Quarrymoor Financial, a small-business funding service in Kingman, Arizona, breaks down how to buy a motel business in Kingman, AZ: real estate versus the business versus furniture, fixtures and equipment, the renovation budget most buyers need, and how term loans and equipment financing fit. County Business Patterns counted 43 hotel and motel employers across Mohave County, AZ for 2023. Partners make credit decisions and set rates and terms.
Start with what is actually for sale
Listings for motels mix several things. Some sell the land and building with the business; some sell only the business on a lease; branded properties come with a franchise agreement that may or may not transfer. Before any funding conversation, write down exactly what the price buys: real property, the operating business (name, bookings, reservation system, customer records), and the furniture, fixtures and equipment (FF&E).
Mohave County, AZ had 43 hotel and motel employer establishments with 849 employees in 2023, and 46.5% of them had fewer than five employees (County Business Patterns 2023). Eighteen of those employers had a ZIP 86401 address (ZIP Business Patterns 2023). Many are small, owner-run properties, the kind of business an individual buyer can look at.
Piece one: the real estate
If the building is included, it is usually the largest part of the price and is often financed on its own, with the property as security. Quarrymoor does not arrange commercial mortgages, so a buyer financing real estate typically works with a bank or commercial real estate lender for that piece, while other parts of the deal can be funded separately.
Piece two: the operating business
The business itself, its goodwill, bookings and systems, is usually funded with a term loan. Partners review the seller's profit-and-loss statements and tax returns, monthly revenue history, online travel agency commissions, the payroll and the buyer's own lodging or hospitality experience.
Paperwork to request from the motel's seller
- Three years of tax returns and monthly profit-and-loss statements
- Monthly room revenue and the share booked through online agencies
- Payroll records and any contracts with outside housekeeping or maintenance
- Utility bills for a full year
- The franchise agreement, if the property is branded
- Recent inspection, repair and insurance claim history
Piece three: FF&E and the renovation budget
Beds, case goods, PTAC units, TVs, laundry machines and front-desk systems wear out on a cycle. A buyer may plan a refresh soon after closing, which is a second funding need on top of the purchase. Hotel renovation financing for soft goods often goes on a term loan, while units like PTACs and laundry equipment can be financed as equipment. The hotel and motel funding page covers both in more detail.
Run the numbers before you call
The hotel and motel loan calculator shows the monthly payment, total interest and total repaid for any amount, rate and term. Try the business piece and the renovation piece separately, then add the payments together and compare them with the property's monthly revenue history.
An illustration with invented numbers: a buyer finances $210,000 for the business and FF&E and $48,000 for a refresh of 24 rooms. If the seller's records show average monthly room revenue of $38,000 and operating costs of $27,500, the property leaves about $10,500 a month before debt payments. The combined payments on both pieces need to fit comfortably inside that figure, with a margin for slower months. These figures are made up.
Hotel motel loans: what partners commonly weigh
- Revenue history, month by month, not just annual totals
- Property condition and the renovation plan
- The buyer's experience running lodging or a similar business
- How much cash the buyer is putting in
- Whether a franchise agreement transfers, and on what terms
Further Quarrymoor reading on lodging
Background figures for the county are on the Kingman, AZ business funding page. More Quarrymoor articles sit on the Quarrymoor blog.
By Quarrymoor Financial · Updated
