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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 August 2010
Monday, 12 July 2010 11:36
The cost of a motel refurbishment can be an expensive exercise. What does one start and finish on such a job and how far does one go? What will be the end result? Will we be able to achieve a higher tariff in the market by doing the refurbishment? One way to answer these questions is by looking at a motel where this scenario was recently completed.
About 18 months ago the owners of a 35 year old, 20 unit motel completed a number of improvements to the property including adding Austar and Broadband services, new beds and linen, a new booking systems, exterior painting, and new benches and cupboards in the rooms. That allowed the owners to increase their room rates from $105 per night to $110 without seeing a decline in occupancy rates.
More recently the owners embarked on what I would call a major refurbishment, It involved taking the bathroom back to bare concrete and completely retiling including new shower recesses, vanities and fittings, cutting holes in brick walls to make new windows larger and rooms brighter with more natural light, a complete internal repaint, new carpet, new LCD HD televisions, new split system air conditioning and exterior landscaping. The cost for the most rent exercise was $150,000. There was also some short term pain in the amount of approximately $12,000 in lost income whilst the unit were unable to be occupied while they were shut down during the time the works were being completed. The real cost to complete the refurbishment was therefore $162,000
The situation now is that the motel presents extremely well and guests appear to be very happy with the complex and the standard of the rooms. The refurbishment has allowed the owners to increase the room rates to $120 without a drop in the occupancy rates. The owners also now have a renewed sense of pride in the property and are very eager to show guests a room prior to them making a decision on whether to stay the night or not. They know the answer they are going to get as soon as the motel room door opens and the guests casts their eye over the room.
The result of the $10 increase in room rate per night equates to an increase of $53,000 (excluding GSt) in revenue and an increase of approximately $39,000 in the Net Profit of the business. There is also an expectation by the owners that over time word of mouth will increase the current occupancy rate rather than a possible decline due to the room rate increase.
The financial flow on effect here other than the increase in revenue and profit is that the value of the business/property has increased by approximately $280,000 based on the expected return on investment that the market is demanding. The increase in value may even be higher than this due to the market's willingness to pay a premium for high quality motel complexes rather than one that requires a refurbishment to be completed.
In this case the refurbishment has cost the motel owners $162,000; however they have gained an increase profit per annum of $39,000 and an increase in value of the motel of $280,000, and a renewed pride in the ownership of the property and motivation to take it to the next level.
Andrew Morgan
Motel Broker/Director
Qld Tourism & Hospitality Brokers