The data room in a hotel sale: the document checklist

The data room holds the documents on which the buyer bases its final offer and its advisers their review. In a hotel sale it covers the property, the trading business, the contracts and the workforce. Its quality shows immediately: a complete, well-organised, dated data room shortens due diligence and limits grounds for renegotiation. This guide sets out its purpose, how it works and what it contains, section by section.

What the data room is for

The information memorandum presents the hotel and its figures. The data room proves them. It has three functions.

• Enabling verification. Every figure in the memorandum, every EBITDA adjustment, every statement about the lease or compliance must be traceable to a document.
• Defining what was disclosed. The documents provided and the answers given establish what the buyer knew when it signed. Depending on the terms of the sale and purchase agreement, they serve as a reference when negotiating the warranty and indemnity package, or garantie d’actif et de passif.
• Holding the timetable. A data room that is ready avoids reviews waiting weeks for documents, while the hotel keeps trading and the risk of a leak grows.

When to open it

A data room is assembled early and opened late. Documents are gathered while the file is prepared, alongside the teaser and the memorandum, because that is when gaps appear and can still be fixed.

It opens at an advanced stage. Two approaches coexist:

• After the letter of intent, for the selected buyer, often under exclusivity. This is the most common case in a restricted process.
• Before final offers, for a small number of buyers who have viewed the hotel and must base a firm offer on documents. Access can then be staged: financial and property documents first, sensitive contracts and employee data later.

In both cases, opening a full data room to a buyer who has not yet shown its financial capacity exposes the hotel for nothing in return.

Named access, tracking and Q&A

A sale data room is not a shared folder. Its rules are set before it opens.

• Named access. Every user is identified: the buyer, its executives, its advisers, its lenders. No shared logins.
• Tracking. Views and downloads are logged. Rights are granted by section, with view-only access, without download or printing, for sensitive documents where needed. They are withdrawn as soon as talks end.
• Recorded questions and answers. Questions are put in writing, through the seller’s adviser, never to staff. Each answer is dated, linked to the relevant documents and kept. At the end of the process, the document index and the Q&A log are frozen and may be annexed to the deed or the sale and purchase agreement.

These rules extend those set out in the guide selling your hotel without disrupting its operations.

The eight sections and their documents

The structure below is the one RR Hôtels & Finance uses in its memorandums. It applies to most transactions, with documents added according to the deal structure.

Adapting the contents to the deal structure

The scope of the data room follows that of the transaction, described in the guide property, business or shares.

• Asset deal covering the property (murs) and the business (fonds de commerce). The focus is on the property, technical matters and trading. The selling company keeps its tax and employment history, so sections 1 and 7 are lighter.
• Sale of the business alone. The commercial lease becomes the central document: remaining term, permitted use, rent, charges, landlord consent clause. Transferred contracts and the position of employees are examined closely.
• Share deal. The buyer takes over the company with its history. Every section is relevant, especially governance, tax, employment and litigation, along with change-of-control clauses in franchise, management and financing agreements.

Common mistakes

Missing documents

A missing document does not go away: it becomes a question, then a reservation, then often a condition or a price adjustment. The most common gaps concern fire safety commission reports, lease amendments, evidence of recent works and support for EBITDA adjustments. It is better to flag a document as unavailable, with an explanation, than to let the buyer discover the gap.

Employees’ personal data

Named employment contracts, payslips, sick-leave records, disciplinary files: none of these belong in a data room. They expose the seller under data protection rules and compromise confidentiality towards staff. The register is anonymised. Only aggregated or pseudonymised data is shared, at an advanced stage.

Undated versions

An undated budget, two versions of the same lease, a plan with no revision number: the buyer no longer knows what it is committing to. Every document carries a date and a version, every update is flagged, and superseded documents are kept in the history rather than deleted.

Other shortcomings

Illegible scans, folders uploaded in bulk, figures that do not reconcile between memorandum, reporting and tax returns, or an unfavourable document uploaded the day before signing: each of these lengthens due diligence and weakens the seller’s position.

Key point: the data room is prepared while the file is assembled, opened at an advanced stage to identified buyers, and every document and every answer in it is dated and tracked.

Preparing the data room before going to market

Gathering documents before any approach has two advantages. Gaps can be fixed without time pressure: a safety commission report to renew, a lease amendment to regularise, a technical audit to commission (see CAPEX, compliance and star rating). And the seller knows, before the buyer does, which points will be discussed.

A simple method is to start from the index above, assign each document to an owner (seller, accountant, lawyer, hotel management) and track progress until opening. The data room is part of the sale file prepared under a hotel sale mandate.