Buying a Hotel in Morocco: Transaction Structure and Legal Due Diligence for Foreign Investors

An investor asks to buy "a hotel" that is open, has staff and takes bookings. Before price or financing, one question decides almost everything that follows: what, in law, is actually being transferred? In Morocco the same hotel can be acquired in several very different ways, and each one moves a different set of assets, contracts and liabilities.

The hotel property is the land and the building — the real estate itself. Buying the property means acquiring the walls, not the business running inside them.

The fonds de commerce is the operating business: its clientele and goodwill, trade name, lease rights, equipment, and certain transferable elements. Importantly, buying the fonds de commerce does not by itself transfer ownership of the building, and it does not automatically transfer every administrative authorisation.

A share deal means buying the shares of the company that owns or operates the hotel. The company remains the same legal person, so it generally keeps its assets — and its liabilities, known and hidden.

A mixed transaction combines these layers, and in practice hotels are often acquired this way: for example, buying the company that owns the walls while checking the management contract, the lease over adjacent premises and the operating licence all at once.

There is no structure that is universally "best". The right one depends on the specific hotel and on what the buyer is trying to achieve. The trade-offs are real and should drive the decision rather than a general preference.

Buying only the property gives the cleanest position on liabilities, because most of the operating history stays with the seller. But it leaves the business, the staff, the bookings and often the licence outside the deal, so the buyer may effectively be starting operations again.

Buying the fonds de commerce captures a running business without inheriting the seller company's whole balance sheet, but it follows a formal transfer regime with creditor-protection steps, and it does not include the building or, by itself, every licence.

Buying the company is the most complete way to take over an operating hotel as-is, but the buyer steps into the company's existing liabilities, tax exposure and disputes, which is why this route relies heavily on due diligence and on contractual warranties. The general mechanics of a share deal — corporate approvals, signing, closing and post-closing — follow the same lifecycle as acquiring any Moroccan company, with the hotel-specific regulatory layers added on top.

The factors that usually decide the structure are the title and property position, the level of existing liabilities, the important contracts, the employees, the tourism licence and classification, the financing, the tax and accounting consequences, the foreign-exchange documentation, and the buyer's commercial objectives. Some of these overlap with general commercial-law issues in Morocco, but a hotel adds regulatory and operational layers on top.

Foreign individuals and foreign-owned companies may generally acquire urban and commercial real estate in Morocco, including property used for tourism, without needing to be resident. This is why acquiring a city hotel is, in principle, open to foreign buyers.

The important qualification concerns land classification. Agricultural land situated outside urban perimeters is restricted and is generally reserved for Moroccan nationals and Moroccan-law entities. A resort or a hotel project on the edge of a built-up area, or on land that has an agricultural or peri-urban status, can therefore raise a land-status question that must be verified early — long before signing.

For that reason the classification and zoning of the land matters as much as the price. The general rules on buying property in Morocco as a foreigner apply, but a hotel acquisition adds the operating business and the regulatory status on top of the pure real-estate question.

Where the deal includes the building, the property side has to be verified in its own right. Ownership of titled property in Morocco is established through the land registry (titre foncier, ANCFCC), and the registered title is the starting point for everything else.

The checks typically cover who actually owns the property, whether it is burdened by mortgages (hypothèques), seizures or other charges, the boundaries and surface, easements, the urban-planning position, and the building permits and authorisations. Occupancy also matters: any leases over parts of the property, and any disputes or litigation affecting the asset, change what the buyer is really getting.

Unfinished or defective construction and renovation work is a frequent hotel-specific issue and needs its own technical review; where a contractor dispute is already running, it can follow the asset. This overlaps with construction and contractor disputes, and with property disputes more generally, which are covered in their own guides — here they are a due-diligence line item rather than the whole subject.

This is where a hotel acquisition differs most from an ordinary property or business purchase. Tourist accommodation establishments in Morocco are subject to a dedicated tourism regulatory framework, principally Loi 80-14 on tourist accommodation establishments and its application texts, which cover the operating/licensing regime and the classification (the star rating) of the establishment.

For a buyer, the practical point is simple but easy to miss: the status of the establishment's operating licence and classification should be verified as part of the transaction, particularly where ownership or the operator changes. You should not assume that an existing hotel's licence and classification carry over automatically and unchanged to a new owner or operator.

The due diligence therefore looks at the current operator, the licence and classification actually held, and whether the contemplated change of ownership or operator may require administrative steps, updates, approvals or re-issuance. Because the detailed procedures are set by regulation and can evolve, the safe approach is to confirm the current position with the competent administration for the specific establishment rather than rely on assumptions.

If the investor buys the company that owns or runs the hotel, the due diligence has to investigate the company itself, because the buyer inherits it as it stands. In a share deal the legal entity does not change: its assets, contracts and liabilities generally remain in place after the sale.

The review typically covers the company's existence and good standing, its shareholders and share capital, the articles of association, and who has authority to sell. Share-transfer restrictions matter: transferring shares in a SARL to an outside buyer requires the approval of partners representing at least three-quarters of the capital, while shares in an SA are freely transferable unless the bylaws impose an approval clause.

Beyond the corporate layer, the diligence looks at the accounts, tax exposure, debts and bank financing, guarantees and security granted, litigation, employment liabilities, the major operating contracts, the licences, and anything that could be an undisclosed liability.

Because a share buyer takes the company with its history, the deal is normally protected by representations, warranties and a liabilities guarantee negotiated in the acquisition agreement. These allocate risk and give a remedy if something surfaces later — but they reduce and manage risk, they do not eliminate it, which is why they sit alongside diligence rather than replacing it. If the target is a newly formed holding vehicle rather than the historic operator, the company-formation rules can also be relevant to how the acquisition is structured.

A fonds de commerce is the operating business as a legal object: broadly, the clientele and goodwill, the trade name and sign, the right to the commercial lease, the equipment, and other transferable elements depending on the deal. A hotel that operates as a going concern usually has a fonds de commerce, and buying it can be a way to take over the activity.

The single most important point for a buyer is that the fonds de commerce is legally distinct from the walls. Buying the operating business does not, on its own, make you the owner of the building, and it does not automatically transfer every administrative authorisation attached to the establishment.

The sale of a fonds de commerce follows a formal regime under the Code de commerce. It requires written transfer documentation containing prescribed statements, registration and filing formalities, and publication. After the required publication formalities, a statutory creditor-opposition period applies, during which the seller's creditors can object, and the purchase price is handled through a sequestration mechanism so that those claims can be dealt with before the money reaches the seller.

In practice this means a buyer should map, item by item, what is included in the fonds — clientele, name, lease rights, equipment — and treat the tourism licence and other administrative permissions as separate items to verify, not as things that come along automatically with the business.

Hotel employees are one of the highest-risk items in an acquisition, and the answer depends on the structure. Moroccan labour law protects continuity of employment: under Article 19 of the Labour Code, where the employer's legal situation changes — including by sale, merger or succession — the contracts in force on the date of the change continue with the new employer, who takes over the previous employer's obligations toward the staff. This rule is a matter of public order.

So in an asset or business transfer, employment continuity rules may apply and the staff generally move with the business. In a share deal the analysis is even simpler: the employing company itself remains the same legal person, so the employment contracts continue within the same company without a transfer at all.

The practical consequence is that an acquisition is not, by itself, a reason to terminate employees. Buyers should verify the workforce, contracts, seniority, social-security position and any employment disputes as part of the diligence, and treat staff costs and liabilities as part of the real price of the deal. This is a Moroccan-law regime; it is not the European "TUPE" mechanism, even if the protective idea is comparable.

A functioning hotel runs on contracts, and those contracts do not all transfer automatically. Whether a contract passes to the buyer, can be assigned, or needs the counterparty's consent depends on the structure of the deal and on the terms of each contract — many important agreements contain change-of-control or assignment clauses precisely to give the counterparty a say when the hotel changes hands.

The contracts that usually matter most are the hotel management agreement, any franchise or brand agreement, booking and distribution arrangements where they are material, supplier and maintenance contracts, financing agreements, insurance policies, and any commercial leases. Where a management or franchise agreement exists, a buyer should check the parties, the duration, the fees, performance and standards obligations, termination rights, owner approval rights, and — critically — the change-of-control and assignment provisions.

The aim at the due-diligence stage is not to renegotiate every contract, but to identify which agreements survive, which need consent, and which give a counterparty the right to walk away or impose conditions when control changes. A full treatment of management and franchise agreements is a separate subject; here they are reviewed through the narrow question of what the buyer needs to secure before closing.

For a foreign investor this section is often the difference between a good return and a trapped one. Investments made in foreign currency, brought in through an authorised Moroccan bank, benefit from Morocco's convertibility regime, which is administered under the foreign-exchange rules of the Office des Changes. Within that regime, and subject to the applicable conditions, an investor can transfer abroad the income from the investment and the proceeds of a later disposal.

The wording matters: this is a conditional right, not an unlimited freedom to move any amount abroad. The benefit depends on the investment having been properly financed in foreign currency and on a clean banking and documentary trail evidencing that funding.

Two practical points follow for a buyer. First, preserve the evidence of the foreign-currency funding of your own acquisition from the outset, because that documentation is what protects future transfers. Second, when acquiring from another owner, investigate the existing convertibility status of the investment: the status attaches to the investment and a later buyer generally inherits the seller's position, so a poorly documented history on the seller's side can affect the buyer. This should be checked with the bank and adviser at the structuring stage, not after closing.

Tax is one of the clearest reasons the transaction structure has to be decided deliberately. Acquiring the property, acquiring the fonds de commerce, and acquiring the shares of the company do not carry the same tax consequences, and the differences can be significant enough to change which structure makes sense.

Because rates and treatments depend on the specific structure and can change, this guide does not set out figures. The right approach is a transaction-specific tax and accounting review, run in parallel with the legal work, so that the structure is chosen with its tax profile understood rather than discovered afterwards.

A hotel acquisition is a multidisciplinary exercise, and the lawyer's role is to structure it and hold it together rather than to perform every technical task. In practice the lawyer helps choose and structure the transaction, coordinates the legal due diligence, and reviews the title, the company and the key contracts.

The lawyer also identifies the approvals and conditions precedent the deal depends on, drafts and negotiates the acquisition documents and the warranties, and coordinates the closing so that consents, releases of security and payment mechanics line up. For a foreign investor, the lawyer typically also helps assemble the foreign-exchange documentation and coordinates with the other specialists a serious deal requires.

Those specialists include a technical surveyor for the building, an accountant or auditor for the financial review, a tax adviser, a valuer where needed, and a notary for the conveyance of the immovable. The lawyer does not personally carry out structural surveys, accounting or tax audits, or valuations; the value is in coordinating them into a single, coherent transaction. Choosing and verifying the right professional is itself a step worth taking care over — the general points on working with a lawyer in Morocco apply here too.

Agadir is one of Morocco's established seaside tourism markets, with a stock of hotels and resorts and a steady flow of renovation and repositioning. For an investor looking specifically at Agadir, the legal framework is the national one described above — the rules on foreign ownership, tourism licensing, the fonds de commerce, employees and foreign exchange do not change from one city to another.

What Agadir adds is context rather than a separate body of law: operating hotels and resorts that trade as going concerns, deals that combine the property with an operating business, and, given the age of parts of the stock, a real need for technical and construction due diligence on renovation work. Many buyers here are also foreign investors who are not permanently present in Morocco, which makes remote due diligence, powers of attorney and local coordination part of how the deal is actually run.