2020 Motel Market Wrap Up

2020 Motel Market Wrap Up

2020 Motel Market Wrap Up

Having been in the industry as an accommodation business broker for 25 years you experience all the ups and downs.  If you think you have seen it all, to that I say “this has been a new one for me!”
 
At the end of each year we take a look back at how things unfolded and whether the crystal ball we have was working or not.  Whether our predictions on how the market would perform were on point, or way off.  This year has been a very different one for obvious reasons.  Many are saying goodbye and good riddance to 2020, however others are wanting it to go on and on.  A very strange year indeed!
 
This time last year I noted about 2019, “the market performed pretty much as we expected.”  This time I admit we were way off base in our predictions for 2020.  Let’s break down the year by quarter and recap the journey.
 
It started out like any other, however there were some rumblings in the media from overseas about a deadly new virus.  A long way from Australia, so business as usual.  January and February were tracking as planned with reasonable enquiry levels for accommodation based businesses.  Inspections were being conducted right up until around mid March and plans for inspections from New South Wales and Victorian residents were also being planned going forward into April.  As we all know, this when the tap was turned off.  That one particular Prime Minister’s speech brought a reality to this virus and that was it.  Enquiries slowed to a stop and a lockdown meant a big change was here.
 
Moving forward into the second quarter things looked bleak as employees and workers were sent home and the economy essentially stopped revolving.  April and May meant many businesses were in damage control and in a lot of cases the doors were closed.  Tourism and hospitality businesses were hit particularly hard.  Some areas of the state however slowed only temporarily and were able to get moving again quite quickly, as demand from various sectors of the economy such as agriculture, mining and government sought accommodation.  June was only slighty better overall, however signs of increased activity in many areas was on the horizon.  Enquiry levels for business acquisitions was still poor with those in the southern states unable to access Queensland without quarantine.  This meant a substantial part of the market was stuck sitting on the sidelines.
 
The second half of the year continued that position, essentially starving buyers and sellers via the lock out.  Even those most serious buyers were not prepared to quarantine for fourteen days.  Enquiries were limited but had improved a little, over and above the end of the financial year.  The trading numbers of many accommodation business’ throughout the state had begun to improve significantly with a more locally based tourism market building and business and work related travellers increasing in numbers.  In many areas where lessee’s were struggling to pay rent and freehold owners struggling to make loan repayments, the tide had turned.  Moving forward to September enquiries for businesses were starting to increase and inspections, although still slow, were improving.
 
The final quarter has seen a much improved level of activity with October turning it around with more enquiries and inspections, particularly for motels and caravan parks.  Contracts of Sale started to present themselves, with genuine offers on the table that we had not really experienced for many months.  This was a clear sign that many are wanting to get into the accommodation industry and that confidence going forward is strong.  Five months earlier there was a feeling everywhere of complete doom and gloom with no confidence at all.  Continued low bank interest rates available on loans (and deposits) should continue to see demand grow for accommodation businesses.  This growth in demand is expected to continue with low interest rates to remain for the foreseeable future.
 
How does 2021 look?  Well for the sake of making a prediction, we would say based on momentum going forward the start of the year looks quite strong.  Even though at this point in time international tourism does not look promising, we expect strong demand for accommodation from work related travellers and intra state based tourism should provide much demand.  As state travel restrictions are lifted to the other states, one would have to expect an influx of travellers to Queensland for a holiday or change of scenery.  Some temporarily, and some more permanently perhaps.  Those who were looking to buy an accommodation based business (no matter where they live) but fell away during the early and mid year period, will no doubt be back fuelling demand for accommodation businesses well into 2021.
 
All of us at Queensland Tourism and Hospitality Brokers (QTHB) wish you a safe and prosperous 2021 throughout the accommodation industry.
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