Buying a hotel in Switzerland: property, business and operating risks

Define the acquisition before choosing the building

Set out the investment mandate in writing: canton and local catchment, operating or owner-landlord strategy, number of rooms, meeting or wellness facilities, condition, budget in CHF, management capacity, financing and desired closing date. A lakefront landmark, an airport business hotel and a mountain-season property have different demand cycles and staffing needs; they are not substitutes merely because their asking prices appear similar. Request a one-page asset summary, exact site and ownership structure, recent trading data and reasons for sale before signing exclusivity. Screen out offers where you cannot identify the real counterparty or the legal right on offer.

For a first shortlist, put each candidate through three gates: identifiable property and seller; hotel use and buyer eligibility capable of confirmation; and credible trading data with a costed capital-work plan. Compare freehold-with-operator, tenanted freehold and leasehold businesses on different lines rather than ranking them by asking price alone. Mark any missing gate as “evidence needed”, not “approved”; reject a candidate if the seller will not identify the rights being sold or permit basic verification.

Four structures, four different risks

The expression “buy a hotel” may mean acquiring land and building, assets of a trading business, shares of a company, or a lease/operating position. One transaction can combine several. A deed for the building does not automatically assign a franchise or booking-platform account; conversely, buying company shares may leave existing contracts and liabilities inside the target company. Ask the seller to mark exactly which land parcels, FF&E, inventory, brand rights, guest bookings, employees, debts and contracts are included or excluded. A landlord-and-operator split requires a separate assessment of rent, lease duration and termination rights.

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Foreign ownership: the operating-hotel distinction

Under Swiss Lex Koller rules, a site lawfully permitted and continuously used as a permanent commercial establishment, including a hotel, can in principle be acquired by a buyer classed as a foreign non-resident without authorisation. This is not a blanket exemption for every property advertised as a hotel. Separately saleable apartments, private residences, undeveloped reserves and a proposed conversion to holiday housing may change the classification; limited ancillary staff accommodation can involve specific exceptions. The canton evaluates the facts and, in doubtful cases, should be asked for a formal decision before commitments become unconditional. Foreign-controlled Swiss companies must also be screened. Buying property itself grants no Swiss residence right.

Prove lawful use and an operable business

Obtain the land-register extract, cadastral plans, zoning and approved hotel use, building permissions, fire and safety records, heritage or noise restrictions, food/alcohol permissions where relevant, and proof of hotel or public-establishment authorisation for the actual operator. Requirements vary by canton and activity: Geneva expressly includes hotels among establishments requiring an operating authorisation, while Zurich describes municipality-level restaurant licensing and food-business notifications. Neither regime should be copied across all Swiss cantons. Confirm whether a change of operator, restaurant concept, room count, terrace or spa requires a fresh application or works approval; ownership and trading permission are different tests.

Use tourism statistics as context, not a valuation

The Federal Statistical Office reported 43.9 million Swiss hotel overnight stays in 2025 and a national net room occupancy rate of 56.8%. These figures describe the hotel sector, not occupancy, pricing power or profit at an individual property. Compare the site with a genuinely relevant local competitor set by market, season, category, number of keys and service mix. Examine accessibility, weekday/weekend demand, winter/summer concentration, corporate contracts and event dependence. Do not quote a national statistic as a forecast of a specific hotel or treat advertised sale listings as evidence of completed deal prices.

Rebuild operating performance from primary records

Ask for three complete fiscal years plus current monthly management accounts, room-nights sold, available room-nights, average daily rate (ADR), revenue per available room (RevPAR), departmental revenue, payroll, utilities, distribution commissions, maintenance, guest deposits and tax filings. Reconcile management accounts with bank receipts, VAT returns and reservation-system reports, separating one-off events, owner-specific expenses and deferred work. Seek audit reports where available and understand whether management fees, rent or related-party contracts are already included. If the seller supplies only a brochure, headline EBITDA or an unsupported “guaranteed return”, do not use it to fix the purchase price.

Model downside, not just the brochure case

Build a CHF model with rooms × available nights × occupancy × ADR, then subtract distribution costs, payroll, food and beverage costs, utilities, insurance, routine maintenance, management fees, rent if applicable, financing and taxes on the correct basis. Treat acquisition fees, refurbishment, working capital, and replacement of furniture, fixtures and equipment (FF&E) as separate cash requirements. For illustration only: 40 rooms × 365 days × 55% occupancy × CHF 220 ADR implies approximately CHF 1.77 million annual gross room revenue before deductions; it is not net income or a Swiss market benchmark. Test lower occupancy, staff inflation, interest-rate changes and the first low season.

Build a valuation bridge, not just a revenue forecast. Reconcile reported EBITDA with market-level management pay, an arm’s-length rent where property and operation are separated, recurring maintenance and a reserve for periodic FF&E replacement. Show unlevered cash available after necessary capital works separately from cash remaining after debt service. A freehold with rental income, a trading hotel with property and a leasehold operator should not be priced using an unexplained common EBITDA multiple. Test the implied price per legal room, effective yield and debt-service headroom against genuinely comparable evidence; if no dependable comparables exist, disclose that limitation instead of inventing a market value.

Inspect the physical asset and future capital works

Commission an independent technical assessment of the roof and envelope, structure, heating and ventilation, lifts, fire systems, accessible circulation, kitchens, water installations, energy performance and environmental exposure. Confirm room count against plans and the actual legally permitted configuration. For a mountain property, examine winter access, snow-related obligations and seasonal shutdown costs; for older urban stock, look for protected fabric and constraints on reconfiguration. Obtain quotations and a realistic timetable for mandatory and discretionary renovations; a visually finished lobby does not prove that back-of-house systems are sound. Price the work and trading disruption rather than assuming an automatic permit for additional rooms.

Test the brand, operator and distribution perimeter

Read management and franchise agreements for term, performance tests, fees, change-of-control consent, renewal, termination payments, brand standards, renovation obligations and ownership of customer data. Examine leases, supplier exclusivity, OTA commission and hotel technology licences separately. A famous brand may improve distribution but can also constrain pricing, capex and exit. Require written evidence that critical arrangements will continue or can be replaced after closing, rather than treating an existing sign on the building as transferable intellectual property. An unconsented management exit can erase part of the buyer’s projected value.

Employees, prepayments and hidden obligations

When a business or part of it transfers, Article 333 of the Swiss Code of Obligations can transfer employment relationships, rights and obligations to the acquirer unless an employee objects; special rules and joint liabilities must be assessed on the facts. Review payroll, accrued holiday and overtime, pension obligations, collective agreements, disputes and staff accommodation. For a share purchase, the company generally continues as employer, subject to the deal and contracts. Reconcile prepaid room stays, vouchers, events, loyalty commitments, refundable deposits and supplier balances; allocate these in the sale agreement and set a practical handover plan for guests and staff.

Total acquisition cost and Swiss taxes

Treat price as only one line: model cantonal/municipal transfer charges where applicable, public-deed and land-register fees, adviser costs, financing fees, bank charges, CHF conversion spreads for non-CHF funds, stamp or other transaction tax exposures as applicable, working capital and capital works. Get a written case-specific estimate; there is no defensible uniform nationwide hotel transfer-tax percentage. Switzerland applies a reduced VAT rate to qualifying accommodation services and a higher standard rate to many other services; check the current rates with the Federal Tax Administration. These operating rates do not settle the VAT or property-transfer treatment of an asset or share purchase. Secure financing terms and currency strategy before a binding commitment.

Sequence diligence, conditions and closing

Start with a confidentiality agreement and non-binding indicative offer that identifies the proposed buyer, assets, enterprise/equity value basis, debt and cash treatment, exclusivity duration and diligence access. Put title, Lex Koller classification, operator consents, licences, financing, employee and booking liabilities, and capex into a written risk register. Negotiate conditions precedent, warranties, disclosure schedules, escrow or purchase-price adjustments and clear termination rights. A direct transfer of Swiss land generally requires a publicly authenticated deed and land-register entry; buying shares is a different legal closing process. Online review, negotiation, deed signing and registration must not be presented as one automatically remote step. Obtain canton-specific execution instructions.

Before exclusivity or a material deposit, request a dated seller pack: title and parcel plan, company or lease documents, relevant permits, three years of accounts and monthly trading, operator agreements, staff liability summary, guest-prepayment schedule and costed works list. For each gap record its owner, deadline and consequence: obtain proof, make closing conditional, reprice or withdraw. A deposit should only be paid under documented release/refund terms acceptable to the buyer; an indicative offer does not itself replace the formal deed, regulatory decision or third-party consent.

A practical proceed, renegotiate or stop test

Proceed to formal diligence only if the asset and transaction perimeter are identifiable, the intended hotel use appears supportable, reliable operating records are accessible and financing can cover the price plus downside cash needs. Renegotiate if a quantified roof replacement, brand consent, staff liability or delayed permission is remediable with an appropriate price adjustment or condition. Stop if critical title, permitted use, foreign-buyer classification, operating permission or revenue evidence cannot be verified on acceptable terms. Before releasing a deposit or signing an unconditional deed, instruct Swiss real-estate counsel, a local licensing specialist, an independent building surveyor and hospitality-focused financial and tax advisers as appropriate.