Texas Hotel Management

Due Diligence Document Requirements

What we need, who provides it, and when — revised per W5 Boardroom review
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. Phasing was reviewed and approved by the W5 Board (Warren, Wynn, Woz, Walton) on March 25, 2026.

Each item shows its priority (Required blocks stage advancement; Recommended is flagged; Conditional depends on property type) and source (Seller, Brand, Third Party, County/State, or Buyer internal).

Deal Pipeline

Stage 1
Research
10-min kill screen
2 items
Stage 2
Analysis
Revenue rebuild
19 items
Stage 3
Qualified
Kill criteria + deal card
14 items
Stage 4a
LOI
Price inputs + pre-hard DD
33 items
Stage 4b
Due Diligence
Close prep + day-one ops
31 items
Boardroom Principles

Answers before documents: At Qualified, frame requests as seller disclosure questions — not document requests. Full document production scales at LOI.
Order vs. review: Long-lead items (PIP, Phase I, PCA) are ordered early but reviewed later. Items marked ORDER should be initiated at that stage.
Kill criteria surface early: Items that can kill a deal (expired permits, litigation, insurance claims) belong before the LOI, not after.

Research

Stage 1 — Kill Screen

2 items

Can this deal survive 30 more minutes of analysis? If STR indices are catastrophic or margin is structurally broken, kill immediately.

Financial & Revenue
1
Most recent STR report
Competitive position snapshot — occupancy, ADR, RevPAR vs. compset.
RequiredSeller
2
Prior full-year P&L / T-12
Revenue, departmental expenses, NOI. If margin is structurally broken, kill here.
RequiredSeller
Analysis

Stage 2 — Revenue Rebuild

19 items

Can we make money here? Full revenue rebuild with forward demand, account structure, brand performance, and expense verification. This is the engine of the deal process.

Financial & Revenue
3
All Monthly STR reports (current + prior year)
Trend analysis, seasonality, compset tracking. Need every month.
RequiredSeller
4
Dec Monthly STRs since opening
Year-end benchmark snapshots for each year of operations.
RequiredSeller
5
GOS Property Report year-end (last 2yr)
Third-party revenue and accounts verification.
RequiredSeller
6
GOS Property Report monthly (current + prior yr)
Monthly production detail for revenue trend analysis.
RequiredSeller
7
Flash report YTD comparisons
YTD current vs prior year performance.
RequiredSeller
8
Occupancy forecast (90-day minimum) MOVED UP
Forward demand is a revenue rebuild input. Cannot project stabilized RevPAR without forward pace.
RequiredSeller
9
Top 10 LNR & CNR accounts (2yr) MOVED UP
Account structure informs ADR quality. Top 3 accounts = 40%+ room nights is a concentration risk flag.
RequiredSeller
10
Direct Bill accounts list MOVED UP
Corporate receivable exposure and billing relationships feed the revenue rebuild.
RequiredSeller
11
Business on the books (group + meeting room) MOVED UP
Forward booked revenue is an asset; committed pricing is a liability. Needed to model forward RevPAR.
RequiredSeller
12
Rate strategy documentation MOVED UP
ADR upside assessment. Hotel anchored 15% below compset on weekday corporate = fragile index.
RecommendedSeller
13
OTA production report by channel
Channel mix breakdown. High OTA concentration (40%+) means heavy commission drag.
RecommendedBuyer
14
Loyalty program production report
Bonvoy/IHG Rewards/Hilton Honors penetration rate.
RecommendedBrand
15
TTM Utility bills (Gas, TV, Internet, Electric, Water, Waste) MOVED UP
P&L verification. Utilities = 4-7% of revenue. Running 9% on bad HVAC means the NOI model is wrong. Need the actual number to anchor the LOI price.
RequiredSeller
Franchise & Brand
16
Franchise agreement + all amendments
Fee structure, royalty, marketing fund, rewards contribution, term, default provisions.
RequiredSeller
17
SALT / GSS scores (last 2yr)
Guest satisfaction trends — leading indicator of ADR sustainability.
RecommendedBrand
18
AOP letter MOVED UP
Operator forward view feeds revenue model. Belongs with other brand performance data.
RecommendedBrand
19
PIP — order from brand ORDER
60-90 day lead time. Order immediately at Analysis. Review when received (Qualified or LOI). Without PIP scope, you cannot price the deal.
RequiredBrand
Vendor & Contracts
20
Management agreement (if third-party managed)
Fee structure, term, termination provisions, change-of-control clause.
RequiredSeller
21
Ground lease (if applicable)
Most critical document if seller doesn't own the land.
ConditionalSeller
F&B (if applicable)
22
F&B P&L breakout (separate from hotel P&L)
F&B frequently operates at a loss. Verify independently.
ConditionalSeller
Qualified

Stage 3 — Kill Criteria + Deal Card

14 items

Is this deal worth writing an LOI? Focused on kill criteria (expired permits, litigation, insurance claims) and deal card inputs. Frame requests as seller disclosure questions — not full document requests.

Kill Criteria — Legal & Permits MOVED UP
23
Certificate of Occupancy FROM DD
Kill criterion. Expired CoO = hotel cannot legally operate in Texas. Public record, zero cost to pull.
RequiredCounty
24
Elevator Permit and License FROM DD
Kill criterion. Public record, same logic as CoO.
RequiredCounty
25
Pending litigation / demand letters FROM LOI
Kill criterion. $3M pending lawsuit on a $12M deal is a Qualified-stage killer. Scope: material litigation disclosure (1 paragraph).
RequiredSeller
26
Insurance loss runs (3yr summary) FROM LOI
Kill criterion. Claims pattern signals deferred maintenance and management culture. Scope: 3-year summary, not full claims file.
RequiredSeller
Property Condition & Capital
27
Capital expenditure history (3-5yr)
Compare actual spend to PCA recommendations = deferred maintenance gap. Cannot model without this.
RequiredSeller
28
Inventory of FF&E items
Capital reserve input.
RequiredSeller
Operations & Staffing
29
Staff list and pay (department summary)
Department headcount + total labor cost. Not individual register — that comes at LOI.
RequiredSeller
30
Brand QA inspection score
Score below 80 is deal-structural. Full reports move to LOI.
RequiredSeller
Seller Disclosure Questions (answers, not documents)
31
Vendor disclosure summary
"Who is your laundry, HVAC, landscaping, pest control? Any long-term contracts surviving sale?" One-page disclosure.
RequiredSeller
32
PMS system name (informal)
One-line answer. Opera? Maestro? HotelKey? Determines integration path. Full contract at LOI.
RecommendedSeller
33
Pest control vendor + last inspection date
Pass/fail signal. Full reports move to LOI.
RecommendedSeller
34
PIP — review if received REVIEW
Ordered at Analysis. If brand has responded, review here and incorporate into deal card. If not, flag as pending.
RequiredBrand
LOI

Stage 4a — Letter of Intent

33 items

What shapes the offer? Full document production. Legal, environmental, physical inspection, vendor contracts, insurance, building plans, and transition planning. Long-lead third-party items (Phase I, PCA, title, survey) ordered day 1.

Title, Survey & Encumbrances
35
Title commitment ORDER DAY 1
Reveals liens, easements, encumbrances, deed restrictions. Non-negotiable.
RequiredThird Party
36
ALTA / NSPS survey ORDER DAY 1
Boundaries, setbacks, easements, encroachments, parking count.
RequiredThird Party
37
Property tax certificates (2-3yr)
Confirms no delinquent taxes. Establishes protest baseline.
RequiredCounty
38
Tax assessment notices + protest history
TX-specific: has the seller been protesting? Unprotested hotel may be over-assessed 15-25%.
RecommendedCounty
Environmental
39
Phase I ESA ORDER DAY 1
Identifies recognized environmental conditions. Lender-required. 2-4 week lead time.
RequiredThird Party
40
UST report / TCEQ search
Underground storage tanks. TX Railroad Commission database.
RecommendedCounty
Property Condition & Capital
41
Property Condition Assessment (PCA) ORDER DAY 1
Engineering assessment. Lender-required. 2-3 week lead time.
RequiredThird Party
42
Roof warranty + remaining term
Replacement = $200-500K+. Warranty status affects capital reserve.
RequiredSeller
43
FF&E reserve fund balance
Current escrow balance. Does it transfer at close?
RequiredSeller
Franchise & Brand
44
Franchise transfer / assignment consent ORDER
60-90 day timeline. Transfer fee $50-150K. Order immediately.
RequiredBrand
45
Brand deficiency report / open QA items FROM QUALIFIED
PIP number carries the signal at Qualified. Underlying reports support LOI negotiation.
RecommendedBrand
46
Brand QA inspection reports (last 2yr, full) FROM QUALIFIED
Full reports validate PIP scope. Score already obtained at Qualified.
RecommendedBrand
Financial & Revenue
47
Appraisal from initial financing
If available. Historical value baseline.
RecommendedSeller
48
Dec YTD Manager Flash Reports since opening FROM QUALIFIED
Historical operational snapshots. Redundant with STR + GOS at Qualified. Useful for anomaly validation at LOI.
RecommendedSeller
49
Daily Managers' report (night audit sample) FROM QUALIFIED
Reporting quality verification, not go/no-go.
RecommendedSeller
50
Top 100 guest report (2yr + monthly current) FROM QUALIFIED
Repeat guest loyalty detail. Nice-to-have, not a decision driver.
RecommendedSeller
Building & Construction
51
Full building plans
Confirm completeness — plans on hand may be incomplete.
RequiredSeller
52
Construction manual / spec book (digital)
RecommendedSeller
53
Interior design CAD files
RecommendedSeller
54
Spec book for FF&E purchased during construction
RecommendedSeller
55
Name of FF&E purchasing company
RecommendedSeller
Operations & Staffing
56
Payroll report (full individual register)
Full detail for labor cost verification. Department summary already at Qualified.
RequiredSeller
57
Workers' compensation claims (3yr)
Insurance premium baseline. Elevated claims = elevated premiums.
RequiredSeller
58
30-day pre-close staffing transition plan FROM DD
Need at LOI to start recruitment pipeline during DD. Can't hire into a gap.
RequiredSeller
59
Maintenance records (full work orders) FROM QUALIFIED
Full work orders belong with PCA block. Summary flag at Qualified.
RecommendedSeller
60
Pest control reports (full, last 2yr) FROM QUALIFIED
Full reports with PCA block. Pass/fail summary at Qualified.
RecommendedSeller
61
OSHA citations / inspection history FROM DD
Price negotiation input, not just compliance. Pattern of violations affects bid.
RecommendedSeller
Vendor & Contracts (full documents)
62
All vendor contracts (full docs)
Full legal review. Summary already obtained at Qualified.
RequiredSeller
63
Equipment leases, contracts, end dates
RequiredSeller
64
Maintenance and service contracts
RequiredSeller
65
All other vendor contracts
RecommendedSeller
66
Elevator maintenance contract + remaining term
5-10yr contracts with auto-renewal and early termination penalties.
RequiredSeller
67
Parking agreements (if offsite/shared)
ConditionalSeller
68
REA / shared services agreements
Shared parking, utilities, access with adjacent properties.
ConditionalSeller
Insurance & Risk
69
Insurance Summary Coverage
Full coverage details. 3yr loss run summary already at Qualified.
RequiredSeller
Legal & Permits
70
Zoning confirmation letter
Confirms hotel use is permitted under current zoning.
RequiredCounty
71
Flood zone determination (FEMA)
Affects insurance cost. Critical for Houston / Gulf Coast.
RecommendedThird Party
72
Fire Safety Inspection Certificate FROM DD
Operational kill criterion. Public record.
RequiredCounty
73
Pool Permit and License FROM DD
RequiredCounty
74
Health inspection reports (2yr, if F&B) FROM QUALIFIED
Recurring violations signal management problems.
ConditionalCounty
75
Catering / event contracts (F&B) FROM QUALIFIED
Booked revenue = asset. Committed pricing = liability.
ConditionalSeller
ADA & Accessibility
76
ADA accessibility survey / transition plan
Pre-1993 = six-figure exposure. You buy the ADA liability.
RecommendedThird Party
77
ADA complaints / DOJ settlement history
RecommendedSeller
Technology & Systems FROM DD
78
PMS configuration + contract details
Contract term, cost, transfer terms. Legacy PMS = $200-500K conversion cost. Must know for transition planning.
RequiredSeller
79
Key card / lock system documentation
Brand mandates specific systems. Replacement cost if outdated.
RecommendedSeller
Due Diligence

Stage 4b — Close Prep + Day-One Ops

31 items

Post-hard DD. Everything needed to take the keys and operate on day one. Final title work, environmental follow-ups, permits, technology audit, and compliance verification.

Title, Survey & Encumbrances
80
Existing deed / mortgage payoff statement
What debt gets paid off at closing and prepayment penalties.
RequiredSeller
81
UCC financing statement search
Liens on personal property (FF&E, equipment) that survive the sale.
RequiredThird Party
82
Mechanic's lien search
Unpaid construction work attaches to property. In Texas, can be seven figures.
RequiredThird Party
Environmental
83
Phase II ESA (if Phase I flags RECs)
Soil/groundwater testing. Only if Phase I warrants.
ConditionalThird Party
84
Asbestos survey (ACM)
Pre-1990 construction. Affects renovation cost.
ConditionalThird Party
85
Lead-based paint survey
Pre-1978 construction.
ConditionalThird Party
86
Stormwater permit (TPDES)
Sites >1 acre. Confirm active and transferable.
ConditionalCounty
Franchise & Brand
87
Comfort letter from brand
Lender-required. Confirms franchise in good standing.
RequiredBrand
88
CRS / GDS setup confirmation
Verify Amadeus, Sabre, Travelport connectivity.
RecommendedBrand
89
PIP — final scope confirmation REVIEW
If not yet received from brand, escalate. Must be in hand before going hard on earnest money.
RequiredBrand
Property Condition & Capital
90
Structural engineering report (if PCA flags)
Foundation, cracking, settling, drainage.
ConditionalThird Party
Legal & Permits
91
Elevator inspection reports since opening
RequiredSeller
92
Liquor license (+ transfer process/timeline)
Transfer varies by TX county. 60-90 day timeline.
ConditionalCounty
93
Business Operating License
RequiredCounty
94
Health & Safety Certificate
RequiredCounty
Operations & Staffing
95
Employee handbook
Severance, non-competes, PTO accrual policies.
RecommendedSeller
96
I-9 compliance status
High hourly turnover = frequent I-9 deficiencies.
RecommendedSeller
97
Full insurance claims files
3yr summary already at Qualified. Full files for legal review.
RecommendedSeller
98
Full litigation case files
Material disclosure already at Qualified. Full files for legal review.
ConditionalSeller
Insurance & Risk
99
Flood insurance policy (if in flood zone)
Required if FEMA determination shows flood zone A or V.
ConditionalSeller
Technology & Systems
100
POS system contracts (if F&B)
ConditionalSeller
101
WiFi infrastructure documentation
RecommendedSeller
102
Phone / IPTV system contracts
Long-term with early termination penalties.
RecommendedSeller
103
PCI DSS compliance status
Open findings = post-close liability.
RecommendedSeller
104
Unonet documentation
Marriott-specific.
ConditionalSeller
105
Connected rooms documentation
ConditionalSeller
F&B (if applicable)
106
Liquor inventory valuation
ConditionalSeller

Summary by Phase

2
Research
19
Analysis
14
Qualified
33
LOI
31
Due Diligence
99
Total Items