In the context of a hotel acquisition, due diligence is the analytic review of the real and personal property, the business operations, and potential of the specific hotel. In relation to project management, the due diligence process refers to the investigation conducted by a potential buyer of the hotel that is the target of the acquisition. The investigation covers both the physical asset (i.e. the hotel structures, parking, systems, equipment, and inventories) as well as the business operations conducted at the hotel facility, relevant markets, and other market environments.

The purpose of the investor’s due diligence is to understand and evaluate a potential investment. These efforts seek to validate the investor’s reason for buying the hotel and to avoid surprises after the purchase has closed. By performing the necessary due diligence process steps in the early stages of a contract negotiation, the buyer will have more alternatives, fewer costs, and more negotiating power to deal with the issues that arise.