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Latest News
Caravan Park Market Review - June 2010
The commencement of this year’s tourist season was again heavily dependant on the quality of the weather in the southern states compared to that in Queensland. In spite of a lengthy wet season, initial reports suggest that it has been an exceptional start to the 2010 season as Caravanners progressively make their way north.
Read more...Resort News Magazine - Issue June 2010
Most motel owner/operators/managers will tell you they are rarely in the onsite residence. Maybe this is why the motel residence is the most forgotten about, ignored, and neglected, part of many, many motel complexes. In “the good old days” motels were typically built with a lovely 3 or 4 bedroom home above or beside reception where the owner/operators (who were often the one’s having the motel built) were going to live with their children, and operate the motel business as a family concern. The motel was not only built as a place of business but also a home for the family to live and run the operation
Resort News Magazine - Issue September 2010
Monday, 12 July 2010 11:29
There is a reason why a large majority of people buying motels today have been in the accommodation industry before. Many of the benefits of owning a motel are what keep people coming back to the industry. Within the motel industry today there are more and more people who already own a motel lease that are acquiring more motels to add to their portfolio.
Every different business or indutstry has its benefits, however when comparing one to another consider some of the benefits a motel lease offers.
Financial Benefits
High Return on Investment - The returns on investment for motel leases are strong and range anywhere from 25% - 35% depending on certain factors such as location, length of the lease, level of rent, economic strength of the region, standard of the property and strength of the business etc
Low Capital Outlay - A motel lease does not require one to buy the land and buildings of the motel. This is the larger value component of a motel and buying the property therefore increases the capital outlay considerably and reduced the risk and return.
Financing and Low Loan Requirement - The lower capital outlay means the loan required to buy will be substantially lower. This means lower loan repayments and less sleepless nights for those who are not comfortable borrowing millions of dollars to buy Freehold motel. Banks are historically very comfortable lending for motel acquisitions as they are seen as solid and secure business.
Taxation Benefits - This is dependant on numerous factors such as how the owershop structure is setup. The benefits of living out of the business includes whatever costs one incurs living in their stand alne home such as insurance, electricity, food, beverages, phone costs, rent/loan repayments, motor vehicle costs etc.
Good Quality Building - If a budget to buy a motel is one million dollars, the opportunity exists to buy a much higher quality motel property under lease than a freehold motel at the same budget. It may allow one to buy a 3.5 star leasehold motel over say a 2 star freehold motel at that budget level.
Long Lease Tenures - On most occassion leases commence as a 25 or 30 tear term inclusive of option periods. This is a very long lease tenure offering the lessee long term security to operate the business.
Strong Cash Flow - Upon commencing operating a motel ther is an income from day one depending on the level of occupancy. An operator will achieve a certain level of cash flow immedietely as most guests pay by credit card.
Limited Stock on Hand - Motels carry very low amounts of stock. Motels with restaurants will carry more stock than those without but generally no more than $15,000, depending on the size of the food and beverage options.
Ready Market - When the time comes to sell there is always a competitive market eager to acquire motel leases.
Lifestyle Benefits:
Easily Operated Under Management - Motel are comfortably managed by a couple, so if an owner decides they would like to step back from the business for a while they are many good management coupld available who can manage a motel day to day
Onsite Residence - Offers a home to live on site for the family allowing more family time together whilst operating a business. Children can also get involved in some ways and start learning from a young age.
Downtime During the Day - Motels are generally busy untill late m orning and again between 5pm and 7pm. The time during the middle of the day offers some downtime for operators.
Building Customer Relationships - For those who enjoy building customer relationships, motels can offer a lot of repeatt clientele if the guest is looked after. There is alot of satisfaction gained when a customer keeps coming back regularly because they are happy with the service being provided.
Andrew Morgan
Motel Broker/Director
Qld Tourism & Hospitality Brokers