So you want to buy a B & B, Apartment House or Hotel?
I have a dream
At the moment hardly a day passes without us receiving a request from families wanting to make a new life abroad by running a B & B, hotel or pension. There seems to be a mass exodus from the British Isles, Ireland and other densely populated countries.
“We have houses, jobs and money – but no quality of life” is the general theme.
May we, therefore, offer you some sound advice?
Generally, family businesses only come for sale for three reasons . .
There is strife between the owners
They are in a financial muddle.
They want to retire and have no family to follow them. These are usually the best ones and are coming onto the market more frequently.
You will not often find a small family pension for sale which has been making wonderful profits year on year, and which is in perfect order and run by the ideal couple who suddenly want to sell. It just doesn’t happen unless it is a retirement situation.
The Austrian Government are rather worried that some 800 - 1000 family guesthouses will come up for sale in the next year or two because the third generation do not want to run them. They have seen how much work their parents and grandparents put in and they are not keen to follow.
Investments & Operating costs
We can usually ascertain the operating costs for you.
- water charges,
- sewage charges,
- heating costs etc.,
but you are going to have to say “OK. In my hands and with the marketing that I will do, this business can gross xxx” . Make those figures achievable.
Which side of the Alps?
Businesses on the north side of the Alps and in popular ski areas are getting hard to find and it is worth turning your attention to the businesses that we have in Carinthia or in Styria and Burgenland or Niederösterreich – even though you may not be familiar with these areas. Property there is generally cheaper anyway. These are equally beautiful parts of Austria. We currently have lots of large farmhouses and other attractive buildings to renovate which are well worth thinking about.
No, they are not in ski resorts but they are in a 'different' Austria to that which you might know.
Thermals in Styria & Burgenland
They are in "Thermenland" an area with many Thermal Baths which attracted more than 7.5 million tourists last year and where high season is 12 months of the year.
It is better to have six bedrooms occupied almost all the year round than 12 bedrooms with only 40% occupancy if you are lucky. The Danube valley also attracts a great many visitors just as the Rhine valley does so look at Lower Austria too.
See the Steiermark section of our website. Properties to renovate start at about 70,000 Euros and we have contacts with architects and builders who can arrange the renovation for you. It's a really lovely area to live and work and makes much more sense than borrowing large sums of money!
Vineyards in Niederösterreich (Lower-Austria)
Also check out the businesses that we have on offer in Niederösterreich (Lower Austria).
The local government there are offering renovation grants for property insulation, installation of environmentally friendly central heating systems such as wood pellet systems, replacement and insulation of roofs and the replacement of old windows. These costs can be funded with subsidised bank loans and lower deposits are acceptable.
See section on low interest subsidised loans.
We have a very good relationship with the department of the Austrian Government who's responsibility it is to attract outside investors into Austria. They are echoing the government view and anticipating that some 500 - 800 family Guest Houses will come up for sale in the next few years.
They will also assist with Austrian residence issues for non EU citizens subject to their bringing a minimum amount of working capital into the country in order to set up their chosen business enterprise. We will give you all the details.
No continuing generation
Some of these commercial sales will be due to the fact that many owners have no-one to follow them in the business.
Either their children consider themselves too well educated and choose to follow other professions - or maybe they have left home in order to live abroad.
Cheap 5 star hotels
Another factor is the price structure in the Austrian hotel industry as a whole. In general, the four and five star hotels do not charge enough in comparison to other countries.
This means that 3-star, 2-star and 1-star hotels find themselves in a position where they too have to scale back their room rates. Therefore, at the lower end there is an invisible limit on the prices that B & B's and Apartment Houses can charge their clients, otherwise they will opt for a hotel with a higher star rating as the cost differential is negligible.
Whilst the banks require a 40% deposit, that in no way implies that it is a good idea to borrow the whole of the other 60%. If you have ten bedrooms and it takes six of them to pay the bank, then you might as well have only four in the first place.
Right now, the banks have started to lend again but rather cautiously.
You require a Konzession from the authorities. That is, permission to operate your business and show that you are qualified to do what you do. That said, no-one has so far been denied that we know of. However, your qualifications, a good CV, and a résumé of your commercial experience should be carefully prepared.
Make a realistic plan
– and stick to it.
Prepare a realistic business plan. Anyone can put figures on paper and prove almost anything, but do it sensibly and realistically. Having agreed a mortgage with a lender, keep to your budget and don’t get big ideas. If you need to renovate, then do a couple of rooms first, and then a bit more next year once you can see that the clients are happy and that your bookings are increasing. We have seen clients who have torn up their plans and renovated the whole place, put in saunas, bars and a host of other things before they could afford it. Don’t do it !
You have all seen the TV programme “No going back” – well they do!
From: “No going back”
More Chaos at the Castle
We also get egg on our face and a bad name for introducing bad business to the banks which makes it harder for us to help our more sensible clients. We don’t need problems like that. Quite a few buyers have found out after the first few years that it is not as easy as it first looked. There are long hours to be worked and competition is stiff. A noticeable number have subsequently decided to sell up and return home and that is why we try very hard to pass on our experience to our clients at the very outset.
It is not all about spending your days out skiing with your clients - however nice they are!
Most UK people think that their business will come from England or their country of origin. Some of it might, but most of it will come by car from Germany, Poland, the Czech Republic, Hungary, Croatia, Italy, Slovakia, and Slovenia and so on. Thinking that they will only get ‘Brits’ or Irish families on Ryanair who need picking up from the airport the first thing they do is buy a mini-bus. Don’t do it! You are running a hotel and you can’t do it properly whilst you are running people up and down to the airport. Maybe you can afford to do it later. Anyway, you need a separate Konzession to run a taxi firm.
In Österreich wird Deutsch gespochen
They speak German in Austria and you will have to learn – and quickly. The Austrians speak with a very strong dialect especially in mountain valleys and it is difficult to understand them even if you have a smattering of German to begin with. Start learning the language right now.
You and the Agent
The agent is there to help
Make the most of the agent who sells you the property. Don’t approach vendors direct, or start negotiating behind the agents’ back. You will need support from the agent in matters such as electric connections, bank account opening, arranging insurance, dealing with the local authority and so on. Most of them will help you but not if you offend them.
It is usual when a business changes hands for the local Bezirkshaupmannschaft to pay a visit and ensure that everything is OK. They are not as tight on such matters as fire regulations as they are in some countries but they usually ask for something or other to be done. Therefore, get the agent to speak to the authorities and see if there is anything important that is outstanding. Make sure too that there is nothing outstanding with the local Gemeindeamt – unpaid sewer connection charges – that sort of thing.
We are here to help too
The good news is that Austria is a lovely country and many of our business clients have done well. They have usually managed to fill the struggling hotel with a whole new crop of happy clients with an active approach to marketing – usually using the internet. We can also help you with that as we do a lot of websites for our hotel clients and are very experienced in that sector.
The best thing to do is to meet us and our team at our offices in Bad Ischl . These are are about 40 minutes east of Salzburg by car. We can then talk everything through with you and answer all your questions. Our sister company is a properly registered estate agents in Austria and trades as Delta Immobilien GmbH and you will find their details here.
Delta Immobilien GmbH
A – 4820 Bad Ischl
www.deltaimmo.com - this website is in German of course.
00 43 6132 26868
We are usually busy so please plan your visit in advance with us so that we can give you adequate time.
Things are different in foreign countries. The laws are different and you need good advice to get it right. We strongly advise you not to do it on your own. Our contacts all speak both languages and we are in a unique position to advise you.