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Annual Motel Market Wrap Up 2018

Written by Andrew Morgan, Specialist Resort & Motel Broker

What a difference a year can make. In the 2017 wrap up I commented that 2017 was similar in many aspects to 2016. This time I am happy to say that 2018 could not have been more different to its predecessor.

In summary, 2018 has shot the lights out compared to 2017. Sales volumes are up significantly and 2019 is looking strong going forward. Sale values are improving along with occupancy rates and slowly but surely, room rates throughout the state.

The first quarter started out strongly with activity that had been building late in 2017 and the rest of the year continued to follow. The second quarter showed a very strong period of sales and enquiry. The third quarter activity continued with impressive sales numbers that confirmed an appetite for good quality accommodation businesses. The final quarter of 2018 has seen enquiry levels drop slightly however genuine buyers are still active with many accommodation businesses across Queensland under contract. Again, as was the case last year, freehold sales have dominated the transactions settled.

Solid gains in economic prosperity for areas of the state that had been down have been welcomed. Increasing occupancy rates have resulted and room rates are now under pressure to increase. The redevelopment of sites (and pending future redevelopment) predominantly improved with older neglected properties where the highest and best use of the site was no longer the existing motel property has been occurring. There are no doubt more to follow where the lack of capital injection for maintenance on some of these properties will result in redevelopment of the sites.

The tourism sector has again continued to grow with Far North Queensland showing good signs of improvement. Last month’s issue of Resort News spotlighted the North Queensland region which showcased some very positive commentary on how the region’s accommodation sector has been faring. The Australian Dollar has been holding around the 70 – 72 cent mark which at the same time last year it was noted that it was “maintaining that mid 70’s percentage mark”.

The contraction of the resources sector seems to be largely behind the state. Companies have been reporting strong growth and demand for labour has seen regional towns that were struggling now having a spring in their step. A clear example of this is Mackay, where the residential rental vacancy rate reached 10.5% in 2015/16. It is now down to 1.7% which is as low as it has been for the last 10 years. Again it confirms that everything is cyclical. What goes down will go up!

Leasehold motel transactions have been subdued witnessing the lowest amount of sales activity. There is however always a market for a well presented motel business that has good fundamentals, a good client base and is priced correctly. We have noted some improvement in the level of demand for motel leases in the last couple of months.

Investors have continued to seek the comfort that freehold motels offer with freehold sales being recorded at all stages throughout the year. Any good quality freehold properties with up to date trading data, priced correctly, and presenting well are selling.

An interesting point to note is that often in times of fluctuating markets buyer demand and confidence can be hit and miss. In contrast to 2016 and to a lesser extent 2017, this year has seen most properties that have gone to Contract have reached settlement. Pressure on those buyers from under bidders has ensured that special conditions were met on time, or that Contracts were entered into on an “unconditional” basis. Cold feet has not been an option. Again, this has been another very positive sign of the market continuing to strengthen.

2019 looks to be very positive moving forward for the Queensland accommodation sector.

NRMA Acquire BIG4 Atherton Woodlands Holiday Park

The iconic Big4 Atherton Woodlands Holiday Park has been acquired by NRMA, enhancing their presence in Far North Queensland and expanding their network of Parks throughout regional Queensland.

Situated on the rich fertile plateau of the Atherton Tablelands and immersed in natural wonders, the region is also recognised as one of Queensland’s premier mountain biking destinations. The Parks unique position, surrounded by lush rainforest and towering escarpments, yet minutes from the township of Atherton and an easy 90 minute drive to Cairns, makes it popular with grey nomads and families alike.

The Park was owned by Quentin & Patrice Fletcher, both highly respected within the industry and true innovators of the eco holiday park concept. During their 15 year tenure and with an eye for detail the multi award winning park evolved with 28 villas/cabins, 76 powered sites and an abundance of facilities including resort pool, Balinese cabana, camp kitchen and purpose built mountain bike wash bay, set amongst the immaculate landscaped gardens.

Queensland Tourism & Hospitality Brokers (QTHB) Partner and Specialist Broker, Ryan Doughty, negotiated the deal, with the firm also involved when the Fletchers acquired the Park in 2003. He was glowing in his praise for the work done by the Fletchers. Mr Doughty added “The purchase of the Atherton Tablelands Park by NRMA upholds the quality expected by the brand”

Paul Davies, NRMA Parks and Resorts CEO said the Park will complement their Cairns and Palm Cove Holiday Parks. Mr Davies added that providing families with quality holiday accommodation while boosting Australia’s domestic tourism industry was the motivation behind the purchase.

It is also apparent that NRMA have a vision to promote the regional areas with the rebranding of the property to NRMA Atherton Tablelands Holiday Park.

“Holiday parks are the cornerstone of the quintessential Australian driving holiday and NRMA’s expansion in the industry is a tangible way for us to safeguard this wonderful tradition for future generations. Our mission is to make the great Australian road trip experience more enjoyable and accessible for everyone,” Mr Davies said.  “We are proud to be able to continue the success that Quentin and Patrice have established with this unique property.”

Mr Doughty added that “In the past few years we’ve seen a high level of demand for regional tourist parks in Queensland and we expect this to continue”. QTHB having also recently negotiated the sale of other prominent tourist parks, including: Airlie Cove Resort & Van Park, Capricorn Yeppoon Holiday Park and Cairns Crystal Cascades Holiday Park.

Patrice Fletcher expressed gratitude to all who had supported the Park and paid special tribute to their staff. Reflecting on the past 15 years, Mrs Fletcher said “It would be true to say that we shall miss “park life” very much but the time has come, as it does to all good things, and for the new owners, NRMA Holiday Parks, to continue our Park’s successful journey”.

Financial Presentation

Written by Andrew Morgan, Specialist Motel & Accommodation Broker

We talk a lot about making sure a motel’s presentation is up to standard before taking a business or property to the market for sale.  The first thing we think of when talking about presentation is the physical aspect and look of the property.  But what about the financial presentation of the business?

Supporting financial data to confirm what the Seller is saying about the business and how it performs is just as important as the physical standard of the property.  An issue with either will turn a buyer’s focus away from wanting to pursue the business and onto others that are looking more attractive.  How financial data presents can be covered a couple of different ways.

1. So how do the numbers actually present?  Not how high the income or profits are , but how they are presented on hard or soft copy.  Do the totals add up?  Don’t laugh, I have seen many addition errors over the years.  The total expense amount is less than what the individual expenses total.  Are the Seller’s Accountant’s supporting documents also attached to the profit and loss statements?  Is the spelling of each entry correct?  Again, don’t laugh, this is common.  I have the same issue with spelling mistakes on a profit and loss statement as I do with an email.  If I see an email come in and there are spelling mistakes in the subject line on text, I immediately think the email is spam and discredit it.  The same goes for financial statements.  I start to wonder who prepared this profit and loss statement, surely it was not the Seller’s Accountant.  Again, I start to question the validity of the statements.

2. Next comes the all important amounts.  The Income & Net Profit must be as high as they can to achieve the full sale value in the market.  Therefore I suggest every Seller has their Accountant prepare an Abridged Profit and Loss Statement.  This will present the profit of the business as it should for sale purposes.  It will have removed all Income and Expense items that are particular to the current owner and not the business.  As an example an owner choosing to pay themselves a wage of $50,000 per annum as compared to $5,000 per annum, has nothing to do with the business, this is generally a taxation based decision.  Profit and Loss Statements are generally prepared for Taxation Return purposes and to that end include expenses and tax deductions which inevitably present the lowest profit possible, or even a loss depending on each parties individual tax position.  Adjustments will then be completed so the Abridged Profit and Loss Statement can be used for sale, refinancing or other purposes.  If not, a true representation of the profitability of the motel business compared to other motel businesses would not be possible.  Conversely it is also important to make sure that no legitimate operational income and expenses of the business have been removed.  Even the most basic due diligence of the financial statements will determine this.  The best result from this is that the end sale price of the business will be affected negatively if the profit has been overstated.  The worst is that the transaction will be terminated altogether.

Aside from the Profit and Loss Statements being required by a potential buyer, other financial data such as monthly income and occupancy figures will be required for cash flow purposes.  Council rate notices, electricity, laundry, rent (in the case of leases) and Insurance Invoices and Receipts (to name a few) will be required.  These must all match what has been included in the Profit and Loss Statements.  Providing monthly Income Statistic reports that include GST, will not match the Profit and Loss Statement.  As long as the consistency of the difference of the GST is there, the issue can be cleared up quickly however if this is not the case, the interested buyer starts to question the accuracy and legitimacy of the data.  If there are anomalies for a particular reason, be upfront and explain why this is the case.  Never try to sweep it under the carpet and hope that the issue goes away.  That never happens!  Make sure all the data you as a Seller are providing matches up.

Buyers who are interested in buying a business want the financial data presented to them to be accurate.  When their interested is sparked in a business it is based on the information that has been provided.  If any anomalies arise they are probably more disappointed than anyone.  Nine times out of ten the financial data presented will be accurate.  There may be small differentials here or there but in the main these will not have a material affect on the profitability or value of the business and are easily explained or remedied.

No one buys the smallest of products if they are unsure of its validity and correctness, let alone a business and property.  The credibility of the financial data being presented and the person presenting that data is paramount.  Lose that credibility and lose the sale.

Discovery Parks Acquire Airlie Cove Resort and Van Park

Adelaide based Discovery Parks now has a presence in the Whitsundays, adding Airlie Cove Resort and Van Park to their portfolio. Set on 28 tranquil acres close to the bustling tourist destination of Airlie Beach and adjoining the spectacular Conway National Park the property has a diverse range of accommodation options including Bali Villas, 1 & 2 Bedroom Villas, Holiday Cabins, Ensuite Cabins, Studio Cabins, Caravan Sites, and 2 Camping Areas.

The Park is well serviced by modern facilities including three large Polynesian style camp kitchens, bbq gazebo, 2 amenities blocks and laundry. The Resort is a destination within itself, with plenty to keep guests of all ages occupied including resort style pool with water slide, water park featuring a big tip bucket, three slides, walk through spray tunnel and ground sprayers, pirate ship playground, jumping pillow, TV & internet room, go karts and mountain biking tracks. 

“The idyllic location, quality cabins and range of facilities the Resort offered made this property highly sort after by investors.” said negotiating broker Ryan Doughty of Queensland Tourism & Hospitality Brokers.

Discovery’s chief executive, Grant Wilckens, said the Airlie Cove acquisition was a strategic investment in the globally recognised Whitsundays region where strong demand for accommodation is forecast beyond 2020.

“The Airlie Cove Resort and Caravan Park is a beautiful family holiday destination with the largest resort pool in Airlie Beach, water slides, mini golf and an outdoor cinema” he said. “It compliments our resorts in Coolwaters Yeppoon, Fraser Coast and Byron Bay – providing high quality accommodation options for customers travelling the coastal route.”

It is the first deal since Discovery Parks’ acquisition of the Top Parks Brand, which created a network of more that 220 parks.

Source: Discovery Parks, The Australian Financial Review

New QTHB Brisbane Office Opened September 2015!

Finally!!!!!  It has been a long time coming but we are happy to announce the opening of our Brisbane office in addition to our head office in Mackay.  This will be of great benefit to our existing and new clients in the future.  The Partners have been eager to open an office in Brisbane and the right timing and opportunity has now made this possible.  The opening of the Brisbane office will allow QTHB to better service all our clients needs and is a strategic move for the firm to offer new and higher levels of service to the accommodation industry.

Strong Growth for Caravan Industry

It has been reported recently that caravanning and camping experienced the nation's largest accommodation-type growth last year, growing by 7% to nearly 45 million nights in 2014.

The Mackay Daily Mercury (10/06/2015) reported:

Growth In Mackay's Caravan Industry

FREE-WHEELING holiday-makers are driving up caravan and campervan sales in Mackay and putting more money in our pockets.
Registrations of these vehicles increased 9.1% across the region last year.
The rise was 3.8% above the national average of 5.3%.
The city is home to 2732 mobile holiday homes - an increase of 230 on 2013's figures.
Caravan Industry Association of Australia chief executive officer Stuart Lamont said regional and rural areas were the biggest winners.
"We are in a boom at present - and this flows through suppliers, manufacturers, retailers and caravan parks," Mr Lamont said.
"But what is most important is that 90% of all activity is in regional Australia.
"About $17.44billion is the estimated size of contribution to the Australian economy by caravanning and camping and many regional centres receive welcome money from the expenditure conducted by caravanners and campers."
Travel writer Cindy Gough said caravanning holidays were cheap and cheerful.
"You can go wherever you want to," the co-author of The Grey Nomad's Guidebook and website said.
"You can get into the outback, you can get into some of those far-away places and camp and you can get in tune with nature."
Australia is home to 556,844 registered caravans and campervans and it is the country's fastest-growing vehicle type.
According to Tourism Research Australia, caravanning and camping had the nation's largest accommodation-type growth last year.
It grew 7% to almost 45million nights in 2014, while the drive market also rose 7% to 58million trips.

The full article can be viewed here:

Mackay Caravan Parks Are Full

The Daily Mercury in Mackay recently reported on the popularity of the region as a destination, with caravan parks full with travellers. 

Our beaches and parks feel like paradise to travellers (DM, 17/07/2015)

RETURN holiday makers and grey nomads love our pristine beaches and warm weather.  And they want to spend their travel dollars locally.

The peace and mesmerising view of Blacks Beach is deceiving as Mackay Blacks Beach Holiday Park is full of travellers.
Victorians from East Gippsland, Bruce Klinge and his wife Vicki Williams have parked their van on site since May, as they catch up with family, and explore Mackay.  The couple think Mackay's parks are good value for money too.

"If you want value for money you come here". Mrs Williams said.  "We've been to Finch Hatton; all of the national parks. All the tourist things. We've had friends come and stay here too and we've shown them around" Mrs Williams said.  "We use the beach here every day. It's one of the most beautiful beaches in the country and it's right there at our doorstep. Mr Klinge said. "Family moving up here has encouraged us to stay too," Mrs Williams added.

For park manager John Young and his wife Michelle, it's all about creating a relaxed, social atmosphere at the busy park.  "We are at capacity every night with the vans. We still have villas available," Mrs Young said.

View the full article here:

Market Update 2015 - Caravan Parks, MHP'S and Accommodation Villages

With the commencement of the 2015 tourist season fast approaching many operators are optimistic of a solid season. With the AUD at its lowest level in approximately 5 years and fuel prices having fallen considerably (and both likely to remain at current levels for some time) there are encouraging signs for the Australian domestic and overseas tourist market, particularly the drive holiday market. Far northern and western regions of Queensland in particular will hopefully experience a strong season as a result of lower fuel prices. Weather in the southern states compared to that in Queensland will also play a huge role in the commencement and duration of this year’s tourist season.

Caravan Parks with a permanent resident focus in SEQ should continue to see good occupancies, whilst many in regional centres will be reliant on their core base of residents as economic conditions in each region will be reflective of their ability to improve occupancy.  The performance of Seasonal Worker Parks will again be heavily dependent on growing conditions within each region. In general terms 2014 was consistent for this sector without any region having a standout year.

Manufactured Home Parks (MHP’s), particularly in SEQ, should continue to experience high levels of demand whilst residential prices remain strong in the southeast and the southern states as they offer an affordable housing option for a number of demographics.

Workforce Accommodation Villages – with a contraction in the coal mining sector demand for accommodation continues to be subdued, however some areas are still seeing capital works programs or new developments take place. The one sector that had predominately escaped the contraction in 2014 was LNG related areas, however with the price of gas tied to oil it will an interesting year for future developments and capital expenditure by mining companies in this space.

The Tourist Park market continues to gain traction with a number of Parks having recently sold or presently under contract. We expect given favourable conditions for the industry (lower fuel & AUD) and the potential for lower interest rates to spur buyer confidence when other market segments may be more reliant on economic conditions.

The Manufactured Home Park market has also experienced a high level of sales activity in 2014 and this is expected to continue, not just in SEQ but also in select regional centres.

In general terms we expect buyer demand for all sectors to show continued improvement in 2015. There’s limited quality product available for sale in the market across all sectors, as such it may represent an opportune time for some operators whilst conditions are favourable and/or improving.

Caravan Parks, MHE and Accomm Villages Market Update July 2014

Caravan Parks, MPH and Accommodation Villages

The commencement of this year’s tourist season was again heavily dependent on the quality of the weather in the southern states compared to that in Queensland. A number of regions experienced a delayed start to the season with the  cool change in the southern states taking a little longer to get caravanners to progressively make their way north. We are optimistic that the remainder of the season will be strong and extend into the traditional shoulder months of October/November.

Caravan Parks with a permanent resident focus have generally performed well, however some regional centres have seen a decrease in demand. Seasonal workers Parks although not experiencing a record year are in the main trading consistently. Mining related Parks and Workforce Accommodation Villages are experiencing differing levels of demand dependant on activity within each region.

Manufactured Home Parks continue to perform strongly, particularly in the south east where an improving residential market is having a natural flow on.

In general terms the market for Caravan Parks understandably reflects economic sentiment and tracks closely that of other property markets. In this respect the Caravan Park Market is also within itself diverse depending on a range of factors, such as location and market focus (Tourist, Permanent, Manufactured Homes and Workforce Accommodation).

Some market segments have gained considerable traction in the past year which is supported by a number of Parks having either recently sold or now under contract. A number of others Parks presently for sale are also experiencing high levels of enquiry.

At the moment there is a high level of buyer interest for Tourist Parks and Manufactured Home Parks. Tourist Parks with existing or future expansion potential to include a Manufactured Home Park component are of particular attraction to buyers/investors. Interest in mining related Parks and/or Workforce Accommodation Villages is heavily dependent on the prospects within a particular region with a clear distinction now apparent between the buyer appetite for Bowen Basin and Surat Basin property – as we’ve seen however things can change quickly in this space.

Interest rates and an easing in the banks squeeze on lending have most definitely assisted in enabling buyer confidence. However, at some point in the future the potential for interest rate increases will be of concern to buyers. As yields for Parks have remained relatively strong in comparison to other market sectors, any increase in interest rates will have a diminishing effect on a buyers yield gap. Expectations are that interest rates will hold for the remainder of the year with many economists not predicting increases until 2015.

If you’ve considered selling in the last year or envisage selling in the next 12 months then it’s an opportune time to get the process underway. There’s limited product available in the market at present and yet as discussed more buyers are starting to flow back into the market as interest rates and yield gaps engender buyer confidence. 

For any owners wishing to discuss the market at present or for an obligation free appraisal on the value of your park, please do not hesitate to call one of our experienced brokers


m  0438 730 166   e

This market update is general in nature and does not take into account individual circumstances.  Please contact us  to discuss  specific market sectors.