It's All About Location

It's All About Location

It's All About Location

There is not a week that goes by that I am not asked the question, where is the best place to buy a motel?  Whether it be the broader question of inland, coastal, north, south, or the more specific question of which is the best town to buy a motel?  Next is, what is the best position to have a motel?  Highway, CBD, suburbs, beachfront or riverfront, etc?

Of course there is no one silver bullet answer here.  It depends on numerous variables and on each individual property and business.  There is no “best” location for a motel.  All the things that go into making that business or property what it is, such as location, presentation, the operator, the standard of beds, the local economy, the services provided, marketing, etc, all play their part.

There will always be locations where the economy is performing stronger than others at one time or another.  Certain positions within a locality may also be performing better for specific reasons.  In regard to the “best places”, timing plays a big role here with fluctuating local economies and how they are performing.  An excellent example of this is Mackay.  It had a very strong demand for accommodation over the long term until the economy declined about ten years ago.  After a few years demand began to increase again and today the local economy and demand for accommodation is very strong.  Hence why many experienced motel investors are now taking their opportunity to buy back into Mackay.  The strength of economies and industries fluctuate, they are cyclical.  No locality runs hot all the time and they will fluctuate for different reasons.  Mind you, this could describe any towns/region over the last 25 years.  

A common situation we encounter is receiving enquiries from those wanting to buy their first motel and invariably wanting to limit their search to one town or location.  This is fine when buying a house, as the decision is largely based on where one needs to live for employment, family or retirement purposes.  When buying a business, limiting one’s search to where one wants to live puts them at a major disadvantage.  It is the best way to buy an unsuitable business, as it is based on the wrong reasons.  Focusing on the business and considering the suitability of the area/locality as part of that decision would seem the best option.  One should always be looking for the best business opportunity that suits their requirements.  Therefore, if return is the driving force so be it.  If the type of business is the determining factor, great.  But limiting a search for a motel for example, to one area, means the best business opportunity may end up being written off as an opportunity lost.

This does not mean going and buying a business that is, location wise, completely unsuitable for family reasons or another.  It simply means not limiting the search, by keeping the options and possibilities open.  Explore different areas of the state that may not have been considered suitable.  A lot of the time people end up finding the perfect motel for them was not what or where they had considered going at all when they first started out looking.  Also limiting the search to one location may mean being stuck as “the kid outside the candy store”.  Whilst others are buying and selling, it may take years for a suitable motel to become available in the desired location.  A common objection heard a lot is that they were told years ago that a particular town was not a good motel locality, for whatever reason.  We say, have a look at all the details and facts about the locality and the business, then make your own decision.

Years ago I was given some advice that has stuck with me for probably 25 years, and that was, “when making decisions in business and life you should listen to the advice given to you by the trusted people around you such as your Accountant, Solicitor, Financier, Friends, Parents, etc.  Take that advice on board, go with it, go against it, but be your own man and make your own decisions”.  I have tried to use that advice, and suspect have even continued to use it subconsciously since.  This relates directly to considering a motel and its location and making the decision on what one believes is the best option for them.

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