Texas Hotel Management

Due Diligence Document Requirements

What we need, who provides it, and when it's needed in the deal process
99
Total Items
13
Categories
5
Collection Phases
49
Required Items

This document outlines every item we collect during hotel acquisition due diligence, organized by when it's needed in our deal pipeline. Items accumulate — everything from Research is still needed at LOI.

Each item is tagged with its priority (Required items block deal advancement; Recommended items are flagged but non-blocking; Conditional items depend on property type) and source (who provides it: Seller, Brand, Third Party we order, or County/State public records).

Deal Pipeline

Stage 1
Research
10-min screen, kill criteria
2 items
Stage 2
Analysis
Deep dive, revenue rebuild
13 items
Stage 3
Qualified
Deal card, go/pass
21 items
Stage 4a
LOI
Letter of intent, pre-hard DD
26 items
Stage 4b
Due Diligence
Post-hard DD, close prep
37 items
Research

Stage 1 — Initial Screen

2 items

Minimum docs to evaluate whether the deal merits a deeper look.

Financial & Revenue
1
Most recent STR report
Current competitive position snapshot — occupancy, ADR, RevPAR vs. compset.
Required Seller
2
Prior full-year P&L / T-12
At minimum the last complete calendar year. Need revenue, departmental expenses, and NOI to screen the deal.
Required Seller
Analysis

Stage 2 — Deep Dive

13 items

Revenue rebuild, expense verification, competitive benchmarking. Need full financials and brand performance data.

Financial & Revenue
3
All Monthly STR reports (current + prior year)
Trend analysis, seasonality, compset tracking. Need every month.
Required Seller
4
Dec Monthly STRs since opening
Year-end benchmark snapshots for each year of operations.
Required Seller
5
GOS Property Report year-end (last 2yr)
Third-party revenue and accounts verification.
Required Seller
6
GOS Property Report monthly (current + prior year)
Monthly production detail for revenue trend analysis.
Required Seller
7
Flash report YTD comparisons
YTD current vs prior year performance.
Required Seller
8
OTA production report by channel NEW
Channel mix breakdown. High OTA concentration (40%+) means heavy commission drag.
Recommended Buyer
9
Loyalty program production report NEW
Bonvoy/IHG Rewards/Hilton Honors penetration rate.
Recommended Brand
Franchise & Brand
10
Franchise agreement + all amendments
Fee structure, royalty, marketing fund, rewards contribution, term remaining, default provisions.
Required Seller
11
SALT / GSS scores (last 2yr) NEW
Guest satisfaction trends. Declining scores are an early warning of operational deterioration.
Recommended Brand
Vendor & Contracts
12
Management agreement (if third-party managed) NEW
Fee structure, term, termination provisions, change-of-control clause. Critical if managed.
Required Seller
13
Ground lease (if applicable) NEW
Most critical document if seller doesn't own the land. Terms, rent escalators, lender consent.
Conditional Seller
F&B (if applicable)
14
F&B P&L breakout (separate from hotel P&L) NEW
F&B frequently operates at a loss in branded hotels. Verify independently.
Conditional Seller
Qualified

Stage 3 — Deal Card Complete

21 items

Complete the deal card with operational data, brand performance, capital history, and revenue quality indicators. Go/Conditional/Pass recommendation.

Financial & Revenue
15
Dec YTD Manager Flash Reports since opening
Historical operational performance snapshots.
RecommendedSeller
16
Daily Managers' report (night audit sample)
Sample reports to verify reporting quality and data integrity.
RecommendedSeller
17
Occupancy forecast (90-day minimum)
Forward-looking demand visibility and booking pace.
RequiredSeller
18
Top 10 LNR & CNR accounts (2yr)
Corporate contracted business quality and revenue concentration risk.
RequiredSeller
19
Top 100 guest report (2yr + monthly current)
Repeat guest loyalty patterns and individual revenue concentration.
RecommendedSeller
20
Direct Bill accounts list
Corporate receivable exposure and billing relationships.
RequiredSeller
21
Business on the books (group + meeting room)
Forward booked revenue is an asset; committed pricing is a liability.
RequiredSeller
22
Rate strategy documentation NEW
Current rate plan structure, seasonal rates, LNR/CNR contracted rates, floor rates.
RecommendedSeller
Franchise & Brand
23
Property Improvement Plan (PIP) NEW
Get BEFORE finalizing price. PIP costs range $500K–$5M+ and must be factored into acquisition price.
RequiredBrand
24
Area of Protection (AOP) letter NEW
Territorial protection against same-brand competition nearby.
RecommendedBrand
25
Brand deficiency report / open QA items NEW
Open deficiencies become your responsibility on day one.
RecommendedBrand
26
Brand QA inspection reports (last 2yr) NEW
Specific deficiencies and trend direction — improving or deteriorating.
RequiredBrand
Property Condition & Capital NEW
27
Capital expenditure history (3–5yr)
Compare actual spend to PCA recommendations to quantify deferred maintenance gap.
RequiredSeller
Building & Construction
28
Inventory of FF&E items
RequiredSeller
Operations & Staffing
29
Staff list and pay
RequiredSeller
30
Payroll report (last pay period)
RequiredSeller
31
Maintenance records
RecommendedSeller
32
Pest control reports (last 2yr)
RecommendedSeller
33
QA reports (last 2yr)
RequiredSeller
Vendor & Contracts
34
TTM Utility bills (Gas, TV, Internet, Electric, Water, Waste)
RequiredSeller
F&B (if applicable)
35
Health inspection reports (2yr) NEW
Recurring violations signal management problems, not just cleanliness.
ConditionalCounty
36
Catering / event contracts (forward-looking) NEW
Booked revenue is an asset; committed pricing is a liability you inherit.
ConditionalSeller
LOI

Stage 4a — Letter of Intent

26 items

Pre-hard DD. Physical inspection reports, title/survey, environmental, insurance, building plans, vendor contracts, and legal exposure. These items shape price negotiations and deal structure.

Title, Survey & Encumbrances NEW CATEGORY
37
Title commitment
Reveals all liens, easements, encumbrances, deed restrictions, ownership chain. Non-negotiable.
RequiredThird Party
38
ALTA / NSPS survey
Boundaries, setbacks, easements, encroachments, parking count. Required by most lenders.
RequiredThird Party
39
Property tax certificates (2–3yr)
Confirms no delinquent taxes. Establishes baseline for post-close tax protest strategy.
RequiredCounty
40
Tax assessment notices + protest history
TX-specific: has the seller been protesting? An unprotested hotel may be over-assessed 15–25%.
RecommendedCounty
Financial & Revenue
41
Appraisal from initial financing
If available. Historical value baseline and market analysis at underwriting.
RecommendedSeller
Environmental NEW CATEGORY
41
Phase I ESA
Identifies recognized environmental conditions. Required by every lender. Environmental liability follows the land.
RequiredThird Party
42
UST report / TCEQ search
Underground storage tanks. Check TX Railroad Commission database.
RecommendedCounty
Property Condition & Capital NEW
43
Property Condition Assessment (PCA)
Third-party engineering assessment. Lender-required. Identifies deferred maintenance and 12-year capital needs.
RequiredThird Party
44
Roof warranty + remaining term
Roof replacement = $200–500K+. Warranty status directly affects capital reserve forecast.
RequiredSeller
45
FF&E reserve fund balance
Current escrow balance and whether it transfers at close.
RequiredSeller
Franchise & Brand
46
Franchise transfer / assignment consent
Brand approval to transfer franchise to new entity. 60–90 day timeline. Transfer fee $50–150K.
RequiredBrand
Building & Construction
47
Full building plans
Confirm completeness — plans on hand may be incomplete.
RequiredSeller
48
Construction manual / spec book (digital)
RecommendedSeller
49
Interior design CAD files
RecommendedSeller
50
Spec book for FF&E purchased during construction
RecommendedSeller
51
Name of FF&E purchasing company
RecommendedSeller
Operations & Staffing
52
Pending litigation / demand letters NEW
EEOC charges, ADA complaints, slip-and-fall claims. These survive the sale.
RequiredSeller
53
Workers' compensation claims (3yr) NEW
Establishes insurance baseline. Elevated claims = elevated premiums post-close.
RequiredSeller
Vendor & Contracts
54
All vendor contracts
RequiredSeller
55
Equipment leases, contracts, end dates
RequiredSeller
56
Maintenance and service contracts
RequiredSeller
57
All other vendor contracts
RecommendedSeller
58
Elevator maintenance contract + remaining term NEW
5–10yr contracts with auto-renewal and early termination penalties.
RequiredSeller
59
Parking agreements (if offsite/shared) NEW
ConditionalSeller
60
REA / shared services agreements NEW
Shared parking, utilities, or access with adjacent properties.
ConditionalSeller
Insurance & Risk
61
Insurance Loss Run Reports since opening
RequiredSeller
62
Insurance Summary Coverage
RequiredSeller
Legal & Permits
63
Zoning confirmation letter NEW
Confirms hotel use is permitted under current zoning.
RequiredCounty
64
Flood zone determination (FEMA) NEW
Affects insurance cost. Critical for Houston / Gulf Coast properties.
RecommendedThird Party
ADA & Accessibility NEW CATEGORY
65
ADA accessibility survey / transition plan
Pre-1993 properties = six-figure exposure. You buy the ADA liability with the building.
RecommendedThird Party
66
ADA complaints / DOJ settlement history
Prior complaints signal areas of ongoing risk.
RecommendedSeller
Due Diligence

Stage 4b — Hard Due Diligence

37 items

Post-hard DD, close preparation. Final permits, technology systems, environmental follow-ups, staffing transition, and regulatory compliance. Everything needed to operate on day one.

Title, Survey & Encumbrances
67
Existing deed / mortgage payoff statement
What debt gets paid off at closing and prepayment penalties.
RequiredSeller
68
UCC financing statement search
Liens on personal property (FF&E, equipment) that survive the sale.
RequiredThird Party
69
Mechanic's lien search
Unpaid construction work attaches to the property. In Texas, can be seven figures.
RequiredThird Party
Environmental
70
Phase II ESA (if Phase I flags RECs)
Soil/groundwater testing. Only required if Phase I warrants further investigation.
ConditionalThird Party
71
Asbestos survey (ACM)
Pre-1990 construction. Affects renovation cost estimates and OSHA compliance.
ConditionalThird Party
72
Lead-based paint survey
Pre-1978 construction.
ConditionalThird Party
73
Stormwater permit (TPDES)
Sites >1 acre. Confirm active and transferable.
ConditionalCounty
Franchise & Brand
74
Comfort letter from brand
Lender-required. Confirms franchise is in good standing and will survive the sale.
RequiredBrand
Financial & Revenue
75
CRS / GDS setup confirmation
Verify connectivity to Amadeus, Sabre, Travelport.
RecommendedBrand
Property Condition & Capital
76
Structural engineering report (if PCA flags issues)
Foundation, cracking, settling, drainage. Only if PCA warrants.
ConditionalThird Party
Legal & Permits
77
Certificate of Occupancy
RequiredCounty
78
Pool Permit and License
RequiredCounty
79
Elevator Permit and License
RequiredCounty
80
Elevator inspection reports since opening
RequiredSeller
81
Liquor license (+ transfer process/timeline)
Transfer varies by TX county. 60–90 day timeline.
ConditionalCounty
82
Business Operating License
RequiredCounty
83
Fire Safety Inspection Certificate
RequiredCounty
84
Health & Safety Certificate
RequiredCounty
Operations & Staffing
85
30-day pre-close staffing transition plan
Who is staying, who is leaving. Need 30 days before close to staff property.
RequiredSeller
86
Employee handbook
Severance provisions, non-competes, PTO accrual policies.
RecommendedSeller
87
OSHA citations / inspection history
Open citations transfer to new owner.
RecommendedSeller
88
I-9 compliance status
Hotels with high hourly turnover frequently have I-9 deficiencies.
RecommendedSeller
Insurance & Risk
89
Flood insurance policy (if in flood zone)
Required if FEMA determination shows flood zone A or V.
ConditionalSeller
Technology & Systems
90
PMS configuration + contract details
Opera, FOSSE/MARSHA, etc. Contract term, monthly cost, ownership transfer terms.
RequiredSeller
91
POS system contracts (if F&B)
ConditionalSeller
92
Key card / lock system documentation
Brand mandates specific systems. Replacement cost if outdated.
RecommendedSeller
93
WiFi infrastructure documentation
RecommendedSeller
94
Phone / IPTV system contracts
Long-term with early termination penalties.
RecommendedSeller
95
PCI DSS compliance status
Hotels are PCI scope. Open findings = post-close liability.
RecommendedSeller
96
Unonet documentation
Marriott-specific.
ConditionalSeller
97
Connected rooms documentation
ConditionalSeller
F&B (if applicable)
98
Liquor inventory valuation
ConditionalSeller

Summary by Source

57
From Seller
10
From Brand
14
Third Party (Buyer Orders)
16
County / State Records
1
Buyer Internal
99
Total Items