Inside the business of selling hotels

the Future of HospitalityWelcome to our podcast, the future of hospitality. I'm your host, Adrian Eichelbaum, and today our guest is Theodor Bussmans, hotel broker at Christie and Co. Theodor, welcome to our show. Thank you very much, Arjan. Thank you for having me. My pleasure. Can you tell us a bit more about yourself, where you're from?

Théodore BoschmansYeah. Well, I've been I've been growing quite internationally. I'm born in Germany, lived nine years there, then I did a month in Paris. Then I moved to The Netherlands in 2010. There I grew up within the Dutch educational system. I learned Dutch while knowing French on the site and knowing French has always been quite a big part of my life because currently where I work, I work in France. So I need that knowledge of French and both my parents have been or did actually the hotel school in Switzerland, Eco Hotel de Lausanne in Lausanne. They met there. So I grew up in a family with people working in the hotel industry. Wow. Okay. I also between my high school in The Netherlands and the university or the bachelor I did at Hotel School The Hague, I did an internship of five months in the Western Palace of Madrid where I did banking operations and sales and reservations.

Théodore BoschmansSo it's where I really got to learn more about the industry, where I really got to talk with guests from various different nationalities and ethnicities. And it was fantastic to discover all of that and it showed it proved me right. Well, it proved right that I wanted to continue within that industry and that I wanted to do Hotel School Lehague. So that confirmed my thought. Okay. Let me do a Hotel School and then let me see where Hotel School brings me. Hotel school is a very, very broad study, so if somebody doesn't know what to do, I highly recommend it. It's basically a business school with a bigger focus on hotels. But what we learn at the hotel school is we learn about finance, marketing, sales and marketing, reception, human resources, and these are all departments you find within a hotel.

Théodore BoschmansBut these are all departments you find as well at Tesla, Meta, at Microsoft. So these are very important for a normal company, but as well for a hotel.

the Future of HospitalityYeah. Yeah. I I used to be a banker at ABN AMRO. And to my surprise, when I I I found out that there's a lot of hotel schools, people working in the in the financial industry. And the reason is because they are being so called Swiss Army knives. They know everything. They've been trained well. And so I I totally get what you what what you say. So you did the hotel school. And what what happened after the hotel school? What did you do then?

Théodore BoschmansSo the good thing about the curriculum of the of the hotel school in the Ag is that you get to do two different internships. The first one I managed to do a pre opening of an ultra luxury resort in Montenegro, being the one and only resort. It's part of the Kersner family. They also own the Atlantis in Dubai and other brands such as Mazagan, which is a huge golf resort in Morocco. And the second internship is where school wants you to do something less in the operational side, but more something in the back office, being finance or human resources or sales and marketing. I was very interested by the finance aspect, I also wanted to study a bit about real estate. So I was looking for an internship that would intertwine finance and real estate.

Théodore BoschmansIt was very difficult to find, but I managed to find one that clearly said black and white on the website, if you're looking for an internship within finance and real estate, this is the place for you. And the company I applied for was Christy and Co, and that is where I work today.

the Future of HospitalityWow. Okay. Tell us a bit more about Christy and Co. Give us a quick overview of what it is and what is your role.

Théodore BoschmansYeah. So Christy and Co is a UK based company. We have our headquarters in in London, and we help with transactions, transactions of assets. So in The UK, we do several industries. We do retail, pubs, restaurants, hotels, care, childcare is as well another one of those industries we cover. But in France, we primarily do hotels and since 2024, so since last year, we've started the care site. So care would be more dentist cabinets or pharmacists or hospitals even. So these are all assets that people can buy as an investment. And we major, we primarily do hotels. So we sell hotels. And I've been doing that since my, well, not really been doing that, but I entered the company Christine Co. In November 2023.

Théodore BoschmansAnd I have the responsibilities of a broker since June 2024. So in two months, that will be one year. So I'm still learning. And the entire idea of why I am here with you today, Arjun, is to talk a bit more about the transaction industry, the hotel transaction industry to students who maybe have no idea about it Mhmm. And who would like to discover more. So I'd like to cover a few fundamentals.

the Future of HospitalityYeah. Go ahead, please. That's exactly why I wanted you on the show because when we connected, I was intrigued by a hotel brokerage. And I was like, I haven't spoke to anyone ever who is working in that business. So again, I come from finance, but this is totally new to me. So enlighten us, please. Fantastic. Well, I mean, it's it's it's I would say it's quite simple whenever we look at the big picture. We are a,

Théodore Boschmansjust like an apartment broker or a house broker, somebody is selling, somebody would like to buy and we need to discover who wants to buy. But then I can as well detail the entire journey from the beginning to the end and all the intrinsic actions and responsibilities that take part within this journey, I would say again. So let me cover first. Okay. The moment we discover a owner that would like to sell, and we already know him quite well, we will do our price estimation. In order for us to do price estimation, we will need a few different documents. P and Ls, profit and loss statements, security commission. So security commission is a document in France that tells us if currently the operation is allowed as a hotel.

Théodore BoschmansIf it's not, well, then there's maybe a little issue, but that can be resolved. Usually, there are three possible ways to receive this document. So the first one is a favorable commission, meaning that the hotel is running according to the security guidelines. So you don't need to do anything. You can continue operating operating it as is. The second option is favorable, but with prescriptions. So you can continue operating it, but if you want to be completely according to the guidelines of the security measures, you need to adjust a few things. For example, on the parking, you always need to have places for PMR. So PMR in French is meaning people that are less how do you say that That need a bit more people with less mobility.

Théodore BoschmansSo think about you know, the blue squares at the supermarket for people that have that need to have a bigger space because they have a wheelchair in the car? Oh, right. Yeah. Yeah. Yeah. I know what you mean. Yeah. Yeah. You see that on the trams in Amsterdam as well. Perfect. Exactly. So in France, if your hotel has less than 50 rooms, you need to have two rooms that is accessible for people in a wheelchair. Meaning that everything will be lower in the rooms, lower buttons, lower sink, lower bed in order for the person to be able to get into the bed on his own. Right.

Théodore BoschmansAnd you also need to have those places on the parking for them to have a bit of a wider space and that will need to be applicable, that is applicable to every hotel. So in the commission security, in the security commission, you will find those requirements back. What do we ask more? We ask as well for the activity reports to see what is the current occupancy rate and what are the current ADRs. Occupancy rate is how many rooms do you sell and how many are available. And then ADR will be your total room revenue divided by the amount of rooms you sold. And that will give you an idea of how am I performing in comparison to my competitors.

Théodore BoschmansUsing this information, we brokers can see is this hotel currently over performing its competition or the market or underperforming its competition markets. So that gives us well a little insight. And what we usually do as well is once we have the statement, the profit and loss statement, we look at the different types of revenues. Usually, it's room revenue and maybe a miscellaneous revenue. So for example, parking or other types of revenue. And the other big categories are F and B, food and beverage, and spa, if there is a spa, or even conferences. If there are conference rooms, then we know that it might accommodate some of its rooms to a different type of clientele, being business guests.

Théodore BoschmansUsing all this information, we will be able to create our price estimation, and we use three to four different methods to come up with a price estimation. Alright.

the Future of HospitalityWould you like me to go into depth about those? Go go ahead. I'm I'm learning now. Yeah. Yeah. Yeah. Go ahead.

Théodore BoschmansIt's good to hear. It's good to hear. So those different methods, we use a EBITDA multiple. EBITDA earnings before interest, depreciation and amortization. But we rework this EBITDA to get either an EBITDAR with an R at the end or to get an EBITDA with the M of management fees. Why do we do that? Because whenever an owner is selling its hotel, so a hotel is real estate and a company, a business. Sometimes what happens is that the business pays an internal rent to the real estate. So it's like two different companies. One that owns the real estate and one exactly. That owns The property and one that owns the operation, the business. The business in it. Yeah. Yeah. Exactly. The same as McDonald's work. I mean, know the story about McDonald's, their properties Same are Croc. Yeah. Exactly. Yeah. Yeah. Yeah. I know that story. That's why I I was like, hey. So sometimes it pays itself a an internal rent. And if you, Ari and would like to buy the hotel again, you are gonna be putting this internal rent in your pocket at the end of the day as well. Yeah. So we add it back into the EBITDAR.

Théodore BoschmansWe also add back depreciation and amortization within the EBITDAR because it's a well, it's not a fictional value, but it's money that hasn't left your account. It is there. But because we are depreciating over years, it's to have an idea of how much would the company be making on paper because of the linear depreciation of assets, right? So we add those two things. And then the last thing we add, if there are, are any management fees. Right. So sometimes if you're an owner, you also pay yourselves because you're the one managing the company, operating the hotel on a daily basis.

the Future of HospitalityRight.

Théodore BoschmansAnd if you are in are going to buy the hotel again, you will be able to get the management fees for yourself, the rent for yourselves, and the depreciation and amortization as well because it's an existent costs, but it's a fictional type of cost. And then we add a multiple on that. So a multiple is like how many times do we multiply this number to have a value. And this is going to be this is going to give us the answer to one of the three methods.

the Future of HospitalityRight.

Théodore BoschmansYeah. And we have two different types of hotels usually in France. What we call H1 in the jargon are hotel bureau, hotel office, and it's a hotel with only rooms and a buffet breakfast. There is no restaurant. And then h four would be considered hotels with a restaurant as well. Mhmm. And that is called, know, hotel restaurants. Very simple. But these type of hotels are a bit more risky. Why? Because if you don't know how to run an F and B business,

the Future of Hospitalityyou will be you will lose a lot of money. Because that's the other business. You buy the other business as well. Just like you explained. And that is indeed tricky. Yeah. Yeah. Quite interesting. Yep. And Yep. No. I just want I want to have because this this this is all the the theory behind it, how it works. I would like to hear a success story. You're only with the company for, like, an a year and a half, as I understood. But your recent the most recent story, success story or sell, can you say, okay, you tell us something about that to give us a more practical clear picture?

Théodore BoschmansAbsolutely. Well, I sold recently a hotel the the Cote D'Epee. So it's like the coast in the North Of France. And it's going to be turned into a B and B. B and B, which is a completely different business model. B and B Hotels. It's a French brand. It started in Saint Maleau and Brace, which is the extreme left side of Brittany. And this used to be a Mr. Bede brand, which was owned by Blackstone Real Estate in the past. And well, we sold this hotel and it was a share deal. So for the viewers, there is a difference between an asset deal and a share deal. An asset deal is that we are selling the assets of a company and a share deal is we are selling the the shares of the company that is owner of hotel, of the real estate and of the business.

Théodore BoschmansSo it's two different types of way to do a transaction. The asset deal where you buy assets of the companies, so the real estate and the business is good for buyers but not good for sellers. So there's a huge dilemma going on between those two. Banks as well, they would rather want to finance assets than shares. So what a buyer will try to do every time is buy the assets of a hotel so that he will be able to get a longer loan on a longer loan and more quickly as well. Usually loans for businesses are seven to ten years and loans on real estate, which is a tangible item, are ten, fifteen, twenty, maybe even to thirty years. Exactly.

Théodore BoschmansI mean, worked as a banker, you know. Yes, I understand that.

the Future of HospitalityWhat are the challenges that your company and you are facing right now in this business, but also the whole market, the whole space, the landscape is changing. I mean, before COVID, after COVID, What are the challenges right now that you are facing?

Théodore BoschmansWell, mean, think it's quite a resilient market, like a resilient niche, the hotel industry. And we don't really see obstacles. We see more evolution going on. What we see more and more right now are long term stays. So we see more and more of concepts that try to become a hybrid hostel long stay type of hotel with maybe Like a hybrid thing, yes.

the Future of HospitalityYes, yes.

Théodore BoschmansAll right. A hybrid thing, yes. We did have or we did see at least a dip in hotel transactions right after COVID at the start of the Ukraine war because and inflation as well followed quite quickly thereafter. So the Central European Bank interest went up and it slowed a lot of people. And banks as well were also a bit more they would decline a bit more finance requests, loan requests, but now it's trying to ease it is easing up a bit and a bit more. And then a real well, I wouldn't say it's a real obstacle, but what we see happens more and more as well is banks declining because the hotel is not green enough, because it doesn't have or it doesn't have a plan of action to become green, to have a green label.

Théodore BoschmansSo that is something we see. It's a challenge, yeah. It is. It is a challenge, yeah. Because that is something as a broker, we can't really control what the bank is going to say.

the Future of HospitalityIsn't that most maybe part of the reason why hotel owners or the the ones who are selling hotels that because of all these rules and regulations being put on them, that is the reason why they decide, okay, it's getting too much. I'm gonna sell. Is is could could that be? I can only imagine that could be a reason because I've Mhmm. I've known that in the in the restaurant world where there is more and more regulation. I mean, it's no more fun to start a restaurant. There's too much going on before you start doing the thing that you really love. I mean, entertaining people, cooking, making good food, and and and make people happy. It's the same in the hotel industry.

the Future of HospitalitySo in your opinion, what are the type of hotels or the type of people who sell hotels? Well, the good thing is we have

Théodore Boschmansinvestment funds that have a type of strategy where they buy and hold a hotel for several years and it's in their cycle to resell it. So you always have this cycle of investment funds with different types of strategies that are going to be selling their hotels.

the Future of HospitalityMhmm. And

Théodore Boschmansthen I would say you always have people who indeed would like to sell because there are restrictions coming up. Yes. I know that in France, you're not allowed to rent your apartment anymore if it if it has like a g or an f rating. So you're not allowed to do that and it will Is that energy label? Alright. The energy label I need. The little rainbow that goes from a to f or g. Yeah. Or h even.

the Future of HospitalityA is good and the bottom is not good. Red is not good. Exactly.

Théodore BoschmansExactly. Exactly. But I know that is becoming more and more we see it at least more and more within the hotel industry that it's becoming something. Right. There will always be buyers and there are quite some nice concepts out there like I

the Future of Hospitalitythink it's even a Dutch brand, Conscious Hotels, the Conscious Group. Conscious Group, I know it. Yeah. Yeah. Yeah. I had a presentation there once in the at a conscious hotel in Amsterdam

Théodore Boschmansyears and years ago. Yeah. Absolutely. Yeah. Yeah. Yeah. I mean, they have a very very nice concept and they're very eco friendly. Easy hotels as well. Super eco friendly. Really? I didn't know that. They're really they put a big focus on sustainability, and that's what you see. It's not an obstacle for some people. It's really an evolution for the majority. Some people, obviously, like every industry, if they don't follow, they will fall. And that will ultimately happen. I guess it's a type of natural selection or attrition is more But the term, I would big concepts are coming up that keep sustainability in mind and that is something that will be in their favor for the coming years.

the Future of HospitalityRight. Something about yourself working in this industry. What is it that makes you excited about this working in this industry? And give me example maybe in the next few days or weeks what is on your desk, what you're doing, give us a draw the picture. Yeah. Well,

Théodore Boschmansreason I got into hospitality is that I like to help people. I like to help people whether it's opening the door indicating where the bathroom is or actually making their stay fantastic. And that is something I managed to find back within this broker's position. It is an industry filled with passionate people. There are several hotel owners who have been running their hotels for the past fifteen, twenty years. You ask them three questions, they talk to you for thirty minutes straight. Yeah, we got started with this. I was doing this in my past. We've never done anything like this, but my wife and I learned throughout the years and then they tell you everything about it. I think it's such a fantastic industry to be able to see these people, see what they have made from when they started to where it is today, and being able to help them close a chapter as well and start a new one off there. I'm helping, for example, several people sell their hotel because they would like to retire, and they would like to buy a house on the coast, and they just wanna settle.

the Future of HospitalitySo

Théodore Boschmansthat's

the Future of Hospitalitywhat I think is the most beautiful thing about my job. Yeah. It is. Yeah. I I can totally totally get that. Something else that was popping up, technology, hotels, and advanced technology. I mean, we talk about AI a lot. Does that play a role in buying and selling hotels? Because I can only imagine that that is also becoming more important in your role.

Théodore BoschmansYes. Well, I do think that some brokers use it maybe to summarize a few things, but we are not scared of AI taking our job over because our job doesn't rely on technology solely. It really relies on human contact. We should be more often outside in our cars, in our car going to hotel owners, visiting a hotel, doing visits, then we should be at the office. So we have a very active job and it requires us to be as well on the field to see, to experience ourselves as well. And then is technology going to become more and more important within the hotel operation? I think it will.

Théodore BoschmansHave seen several different advances, whether it's in PMSs or even booking.com, which is doing a lot of AB testing every single second. And for example, Muse, is a Dutch company as well by Matthijsweiler. A former hotel school, the AXT unit as well, by the way. Right. Yeah. It's a small world. It's a very, very small world. Yeah. Yeah. Yeah. They have included as well an AI agent within their PMS, and it's it looks fantastic and great. It makes you save a lot of time. That's conversational AI, I think. No. That that is really an AI for people at the reception. Oh, okay. So whenever I am checking somebody in, I will have a very small bot or summary

the Future of Hospitalityof this person came last time here. She, he really liked to have this pillow, have a cup of coffee in the morning, a cappuccino to be more precise. And it's like all these small details It's personal data of of the guests that have stayed there. So the AI or or the the the the system saves us and AI know how to find it when they book again and know exactly what they like and want. So it's becoming more personalized. Is that what I'm It is indeed. It is. And I think AI

Théodore Boschmansyeah. Okay. Now go ahead. I think that AI is is is helping a lot of operational aspects of the hotel industry, which is good because the more personalized, the better for some people. So that's good. And then we also see some types of hotels that reduces as much as possible their operational costs. So think about staff to make the entire guest journey digital and to have them check-in at a at a check-in desk, at a check-in screen. Maybe maybe it's not human, but it, in my opinion doesn't really matter because you will there are so many humans on earth and you will be able to find a type of concept that matches every time somebody else.

Théodore BoschmansSome people don't want to be bothered when they arrive at a check-in. They just want to check-in online, get their get their key when they arrive at the hotel and go to the room. And others prefer the human contact.

the Future of HospitalityYep. As long as people have those two options, I think we're doing the right thing. Right. I have a final question for you because this was indeed very enlightening. You just started in this business recently. Do you have any advice people who are young people who are looking for or contemplating or thinking about a career in this industry?

Théodore BoschmansAbsolutely. Well, it's always nice to start as an intern within one of the companies we compete against, whether it's JLL, CBRE, Cushman and Wakefield, they offer quite a lot of intern positions and it's a fantastic opportunity to hop in the business and learn. There's a lot online as well I discovered. Unfortunately, where I come from, get to do a lot of lessons on the subject, but it's so much bigger in The United States, for example. Every country has as well a different way of doing transactions. We in France have a difference between, well, what we call, the real estate and the business, which are two separate entities.

Théodore BoschmansBut for example, in Spain, I think, you can either own or not own a company and then you can decide to have an operator or not. And in France, you have a owner of the real estate and you have an owner of the business, two separate things. So these are things you can find online, but you can also learn daily. I think I learned the most at least by doing. And it's one of these industries where it only makes sense when you do it. Yep. Perfect. And, as an intern, I managed to see as well lots of the presentational products. So pitches and info memorandums, which are product presentation. So pitch we do if we would like to get mandated to sell a hotel.

Théodore BoschmansAnd a mandate is a contract between us and the owner that says we are allowed to sell the hotel on his behalf. And once we have done the pitch and the entire point of the pitch is to put the hotel and to talk about the hotel, to talk about the area, to say as well how much we estimated the hotel for and as well our commission. It's really to show him, hey, we know the hotel, we know the area, we have sold similar hotels, and that's why we think this is a market price. And then the investment memorandum is once we've got mandated, we need to prepare a similar type of document but for investors.

Théodore BoschmansAnd this document will talk as well about the area, but it will be more in-depth about the assets, its staff, the contracts it has, the current loans it has, and at the end normally there is a price. And then if somebody would like to continue, they write the nonbinding offer.

the Future of HospitalityAll right. Okay.

Théodore BoschmansSo the advice for young people would be Advice for young people would be to Well, don't hesitate to message me or anybody else that works within the industry. It's a very small industry. Don't hesitate to look online as well. There are several videos I've seen that tell you as well the fundamentals, how it is currently how it is currently shaped within Europe and within The United States as well. I think there is a very good one that explains why there are several Marriott hotels on Times Square. And that's when you discover that they look like they are different hotels, the W, the Weston, the Marriott, but behind it, there is the Marriott brand. So which you think you're going to several different hotels and there are several different hotels from several different companies.

Théodore BoschmansBut no, they're all owned, at least the brands, by Marriott International.

the Future of HospitalityRight. Interesting.

Théodore BoschmansAnd franchising, which is a model that you see a lot with Burger King as well, is very famous as well within the hotel industry. Whether it's Intercontinental hotels, they have several brands Holiday Inn, Holiday Inn Express, while Intercontinental being a luxury brand, Six Senses being also part of IHG and they recently bought a German company called Ruby, which this one is a hybrid type of experience where when you enter you can either get checked in by a staff of the F and B or by a self check-in kiosks. Aspects, the franchise contracts, how much how much they always take a percentage of the total revenue, how much that percentage is.

Théodore BoschmansAnd then we also get the the debate, not really debate, more discussion with a potential buyer. Is this the right brand for the hotel where it is currently located? Sometimes we are looking to maybe change the brand, sometimes the current brand is good enough and if somebody would like to get out of a franchise agreement, it's possible, but then this person needs to pay. Either you wait until it ends or you pay 3x what you paid last year, usually.

the Future of HospitalityTheodor, I think this was very informative. Thank you so much for your time. Is there anything else that you would like to share?

Théodore BoschmansIs there anything else that I would like to share? No. If you have any questions, you covered everything well enough. I think that was very clear. I like it. Good. Well, if somebody has any questions, don't hesitate. I'm I'm still learning, as I'm saying, but it's a it's a great industry, and it's very interesting. And it combines real estate and finance, so for anybody looking to combine those.

the Future of HospitalityWonderful. I can see you like it. You enjoy it. Thank you so much. Thira, thank you for being on the show. Alright. Thank you. Have a great day. You too.