Buying a hotel or motel for sale Australia

Providing accommodation for a profit is a business that many of us have thought about and have followed through on.

Hotels and motels can be great investments. There is the attraction of working for yourself, working from home, meeting new people and generating an income as part of a lifestyle option. Before you buy a motel or hotel talk to some operators and check out some of the hotels and motels for sale to find out what you need to do to be a success.

Before buying a hotel or motel for sale in Australia consider:

Issues as economic conditions, over supply and seasonal factors which can result in harder times as operators are driven to cut costs and compete on price.

You need to be passionate about good service, working in and providing a clean environment; you also need to enjoy working with people day in and day out. This is especially important as tourists can be demanding customers and what they demand above all else, is quality service. Good accommodation operators understand and deliver to the wants and needs of their customers.

There are a number of ways to enter the accommodation-provider sector, including motels and motor lodges, luxury lodges and boutique hotels, backpacker accommodation, tourist hotels, holiday parks, management rights,  and bed and breakfast accommodation businesses.

As with every business, it is all about the price you are prepared to invest. While owning the bricks and mortar (the freehold) is attractive investment wise, it can represent a considerable financial burden. To be financially successful in your accommodation business it is important not to have huge borrowings, as these can quickly drag you down during lean times.

The accommodation industry also offers the opportunity for lucrative add-ons like restaurants and bars. This can help diversify your income but will require additional staffing. Maintaining a balance needs consideration. Small business owners can easily end up overworked; doing everything from marketing and bookings to cleaning and general maintenance, plus the cooking and bar work.

When searching to buy an existing hotel or motel business, follow the basic rule of real estate and put ‘location’ at the top of your list of requirements. Some holiday destinations like the Sunshine Coast may have some seasonal factors whereas areas like Sydney, Melbourne or Brisbane could have a steadier clientele.

See if the hotel or motel meets your basic criteria. Check out its financial statements for the most recent two or three years, gather information about the hotel’s physical facilities, market demand, surrounding area, competition etc. Once you have the necessary information, do your own estimate as to what the hotel’s operating returns will be for the next three to five years, have your accountant help with this. Watch for expenses that are missing, or are unusually low or high and find out what is impacting them. Work out a staffing schedule, wage rates plus whatever premium you might pay to have better employees. Make sure the numbers work for you.

Check to make sure that the hotel or motel is compliant with governmental requirements and holds any necessary licenses and permits. Review contracts that the current owner has with suppliers, and potentially customer groups; will these stay in place after you take over the property, or do you need to change these?  If it is a franchised operation you will need to read the franchise conditions and disclosure carefully, and find out if the agreement will be transferred to you and if any costs will be incurred.  Check with town planning about any planned changes to the area and roads, as this could have a direct impact on the business and it may not be as valuable as you thought.

What’s the competition like? Identify any potential threats. What is the hotel or motel’s reputation? This can be hard to rebuild and will affect its market value.  Check the room rates at nearby hotels and motels for comparison. Verify all financial information.  As with any property know exactly what you are getting, what its market value is and its condition.

While the investment in the accommodation industry is generally sound, not all hotels and motels are worth investing in. Expect to be exhausted in the first year as you learn and fine-tune your business. Find a good motel minder to allow you some free time. No business can survive if the owner is constantly tired.

Owning accommodation can be a very rewarding and fulfilling lifestyle option. For more information on how to go about purchasing your ideal business, check out our Australian Motels and Hotels for Sale listings on aubizbuysell.com.au

Check out the following hospitality opportunities:

Accommodation Businesses for Sale
Motels for Sale Australia
Hotels for Sale Australia

By Richard O'Brien - aubizbuysell
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