Buying a hotel in Germany: transaction structure and due diligence

What exactly is being bought?

Buying a hotel in Germany is not simply acquiring rooms and a building. The advertised opportunity may combine registered land ownership, a lease, a company, an operating business and third-party management or brand rights. Ask the seller for a written transaction perimeter before assessing yield: who owns the land, who employs staff, who contracts with guests, and who holds the operating approvals? If those answers refer to different entities, a single price does not mean a single asset or a seamless handover.

The first decision is what the buyer actually wants: stable rental income from a hotel property, exposure to hotel trading profit, or control of both property and operations. A leased hotel may fit a passive owner but leave tenant-credit and re-letting risk. An owner-operated hotel exposes the buyer to labour, occupancy, rates, repairs and working capital. A franchise adds brand-related costs and standards. No acquisition structure, existing hotel operation or property title by itself guarantees that a particular buyer can run every hospitality service. For buyers based outside Germany, property ownership, permission to operate the hotel, and any personal immigration or work authorization must be assessed separately; the deed alone establishes none of the latter permissions.

Four transaction structures that change the deal

Freehold property purchase: the buyer purchases the plot and building, but does not automatically buy the seller’s company, staff contracts, booking platform accounts, brand or business assets. Determine whether any hotel lease continues, whether equipment is included, and what registered rights restrict the land. German property-sale obligations require notarial authentication under §311b BGB; ownership normally transfers only after the relevant conveyance agreement and registration in the Grundbuch (§§873, 925 BGB).

Share purchase: the buyer takes shares in a company that may own the land, operate the hotel, or both. The company ordinarily continues to hold its existing assets, contracts and liabilities; the buyer must therefore review debt, tax exposures, litigation and change-of-control clauses. A transfer of German GmbH shares requires notarial form under §15 GmbHG. Do not assume a share deal avoids real-estate transfer tax: German GrEStG also captures specified changes in property-holding companies.

Business or asset purchase: selected equipment, goodwill, agreements or operating assets move to the purchaser, potentially with premises purchased or leased separately. Specify transferred assets, guest deposits, receivables, reservations, gift vouchers and assumed obligations in a schedule. Contractual transfers can require third-party consents, while a transfer of an economic undertaking may trigger mandatory employee protections under §613a BGB. Carving a business out of its premises can leave the buyer unable to trade.

Lease or management arrangement: a long hotel lease, leasehold or operator agreement may deliver operational control without ownership of the underlying freehold. Check term, rent indexation, repair obligations, guarantees, renewal and termination rights. A management contract may leave hotel profit and capital risk with the owner while remunerating an operator through fixed and incentive fees. Compare the actual allocation of operating risk, not the marketing name used for the deal.

Choose the right asset before negotiating price

Create a shortlist against a written investment mandate: location and demand generators, corporate versus leisure mix, room count and room configuration, accessibility, parking, meeting space, restaurant scope, service access and nearby competition. Separate the physical count of rooms from rooms permitted and currently saleable. Ask whether rooms are unavailable due to refurbishment or fire-safety defects. This screen narrows the field before paying for extensive diligence; it is not a claim that any particular property is currently for sale.

Reject an apparently cheap asset if its business case depends on an unapproved extension, unavailable parking, replacing critical staff or a franchise that cannot transfer. A city business hotel with weekday corporate demand is not interchangeable with a seasonal resort, wellness property or roadside budget hotel. Require comparable local trading evidence, transport links and realistic refurbishment downtime. Rank each target separately for location, achievable guest demand, building condition, operator dependence, cash requirement and an evidenced exit route. A quoted price per room is not directly comparable between freehold and leased hotels, or between deals with different debt, franchise commitments and deferred capital works; first bring the purchase perimeters and future cash requirements onto a consistent basis.

Test sustainable hotel earnings, not headline revenue

Request monthly room revenue, rooms available and sold, average daily rate (ADR), occupancy and revenue per available room (RevPAR), together with restaurant, events and other departmental revenue. Verify these against property-management-system exports, bank receipts, financial statements and VAT returns where available. Distinguish owner-paid expenses, payroll, utilities, platform commissions, maintenance and one-off items. Revenue growth presented in a sales memorandum is not evidence of repeatable cash flow; examine at least the available historical periods and any demand shocks.

Rebuild a sustainable operating result before financing: normalize genuine nonrecurring expenses without erasing recurring repairs or management costs, then deduct an appropriate capex reserve, financing costs and taxes in a separate investment model. Stress-test occupancy, ADR, wage inflation, energy prices, refurbishment closure and variable-rate debt. Example, not a market estimate: 60 rooms × 365 days × 65% occupancy × €110 ADR gives about €1.57 million annual room revenue before operating costs; RevPAR would be €71.50. The example says nothing about purchase value or profit.

Property rights are not operating permission

Request the current Grundbuch extract, cadastral data, property plan, encumbrances, mortgages, easements, lease interests and relevant sale restrictions. Independently compare actual room, restaurant, terrace and event use against building permits, approved plans, planning rules and fire-protection documentation. Section 30 BauGB addresses development-plan compliance; building-control requirements and possible change-of-use approvals also depend on the Land and competent local authority. Historic operation is not proof that all present or planned uses are authorized.

Identify the actual operator and ask the municipal trade and hospitality authority to confirm what notices, permits or inspections will apply after closing. Section 14 GewO addresses trade notification. In the areas to which the federal Gaststättengesetz rules apply, §2 contains permit rules and exceptions, including services to hotel residents; Länder can have their own hospitality rules. Separately check any public alcohol service, food hygiene, terrace, music, spa or event requirements. A seller’s permit should never be treated as universally transferable.

People, brands and liabilities can survive completion

Examine hotel management, franchise, distribution, supplier, laundry, cleaning, maintenance, IT, software, payment-processing and key-account agreements. Document duration, exclusivity, termination payments, minimum performance, property improvement plans, audit rights and consent/change-of-control provisions. Verify rights to continue using the hotel name, domain, guest database and booking accounts subject to contract and data-protection requirements. Loss of the flag or booking channels may radically change the economics even where the building is sound.

Employee exposure requires separate analysis from the purchase contract. Under §613a BGB, where the legal conditions for a transfer of an undertaking are met, existing employment rights and obligations can move to the new operator; information duties and employee objection rights may apply, and dismissals solely due to the transfer are ineffective. In a share deal the same employer may remain in place, but inherited employment liabilities still matter. Check staffing rosters, collective arrangements, holiday accrual, pensions, agency labour, training and any disputed claims.

Calculate the all-in investment and taxes

Budget for the agreed consideration plus notary and land-registry charges, due diligence, financing and security costs, refurbishment, equipment replacement, opening working capital, taxes and contingency. Germany’s real-estate transfer tax (Grunderwerbsteuer) depends on the Land: Germany Trade & Invest lists rates of 3.5% to 6.5% for 2026. On a hypothetical €4 million taxable property consideration that corresponds to €140,000–€260,000 before assessing the actual Land and tax base. This range is arithmetic, not a quote or total closing-cost estimate.

Get specialist tax advice before choosing asset versus share structure. Section 1(1a) UStG excludes a qualifying transfer of a whole business to another entrepreneur for that entrepreneur’s business from German VAT; not every sale of a hotel building or isolated assets qualifies. The real-estate-transfer-tax rules include certain company ownership changes, including specified 90% thresholds and ten-year periods under §1 GrEStG. Model recurring real-estate tax, VAT position, income/corporate taxes and purchase-price allocations separately; never price the transaction on an unverified exemption.

Evidence requests and conditional signing

Before granting exclusivity or making a binding offer, ask for: ownership and corporate chart; title and land documents; full permits and fire reports; energy certificate where required; measured floor areas; building survey and capex plan; three years of available accounts and monthly trading; tax records; management/franchise/lease contracts; payroll and employment liabilities; major disputes; guest deposits, outstanding vouchers and forward bookings. Verify source dates and originals, reconcile seller representations to independent evidence, and involve German property, corporate, employment, tax, hotel-operations and technical advisers as relevant.

Use a written indicative proposal identifying the exact assets or shares, price allocation, net debt/working-capital mechanics, inventory and deposit adjustments, consents, financing conditions, information access, timetable and break rights. Document warranties, disclosure, indemnities, security or escrow where appropriate; signing, commercial handover and registered legal title are distinct milestones. A German land purchase and a GmbH share transfer can each require notarization, but neither establishes a universal remote-closing method. Discuss identity checks, powers of attorney and notarization logistics with the acting German notary before assuming remote execution.

Proceed, renegotiate or reject

Proceed to detailed diligence only where the seller proves control of the offered perimeter, lawful present use and sufficiently reliable trading performance, and where the buyer can fund closing plus realistic capex and working capital. Renegotiate if a documented but remediable roof, heating, franchise transfer or labour exposure can be priced and made conditional on completion. Stop if the transaction cannot transfer essential premises or operating rights, the authority will not support the intended use, key data cannot be reconciled, or debt and liabilities defeat the investment case.

For each finalist prepare a one-page investment decision: structure and entities; source-checked purchase perimeter; actual permissions; sustainable earnings and downside scenario; all-in equity need; third-party consents; required conditions precedent; open red flags; accountable advisers; and a no-go threshold. The next action is a targeted evidence request and jurisdiction-specific advice, not an unconditional deposit or promise of yield. This is a transaction-screening framework, not a verified listing, individualized legal opinion or valuation; review its legal and tax assumptions against the deal date and municipality.