Succession planning in hotels and restaurants: How to get it right

Succession in the hotel and restaurant sector determines the future of a lifetime’s work, the family, jobs and, in most cases, also a property. Those who consider the property, licence, staff and tax implications together at an early stage retain flexibility – and avoid mistakes that cannot be corrected later.

Why 2026 is a particular year for succession planning

Two developments are influencing the starting position:

• Since 2026, food is again subject to VAT at seven per cent, while beverages remain at 19 per cent. This relieves operators – but makes the years 2024 and 2025 more difficult to use as a basis for valuation for succession purposes, because a three-year average does not reflect the new earnings situation.
• At the same time, the Federal Constitutional Court (Bundesverfassungsgericht) will hear the case on inheritance tax relief for business assets in October 2026; a decision is not expected until 2027. Until then, the current law applies. The planning risk therefore lies less in a possible tightening than in the question of when any change would take effect.

Why succession planning should start early

Many business owners put off succession: day-to-day operations demand attention and stepping back is emotionally difficult. Yet a viable solution requires time to clarify personal objectives, involve potential successors, prepare the business economically and compare tax and legal options.

Starting early does not mean immediately fixing a handover date. The first step is to gain clarity on objectives, dependencies and possible paths.

The crucial question: Who can and wants to take over?

In family businesses, it is natural to consider passing the hotel, restaurant or guesthouse to the next generation. However, family membership alone does not make a suitable successor. The children must be able to take on the responsibility and, above all, want to do so.

This requires open discussions about expectations, capabilities and life plans:

• Does a family member have a genuine interest in the business?
• Are the professional, commercial and personal prerequisites in place?
• Should operational management be transferred immediately or gradually?
• How will siblings or other family members be appropriately considered?
• What role does the current owner wish to retain after the handover?

If no one within the family can or wants to take over, this is not a failure of succession planning. In that case, alternatives should be considered early: participation or takeover by employees, an external management solution, leasing or sale to an external successor. The earlier these options are examined, the more purposefully the transition can be prepared for them.

Which issues need to be addressed?

A robust succession solution brings together several perspectives. Individual measures should therefore not be decided in isolation.

1. Personal Objectives and Allocation of Roles

For many owners, the business is part of their identity. Letting go, delegating responsibility and accepting changes brought by the next generation can be difficult. At the same time, successors have their own ideas. Good planning creates space for these different perspectives and clarifies how responsibility should actually be transferred.

2. Economic Starting Position and Business Value

A succession must be economically viable. This requires up-to-date figures, a realistic valuation and transparency on investment needs, financing, earning power and liquidity. In hotels and restaurants, the property, equipment, location and dependence on the previous owner in particular influence value.

Kitchen management, service and reception drive quality and guest loyalty. When a business is transferred, employment relationships pass automatically by operation of law, with obligations to inform employees, employees’ right to object and the outgoing owner’s residual liability. Economically, wage developments must be planned for: the minimum wage in 2026 is €13.90 and will rise to €14.60 in 2027 – no other sector affects so many employees. This shapes not only the successor’s planning calculations but also the forecast total wage bill on which tax relief depends.

The value of the business is determined by sustainable earning power, assets, liabilities and investment requirements. Industry-specific factors include location, condition of rooms, kitchen and technical equipment, energy efficiency and dependence on the previous owner. Also to be examined are the transfer of brand, regular guests, booking portals and online profiles, as well as cash register management, whose tax risks the buyer also assumes. Finally, the right timing depends on seasonality, reservations, vouchers and advance payments.

Further reading: What is my company worth? Business valuation 2025

3. Tax Structuring

Gifts, sales or gradual transfers of shares have different tax consequences. Among the issues to be examined are asset structure, shareholding percentages and the requirements for possible reliefs for business assets. Tax optimisation should begin early, but must not alone determine the succession model.

Often, the property used by the business is held in the owner’s private assets. From a tax perspective, this frequently results in a split of the business (Betriebsaufspaltung). If, in the course of succession, only the business or only the property is transferred, this can result in all latent reserves having to be realised and taxed. For properties held for decades in good locations, this quickly leads to a tax burden that calls the economic viability of the succession into question.

Leasing the business may at first sight appear to be a convenient intermediate step, but has significant tax consequences. For income tax purposes, in the case of a lease of the entire business (Betriebsverpachtung im Ganzen), there is an option: without an express declaration of cessation, the business continues for tax purposes and the latent reserves remain tied. For inheritance and gift tax purposes, risks may arise from this. A detailed examination of the current situation is therefore required.

It should also be noted that the reliefs available for gift tax purposes for business assets are subject to various conditions. The acquirer must continue the business for several years and – depending on the number of employees – maintain a certain total wage bill. In a sector with high staff turnover, seasonal workers, casual staff and currently declining real revenues, this is a real risk, as the tax relief may be jeopardised. Before the transfer, it should therefore be examined whether projected staffing levels in the coming years can realistically meet the requirements.

Further reading: Tax-free transfer of business assets: Act now!

4. Legal Form, Liability and Contracts

Legal form, liability, partnership or shareholders’ agreements, and voting and control rights must fit the planned handover. In addition, there are lease, rental, supply, franchise, financing or management contracts, as well as permits and licences.

5. Provision and Security for the Outgoing Owner

The outgoing owner’s financial future must also be secured. Depending on the model, purchase price or pension payments, rental income, profit participation rights or a transfer subject to a retained life interest (Nießbrauchvorbehalt) may be appropriate. The solution must suit both personal needs and the business’s capacity to perform.

Further reading: Hotels & Gastronomy: Business succession and usufruct interest

6. Contingency Planning

Until the planned handover, the business must remain operable in the event of illness, accident or death. Powers of attorney for the entrepreneur, representation arrangements and an entrepreneur’s will (Unternehmertestament) aligned with the partnership or shareholders’ agreement therefore form part of contingency planning.

Further reading: Unternehmertestament: Ein Muss für Unternehmer & Gesellschafter and Entrepreneur’s will: What you need to bear in mind

What makes succession in hotels and restaurants special

Hotels and restaurants are often strongly shaped by the entrepreneur’s personality, the location and long-standing relationships. In addition to general succession issues, the following points in particular should therefore be examined:

• Does the business property belong to the company, to private assets or to another family member?
• Can an existing lease be taken over or renegotiated?
• Which permits, licences and regulatory requirements must be observed?
• Which key employees safeguard quality, guest contacts and operational know-how?
• What investment and modernisation needs exist for rooms, kitchen, technical equipment or energy efficiency?
• How will the brand name, regular guests, booking portals, online profiles and supplier relationships be transferred?
• How do seasonality, reservations, vouchers and advance payments influence the appropriate handover date?

The first steps towards business succession

• Clarify personal objectives, desired role and timeframe.
• Speak openly with family and potential successors about interest, suitability and expectations.
• Record the economic, legal and tax starting position and the business value.
• Compare intra-family and external succession models, including financing and provision.
• Plan measures, responsibilities and the handover date in a binding manner.

Which documents are helpful for the initial review

For an initial discussion, current annual financial statements and management reports, partnership or shareholders’ agreements, lease or rental contracts, financing documents, staff and asset summaries, as well as wills and powers of attorney are helpful. Industry-specific additions include permits, licences, franchise agreements and key supply contracts.

Conclusion: Good business succession starts with clarity

Business succession is not a topic for the last day of work. Those who start early can compare options, prepare the business in a targeted way and align the interests of family, successor, employees and the outgoing owner. It begins with an honest assessment: what should be preserved, who can take on responsibility and which solution is economically, legally and personally viable?

ACCONSIS supports business successions on an interdisciplinary basis – from initial orientation through valuation, tax, legal and financing matters to concrete implementation. Business succession ACCONSIS, Munich

Frequently asked questions on business succession in hotels and restaurants

When should business succession be planned?

Ideally, planning should begin several years before the desired handover. This leaves sufficient time to find a successor, value the business, clarify financing and examine tax and legal structuring options.

What succession models are available if the children do not want to take over?

In addition to an intra-family transfer, options include in particular employees or management, an external buyer, external managing directors, leasing or a gradual transfer of shares. Which model is suitable depends on personal objectives, the successor’s suitability and economic viability.

What tax issues arise in business succession?

The tax consequences differ depending on whether the business is gifted, sold or transferred gradually. Among the issues to be examined are inheritance and gift tax, corporate and income taxes, possible reliefs for business assets and the composition of the business assets. The tax structuring must fit the overall succession concept.

How is the value of a hotel or restaurant determined?

The valuation takes particular account of sustainable earning power, assets, liabilities, investment needs and market conditions. For hotels and restaurants, the property, location, lease arrangements, equipment, reputation and dependence on the previous owner may also be important. Business value and achievable purchase price are not necessarily identical.

What special features apply to business succession in hotels and restaurants?

Particularly important are the ownership or lease arrangements for the business property, permits and licences, key employees, investment and modernisation needs, supply and franchise agreements, as well as regular guests, booking portals and online profiles. Seasonal patterns, vouchers, advance payments and reservations can also influence the handover date.

Why is holistic advice sensible for business succession?

Because personal, economic, tax, legal and financial decisions depend on one another. Holistic advice first develops a shared vision of objectives and then aligns valuation, tax, legal, financing, provision and implementation accordingly.