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#84 | OCTOBER 2016
INFORMER
AUSTRALIA’S NO. 1 | TOURISM & BUSINESS
We are all about the accommodation sector
MANAGEMENT BREAKTHROUGH BRAND INSPIRED
RIGHTS GROWTH SOLUTION BY LUXURY
MLRs gain ground in our Short-term motel We profile rising Melbourne
accommodation landscape valuations revisited - based developer, BPM
RESORTBROKERS.COM.AU
2 RESORTBROKERS.COM.AU
WHAT’S INSIDE...
4 40
WE SAY, YOU SAY,
THEY SAY
A regular forum for the
24 SOCIAL PAGES
Resort Brokers' mid-year
conference saw the launch of
exchange of views, news BREAKTHROUGH ON our smart new Brisbane HQ
& ideas
MOTEL VALUATIONS
We revisit the formula
8
making short-term leases
viable and valuable
53
34
MANAGEMENT DOWNSIZING &
RIGHTS GROWTH UPGRADING
Mike O'Connor presents
Hotel group demand is another witty take on
increasingly underpinning MANY FACES: accommodation matters
growth in the sector
PETER BARGE
56
An accidental career start
22
for one of the tourism
property sectors most
dynamic leaders
STAMP DUTY
INSPIRED BY LUXURY CHARGES
Creative BPM is building a Must know facts for NSW
brand steeped in quality, business buyers
beauty and the exotic
Regular Features
70 72 76
AGENT PROFILE INDUSTRY EXCLUSIVE
SPECIALISTS LISTINGS
Get to know one of our Our directory for some of You won’t read about these
Brisbane brokers the best services and/or listings anywhere else!
Jessica Wilkie products in the industry
"Sit back, relax and enjoy
October's edition of the
Resort Brokers Informer" 71 73 78
SOLD RELIEF MANAGERS MEET OUR TEAM
PROPERTIES
See some of the properties Going on holiday? Need a Our company directory
Resort Brokers Australia has manager? Visit our directory
sold recently
RESORTBROKERS.COM.AU 3
PREFACE
WELCOME TO ‘WE SAY, YOU SAY, THEY SAY’ – A REGULAR FORUM FOR THE EXCHANGE OF
VIEWS, NEWS & IDEAS.
WE SAY growth MANAGING
SINCE our last edition, the lately. When economic growth data
Federal election returned the Turnbull was released in September, headlines
Coalition government, albeit with the highlighted strong 3.3% GDP growth.
slimmest majority. Naturally, there Actually, Australia’s GDP
was some nervousness about how growth has gone up pretty much
that would work, and a few hiccups uninterrupted for 25 years. But it
early on. doesn’t always feel like that, does it?
But the passing in the first That’s because the measure that
sitting of two major bills, the $6.3 really matters to us is ‘real national
billion savings bill and an amended net disposable income’. That is
superannuation reforms package, our per capita income, adjusted
shows our parliamentarians can work for inflation, excluding earnings by
together to keep us on track. That is, foreigners – or, as one commentator
at least, good news for our economy. explained it, “actual money in
Ian Crooks Speaking of our economy, there Australian pockets.”
MANAGING DIRECTOR
have been some encouraging figures The good news is, it’s back ahead
4 RESORTBROKERS.COM.AU
They Say
GOLDEN AGE
“To my mind, the greatest reward and OF TRAVEL
Cost to travel from
luxury of travel is to be able to experience Australia to London
everyday things as if for the first time, to 1947
85 WEEKS PAY
be in a position in which almost nothing to
is so familiar it is taken for granted.” 2015
1.3 WEEKS PAY
BILL BRYSON - AUTHOR
Flight Centre, The Golden Age
of Travel, 21 April, 2015
Travel tops
of where it was in 2008. Many But, it’s not all about management online
industries are doing well now, rights. Asset owners nationwide
TOP 3 ITEMS
agriculture, retail and tourism among are taking advantage of the surge in BOUGHT ONLINE
them. Even a recent lift in coal prices, tourist numbers and rising investment BY AUSTRALIANS:
some economists say, could add 2% demand to dispose of quality
1. Airline tickets
to national income this year, boosting properties.
á from 51% to 62%
the budget by close to $7 billion and Resort Brokers has been
2. Clothing
kick-starting wages growth. appointed to diverse, large-scale
á from 51% to 57%
Harvey Norman posted a 30% full listings including magnificent Fitzroy
3. Accommodation
year profit increase on the back of Island Resort on the Great Barrier á up from 48% to 53%
robust housing and lifestyle markets, Reef and the 479-berth Mackay
and Coles and Bunnings recorded Marina, village and shipyard, both
strong results. Macquarie Group with high profile EOI campaigns.
reaffirmed forecasts in line with its And sometimes, really exciting
record $2 billion 2016 profit. opportunities are offered more
Actually, we are especially discreetly. For example, we’re
pleased to see the giant investment working off-market to sell a rare
bank is now a great supporter of portfolio of seven motor inns, mostly
management rights. It’s no surprise, in prime regional NSW locations, that
on the back of the surge in new promises very lucrative investment
apartment development, national off- rewards for a $20m-plus buyer.
the-plan management rights sales are We are also expanding into the
going gang-busters. South Australian market, appointing
Thanks in no small way to Tim a very experienced sales team there. Tourism Research Australia,
Crooks’ efforts in establishing and They’ll be working closely with our IVS YEJun16
growing our off-the-plan division, successful Victorian team, and we’ll
Resort Brokers is at the forefront. introduce the new SA brokers in the
We’re seeing huge growth, not just next Informer edition.
in traditional Queensland markets, as Finally, Resort Brokers’ mid-year
we work closely with major Sydney conference at our newly renovated
and Melbourne-based developers, Brisbane HQ was a tremendous
including BPM for whom we’ve success (see P.40). Our two keynote
handled a number of sales (profiled on speakers, global industry doyen Peter LETTER TO
P.22) and GURNERTM. Barge and dynamic Mantra CEO Bob THE EDITOR
Growth in the management rights East, are also featured in this issue.
market, driven to a large extent by And, as always, we bring you some WE’D LOVE TO HEAR
FROM YOU:
rising demand from hotel operators very informative contributions from CARLACOOK@
like Mantra, is examined in depth in our valued associates, all consummate RESORTBROKERS.COM.AU
this issue’s cover story. professionals in their fields. ENJOY.
RESORTBROKERS.COM.AU 5
EDITORIAL
Yet he said the outlook for hotel
room supply growth was forecast
at a modest 1 – 3% p.a. through
to 2022, pointing to a very stable
market in the years ahead.
“I cannot stress enough just how
important Asia will be to our visitor
economy. The world’s economic
centre of gravity is shifting. You
only have to watch the urbanisation
of Asian countries to see what is
fuelling people movement, that is,
how many more people now live
within an hour of an international
airport.
“In the next five years, a
YOU SAY...
staggering 20% of the travelling
population will be Chinese. The
growth of the upper middle class
there is staggering. From 2011 to
2015, Australia has seen 19% growth
per annum in visitors from China.”
At that point, East stressed
Mantra CEO Bob East was a keynote speaker at Resort Brokers
how important it is that Australia
Australia’s recent mid-year conference. Founded 10 years ago, the
frees up our tourist visa application
group (Peppers, Mantra, Breakfree) has gone from a loss-making start
process and fees. Australia
to its latest annual profit of $53.2 million.
competes with other countries for
the lucrative Chinese market and
Mantra today has 127 hotels across Australia, Asia and the Pacific, with our more onerous visa process will
20,500 rooms under management and more than 5,000 employees. make us less competitive.
His presentation provided a fascinating insight into how such a big On current estimates, we could
accommodation operation is thinking in the current tourism market be welcoming 2 million visitors
environment. Here is some of what Bob East had to say: from China annually by 2025, for a
potential economic impact of $140
"THERE has never been a better ‘boom’. It is Australia’s new reality, billion.
time to be in tourism. I have never given the vast emerging markets in But it is the growth in aviation
seen us receive so much attention – our region. 60 per cent of growth will seat capacity that East says is most
politicians, the industry and the general come from China alone, and then you critical to Australia’s tourism future.
public are all now acknowledging the have all the other growth markets Forecast growth in direct aviation
huge visitor economy contribution to making up the rest.” capacity to Australia underlined his
GDP and jobs growth. East pointed to the latest statistics, upbeat outlook.
“Demand is strong and the outlook Tourism Forecasts 2016, from Tourism According to Tourism Research
is for sustained growth. This not a Research Australia, which showed: Australia’s latest analysis, we are
on track to grow capacity from 22.9
million (YE March 2016) to 36.5
INTERNATIONAL ARRIVALS million by 2024-25. The primary
focus of growth is already evident in
2015-16 2016-17 2017-18 2024-25 current figures.
7.8 MILLION 8.3 MILLION 8.8 MILLION 12.3 MILLION In 2015-16, capacity from China
á 9.3% á 6.7% á 5.9% á 5.6% to Australia grew 31%, followed by
Japan at 24.5%. While growth from
Japan is set to reduce, capacity
from China is forecast to continue
to increase by 20.6% in 2016-17 and
10% in 2017-18. Impressive growth
DOMESTIC VISITOR NIGHTS is also forecast in flights from India
and the Middle East. END
2015-16 2016-17 2017-18 2024-25
Note: Bob East is Chairman of Tourism
328 MILLION 340 MILLION 351 MILLION 423 MILLION
and Events Queensland (TEQ) and a
á 4.5% á 3.8% á 3.2% á 3.1% Board Member of Tourism Australia and
Tourism and Transport Forum (TTF)
6 RESORTBROKERS.COM.AU
IT
PROF
NETT
$2.7m
Projec
ted FY
17
RARE & EXCEPTIONAL TROPICAL
ISLAND PROPERTY + PROVEN TOURISM
BUSINESS + GROWTH POTENTIAL
Offered for sale for the first time since opening in 2011, Fitzroy Island Resort is a
rare and valuable tourism asset – a fully-operational tropical island resort in one of
the most desirable destinations on the planet.
• 102-room 4.5-star resort hotel Offered with vacant possession, a trophy
• 4.312ha perpetual lease income-producing asset with brand
• 30km from Cairns (45min by Fast Cat) building opportunity. DAs and plans in
• multiple food & beverage venues place for future stages.
• 190-seat Fast Cat ferry operation
• wide range of tourist & leisure facilities All the work is done. Constraints
• extensive supporting infrastructure are overcome. All that lies ahead is
• robust income + growth opportunities opportunity-laden ‘blue sky’.
NETT PROFIT: $2,700,000 (proj. FY17)
EX PRESSI ONS OF INT EREST C LOSE 5PM, THURSDAY, 27 OCTOBER, 2016
TRUDY CROOKS SHA N E M U LLIN S
NATIONAL SALES MANAGER BROKER
M. +61 477 882 210 M. +61 447 185 001
RESORTBROKERS.COM.AU
EDITORIAL
MANAGEMENT
RIGHTS GROWTH
… IN AN EVER-CHANGING
ACCOMMODATION LANDSCAPE
MORE THAN 40 YEARS AFTER THE CONCEPT WAS DEVELOPED
IN QUEENSLAND, THE MANAGEMENT RIGHTS MODEL IS FINALLY
GAINING WIDESPREAD ACCEPTANCE AND SUPPORT ACROSS
AUSTRALIA’S DYNAMIC ACCOMMODATION LANDSCAPE. SO MUCH
SO, THAT IT IS UNDERPINNING GROWTH IN THE SECTOR.
IF you required any convincing of plan Management Rights sales
just how far the management rights specialist, Tim Crooks from Resort
industry has come, you only needed Brokers Australia, and Mantra
to scan the programme for this year’s Group’s Executive Director of Asset
5-day peak hotel industry conference Management, Michelle Lalli.
held in Sydney in July.
Reflecting the rise and rise of EVOLUTION
management rights and franchising
in the development of guest One of the most significant
accommodation in Australia, developments in the management and
HotelsWorld 2016 included for the letting rights (MLR) sector has been
first time a special event focused the model’s growing acceptance by
entirely on these important industry what might be termed ‘traditional’
segments. hotel operators.
A panel of experts was “We are seeing branded hotel and
convened to discuss the growth of serviced apartment operators such
management rights, its impact on the as Mantra, Accor and Minor Hotels
accommodation industry in general, begin to dominate the market for
and on the hotel industry in particular. large-scale, high-netting short-term
They included Mantra Group management rights opportunities,”
Development Manager, Richard Crooks said.
Crawford, National Off-the- Mantra Group now has more than
8 RESORTBROKERS.COM.AU
20,500 rooms under management, security the model offers, Crooks said. Woolloongabba, bought off-the-plan.
including approximately 14,000 via “Because critical operational areas “In buying off the plan, we can
MLR ownership. in the building, like reception, back work with developers from the
As Michelle Lalli explained, the of house, storage and maintenance earliest stage,” Hoswell says. “The
management rights model allows the areas, are usually purchased as Beach Apartments Broadbeach is a
hotel industry to expand and brand- freehold real estate associated with perfect example. This new build will
build with capital-light ownership the management rights business, be the launch of Avani Residences in
structures where supply is needed, the accommodation operator has Australia by Minor Hotels, being one
but could not otherwise be achieved complete control.” of our premium hotel brands.
through the cost structure of a And, he said, more and more “Avani Broadbeach Residences
traditional hotel. developers are realising that selecting will open at the end of next year in
Her colleague described it as a the right operator for their projects time for the Commonwealth Games
“natural evolution” that would take from the outset benefits them by on the Gold Coast. It has been
place wherever there is fractional driving higher returns for their purpose-built to meet the needs of
ownership and a common intent to investors (equals happy customers) both short-term guests and owner
earn a return from investment in and building their development brand occupiers.
apartments. reputation and value. “By working closely with the
Tim Crooks sees first hand the Oaks Hotels & Resorts, a brand developer during construction, we
developer’s role as a catalyst for that of Minor Hotels, was among the first can ensure our operational needs
evolution. He says the scarcity and branded hotel-style operators to are catered for so that we can
cost of suitable hotel sites, plus rising pursue growth via the MLR model. deliver high level short-term guest
development costs are making it “Management rights in Australia experiences as well as cater for
increasingly difficult for developers to are the roots of Oaks Hotels & the needs of the owner-occupiers
get a freehold hotel to stack up. Resorts,” explains Minor Hotels fortunate enough to reside in this
Australia General Counsel and building.”
EVERYONE WINS Commercial Officer, Lachlan Hoswell. Projects need not be solely short-
“Oaks Hotels & Resorts was founded term accommodation properties
“The management rights model is on management rights, it is how either, Tim Crooks says.
OUR EXPERT PANEL
From left to right: Mantra Group Executive Director of Asset Management, Michelle Lalli, Mantra Group Development Manager, Richard Crawford,
Minor Hotels Australia General Counsel and Commercial Officer, Lachlan Hoswell, AccorHotels Vice President Development Pacific, Lindsay Leeser, Resort
Brokers Australia National Off-The-Plan Specialist, Tim Crooks, and Resort Brokers Australia Senior Gold Coast Broker, Alex Cook.
mutually beneficial to all stakeholders we evolved, and we are continuing “The mixed use model allows
– the developer, the unit investors and on that path. We’ve been very developers to make projects viable
the hotel operator,” he says. successful in this space and, though in key inner city locations, introduce
“Developers are able to build and we do look at other operation a range of unit styles, and include
sell the units at residential property models, management rights is still commercial components that add
prices. Operators are able to control a our preferred model for growth in appeal for the hotel, such as shops
large number of keys in prime locations Australia.” and restaurants.
for a fraction of the price of freehold “Operators who secure the
purchase. And lot owners benefit from EARLY INVOLVEMENT management rights over both
quality management driving strong residential and short-term
returns.” Under the Oaks Hotels & Resorts apartments have the flexibility to
Hotel operators interested in brand, Minor Hotels has 50 properties adjust inventory to suit fluctuations
management rights as a means of across Australia and New Zealand and in demand and occupancy rates.
expanding their portfolio are also all but three are management rights. Furthermore, they get a guaranteed
gaining a greater understanding of The latest include Oaks Southbank income from the levies to look after
the high level of control and long-term Melbourne, and Brisbane’s Oaks the common areas and shared
RESORTBROKERS.COM.AU 9
EDITORIAL
facilities like the pool and gym.” access to the benefits from our their increasing market share.
Though management rights is a comprehensive loyalty programme,” “If you look at two of the most
tried and true operational model in he said. noteworthy sales of recent times, it
Queensland, some commentators “We are focusing on opportunities would certainly seem hotel groups
interstate have expressed in Australia where we can improve are becoming increasingly dominant,”
uncertainty about its place in the room revenue through our Cook says, pointing to his sales of
industry, labeling it as a potential branding, distribution and revenue Soul Surfers Paradise to Mantra
‘disruptor’. management, increase the number of and The Beach (Avani Broadbeach
keys under management, and benefit Residences) to Minor Hotels.
ESTABLISHED ADVANTAGES from operating synergies with our “The hotly contested bidding war
existing portfolio.” between the two resulted in a record
But the HotelsWorld panelists price for the sale of an existing
disputed that, saying that far from LOCATION STILL KING management rights in case of Soul,
a disruptor, it was already well and a strong per-key price for Avani
established and largely recognised as But, irrespective of the emerging, Broadbeach Residences.
being part of the hotel industry. The digitalised sharing-economy, the
model has spread from Queensland major imperatives will remain service OTHER PLAYERS
to other states, and from emerging and location.
markets to more mature ones, filling “If your product is superior “That said, though, large, non-
niches to compete head on with to that of the competition, the branded private MLR operators such
traditional models. consumers will find you and you as the Picone Family and Dreamtime,
“With the proliferation of will be rewarded,” Mantra Group’s as well as smaller branded operations
corporatised management rights Richard Crawford said simply. “Any like Ultiqa and Balmoral Group
over the last 15 years, there is little successful strategy has the basic (Oatley family) are still competing
difference to the consumer between guest centric delivery at its heart.” strongly for prime offerings.
the service offering provided by “And, if you are in the right Cook said the Picone's, who sold
traditional hotels or strata-titled location, whether the ownership Chevron Renaissance to Mantra in
hotel-styled offerings,” Lalli said. structure is fractional or a hotel held an off-market deal believed to have
But the panel did warn operators in one line, the consumer will choose broken the Soul price record, had
that strong resourcing in the you regardless of the online channel recently bought two holiday letting
areas of online distribution and
digital marketing will be vital for
all operators wanting to remain
competitive.
And branding was also seen as
increasingly important in an age
where the consumer is bombarded
by ever more choice and “needs some
guiding principles to navigate by”.
“We believe stand-alone products
will increasingly struggle to compete
in this highly competitive digitalised
space where brand recognition
and loyalty programmes are so
important,” she said.
AccorHotels now owns 15
management rights across Australia
with more than 1,300 apartments
and villas operated under the
Pullman, Sebel or Quay West brands. The Beach Apartments (Avani Broadbeach Residences), on the Gold Coast was sold off-the-plan by
Lindsay Leeser, Vice President Resort Brokers Australia to Thailand-based Minor Hotels for a very strong per-key price.
Development Pacific, said the
group is actively looking for more they search and book through,” Lalli MLRs off-the-plan on the Gold Coast.
management rights as they are added. “They picked up the Qube
a scalable business that offers So, will branded hotel-style and Synergy developments in
attractive returns and long-term operators entirely corner the market Broadbeach, and are reported to
operating tenure. for larger management rights have secured two more prime large-
“Strata owners can benefit from offerings in prime CBD and resort scale businesses on the Gold Coast.
AccorHotels’ sophisticated revenue locations? “Dreamtime holds some of
management system, unparalleled Alex Cook, who heads up Resort largest holiday management rights
distribution channels, purchasing Brokers’ Gold Coast management on the coast, including Turtle Beach
power and branding as well as rights team, has direct experience of at Mermaid, Wave Broadbeach and
10 RESORTBROKERS.COM.AUThe sale of Soul Surfers Paradise to Mantra Group
UP COMING EVENT
5.30-8.30PM ON WEDNESDAY 16TH NOVEMBER 2016
in 2015 signalled a growing appetite for large-scale
management rights among hotel operators.
INDUSTRY INSIGHTS
Reflections Coolangatta, while Ultiqa, AND INTERACTION
who own Air and Freshwater Point
in Broadbeach, recently secured Management rights operators in Brisbane are invited to mix business
Beach Haven through Resort Brokers, with pleasure and join Resort Brokers Australia for an evening of
another large offering with over 100 industry insights and interaction
units in the letting pool.”
Tim Crooks says private equity LAUNCHING a new programme “They’ll have some valuable
groups and high net worth private of regular information and insights into issues like how
investors are also strong market networking events, Resort Brokers the influx of new apartments
players. Australia will host a get-together is affecting the rental market,
“Resort Brokers is currently for Brisbane building operators at vacancy rates, how demand and
dealing with two major groups who our new West End head office on supply pressures are playing
are forming management rights funds Wednesday 16th November 2016 at out, and what the trends are in
– one out of Singapore and the other 5.30pm. Brisbane for the medium to longer
Australian-based. Headlining the evening will be term.”
“Plus we’ve seen JLL Capital form special presentations by property Bambrick Media specialises in
a $30 million fund and successfully advisors Urbis and digital marketing website development, branding,
secure two management rights of agency Bambrick Media. internet marketing and search
scale in Brisbane, so it is clear large “We are very pleased to offer engine optimisation. They’ll explain
investment syndicates view MLRs as a operators a unique opportunity how operators can utilise effective
strongly-performing asset class.” to hear directly from Urbis about alternative advertising and
These passive investors will, of the current apartment market marketing strategies to improve
course, in turn appoint branded hotel in Brisbane,” said organiser Tim online presence and reach.
groups and experienced operators to Crooks, the agency’s off-the-plan “Then, importantly, guests
run the properties on their behalf. management rights specialist. will enjoy the chance to meet
Thanks to the growing appetite “Urbis are highly respected and socialise with fellow industry
among hotel groups, investment independent urban planners and colleagues over a few drinks,”
funds and private operators for advisors, and their extensive Tim said. “It will be a relaxed
management rights, and the research and analysis is relied upon and informative evening, with no
consequent interest by developers in by developers, property owners, sales agenda, just an opportunity
the way MLRs benefit their projects, investors and governments at all to exchange ideas and build
the model is finally shaking off its levels. relationships.” END
‘Queensland only’ reputation.
“Resort Brokers is currently FOR FURTHER INFORMATION, CONTACT KAITLYN:
assisting a number of developers in 07 3878 3999 or KAITLYNLOOSE@RESORTBROKERS.COM.AU
New South Wales, including working
on two properties for Abacus Property
Group, and in Victoria where Gurner
and BPM are among our high profile
developer clients,” Crooks said. END
RESORTBROKERS.COM.AU 11FH
Freehold motel on the Shoalhaven holiday
coast
This profitable motel is set in the heartland of the beautiful The property has two residences on site for staff or
and thriving Shoalhaven holiday coast, enjoying high year owners - a four bedroom, one bathroom main residence
round bookings from tourists, golfing and sporting groups, and a three bedroom, one bathroom fully self-contained
and strong trade generated by the region’s many attractions, manager’s residence.
venues and events.
Tabourie Lake Motor Inn has much to offer the investor
who is looking for high returns, easy coastal living and
Tabourie sits just three hours drive from Sydney and two room to grow business and put your stamp on an already
hours drive from Canberra and between two major regional popular motel, restaurant and function venue.
centres. Batemans Bay is just 30 minutes drive to the south,
and the main centre of Ulladulla, with its working fishing fleet > Large 3.5 acres of landscaped grounds on 2 separate
harbour and busy shopping centre, lies just 13km north of titles
Tabourie on the Princes Highway. > Central to Tabourie waterways, Wairo Beach and Meroo
National Park
The 3.5 star self-rated resort has 20 spacious units with > Close to main centres of Batemans Bay and Ulladulla
> Established regular coach trade
easy parking and excellent coach access. It sits on 3.5 acres
> Function and conference centre catering for 90
of landscaped gardens with leisure facilities including solar
heated pool, sauna and spa, BBQ, playground area, volleyball
court and games room. The licensed Masquerades Bar and FINANCIALS
Restaurant and Lakeview Conference and Function Centre NET PROFIT: $142,509
has positioned the property to cater for group and corporate PRICE: $1,650,000
travel, and currently services up to 12 coach tours annually.
Russell Rogers
BROKER
REF: FH004383
SYDNEY
M. +61 416 166 909 NEW SOUTH WALES
E. russellrogers@resortbrokers.com.au P. +61 2 9904 8224
12 RESORTBROKERS.COM.AULH
Large 35 room motel leasehold in Brisbane’s
northern city precinct
The opportunity to purchase the leasehold interest of this > Centre of town and 5 minutes to the train station
tidy, AAA rated high 3.5 star, 35 room motel. Conveniently > Room to increase tariffs
located within walking distance of Caboolture CBD, train > Turnover increased last 3 years
station, RSL and shopping centre and just a 30 minute drive > Consistent occupancy and sound repeat business
to Brisbane CBD, Brisbane Airport and Sunshine Coast. > Strong bottom line
> Minimal maintenance as all the hard work has been
completed by the current leaseholder
All 35 rooms have been repainted and recarpeted and 15 of > Expenses = 39% of turnover and profit = 61% of turnover
the rooms have been fully renovated to premium standard (first 6 months in line with industry benchmark)
(full list of extensive renovations available). All car parking is
undercover, with truck and trailer parking available at the rear
it is the only motel in the city precinct to offer this facility. To FINANCIALS
help offset power usage a 10KW solar power plant has been
installed on the roof of the motel. NET PROFIT: $292,970
PRICE: $975,000
This business can be easily run by an owner operator or
managed by couple who would enjoy the recently renovated
managers residence comprising two bedrooms and two
bathroom plus additional third relief managers dwelling fully
fitted out with its own facilities.
REF: LH004076
EXCLUSIVE
Lindsay Cooper
BROKER
BRISBANE
M. +61 418 711 047 QUEENSLAND
E. lindsaycooper@resortbrokers.com.au P. +61 7 3878 3999
RESORTBROKERS.COM.AU 1314 RESORTBROKERS.COM.AU
EDITORIAL
Google algorithm is website mobile
friendliness. The more mobile friendly
your website, the more favoured it will
be in Google search results.
Promote your reviews – According
to a recent study approximately 83% of
travelers will NOT book their stay at a
property without first reading reviews
from other travelers. Given this, it
is extremely important to include
positive testimonials on your website.
With a hotels own website ranked
number one as the most believable
source of a review, this point cannot be
understated.
Keep up with technology – There
is nothing worse for a user than going
to a website where the information
is outdated; whether it be pictures
of the property, invalid specials, old
HOW TO INCREASE YOUR testimonials or incorrect contact
DIRECT BOOKINGS
information. To ensure your website is
up to date you should undertake a web
assessment at least every 12 months,
in addition to keeping your information
current on a quarterly basis.
REDUCING YOUR RELIANCE ON OTAS Keep page load times to a minimum
- Don’t bore your customers, people
Many people don’t realise their website is the most influential marketing don’t like to wait for web pages to
tool they have. When people book online, even when through an OTA, it is load. Most people have an approximate
most often the property’s website they visit for information on the facilities, 3 second tolerance. Websites with a
to view photos and to read past guest reviews. faster page speed will often also rank
higher in internet search results.
Create engagement on your
GIVEN this new consumer reality, your potential guests to view your site – Customers love to interact
it is imperative that a property’s availability, rates and promotions all in with websites that have active
website is optimised to convert these the one place, enabling them to book content providing the latest specials,
visitors into paying guests, increasing there and then. competitions and relevant information
their direct bookings. Don’t send your guests packing about activities they can get involved
– It is important to keep your guests in both at your venue or in surrounding
SO HOW CAN YOU OPTIMISE on your website. Linking to external areas. Links to your property’s social
YOUR WEBSITE TO INCREASE websites may send them on a journey media profiles may also help generate
DIRECT BOOKINGS? of no return. They may get caught up engagement.
in a new search and forget to come Whatever you do, the aim is to
Make booking at your property back, or they may get distracted by keep customers engaged on your site.
easy - Make sure your booking another property that may pop up The longer you keep them there, the
mechanism is simple, visible, and most when directed off your site. more likely they are to make a booking
importantly the booking is able to drop Ensure your site is ‘mobile’ and to come back to your site.
directly into your PMS, to ensure no friendly - Responsive websites adjust
overbookings are made and revenue the layout of your website using fluid
“So you need a new
opportunities are optimised. templates, ensuring your website is
Throw away your enquiry forms - optimised for viewing on all devices i.e.
website, but what should
Most people expect to book whenever desktop, any form of mobile or tablet. you look for/avoid when
they choose, so making them enquire By creating a responsive website, you choosing a website
first will drastically reduce conversions will ensure the best user experience design company?”
on your website. Some website regardless of the device.
providers build in enquiry forms by Expedia’s website traffic is now
default, so make sure you ask why this over 40% via mobile and 1 in 4 Choose a provider that
is being done? Not only does it result transactions are completed by people understands the accommodation
in fewer direct bookings, but they on the go. With over 50% of all internet industry.
may be syphoning YOUR data! Linking viewing done on a mobile device/ The accommodation industry is
directly to your booking form will allow tablet, a key ranking criteria in the complex when it comes to bookings, so
RESORTBROKERS.COM.AU 15EDITORIAL
commission model (% of bookings)
“One of the most important considerations when where you are locked into an on-going
cost beyond a reasonable payback
sourcing a website provider in the accommodation period.
space is to make sure they can integrate your Do not use travel agents to
booking form with your PMS and Channel Manager, produce your website
If using a travel agent to produce
ensuring your stock is always kept current eliminating your website be mindful as to how
overbookings, and optimising revenue opportunities” they capture data from your site.
Travel agents tend to host the booking
SYLVIA JOHNSTON, SENIOR EXECUTIVE form on their servers, enabling them
- HIRUM SOFTWARE SOLUTIONS to syphon the contact data to use in
their own marketing activities. One
way to check this is to click on your
booking form and other pages where
data is captured, and to see where the
url links to. If this links off your site,
the travel agent may be hosting this
Make sure the provider uses an ‘open into a proprietary platform - after all data and can hold the details of all
platform’ so you can make changes to it’s yours. people that have either contacted you
your website whenever you choose. Use a provider that will allow you or booked with you.
It is critical to ensure your website to own your website outright As outlined above, a property's
provider builds your website using an Some providers offer to provide website is critical to the number of
open platform like WordPress, which you with a relatively cheap or free direct bookings they receive. Whilst
allows you to edit content with ease, website in exchange for a percentage there are many pitfalls to avoid, if
without relying on a third-party to of booking revenue. This may at first you do your research and are fully
make changes. seem attractive, however what many aware of potential downfalls, there
Using an open platform also means accommodation providers don’t is no reason why you cannot build an
should you need to change provider at realise is that is much cheaper to pay effective website for your property
some point in time you are not locked an upfront fee rather than paying a with minimum cost. END
Wherever Life Takes You, Best Western Is There.®
Experience Best Western Hotels & Resorts in a whole new light. Best Western now offers six types of hotels
to meet the unique travel needs of guests, and the business needs of hotel owners around the world.
® SM
joinbestwestern.com.au | info@bestwestern.com.au
Best Western and Best Western marks are service marks or registered service marks of Best Western, International Inc. ©2016 Best Western International, Inc. All rights reserved.479-BERTH MARINA + EXTENSIVE FREEHOLD
W H I T S U N DAY C OA S T - Q U E E N S L A N D
Award-winning great barrier reef full-service destination marina
+ Waterfront commercial village + shipyard and hardstand
Mackay Marina and its associated real estate The precinct includes a 479-berth marina for
represent a major tourism, leisure and maritime vessels up to 50m, fuel dock, waterfront village
asset on Australia’s east coast. of bars, restaurants and shops, ample parking and
amenities, shipyard, hardstand, and is home to the
• 20.8ha marina basin, fuel dock & travel lift - award-winning 4.5-star Clarion Hotel*.
99-year lease (to 2098)
• 4.1ha of commercial land & buildings - Freehold • MIA Marina of the Year 2014 and 2006
Strategically positioned midway between Brisbane • Proven performance – $3.2M average nett profit
and Cairns, at the edge of the Great Barrier Reef, last 3 years
Mackay Marina and waterfront Marina Village sit • Official international Port of Entry with onsite
at the southern gateway to the famed Whitsunday Customs & Quarantine
Passage and Islands. • Expansion & growth potential
* not included in the sale
NETT PROFIT: $3,200,000
EXPRESSIONS OF INTEREST CLOSE FRIDAY 11 NOVEMBER, 2016
TRUDY CROOKS GLENN MILLAR
NATIONAL SALES MANAGER SENIOR BROKER
M. 0477 882 210 M. 0412 277 804
RESORTBROKERS.COM.AU
RESORTBROKERS.COM.AU 17MR
Island living at its best – The ultimate lifestyle
business on Moreton Island, Queensland
If you’ve ever dreamt about living and working for yourself on > Consistent year on year growth
an island paradise but didn’t know how, then stop dreaming. > Huge upside via scope for additional letting `
You’ve found it! You can have your very own island business appointments
75 minutes from Brisbane. > Option to buy or rent beachfront accommodation
> Additional real estate sales income of up to $50k p.a
> Real Estate License required – operators happy to stay
This is an incredibly rare opportunity to live and work
on to show you the ropes
on beautiful Moreton Island and own an established
accommodation and sales business. After 18 years the
FINANCIALS
current operators have decided to put their lucrative holiday
letting business on the market and settle into retirement. NET PROFIT: $111,133
PRICE: $295,000
The business consists of 23 luxury holiday rentals including
houses, units and villas across the island. Included in this package
is the exclusive use of a sales office located on Tangalooma
Resort. A management couple could capably operate this BRISBANE
business. However, if the island lifestyle of fishing, surfing, QUEENSLAND
boating, snorkelling, 4WD driving is too much then you can opt REF: MRB004402 P. +61 7 3878 3999
to employ additional staff for cleaning and maintenance.
EXCLUSIVE
Shane Wynhoven Steve Campbell
BROKER BROKER
M. +61 424 174 592 M. +61 407 220 668
E. shanewynhoven@resortbrokers.com.au E. stevecampbell@resortbrokers.com.au
18 RESORTBROKERS.COM.AUFH
Rare 60 room freehold motel in Albany,
Western Australia
A landmark in the area and referred to by West Australians as > $560,000 net profit based on industry averages
the 'whale motel' which originated back in the early whaling > Investment underpinned by freehold real estate
days. The highway location captures drive by business and > The current owner of 40 years has left room for growth
allows guests close proximity to town. Albany has a strong > Just over 1.5 hectares of main road freehold with high
corporate and leisure market and is seen as a safe haven. volume of drive-by traffic
> 2kms to the city centre
> Excellent mix of corporate and leisure guests
The exceptional purchase price works out at under $42,000
per room and is underpinned with just over 1.5 hectares of
FINANCIALS
prime freehold land.
TURNOVER: $1,446,040
We have costed a significant refurbishment at around $1m PRICE: $2,500,000
which includes a new roof, all 60 rooms refurbished and
some appearance entry work. As such, the refurbished
$3.5m investment offers the buyer $58,300 per key and the
opportunity for significant ROI growth, as current occupancy PERTH
is only 39.5% and nearly half of what refurbished motels run WESTERN AUSTRALIA
at in this area. REF: FH004469 P. 1300 665 966
EXCLUSIVE
Steve Dawson Ian Crooks
MANAGING DIRECTOR - AUSTRALIAN BUSINESS SALES MANAGING DIRECTOR - RESORT BROKERS
M. +61 408 550 441 M. +61 411 171 648
E. steve@abs-info.com.au E. iancrooks@resortbrokers.com.au
RESORTBROKERS.COM.AU 19LH
Newly renovated rooms and relisted to sell!
Location, location, location! Amazing opportunity to secure > Good corporate trade such as QLD Cricket & SRS
a 14 room motel in Hamilton, Brisbane. Guests can do > Good quality and great location
everything on foot or via easy access to the City Cat, bus > Newly decorated rooms and minor bathroom upgrades
and train. The business has strong repeat clientele, with an > TripAdvisor awards
increasing Facebook presence. All rooms have been recently > Strong occupancy
re-decorated and the yards are low maintenance. For the best
return, this property is ideal for an owner operator.
EXCLUSIVE FINANCIALS
Nathan Eades NET PROFIT: $149,032
PRICE: $573,200
BROKER
BRISBANE
M. +61 448 339 920 QUEENSLAND
E. nathaneades@resortbrokers.com.au REF: LH004364 P. +61 7 3878 3999
MR
Competitively priced business with great returns
Beachside Resort is a well-established holiday resort > Very little competition in surrounding suburbs
overlooking Buddina Beach on the Sunshine Coast. It is > Good repeat business and forward bookings
located in the largest development area on the Sunshine > Long agreements in place
Coast. Local development either planned or under > Consistent year on year growth with opportunity for
construction includes the Sunshine Coast University Private further growth in the corporate market
> Additional income available from the one bed unit next
Hospital, a Ramsay Health Care project and the massive 738
to reception (not included in profit for sale)
bed Sunshine Coast University Hospital. The demand for short
term accommodation is going to increase dramatically!
FINANCIALS
Caroline Harrison NET PROFIT: $340,600
PRICE: $2,380,000
BROKER
BRISBANE
M. +61 403 372 134 QUEENSLAND
E. carolineharrison@resortbrokers.com.au REF: MR004328 P. +61 7 3878 3999
20 RESORTBROKERS.COM.AULH
The gateway to the Riverina, New South Wales
The leasehold offering of a 23 room AAA rated 3.5 star motel > Consistent year on year growth and opportunity for
with licenced in-house restaurant boasting a full stainless further growth
steel commercial kitchen. The motel is on a large block with > Owners committed elsewhere - experienced staff to
dual street access making it easy to cater for coaches and assist with transition
heavy vehicles requiring off street parking. The family friendly > Spacious/modern living accommodation
> Less than 2 hours from Canberra
motel units open onto a private courtyard area complete with
> A great turnkey operation
salt water pool, heated spa and BBQ area. > Brand new 30 year lease on offer
FINANCIALS
Andrew Rendall NET PROFIT: $123,825
BROKER PRICE: $470,000
SYDNEY
M. +61 412 635 344 NEW SOUTH WALES
E. andrewrendall@resortbrokers.com.au REF: LH004395 P. +61 2 9904 8224
LH
Long lease, large full service motel in Melbourne’s CBD
A sensational opportunity to secure a rare large 39 room motel > Accommodation only business
located on Swanston Street in the heart of Melbourne’s CBD. > Low rent to accommodation turnover
The rent to turnover ratio is very good and it is a very easy > Fantastic three bedroom managers residence with large
business to operate. This business sits nicely in the Melbourne roof top terrace overlooking the city
market with its key strength being its location; within walking > Opportunity to renovate/develop top floor
> Perfect to run under management
distance to Fed Square, Myer, David Jones, Regents Theatre etc.
> Extremely easy business to operate
Don’t hesitate, or you may wait years for another to come up.
EXCLUSIVE FINANCIALS
Stuart Charles NET PROFIT: $366,279
PRICE: Offers over $1.28M
BROKER
MELBOURNE
M. +61 458 588 472 VICTORIA
E. stuartcharles@resortbrokers.com.au REF: LH004369 P. +61 3 9347 3100
RESORTBROKERS.COM.AU 21EDITORIAL
INSPIRED
BY LUXURY
- building brand BPM
MELBOURNE-BASED DEVELOPER BPM HAS BEEN BUILDING STUNNING DESIGN-DRIVEN
MULTI-RESIDENTIAL PROJECTS FOR MORE THAN TWO DECADES. CREATING A NEXUS
BETWEEN CREATIVITY, ART AND COMMERCE, THEY ARE ALSO BUILDING A BRAND STEEPED
IN QUALITY, BEAUTY AND THE EXOTIC.
SINCE establishing BPM in 1995, partners at the forefront of global with their buildings."
founder and managing director design, culture and art," he says, Hallinan purchased his first
Jonathan Hallinan has been constantly "every BPM project responds to more property in the Melbourne
inspired by luxury, whether it is than the constraints of its location and suburb of Bentleigh aged just 19,
found in the detail of fashion, the environment. The goal is always to after completing his carpentry
permanence of architecture, or the go further, to create a highly sensory, apprenticeship. Through diligent
experience of an artefact. engaging and memorable experience management of the renovation and
"Through collaboration with for everyone who uses and interacts subdivision process, including his own
22 RESORTBROKERS.COM.AUinvolvement on site, he doubled his In Brisbane, the company is
investment in just 18 months. active in the inner suburbs of West
The result solidified his passion for End (Escent, 142, Highline, 140, and
development and Hallinan has worked Black Fold, 40 apartments), Fortitude
towards increasingly larger projects Valley and Toowong (White Dawn, 48
ever since. BPM now has more than apartments). Upcoming developments
2,500 apartments under development are slated for Melbourne CBD and
for a combined value in excess of $1.4 Collingwood in Victoria and another
billion. large-scale project for Brisbane.
The latest and largest is the $300 “I constantly seek sites in locations
million Shadow Play at Melbourne’s with a strong coffee and food culture,”
Southbank, a landmark mixed-use Hallinan says of his approach to
development incorporating 470 location scouting.
apartments, retail and a hotel. But that “This is because, where there is
does not signal an abandonment of the a passion for coffee and food, there
smaller, boutique projects that earned are passionate people who have a
BPM its early success. deeper understanding and appreciation
Also in various stages of delivery for the things they love. Identifying
are a range of projects in Melbourne locations that appeal to successful,
and Brisbane, ranging in size from 40 to passionate people and producing
142 apartments. developments that encourage their
“We see it as an opportunity to sense of community will result in
apply the same luxury approach and property growth that is far beyond any
design aesthetic typically associated traditional market forces.”
with our boutique properties to larger Beyond the bricks and mortar,
scale projects” Hallinan says. “Moving Hallinan’s vision is to form and nurture
forward, our higher density projects a brand that stands for more than
will appeal to residents looking for an purely their exceptional properties.
holistic approach to living rather than “I believe that we need to deliver a
just an apartment.” far more intelligent form of social and
BPM’s current pipeline highlights cultural engagement, which is what the
Hallinan’s instincts for prime and ‘BPM World’ is all about,” he said.
emerging locations. In Melbourne, Venture to BPM’s website, and you
projects are underway in Richmond will discover a luxe and sensuous online
(Light Edge, 44 apartments), South environment where every element is
Melbourne (Night Fall, 45 apartments deftly designed to communicate the
and retail) and Southbank (Shadow BPM values and essence. It extends to
Play, 494 apartments). a signature fragrance and a biannual
RESORTBROKERS.COM.AU 23EDITORIAL
broadsheet and blog that provide developers to create a more to strive to create and deliver “the
forums for dialogue exploring compelling value proposition for extraordinary, through courage,
and celebrating luxury in all its purchasers.” attention to detail and an unwavering
incarnations. To that end, BPM will continue commitment to excellence.” END
“It provides signature experiences
and platforms that allow people
access to our world, engaging and
inspiring people at an emotional and
intellectual level,” Hallinan explains.
Another example of extending the
BPM brand by forging relationships
with future patrons, clients and
audiences is a three-year commitment
as a major partner for the National
Gallery of Victoria’s (NGV) Summer
Architecture Commission.
Hallinan’s vision for the BPM
World is gaining momentum, with
plans for further vertical integration
to be announced later this year,
including the inception of BPM Cafes,
BPM Hotels, BPM Champagne Bars
and BPM Health & Fitness, all of which
will be owned and operated by BPM.
The BPM Café concept is about to
debut in Brisbane at the base of the
sleek new Escent apartments in West
End.
In spite of recent industry
reports that the property market
is oversaturated in some inner city
locations, Hallinan insists that staying
in the market is essential. “I have
always maintained that the risk of
being out of the market is far greater
than the risk of being in it,” he says.
“While the current environment
(in some capital city locations) is
referred to as a challenging market,
I believe we are going through a
healthy transition that is encouraging
“Traveling – it leaves you speechless,
then turns you into a storyteller.”
They Say
IBN BATTUTA
Medieval Moroccan Muslim traveler and scholar,
widely recognised as one of the greatest travelers of all time.
“We travel not to escape life, but for
life not to escape us.”
ANONYMOUS
24 RESORTBROKERS.COM.AUwill strengthen the position of both
leaseholders and landlords, while
creating a sound, uniform approach
easily understood by everyone from
professional advisors, financiers and
brokers to vendors and buyers.”
Solicitor David Burrough was
instrumental in the breakthrough
initiative. As partner in charge of
the Tourism and Hospitality Division
of Brisbane firm Hillhouse Burrough
McKeown, he has been advising on
all legal issues affecting motels since
1981.
Burrough said the issue of
diminishing lease terms had come
to the fore in the last five years, as
many of his motel clients found the
years on older leases counting down.
“We need to recognise the
industry is maturing, the number of
years left on a great many leases is
coming down, and it is something
everyone must be thinking about,”
BREAKTHROUGH ON
he said.
“I spoke with Ian Crooks at Resort
MOTEL
Brokers about the fact there was
no science behind determining a
fair price in negotiations between
landlord and motel operator for
the granting of a lease extension.
VALUATIONS
Disputes were increasingly
inevitable.”
Crooks was already considering
the emerging issue. Afterall, he had
years before pioneered the now
common system of motel leases,
Back by popular demand…. introducing the concept of splitting
motels into separate freehold
investment and leasehold business
ALMOST THREE YEARS AGO, WE RAN A SPECIAL FEATURE REVEALING A opportunities.
BREAKTHROUGH IN SHORT-TERM MOTEL LEASE VALUATION, DEVELOPED BY Into the expert mix then came
RESORT BROKERS AUSTRALIA IN CONJUNCTION WITH OUR PROFESSIONAL Tony Rossiter, a Director of Holmans
ASSOCIATES (INFORMER, ISSUE #73, DEC 2013). and specialist in accounting,
taxation and financial planning for
SINCE THEN, THIS NEW APPROACH HAS BEEN VERY SUCCESSFULLY accommodation industry clients.
IMPLEMENTED, MAKING SHORT-TERM LEASES VIABLE AND VALUABLE, “Knowing how critical the issue
AND PROVIDING BENEFITS FOR BOTH OPERATORS AND LANDLORDS. SO, IN was, we set about collaborating
RESPONSE TO REPEATED REQUESTS, WE ARE PLEASED TO RE-PUBLISH THIS over probably an 18-month period
COMPREHENSIVE FEATURE. to consider the matter and come up
with solutions,” Burrough said.
NEW motel valuation formulas determine a fair price for motel lease “Now we have the solutions,
developed by an expert panel extensions, and to value short-term we need to educate and convince
of industry professionals have motel leases. everyone – lessees, landlords, banks,
the power to boost investment “We have come up with logical and other professional advisors – of
confidence for all stakeholders and models that finally put some science the wisdom of these formulas and
provide a secure footing for growth and certainty behind these grey their potential to be a great boon to
in the motel sector. areas of motel valuation,” said Resort the whole industry.
Presented for the first time at Brokers Australia managing director “Not only will they be valuable
a conference convened by Resort Ian Crooks. “Now it is vital they are benchmark tools to underpin
Brokers Australia, the new methods embraced by the whole industry. investment certainty, they will
provide systematic calculations to “As the accepted standard, they reduce the need for protracted
RESORTBROKERS.COM.AU 25EDITORIAL
negotiations and lessen the According to Rossiter, the lack have one purpose – operation of a
likelihood of disputes.” of a generally accepted method for motel,” Rossiter said.
Resort Brokers’ conference was calculating extension values has caused “The goodwill of the business is
attended by a cross-section of motel uncertainty for all parties, with the location-specific, the tenant has goods
industry identities, including many potential to destabilise the industry. and chattels tied up in the premises
valuers active in the sector. Burrough “With no consistent methodology and, at expiry, they can’t simply move
said the response was very positive. applied, premiums paid for additional and start up elsewhere. So it is vital
“A great many questions were years have varied widely, with leaseholders have a sound basis for
asked, and there was broad acceptance landlords taking differing approaches, negotiating with landlords for an
that we have made very important or just setting a price they’ve heard was extension.
progress in the right direction.” paid elsewhere, even though it bears no “An extension has value to the
relation to their property,” he said. operator because it provides them
CONSISTENT APPROACH VITAL TO “In picking figures, there seems to with the opportunity to generate
PRICE LEASE EXTENSIONS have been little regard for the motel additional profits over the period of
size or indeed the profitability of the extension.
A valid system for pricing motel the business. I’ve seen prices range “So the amount they pay must
lease extensions has finally been anywhere from nil to $70,000 per year. be a direct function of the value
developed to provide business “Such inconsistency is detrimental the extension creates in terms of
certainty for operators and fair to everyone – landlord, lessee and the future profits and current capital
reward for property landlords. wider industry.” appreciation, not simply a random
Holmans’ new model recognises amount nominated by the landlord,”
The much-needed price calculation the unique nature of a motel lease, he explained.
model, developed by Holmans partner compared to other commercial “The price must fairly recompense
Tony Rossiter, in consultation with property leases. A formula to facilitate the landlord, recognising there is an
Resort Brokers Australia and Hillhouse motel lease extensions is vital because opportunity cost to them for granting
Burrough McKeown, directly relates the the motelier’s business is inextricably the extension, while providing sufficient
value of the proposed extension to the linked to the premises. financial incentive for the tenant to
profitability of the leasehold business. “A motel freehold can really only proceed with the lease extension.”
BENCHMARK CALCULATION METHOD
Step 1: Calculate the Adjusted Net Profit of the Step 3: Calculate the value per unit of chattels owned
leasehold motel business. This should be done on a by the lessee, and multiply by the number of units.
consistent basis, applying accepted industry standards Reduce the value of the motel lease by the value of
for calculating profit on a ‘for sale’ business. chattels to determine the Goodwill Value of the lease.
Step 2: Determine the capitalisation rate appropriate Step 4: Calculate 45%* of this amount as the value of
for the business (ideally done by a valuer). Divide
the premium for the lease extension.
the Adjusted Net Profit by the capitalisation rate to
determine the value of the motel lease.
(* In the case of a ‘Freehold Going Concern’, the owner-operator retains 100% of profit. There is widespread industry acceptance that, when a
motel is split, the freehold investor (landlord) is paid 45% of the gross profit in rent, while the lessee retains 55% for operating the motel.)
ADJUSTED NET PROFIT $200,000.00
DIVIDED BY CAP RATE OF 30%
= VALUE OF LEASE $666,667.00
LESS VALUE OF CHATTELS $50,000.00
(25 UNITS X $2,000)
HERE'S HOW IT WORKS
= GOODWILL VALUE OF LEASE $616,667.00
Let’s look at an actual example. This
calculation applies to a 25-unit motel where DIVIDE BY ORIGINAL LEASE TERM (25) $24,666.70
15 years remain on the original 25-year MULTIPLY BY LEASE EXTENSION PERIOD (10) = $246,667.00
lease. The maintainable Adjusted Net Profit
of the leasehold business is $200,000, and X 45% = VALUE OF LEASE PREMIUM $110,000.00
the capitalisation rate is 30%. Chattels are
THEREFORE, THE VALUE PER YEAR OF THE
valued at $2,000 per unit. The lessee is
LEASE EXTENSION EQUALS $11,000
seeking a 10-year extension.
26 RESORTBROKERS.COM.AUYou can also read
