I have a client in Baltimore who is looking to sell a 25-key boutique hotel. This is definitely a challenging time for hospitality properties in general, and the kicker is that this hotel isn't currently operating. It's been closed over a year for renovations and just as they were finishing up, COVID struck. I haven't worked with hotels before so I wanted to get some advice from any BP members who have experience in this asset class.

As hotel investors, what would you look for when evaluating a deal like this? The property is in a great location with lots of development occurring nearby. It's a beautiful historic building and the hotel is not currently flagged. It's pretty much ready to operate with the exception of the restaurant they were putting in--they halted construction during the pandemic. Would past performance be the best indicator of the hotel's future profitability? The owner also has a larger 125-key hotel in the city and the same team operates both hotels. Unfortunately, the GM paid a bit more attention to the larger hotel and the smaller hotel's performance suffered as a result, so I think there is a significant upside potential with proper management. Is this something that could be communicated to future buyers or would that matter as they would most likely bring in their own management? I've also considered exploring the possibilities of a condo conversion project, but there is already a lot of new product in the pipeline and I don't see many potential developers wanting to get tangled up with the historic preservation folks.

Would it be worth hiring a firm to conduct a feasibility study to use as marketing collateral or is that just a waste of money? Especially considering that with Covid all assumptions are up in the air. The deal is interesting but has its challenges for sure...Any advice would be greatly appreciated!