Hotel Due Diligence in Italy

Planning and building compliance

The most important check, and the one that most often ends a deal. The question is not whether the building looks sound; it is whether what physically exists corresponds to what was lawfully authorised, and whether that correspondence is documented.

Italian buildings frequently carry a long history of works, extensions, changes of internal layout and changes of use, and hotels — repeatedly altered to add rooms, bathrooms, kitchens and plant — carry more than most. Where an alteration was never regularised, the discrepancy sits in the record until someone looks. A notary will look.

• Building permits and any subsequent authorisations, matched against the building as it stands
• Certificate of fitness for use (agibilità) covering the whole property in its present configuration
• Any amnesty or regularisation applications, and whether they were concluded
• Cadastral plans matched against the actual layout
• Compliance certification for electrical, gas, heating and fire-safety installations
• Fire-safety authorisation, which for accommodation above a certain capacity is a specific regime with its own documentation

Title and encumbrances

Ownership must be traced and the registers searched for mortgages, charges, easements, attachments and other third-party rights. This is discoverable, public information, and there is no excuse for a buyer discovering an encumbrance after completion.

Where the property has passed by inheritance, the succession should be examined: a defect in a chain of title upstream does not disappear with time, and it can render a property unsaleable to the next buyer even if it does not trouble you.

Licences and the right to trade

A hotel is a regulated activity. The authorisation under which it trades, its classification, its capacity, and any conditions attached to it must be verified — and then the separate question asked: will this authorisation still be valid, and available to me, after the transaction I am proposing?

That answer depends on the deal structure and on regional and municipal rules. It is a different answer for a share deal, a going-concern transfer and a purchase of the real estate alone. It should be established before an offer, not assumed and discovered later.

Ancillary permissions matter too: food and beverage, alcohol, swimming pool, spa, any public-facing space, occupation of public land for terraces. Each has its own basis and its own transferability.

Employment

Where you are acquiring a going concern, the workforce comes with it, protected by law, together with accrued entitlements including severance provision. This is quantifiable in advance and must be quantified.

• Headcount, contract types, seniority and the applicable national collective agreement
• Accrued severance provision and untaken leave
• Any pending employment disputes
• Social security position and evidence that contributions are current
• Seasonal contracts and their renewal pattern, in seasonal destinations

Contracts and revenue

• Distribution agreements with online travel agencies, including commercial terms, parity clauses and notice periods
• Tour operator and corporate contracts, and how much of the revenue base depends on them
• Forward bookings and deposits held — money already taken for stays not yet delivered
• Management, franchise or brand agreements and their termination provisions
• Leases of equipment, plant, or parts of the property
• Utility, maintenance and service contracts

Accounts, and reading them properly

Three years of financial statements is the usual starting point, alongside the operating record: occupancy, average rate, distribution mix and seasonality by month. What matters more than any single figure is whether the pattern is credible against the destination's own demand record — which is public.

This is where our observatory is directly useful. If a property's accounts show a trajectory that does not correspond to the arrivals and overnight-stay record for its own municipality over the same years, that discrepancy is worth understanding before you rely on the accounts. See the market data by destination.

What most often stops a deal

• An unregularised building discrepancy that cannot be resolved, or can only be resolved at a cost that changes the transaction.
• Missing or incomplete fitness-for-use certification for the property as it currently stands.
• Fire-safety compliance that would require works the price did not contemplate.
• A licence that will not follow the transaction as structured.
• Employment liabilities materially larger than the buyer assumed.
• A defect in the chain of title, frequently arising from an inheritance.

Every item on that list is discoverable before you are committed. That is the whole argument for doing this work early: the cost of due diligence is small, and it is the only thing standing between you and a liability you cannot return.

Frequently asked questions