Hotel property transactions in Georgia represent a complex intersection of real estate and corporate law. Tourism is one of the leading sectors of the country's economy, which has generated high interest in buying and selling hotels, guesthouses, and aparthotels. Unlike ordinary commercial space, purchasing an operating hotel implies transferring not only the ownership of walls and land but also the entire business ecosystem (operating systems, brand, employees, future bookings, licenses). These types of transactions are characterized by high value and multi-layered risks. An incorrectly structured deal can impose hidden tax liabilities on the buyer or lead to disputes with Management Companies. Therefore, investing in the hospitality sector requires a specialized legal approach that goes beyond standard real estate purchasing.
What does the Hotel Property Transactions service cover?
The service includes full legal support during the process of acquiring or selling a hotel business:
- Due Diligence: Along with checking the property title, the operational side of the hotel is verified: supplier contracts, employment agreements, intellectual property (brand, logo), and court disputes.
- Deal Structuring: Deciding on the form of acquisition—Asset Deal or Share Deal—taking into account tax efficiency.
- Management Agreements: Analyzing existing management agreements with international or local operators (e.g., Marriott, Holiday Inn) and ensuring their assignment to the new owner.
- Permits and Licenses: Verifying the validity of fire safety, food safety, and other mandatory permits.
- Staff Transfer: Legal management of labor relations during the change of ownership.
Common Scenarios and Needs
In hotel transactions, we often encounter the following scenarios: First, Buying a Family Hotel: An investor buys a small hotel in the region. The main risk here is informal business practices (undeclared income, verbal agreements with staff), which the lawyer must bring into a legal framework. Second, Aparthotel Unit Management: A developer sells units to private individuals but signs a lease agreement with them for management. The lawyer prepares agreements for "Pooled Rental Income" schemes. Third, Bringing in an International Brand: The owner wants to sign a franchise agreement. This is a complex international contract requiring detailed analysis for compliance with Georgian legislation.
Georgian Legislation and Regulations
Hotel transactions are regulated by the Civil Code of Georgia (real estate purchase, lease), the Law on Entrepreneurs (corporate structure), and the Labor Code of Georgia (employee rights). The Tax Code is of decisive importance, especially regarding VAT. The supply of a hotel as a "Going Concern" may be exempt from VAT if specific conditions are met. Also important are the Law on Tourism (if new regulations exist) and technical regulations on fire safety, violations of which can lead to the closure of the hotel.
Step-by-Step Process
The process begins with signing a Letter of Intent (LOI), where parties agree on the main price and terms. Then detailed Due Diligence begins, covering financial, tax, and legal checks. Parallel to this, negotiations on the Share Purchase Agreement (SPA) or Asset Purchase Agreement take place. Special attention is paid to Warranties & Indemnities clauses. After signing the contract, ownership is registered in the Public Registry, and the actual transfer of the asset takes place, which includes inventory and the handover of system passwords (Booking, PMS). The final stage is signing new agreements with employees.
Why Legal.ge?
The hotel business is a specific field requiring not just a lawyer, but an expert knowledgeable in the industry. Legal.ge gives you access to professionals with years of experience working on hotel property sales and management agreements. Our specialists will help you correctly assess risks and structure the deal so that your hotel business is successful and secure from day one. Choose industry competence on Legal.ge.
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