owner Financing Urgent Sale
About this business for saleHighly Profitable Budget Mini Hotel with Potential Owner Financing Urgent Sale
The owner bought this as a fully operational lodge for R 3.3m in 2014. Since then he started converting it into an Budget Mini Hotel, spending R 2.8m in the process. The project is now 70% complete and the owner expects full completion in the next three months, costing a further R 3.3m. The owner has undertaken to complete the project for any buyer, to obtain a three star grading, and to remain on for a maximum period of 1 year and give appropriate profit guarantees. The owner has secured funding from a major business funding institution, but wishes to sell as he has another business that presents a significant opportunity for him. Fully approved building plans and an architectural progress report is available. The premises is zoned residential 4 with Hotel Rights
During the renovation process the owner has been renting alternative accommodation for his guests nearby at a cost of R 1.4m in 2017. This rental cost will go straight to the bottom line once construction has been completed and occupation taken. The rental cost has not been added back in the appraisal of the business value.
The hotel is situated in the so-called Golden Triangle, between Gold Reef City, Nasrec and Soccer City, and has very high occupancy rates.
The owner has an impressive blue chip client list which is all repeat business. This ranges from a major franchise, who uses him for all their training accommodation, several government departments who undertake long term stays, and some of the biggest corporates operating in the area. The hotel is already fully booked for March.
The current premises that is being rented has nine bedrooms, and the 2017 financials are based on this. The Hotel will have 19 bedrooms available by end January and a further 13 bedrooms when completed. This alone represents a huge growth opportunity, as the owner refers a significant amount of guests to other service providers in the area.
The owner is willing to provide seller's finance to suitably qualified parties, with negotiations starting at a 50% deposit and the remainder to be financed over an agreed period.
The replacement cost for the building when completed is R 13,2m and the business valuation is R 6.5m. The asking price is R 16.5 million. The owner is also willing to consider the business sale only with the property available for rental at a market related rate.
The owner has another business which represents a bigger opportunity and requires his urgent attention.
Price excludes VAT and transaction can be zero rated for VAT purposes depending on the contract of sale.
Please note the images used does not represent the actual business in order to protect the identity.
Sellers Discretionary Earnings: R 1,747,105.0
Potential Rental Income: R 1,388,578.00
Please contact listing broker for more information.
+27 81 783 8759
*Profit: Sellers Discretionary Earnings, also known as EBPITD (Earnings Before Proprietors Compensation, Interest, Tax and Depreciation). This is the estimated total discretionary earnings (profit) for a business, usually based on historical trading.