Investing in a Luxembourg hotel: evidence, calculations and checks

Start with property records: available rooms by day, rooms sold, accommodation revenue, other income and expenses. Retain dates, accounting evidence and VAT treatment. Guest nights are not the same as rooms sold.

Compare matching periods and scopes. Examine seasonality using the property history and document closures, works and changes in activity. National statistics alone cannot predict the revenue of a particular hotel or neighbourhood.

For the same period: occupancy = sold room nights / available room nights; ADR = accommodation revenue / sold room nights; RevPAR = accommodation revenue / available room nights. RevPAR = ADR × occupancy when the underlying bases match. Without a positive denominator, the ratio is undefined.

Define the accounting scope before reconciling GOP, EBITDA and cash flow. Identify rent, management fees and other expenses; a replacement reserve is different from depreciation. Use accounts and contracts to explain adjustments. This guide assumes no margin or target return.

Distinguish the property, operating business and company shares. For income capitalisation, substantiate annual income and the chosen rate. For transactions per room, check the date, rights sold and costs included. A DCF requires documented cash flows, discount rate and exit; its duration is not a universal standard.

DSCR compares cash available for debt with debt service over the same period, using the lender’s definition. Include principal repayment and interest according to the schedule. Obtain the bank’s definitions, thresholds, security and conditions: a Tevaxia calculation is not a financing approval.

Reconcile accounts, bookings, receipts and operating contracts. Have the title or lease, building condition, equipment, applicable permits and priced works reviewed. The due diligence list records evidence and open issues; it is not a compliance certificate.

Guichet.lu distinguishes the operator’s business permit from hotelier status allowing certain business designations. Check the activities actually conducted and their permits. Identify the applicable aid scheme and conditions before committing to works; the cited environmental aid requires application before work starts. No grant amount is assumed in the budget.