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Folio III · 3 of 7

The briefs

Hotel due diligence — the checklist a CIM hopes you skip

A buy-side walk through the files that actually kill deals. Written so a GM can brief an owner in one sitting.

16 minBuy-side owner / GM / counsel

Diligence is not a data-room scavenger hunt. It is a sequence of questions that are allowed to end the deal. If your advisor is paid only to close, you do not have diligence. You have theater.

If your advisor is paid only to close, you do not have diligence. You have theater.

Methods · named, not blended

I · Night audit

Rebuild before you argue

PMS, folios, payroll versus occupancy. If the seller cannot produce the audit, that absence is the finding.

II · Clock

Flag, PIP, ground lease

A 28-year clock under a 40-year PIP is how equity disappears. A flag you have not been awarded is not an input.

III · Packet

Open, evidence, blocker, cleared

A living file in this browser. Blockers write onto the Deal Frame as triggered kills. Harbor does not host the room.

IV · Stop

Write it in English

Unsigned cutoff, TBD roof, operator you cannot exit. Then the number. Not an appraisal.

Open the labeled estimate · Morning blotter · Compare tapes

01Operations — night audit before narrative

Pull a month of night audits and a week of folios. Rebuild occupancy, ADR, and channel mix from the PMS. Sample comps, no-shows, and walked guests. If the seller cannot produce the audit, that absence is the finding. A CIM is a claim.

Walk as an operator. Rooms product, labor reality, the actual GM, energy, and the 2 p.m. rooms board. Guest comments clustered on the same defect are a capex line, not a reputation slide.

  • PMS extracts: occupancy, ADR, RevPAR, channel, segment, 24 months if you can get them.
  • Payroll versus occupancy by department. Overtime is a tell.
  • STAR or equivalent only after you trust internal rooms.
  • Outstanding guest claims, health-department items, open work orders.

02Brand and affiliation

Read the franchise or soft-brand agreement as if you were the next owner — because you will be. Remaining term, territories, key-money recapture, PIP mandates, termination, and liquidated damages. A flag you have not been awarded is not an underwriting input.

Independent is a strategy. So is a soft brand. So is a hard franchise. They move distribution, reserve policy, and exit buyers. They are not a vibe. See the affiliation explainer before you pay for a logo.

03FF&E and PIP

Walk rooms with a camera and a par sheet, not a brand book. FF&E reserve on the T12 is not the same as the rooms you just stood in. A PIP is a scope, a calendar, and a displacement plan. If the brand has not issued it, price a conservative Harbor reserve and write that it is an assumption.

Closing 40 rooms in August is an NOI event. Model it. Do not bury it in “one-time capex.”

04Ground lease

If there is a ground lease, it is the deal. Remaining term, reset mechanics, landlord consent on sale or refinance, use clauses, and what happens to the building at expiry. A 28-year clock on a 40-year PIP story is how equity disappears. Lenders will teach you this if you do not.

05Management agreement

Base fee, incentive fee, owner priority, termination, operator change-of-control, budget rights, and whether the operator can also earn on procurement. An agreement you cannot exit is a partnership, not a vendor. If you are buying the real estate and inheriting an operator you would not have chosen, that is a price.

Questions owners ask

How long should hotel diligence take?
Enough time to rebuild a T12 from ops evidence and walk the house. Three to six weeks is a serious single-asset file. A weekend is a tour.
What is the most common kill-switch?
Unbooked comps and a night audit that cannot support the CIM; a ground lease nobody modeled; a PIP the brand has not priced; an operator you cannot exit.
Where do I keep the kill list?
On this page, in this browser — Folio III is a living packet: open, evidence, blocker, or cleared, plus a note. Blockers can be sent onto the Deal Frame as triggered kills. Harbor does not host the room. A close without a written stop is theater.

Continue

Folio III · This browser · Dated packet

Diligence kill list

Status, evidence, and blockers — not a checkbox hunt. A blocker can be written onto the Deal Frame as a triggered kill. Harbor does not host the room and will not call a labeled estimate an appraisal.

0 / 29

Tied to AC Hotel Louisville Downtown on the Harbor graph (Louisville, KY · 156 keys). . The house name can still differ if the PSA is not the whole graph node.

No marks in this browser yet. Checks stay local.

A close is theater until a kill-switch is written down.

I · Night audit before narrative0/4 cleared

  • 24-month PMS extract; occupancy, ADR, and mix rebuilt by you

  • A week of folios — comps, no-shows, walks — guest names stripped

  • Payroll versus occupancy by department. Overtime is a tell.

  • Walked the house as an operator, not a CIM tour

Open how →
II · Brand and affiliation0/4 cleared

  • Current franchise or soft-brand agreement, remaining term

  • PIP the flag will actually require — or written “not issued”

  • Key-money recapture and liquidated damages if you exit

  • A flag you have not been awarded is not an underwriting input

Open how →
III · FF&E and PIP0/3 cleared

  • Rooms walked with a camera and a par sheet, not a brand book

  • FF&E reserve on the T12 versus the rooms you stood in

  • Closed rooms modeled as an NOI event, not “one-time capex”

Open how →
IV · Ground lease0/3 cleared

  • Ground lease in file, or a dated “not in file”

  • Remaining term versus the PIP calendar you just priced

  • Landlord consent on sale or refinance is written down

Open how →
V · Management agreement0/2 cleared

  • Base, incentive, owner priority — and whether you can exit

  • If you inherit an operator you would not have chosen, that is a price

Open how →
VI · Legal and the ugly ordinary0/3 cleared

  • Survey, title, zoning, ADA, life-safety you can actually read

  • Insurance — including coastal and wildfire — and loss runs

  • Union, environmental, litigation, condo-hotel declaration if any

Open how →
VII · Close week0/3 cleared

  • Working-capital cutoff night both desks signed — guest names stripped

  • Twelve systems named; year-1 vs year-5; zero TBD on roof, boiler, life-safety

  • GM of record, night audit, and vendor ACH named before keys

Open how →True-up jobPCA job
VIII · Kill-switches (write them)0/7 cleared

  • If the night audit cannot support the CIM, you stop

  • If the ground-lease clock kills the PIP story, you stop

  • If the brand has not priced the PIP, you stop or reserve it in English

  • If you cannot exit the operator, you stop or price a partnership

  • If the working-capital cutoff is unsigned, you stop

  • If the PCA roof is still “monitor,” you stop

  • If vendor ACH is still the seller’s on day one, you stop

Labeled estimate →
Deal FrameLabeled estimateHouse folioCompare tapesApple blotterHire the deskData roomSale-ready fileUnderwrite jobPCA job
Living packet preview
# Harbor diligence packet

House: AC Hotel Louisville Downtown (ac-hotel-louisville-downtown). Louisville, KY.
Not an appraisal. Harbor does not host the room.
Exported 2026-10-30T21:24:16.640Z
No marks in this browser yet.

0 / 29 cleared. 0 blockers. 0 / 7 kill-switches written.

## I · Night audit before narrative

- [open] 24-month PMS extract; occupancy, ADR, and mix rebuilt by you
- [open] A week of folios — comps, no-shows, walks — guest names stripped
- [open] Payroll versus occupancy by department. Overtime is a tell.
- [open] Walked the house as an operator, not a CIM tour

## II · Brand and affiliation

- [open] Current franchise or soft-brand agreement, remaining term
- [open] PIP the flag will actually require — or written “not issued”
- [open] Key-money recapture and liquidated damages if you exit
- [open] A flag you have not been awarded is not an underwriting input

## III · FF&E and PIP

- [open] Rooms walked with a camera and a par sheet, not a brand book
- [open] FF&E reserve on the T12 versus the rooms you stood in
- [open] Closed rooms modeled as an NOI event, not “one-time capex”

## IV · Ground lease

- [open] Ground lease in file, or a dated “not in file”
- [open] Remaining term versus the PIP calendar you just priced
- [open] Landlord consent on sale or refinance is written down

## V · Management agreement

- [open] Base, incentive, owner priority — and whether you can exit
- [open] If you inherit an operator you would not have chosen, that is a price

## VI · Legal and the ugly ordinary

- [open] Survey, title, zoning, ADA, life-safety you can actually read
- [open] Insurance — including coastal and wildfire — and loss runs
- [open] Union, environmental, litigation, condo-hotel declaration if any

## VII · Close week

- [open] Working-capital cutoff night both desks signed — guest names stripped
- [open] Twelve systems named; year-1 vs year-5; zero TBD on roof, boiler, life-safety
- [open] GM of record, night audit, and vendor ACH named before keys

## VIII · Kill-switches (write them)

- [open] If the night audit cannot support the CIM, you stop
- [open] If the ground-lease clock kills the PIP story, you stop
- [open] If the brand has not priced the PIP, you stop or reserve it in English
- [open] If you cannot exit the operator, you stop or price a partnership
- [open] If the working-capital cutoff is unsigned, you stop
- [open] If the PCA roof is still “monitor,” you stop
- [open] If vendor ACH is still the seller’s on day one, you stop