Estimating the value of a hotel for sale in France rests on three inseparable pillars: operating profitability (EBE), turnover and its breakdown per room (RevPAR), and comparison with similar transactions on the market. Unlike a residential property, a hotel is valued both as a business (the goodwill/business assets) and as a real estate asset (the walls/building), which requires clearly distinguishing between the two components before any negotiation. The star rating, the nature of the commercial lease, the operating licence and the technical condition of the building then adjust this base value. For an owner or an investor, a reliable estimate therefore requires cross-referencing several calculation methods and relying on the expertise of a professional in the sector.
In summary
- The value of a hotel generally combines two approaches: a multiple of the EBE (gross operating surplus) and a multiple of turnover, cross-checked with comparable transactions.
- The RevPAR (revenue per available room) is the key indicator of operational performance and serves as the basis for the so-called "capitalisation" method.
- Legal and regulatory elements — commercial lease, star rating, liquor licence — strongly influence the final value of the business assets (fonds de commerce).
- It is essential to distinguish the value of the walls (the real estate) from that of the business assets (the operation), which can be sold separately or together.
Understanding the two components of a hotel's value
The walls: the real estate value
The walls correspond to the building itself: its location, its surface area, its technical condition, its compliance with ERP (establishment open to the public) standards and accessibility for people with reduced mobility (PMR). Their value is assessed using the classic methods of real estate appraisal: comparison with similar properties, the rental income method if the walls are leased to an operator, or the replacement cost approach for the most recent buildings.
The business assets: the operating value
The business assets (fonds de commerce) encompass the clientele, the establishment's reputation, the right to the lease, the furniture and equipment, as well as any licences attached to the activity. Its valuation depends directly on the hotel's economic performance: turnover, occupancy rate, average price per room and profitability. This is the component that varies most strongly from one establishment to another, depending on the management put in place by the outgoing operator.
The EBE (gross operating surplus) method
The principle of the EBE multiple
The so-called "empirical" method consists of multiplying the hotel's restated EBE by a coefficient that varies according to the size of the establishment, its location and the level of risk perceived by buyers. This multiple is most often between 4 and 12 times the EBE for independent hotels in the provinces, and can be significantly higher in major cities or for upmarket establishments. In Paris, some transactions reach markedly higher multiples, particularly for properties combining walls and business assets benefiting from an exceptional location.
The importance of accounting restatements
Before applying a multiple, it is essential to restate the EBE to neutralise exceptional items, the manager's remuneration when it is disproportionate to the market, or non-recurring expenses. A hotel operated with both walls and business assets generally shows a higher EBE, often between 40 and 50% of turnover, compared with 25 to 35% for business assets alone, as the operator must then pay rent to the owner of the walls.
The RevPAR and turnover method
Calculating and interpreting RevPAR
The RevPAR (Revenue Per Available Room) is calculated by multiplying the occupancy rate by the average room price, or by dividing accommodation turnover by the total number of available rooms. This indicator makes it possible to objectively compare hotels of different sizes and serves as a starting point for estimating a normative gross operating result, which is then capitalised at a rate derived from transactions observed in the relevant segment.
Valuation by turnover multiple
Some professionals apply a coefficient directly to the hotel's annual turnover, particularly for smaller establishments where EBITDA is more difficult to isolate reliably. This multiple varies significantly depending on the category of the establishment: an economy hotel may be negotiated at around one times turnover, while a higher-end establishment in a good location can reach much higher coefficients. This method nonetheless remains less precise than the profitability-based approach and must always be cross-checked with other indicators.
The legal specificities to factor into the valuation
The commercial lease and its impact on value
The vast majority of hotels are operated under a commercial lease, concluded for a minimum term of nine years and governed by specific rules of the Commercial Code, particularly for premises built for a single intended use. The lease terms (rent amount, renewal clauses, remaining term) directly influence the attractiveness of the business (fonds de commerce) to a buyer: rent that is unbalanced relative to the local market can significantly reduce the estimated value.
The operating licence and the star rating
The licence to sell alcoholic beverages attached to the hotel's bar or restaurant, where it exists, constitutes a standalone asset that can add value to the business. The star rating, awarded by Atout France for a period of five years on the basis of a national set of criteria, is attached to the establishment itself rather than to the operator: it is automatically transferred along with the business and largely determines the hotel's pricing positioning, and therefore its ability to generate turnover.
Referring to the market: the comparables method
Why cross-reference calculation methods
No single calculation method is sufficient on its own to establish a reliable value. Professionals systematically recommend cross-referencing the EBITDA approach, the turnover or RevPAR approach, and the comparables method, which relies on the analysis of recent transactions involving hotels with similar characteristics: location, category, number of rooms and level of economic performance. This comparative approach makes it possible to verify the consistency of the estimate obtained through the financial methods and to adjust it to local market realities.
Support from a real estate professional
Given the technical nature of these calculations and the often significant financial stakes involved, it is strongly advisable to call on a professional specialising in the sale of hotel businesses. An experienced advisor will be able to analyse the operating accounts, position the establishment in relation to comparable property listings, and legally secure the transaction, from the commercial lease through to the transfer of the licence.
Conclusion
Estimating the value of a hotel for sale requires combining a rigorous financial reading (EBITDA, turnover, RevPAR) with an in-depth analysis of the legal elements specific to the sector: commercial lease, star rating, licences. The distinction between the value of the real estate (murs) and the value of the business (fonds de commerce) is essential for building a coherent offer, whether it is a combined sale or a separate transfer. Given the complexity of these calculations, relying on up-to-date market data and the expertise of a commercial real estate professional helps ensure a reliable estimate and secure transaction, in the interest of both seller and buyer.
Expert's word
"Estimating a hotel's value has nothing to do with valuing a standard residential property: in reality, two assets are being assessed in one, the real estate and the business (fonds de commerce), each of which follows its own valuation logic. Too many owners simply apply a multiple of turnover found online, without taking into account the accounting restatements needed on EBITDA (EBE), nor the specifics of the commercial lease or the star rating, which nevertheless weigh heavily on the final price. I systematically recommend cross-checking at least two calculation methods, the profitability approach and the comparables method, in order to obtain a realistic value range rather than a single, fragile figure. It is also necessary to anticipate, very early on, questions relating to the transfer of the licence and the remaining term of the lease, as these elements directly affect buyers' interest and therefore the time it takes to sell. Finally, presenting a clear financial file, with well-documented performance indicators such as RevPAR or occupancy rate, reassures buyers and often makes it easier to justify the asking price. Professional support is not a luxury for this type of transaction: it is what helps avoid an overvaluation that drives away serious buyers, or conversely an undervaluation that deprives the seller of part of the value they spent years building."
— Frédéric Rémy, Director of Commercial Performance at Capifrance
FAQ - Frequently Asked Questions
What is the difference between valuing the real estate and valuing the business (fonds de commerce) of a hotel?
The real estate corresponds to the property value of the building, estimated using standard comparison or rental income methods. The business (fonds de commerce) corresponds to the value of the operation (customer base, licences, lease rights) and is calculated based on the profitability and turnover of the hotel activity.
What EBITDA (EBE) multiple should be applied to value a hotel?
The multiple generally ranges from 4 to 12 times restated EBITDA (EBE) depending on the size, location and risk level of the establishment, with higher coefficients possible in very tight markets such as Paris. This multiple should always be cross-checked against a comparables method.
What is RevPAR and why is it important in the valuation?
RevPAR (revenue per available room) combines occupancy rate and average room rate. It allows for an objective comparison of the performance of different hotels and serves as a basis for estimating a normative operating result, which is then used in valuing the business (fonds de commerce).
Does the star rating influence a hotel's value?
Yes, the star rating determines the establishment's pricing positioning and image. Attached to the hotel itself rather than to the operator, it is transferred with the business (fonds de commerce) upon sale and constitutes an important element taken into account in the valuation.
Should you use a professional to sell a hotel?
Given the technical nature of valuation calculations and the legal issues related to the commercial lease and licences, it is strongly recommended to rely on a specialised professional. You can, in particular, find a real estate advisor near you to assist you in this process.
Author
Frédéric Rémy – Director of Sales Performance
A real estate professional with several years of experience within the Capifrance network, I would like to share essential advice with you to help you successfully complete your property project with our advisors.
