Buying a Motel – Due Diligence Checklist

Request at least three years of financial statements, BAS returns, and management reports. Rebuild Adjusted Net Profit yourself: check revenue against occupancy and room rate, verify major expense lines, look for one-off items, and confirm wages are at market rates.

BAS data is often more reliable than internal spreadsheets — it's what was actually reported. Cross-check everything; sellers present their best case, and your job is to find the real one.

Look past the annual totals to the monthly detail: occupancy by month, average room rate by month, and the split between OTA, direct, corporate, and walk-in bookings. Understand seasonality — a motel that earns 60% of its profit in twelve weeks has different risk than one that trades evenly all year.

Ask what drives demand in the town: local industry, tourism, events, road traffic. Then ask what happens to that demand if any of those weaken.

For leaseholds, engage a solicitor to review the lease term, options, rent escalation, outgoings, and make-good obligations before you go unconditional. For all purchases, commission a building and pest inspection, check plant age (air conditioning, hot water, laundry equipment), and review any recent capital works.

Confirm the business's licences and permits transfer cleanly, including the real estate or liquor licensing situation where relevant. A small legal issue discovered early is a negotiation point; the same issue found after exchange is a crisis.

Forward bookings, OTA review scores, the website and domain ownership, staff arrangements, and supplier contracts all transfer value — or don't. Confirm what's included in the sale in writing, and assume nothing.

Finally, plan your first ninety days as owner. The best buyers arrive with a plan for the business before settlement, not after it.