Italy is one of the top tourist destinations in Europe, thanks to its impressive cultural heritage and abundant natural resources. Investors are paying close attention to the Italian hotel real estate market, monitoring the emergence of favorable opportunities in major cities and popular resort areas.
The hotel market in Italy is predominantly composed of small hotel structures with 30/50 rooms, often managed by the owners themselves. There is a trend towards an increase in the share of chain hotels, growth in the business segment, and a decrease in 1-2-star hotels. In Italy, you can buy a hotel as a ready-made business with a management company, one in need of renovation or modernization under personal management, as well as buildings suitable for starting a hotel.
The procedure for purchasing hotel real estate in Italy significantly differs from buying residential property. Let’s explore the key aspects of this multi-stage process.
Application Registration
To make the hotel selection process effective, it is essential to specify the following criteria:
- The intended location of the hotel – city, seaside, thermal resort;
- Number of rooms and hotel type (boutique hotel, business hotel, resort hotel, etc.);
- Intended use – ready-made hotel with a tenant, a hotel for future self-management, a hotel or building requiring renovation, launching a hotel, and reselling or leasing to a management company.
Professional Engagement for Search
Signing a professional engagement for the hotel search in Italian or English is required. The document should include the potential buyer’s company details, and a company presentation should be attached.
Confidentiality Agreement (NDA – Non-disclosure agreement)
Next, the agency’s specialist selects suitable hotel options, including those not on the open market. The offers sent include basic general property characteristics and requested prices. To obtain detailed information on suitable properties, it is necessary to sign a Non-disclosure Agreement (NDA). The potential buyer receives confidential information about the hotel, including its name, address, floor plans, and key financial indicators.
Letter of Intent (LOI)
If interested in purchasing a property, a Letter of Intent (LOI) is drafted addressed to the hotel owner. A deposit is transferred to the notary’s trust account to confirm seriousness of intentions. The property is taken off the market, and the potential buyer gains access to data (data room), which includes the hotel’s documentation (cadastre extracts, ownership documents, balances, operating permits, licenses, rental agreements, supplier contracts, urban planning documents, and permits, etc.).
Due Diligence
From this point on, the potential buyer conducts Due Diligence, involving their trusted specialists such as auditors, engineers, technicians, and a notary. Typically, the Due Diligence process takes 1 to 1.5 months, and the buyer covers the specialists’ fees. After the Due Diligence, a report on the actual condition of the property is prepared.
Irrevocable Offer
With a positive outcome of the Due Diligence, an Irrevocable Offer to purchase the real estate is prepared. This offer includes the buyer’s and seller’s details, a detailed property description, timelines for the Preliminary and Final Sale Agreements, and payment conditions. If any cadastral or construction violations, tax arrears, or other discrepancies were identified during the Due Diligence, the seller must rectify them before the final sale agreement is concluded.
Upon signing the Irrevocable Offer, a deposit is made (usually 10% of the proposed price). If the seller accepts the Irrevocable Offer, this monetary amount becomes a confirmatory deposit. In the event the buyer fails to fulfill their obligations under the Irrevocable Offer, the deposit is not returned. If the seller fails to fulfill their obligations, they must return the confirmatory deposit to the buyer at double the amount.
Preliminary Sale Agreement
The next stage of the transaction is the Preliminary Sale Agreement, which requires the buyer or the buyer’s company to obtain a tax code from local tax authorities and open an account with an Italian bank. Upon signing the Preliminary Contract, 20% – 25% of the property’s value is deposited as a confirmatory deposit. Usually, the Preliminary Contract for the sale of a hotel is drawn up by a notary and must be registered with the tax office.
Final Sale Agreement
The final stage of the transaction is the Final Sale Agreement, signed in the presence of a notary, who registers it with the appropriate authorities. The original document is kept in the notary’s archive, and certified copies are provided to both the buyer and seller as proof of ownership. If the buyer is using a mortgage loan, a representative from the bank must be present at the contract signing. After signing the final sale agreement, the process of transferring licenses, permits, and contracts to the new owner begins.
If you are interested in buying a hotel in Italy, it is essential to consult with knowledgeable experts at an Italian real estate agency. The final settlement with the agency occurs when signing the final hotel sale agreement.
