1. Legal Framework and Ownership Structure
Foreign ownership of hotels in Mexico can involve either individual ownership or ownership through a Mexican corporation. Each structure has its own considerations. If you’re a foreigner (a person or foreign company) buying in the restricted zone, you’ll need a fideicomiso (bank trust). If purchasing through an existing Mexican corporation, thorough due diligence is essential, although starting a new corporation is often recommended. At LivingRivieraMaya.com, we can guide you through both options. We’re available for a detailed discussion by phone or virtual meeting.
Conduct thorough due diligence by reviewing permits, licenses, contracts, and legal obligations. Ensure the business complies with local and federal regulations, including labor, environmental, and zoning laws. We work with the best-vetted legal advisors to ensure a smooth process.
2. Financial and Physical Health of the Business
While analyzing financial statements is essential, many family-run hotels in Mexico may not have formal profit and loss statements. Instead, owners often refer to local hotel rates and occupancy for profitability estimates. Assess the value of the real estate and consider the property’s operational history as an indicator of potential. Additionally, investigate any outstanding debts or liabilities to avoid unforeseen issues.
Will you be hands-on in the business or hiring a manager to run it? The choice is yours naturally. Although we usually recommend you purchase for yourself, if you want to be in Mexico and enjoy a profitable business in this beautiful place. It also increases its profitability.
Understanding Mexican tax obligations, including income tax, VAT (IVA), and local taxes, is crucial. Consulting a tax professional familiar with Mexican law can help navigate these complexities. Hiring a good accountant is vital.
Is the hotel in operational condition? Consider any renovations you may want to make. We recommend a property inspection.
3. Market Analysis and Location
Tourism trends, local competition, and the location of the business are critical factors. Evaluate the area’s accessibility, proximity to attractions, and infrastructure. Consider the potential for regional growth, including future developments and tourism expansion.
4. Human Resources and Labor Laws
Review employee contracts and understand your obligations under Mexican labor laws, which tend to favor employees. Decide whether you will self-manage or hire a management team and assess the current team’s competency.
5. Cultural and Language Differences
Local knowledge is crucial, and hiring a reliable assistant can make a significant difference. While some business environments may operate in English, proficiency in Spanish is essential for legal matters and daily operations.