Questions
Should you tell your staff that your hotel is being sold?
Updated
The answer comes in two parts. Until anything is committed, the team does not need to learn that a sale is being prepared: a rumour harms the hotel far more than it protects anyone. Before the sale itself, however, French employment law may require employees to be informed, or even consulted, at a specific time and in a specific form. The whole point is to reconcile the two without improvising.
What follows sets out principles only. The exact scope of each obligation depends on the size of the company, its structure and the deal chosen. It has to be assessed case by case with your lawyer.
Why not tell them straight away
A sale may never happen. Announcing a sale too early, only for it to fall through, worries people for nothing. And what the staff know ends up being known by guests, suppliers and competitors.
The effects are tangible. A front office manager or a sales manager accepts another offer. Service slips, and in a hotel that shows immediately. A competitor uses the uncertainty to approach the team. Yet the buyer is also acquiring a team in place: protecting it is part of protecting value.
What the law may require
Prior notice to employees. In some French companies, the sale of a business (fonds de commerce), or of a majority stake in the company that runs it, must be preceded by notice to employees. This gives them the opportunity, if they wish, to put forward an offer to buy it. This is the scheme known as the “loi Hamon”. Its scope, exceptions, time limits and procedure depend in particular on the size of the company and the nature of the transaction.
Consulting the works council. Where the company has a works council (comité social et économique, or CSE), a transaction that changes its economic or legal organisation, such as a sale, may require the council to be informed and consulted. When that consultation takes place, relative to the commitments signed with the buyer, is prepared with the lawyer.
The two regimes can apply together and follow different rules. Overlooking them exposes the seller to penalties and can push back the signing: this is not a subject to open in the week of completion.
What happens to employment contracts
What happens to contracts depends on what is sold.
| Structure | Employment contracts |
|---|---|
| Sale of the business, alone or with the property | In principle transferred to the buyer, who becomes the employer (article L.1224-1 of the French Labour Code) |
| Sale of the shares of the operating company | The employer remains the same company, only its shareholder changes |
| Sale of the property alone | No direct effect: the operator remains the employer |
In every case, the buyer wants to know the team they are taking on: headcount, collective agreement, company agreements, disputes. This information goes into the data room in anonymised form, and only at an advanced stage.
Reconciling confidentiality and legal duties
The method is to build these obligations into the timetable from the outset, rather than face them at the end. In practice:
- the lawyer identifies, as soon as the structure is chosen, which obligations apply and when.
- the process moves forward without involving the team: documents gathered with the accountant, visits with no contact with staff, no direct contact between buyers and the hotel.
- where staff must not know anything, disclosure is staged: anonymised documents first, the hotel’s identity released only at the visit or at the letter of intent.
- notice or consultation takes place at the planned moment, with a message prepared in advance.
- the final announcement is planned with the buyer: who speaks, in what order, and what is said about the future of the contracts.
Other ways of keeping a sale discreet are covered in our answer to how do you sell a hotel discreetly. Our guide on selling your hotel without disrupting its operations devotes a section to the subject.
We build this timetable with your advisers in every hotel sale we conduct.
Planning a sale?
Let’s talk, in confidence.
Other questions
How do you sell a hotel discreetly?
By entrusting the sale, under an exclusive mandate, to an adviser who publishes nothing: no listings or portals, an anonymous teaser, an NDA before any identifying information, and qualified buyers approached one at a time. Staff and the market hear of the sale only when the seller decides.
Should you sell the property or the business of your hotel?
It depends on what you own and what you want to keep. Selling property and business together reaches the widest range of buyers. Selling the business alone requires a sound commercial lease. Selling the property alone means selling an investment backed by rent. If one company owns it all, you can sell its shares.
Who pays the agency fees when a hotel is sold?
The mandate decides. At RR Hôtels & Finance, fees are set in the mandate in line with our published scale. Whether the seller or the buyer bears them is stated in the mandate and disclosed to the buyer at the first exchange. The scale is displayed, as French law (the loi Hoguet) requires.