October Informer 2016

#84 | OCTOBER 2016

INFORMER AUSTRALIA’S NO. 1 | TOURISM & BUSINESS

We are all about the accommodation sector

MANAGEMENT RIGHTS GROWTH

BREAKTHROUGH SOLUTION

BRAND INSPIRED

BY LUXURY

MLRs gain ground in our accommodation landscape

Short-term motel valuations revisited

We profile rising Melbourne - based developer, BPM

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WHAT’S INSIDE...

"Sit back, relax and enjoy October's edition of the Resort Brokers Informer"

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WE SAY, YOU SAY, THEY SAY

A regular forum for the exchange of views, news & ideas

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MANAGEMENT RIGHTS GROWTH

Hotel group demand is increasingly underpinning growth in the sector

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BREAKTHROUGH ON MOTEL VALUATIONS

We revisit the formula making short-term leases viable and valuable

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MANY FACES: PETER BARGE

An accidental career start for one of the tourism property sectors most dynamic leaders

SOCIAL PAGES Resort Brokers' mid-year conference saw the launch of our smart new Brisbane HQ

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DOWNSIZING & UPGRADING

Mike O'Connor presents another witty take on accommodation matters

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STAMP DUTY CHARGES

INSPIRED BY LUXURY Creative BPM is building a brand steeped in quality, beauty and the exotic

Regular Features

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Must know facts for NSW business buyers

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AGENT PROFILE

INDUSTRY SPECIALISTS

EXCLUSIVE LISTINGS

Get to know one of our Brisbane brokers Jessica Wilkie

Our directory for some of the best services and/or products in the industry

You won’t read about these listings anywhere else!

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See some of the properties Resort Brokers Australia has sold recently

Going on holiday? Need a manager? Visit our directory

Our company directory

SOLD PROPERTIES

RELIEF MANAGERS

MEET OUR TEAM

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PREFACE

WELCOME TO ‘WE SAY, YOU SAY, THEY SAY’ – A REGULAR FORUM FOR THE EXCHANGE OF VIEWS, NEWS & IDEAS.

WE SAY growth

MANAGING

Ian Crooks

MANAGING DIRECTOR

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SINCE our last edition, the Federal election returned the Turnbull Coalition government, albeit with the slimmest majority. Naturally, there was some nervousness about how that would work, and a few hiccups early on.

But the passing in the first sitting of two major bills, the $6.3 billion savings bill and an amended superannuation reforms package, shows our parliamentarians can work together to keep us on track. That is, at least, good news for our economy.

Speaking of our economy, there have been some encouraging figures

lately. When economic growth data was released in September, headlines highlighted strong 3.3% GDP growth.

Actually, Australia’s GDP growth has gone up pretty much uninterrupted for 25 years. But it doesn’t always feel like that, does it?

That’s because the measure that really matters to us is ‘real national net disposable income’. That is our per capita income, adjusted for inflation, excluding earnings by foreigners – or, as one commentator explained it, “actual money in Australian pockets.”

The good news is, it’s back ahead

They Say “To my mind, the greatest reward and luxury of travel is to be able to experience everyday things as if for the first time, to be in a position in which almost nothing is so familiar it is taken for granted.”

BILL BRYSON - AUTHOR

GOLDEN AGE OF TRAVEL Cost to travel from Australia to London

1947

85 WEEKS PAY to

2015

1.3 WEEKS PAY Flight Centre, The Golden Age of Travel, 21 April, 2015

of where it was in 2008. Many industries are doing well now, agriculture, retail and tourism among them. Even a recent lift in coal prices, some economists say, could add 2% to national income this year, boosting the budget by close to $7 billion and kick-starting wages growth.

Harvey Norman posted a 30% full year profit increase on the back of robust housing and lifestyle markets, and Coles and Bunnings recorded strong results. Macquarie Group reaffirmed forecasts in line with its record $2 billion 2016 profit.

Actually, we are especially pleased to see the giant investment bank is now a great supporter of management rights. It’s no surprise, on the back of the surge in new apartment development, national offthe-plan management rights sales are going gang-busters.

Thanks in no small way to Tim Crooks’ efforts in establishing and growing our off-the-plan division, Resort Brokers is at the forefront.

We’re seeing huge growth, not just in traditional Queensland markets, as we work closely with major Sydney and Melbourne-based developers, including BPM for whom we’ve handled a number of sales (profiled on P.22) and GURNERTM. Growth in the management rights market, driven to a large extent by rising demand from hotel operators like Mantra, is examined in depth in this issue’s cover story.

But, it’s not all about management rights. Asset owners nationwide are taking advantage of the surge in tourist numbers and rising investment demand to dispose of quality properties.

Resort Brokers has been appointed to diverse, large-scale listings including magnificent Fitzroy Island Resort on the Great Barrier Reef and the 479-berth Mackay Marina, village and shipyard, both with high profile EOI campaigns.

And sometimes, really exciting opportunities are offered more discreetly. For example, we’re working off-market to sell a rare portfolio of seven motor inns, mostly in prime regional NSW locations, that promises very lucrative investment rewards for a $20m-plus buyer.

We are also expanding into the South Australian market, appointing a very experienced sales team there.

They’ll be working closely with our successful Victorian team, and we’ll introduce the new SA brokers in the next Informer edition.

Finally, Resort Brokers’ mid-year conference at our newly renovated Brisbane HQ was a tremendous success (see P.40). Our two keynote speakers, global industry doyen Peter Barge and dynamic Mantra CEO Bob East, are also featured in this issue.

And, as always, we bring you some very informative contributions from our valued associates, all consummate professionals in their fields. ENJOY.

Travel tops online TOP 3 ITEMS BOUGHT ONLINE

BY AUSTRALIANS: 1. Airline tickets á from 51% to 62% 2. Clothing á from 51% to 57% 3. Accommodation á up from 48% to 53%

Tourism Research Australia, IVS YEJun16

LETTER TO THE EDITOR WE’D LOVE TO HEAR FROM YOU: CARLACOOK@ RESORTBROKERS.COM.AU

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EDITORIAL

YOU SAY...

Mantra CEO Bob East was a keynote speaker at Resort Brokers Australia’s recent mid-year conference. Founded 10 years ago, the group (Peppers, Mantra, Breakfree) has gone from a loss-making start to its latest annual profit of $53.2 million.

Mantra today has 127 hotels across Australia, Asia and the Pacific, with 20,500 rooms under management and more than 5,000 employees.

His presentation provided a fascinating insight into how such a big accommodation operation is thinking in the current tourism market environment. Here is some of what Bob East had to say: "THERE has never been a better time to be in tourism. I have never seen us receive so much attention – politicians, the industry and the general public are all now acknowledging the huge visitor economy contribution to GDP and jobs growth.

“Demand is strong and the outlook is for sustained growth. This not a

‘boom’. It is Australia’s new reality, given the vast emerging markets in our region. 60 per cent of growth will come from China alone, and then you have all the other growth markets making up the rest.”

East pointed to the latest statistics, Tourism Forecasts 2016, from Tourism Research Australia, which showed:

INTERNATIONAL ARRIVALS 2015-16

2016-17

2017-18

2024-25

7.8 MILLION

8.3 MILLION

8.8 MILLION

12.3 MILLION

á 9.3%

á 6.7%

á 5.9%

á 5.6%

DOMESTIC VISITOR NIGHTS

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2015-16

2016-17

2017-18

2024-25

328 MILLION

340 MILLION

351 MILLION

423 MILLION

á 4.5%

á 3.8%

á 3.2%

á 3.1%

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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 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 how important it is that Australia frees up our tourist visa application process and fees. Australia competes with other countries for the lucrative Chinese market and our more onerous visa process will make us less competitive.

On current estimates, we could be welcoming 2 million visitors from China annually by 2025, for a potential economic impact of $140 billion.

But it is the growth in aviation seat capacity that East says is most critical to Australia’s tourism future.

Forecast growth in direct aviation capacity to Australia underlined his upbeat outlook.

According to Tourism Research Australia’s latest analysis, we are on track to grow capacity from 22.9 million (YE March 2016) to 36.5 million by 2024-25. The primary focus of growth is already evident in current figures.

In 2015-16, capacity from China 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 is also forecast in flights from India and the Middle East. END Note: Bob East is Chairman of Tourism and Events Queensland (TEQ) and a Board Member of Tourism Australia and Tourism and Transport Forum (TTF)

NETT

IT

PROF

$2.7m 17

ted FY

Projec

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 4.312ha perpetual lease 30km from Cairns (45min by Fast Cat) multiple food & beverage venues 190-seat Fast Cat ferry operation wide range of tourist & leisure facilities extensive supporting infrastructure robust income + growth opportunities

Offered with vacant possession, a trophy income-producing asset with brand building opportunity. DAs and plans in place for future stages.

All the work is done. Constraints are overcome. All that lies ahead is 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 NATIONAL SALES MANAGER M. +61 477 882 210

SHA N E M U LLIN S BROKER M. +61 447 185 001

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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 just how far the management rights industry has come, you only needed to scan the programme for this year’s 5-day peak hotel industry conference held in Sydney in July.

Reflecting the rise and rise of management rights and franchising in the development of guest accommodation in Australia, HotelsWorld 2016 included for the first time a special event focused entirely on these important industry segments.

A panel of experts was convened to discuss the growth of management rights, its impact on the accommodation industry in general, and on the hotel industry in particular.

They included Mantra Group Development Manager, Richard Crawford, National Off-the8

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plan Management Rights sales specialist, Tim Crooks from Resort Brokers Australia, and Mantra Group’s Executive Director of Asset Management, Michelle Lalli.

EVOLUTION One of the most significant developments in the management and letting rights (MLR) sector has been the model’s growing acceptance by what might be termed ‘traditional’ hotel operators.

“We are seeing branded hotel and serviced apartment operators such as Mantra, Accor and Minor Hotels begin to dominate the market for large-scale, high-netting short-term management rights opportunities,” Crooks said.

Mantra Group now has more than

20,500 rooms under management, including approximately 14,000 via MLR ownership.

As Michelle Lalli explained, the management rights model allows the hotel industry to expand and brandbuild with capital-light ownership structures where supply is needed, but could not otherwise be achieved through the cost structure of a traditional hotel.

Her colleague described it as a “natural evolution” that would take place wherever there is fractional ownership and a common intent to earn a return from investment in apartments.

Tim Crooks sees first hand the developer’s role as a catalyst for that evolution. He says the scarcity and cost of suitable hotel sites, plus rising development costs are making it increasingly difficult for developers to get a freehold hotel to stack up.

EVERYONE WINS “The management rights model is

security the model offers, Crooks said.

“Because critical operational areas in the building, like reception, back of house, storage and maintenance areas, are usually purchased as freehold real estate associated with the management rights business, the accommodation operator has complete control.”

And, he said, more and more developers are realising that selecting the right operator for their projects from the outset benefits them by driving higher returns for their investors (equals happy customers) and building their development brand reputation and value.

Oaks Hotels & Resorts, a brand of Minor Hotels, was among the first branded hotel-style operators to pursue growth via the MLR model.

“Management rights in Australia are the roots of Oaks Hotels & Resorts,” explains Minor Hotels Australia General Counsel and Commercial Officer, Lachlan Hoswell.

“Oaks Hotels & Resorts was founded on management rights, it is how

Woolloongabba, bought off-the-plan.

“In buying off the plan, we can work with developers from the earliest stage,” Hoswell says. “The Beach Apartments Broadbeach is a perfect example. This new build will be the launch of Avani Residences in Australia by Minor Hotels, being one of our premium hotel brands.

“Avani Broadbeach Residences will open at the end of next year in time for the Commonwealth Games on the Gold Coast. It has been purpose-built to meet the needs of both short-term guests and owner occupiers.

“By working closely with the developer during construction, we can ensure our operational needs are catered for so that we can deliver high level short-term guest experiences as well as cater for the needs of the owner-occupiers fortunate enough to reside in this building.”

Projects need not be solely shortterm accommodation properties 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 – the developer, the unit investors and the hotel operator,” he says.

“Developers are able to build and sell the units at residential property prices. Operators are able to control a large number of keys in prime locations for a fraction of the price of freehold purchase. And lot owners benefit from quality management driving strong returns.”

Hotel operators interested in management rights as a means of expanding their portfolio are also gaining a greater understanding of the high level of control and long-term

we evolved, and we are continuing on that path. We’ve been very successful in this space and, though we do look at other operation models, management rights is still our preferred model for growth in Australia.”

EARLY INVOLVEMENT Under the Oaks Hotels & Resorts brand, Minor Hotels has 50 properties across Australia and New Zealand and all but three are management rights.

The latest include Oaks Southbank Melbourne, and Brisbane’s Oaks

“The mixed use model allows developers to make projects viable in key inner city locations, introduce a range of unit styles, and include commercial components that add appeal for the hotel, such as shops and restaurants.

“Operators who secure the management rights over both residential and short-term apartments have the flexibility to adjust inventory to suit fluctuations in demand and occupancy rates.

Furthermore, they get a guaranteed income from the levies to look after the common areas and shared RESORTBROKERS.COM.AU

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EDITORIAL

facilities like the pool and gym.”

Though management rights is a tried and true operational model in Queensland, some commentators interstate have expressed uncertainty about its place in the industry, labeling it as a potential ‘disruptor’.

ESTABLISHED ADVANTAGES But the HotelsWorld panelists disputed that, saying that far from a disruptor, it was already well established and largely recognised as being part of the hotel industry. The model has spread from Queensland to other states, and from emerging markets to more mature ones, filling niches to compete head on with traditional models.

“With the proliferation of corporatised management rights over the last 15 years, there is little difference to the consumer between the service offering provided by traditional hotels or strata-titled hotel-styled offerings,” Lalli said.

But the panel did warn operators that strong resourcing in the 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.

Lindsay Leeser, Vice President Development Pacific, said the group is actively looking for more management rights as they are a scalable business that offers attractive returns and long-term operating tenure.

“Strata owners can benefit from AccorHotels’ sophisticated revenue management system, unparalleled distribution channels, purchasing power and branding as well as 10

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access to the benefits from our comprehensive loyalty programme,” he said.

“We are focusing on opportunities in Australia where we can improve room revenue through our branding, distribution and revenue management, increase the number of keys under management, and benefit from operating synergies with our existing portfolio.”

LOCATION STILL KING But, irrespective of the emerging, digitalised sharing-economy, the major imperatives will remain service and location.

“If your product is superior to that of the competition, the consumers will find you and you will be rewarded,” Mantra Group’s Richard Crawford said simply. “Any successful strategy has the basic guest centric delivery at its heart.”

“And, if you are in the right location, whether the ownership structure is fractional or a hotel held in one line, the consumer will choose you regardless of the online channel

their increasing market share.

“If you look at two of the most noteworthy sales of recent times, it would certainly seem hotel groups are becoming increasingly dominant,” Cook says, pointing to his sales of Soul Surfers Paradise to Mantra and The Beach (Avani Broadbeach Residences) to Minor Hotels.

“The hotly contested bidding war between the two resulted in a record price for the sale of an existing management rights in case of Soul, and a strong per-key price for Avani Broadbeach Residences.

OTHER PLAYERS “That said, though, large, nonbranded private MLR operators such as the Picone Family and Dreamtime, as well as smaller branded operations like Ultiqa and Balmoral Group (Oatley family) are still competing strongly for prime offerings.

Cook said the Picone's, who sold Chevron Renaissance to Mantra in an off-market deal believed to have broken the Soul price record, had recently bought two holiday letting

The Beach Apartments (Avani Broadbeach Residences), on the Gold Coast was sold off-the-plan by Resort Brokers Australia to Thailand-based Minor Hotels for a very strong per-key price. they search and book through,” Lalli added.

So, will branded hotel-style operators entirely corner the market for larger management rights offerings in prime CBD and resort locations?

Alex Cook, who heads up Resort Brokers’ Gold Coast management rights team, has direct experience of

MLRs off-the-plan on the Gold Coast.

“They picked up the Qube and Synergy developments in Broadbeach, and are reported to have secured two more prime largescale businesses on the Gold Coast.

“Dreamtime holds some of largest holiday management rights on the coast, including Turtle Beach at Mermaid, Wave Broadbeach and

UP COMING EVENT The sale of Soul Surfers Paradise to Mantra Group in 2015 signalled a growing appetite for large-scale management rights among hotel operators.

Reflections Coolangatta, while Ultiqa, who own Air and Freshwater Point in Broadbeach, recently secured Beach Haven through Resort Brokers, another large offering with over 100 units in the letting pool.”

Tim Crooks says private equity groups and high net worth private investors are also strong market players.

“Resort Brokers is currently dealing with two major groups who are forming management rights funds – one out of Singapore and the other Australian-based.

“Plus we’ve seen JLL Capital form a $30 million fund and successfully secure two management rights of scale in Brisbane, so it is clear large investment syndicates view MLRs as a strongly-performing asset class.”

These passive investors will, of course, in turn appoint branded hotel groups and experienced operators to run the properties on their behalf.

Thanks to the growing appetite among hotel groups, investment funds and private operators for management rights, and the consequent interest by developers in the way MLRs benefit their projects, the model is finally shaking off its ‘Queensland only’ reputation.

“Resort Brokers is currently assisting a number of developers in 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

5.30-8.30PM ON WEDNESDAY 16TH NOVEMBER 2016

INDUSTRY INSIGHTS AND INTERACTION Management rights operators in Brisbane are invited to mix business with pleasure and join Resort Brokers Australia for an evening of industry insights and interaction LAUNCHING a new programme of regular information and networking events, Resort Brokers Australia will host a get-together for Brisbane building operators at our new West End head office on Wednesday 16th November 2016 at 5.30pm.

Headlining the evening will be special presentations by property advisors Urbis and digital marketing agency Bambrick Media.

“We are very pleased to offer operators a unique opportunity to hear directly from Urbis about the current apartment market in Brisbane,” said organiser Tim Crooks, the agency’s off-the-plan management rights specialist.

“Urbis are highly respected independent urban planners and advisors, and their extensive research and analysis is relied upon by developers, property owners, investors and governments at all levels.

“They’ll have some valuable insights into issues like how the influx of new apartments is affecting the rental market, vacancy rates, how demand and supply pressures are playing out, and what the trends are in Brisbane for the medium to longer term.”

Bambrick Media specialises in website development, branding, internet marketing and search engine optimisation. They’ll explain how operators can utilise effective alternative advertising and marketing strategies to improve online presence and reach.

“Then, importantly, guests will enjoy the chance to meet and socialise with fellow industry colleagues over a few drinks,” Tim said. “It will be a relaxed and informative evening, with no sales agenda, just an opportunity to exchange ideas and build relationships.” END

FOR FURTHER INFORMATION, CONTACT KAITLYN: 07 3878 3999 or KAITLYNLOOSE@RESORTBROKERS.COM.AU

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FH

Freehold motel on the Shoalhaven holiday coast This profitable motel is set in the heartland of the beautiful and thriving Shoalhaven holiday coast, enjoying high year round bookings from tourists, golfing and sporting groups, and strong trade generated by the region’s many attractions, venues and events.

Tabourie sits just three hours drive from Sydney and two hours drive from Canberra and between two major regional centres. Batemans Bay is just 30 minutes drive to the south, and the main centre of Ulladulla, with its working fishing fleet harbour and busy shopping centre, lies just 13km north of Tabourie on the Princes Highway.

The 3.5 star self-rated resort has 20 spacious units with easy parking and excellent coach access. It sits on 3.5 acres 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 Restaurant and Lakeview Conference and Function Centre has positioned the property to cater for group and corporate travel, and currently services up to 12 coach tours annually.

The property has two residences on site for staff or owners - a four bedroom, one bathroom main residence and a three bedroom, one bathroom fully self-contained manager’s residence.

Tabourie Lake Motor Inn has much to offer the investor who is looking for high returns, easy coastal living and room to grow business and put your stamp on an already popular motel, restaurant and function venue. > Large 3.5 acres of landscaped grounds on 2 separate titles > Central to Tabourie waterways, Wairo Beach and Meroo National Park > Close to main centres of Batemans Bay and Ulladulla > Established regular coach trade > Function and conference centre catering for 90 FINANCIALS NET PROFIT: $142,509 PRICE: $1,650,000

Russell Rogers BROKER

M. +61 416 166 909 E. russellrogers@resortbrokers.com.au 12

RESORTBROKERS.COM.AU

SYDNEY NEW SOUTH WALES P. +61 2 9904 8224

REF: FH004383

LH

Large 35 room motel leasehold in Brisbane’s northern city precinct The opportunity to purchase the leasehold interest of this tidy, AAA rated high 3.5 star, 35 room motel. Conveniently located within walking distance of Caboolture CBD, train station, RSL and shopping centre and just a 30 minute drive to Brisbane CBD, Brisbane Airport and Sunshine Coast.

All 35 rooms have been repainted and recarpeted and 15 of the rooms have been fully renovated to premium standard (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 help offset power usage a 10KW solar power plant has been installed on the roof of the motel.

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.

> Centre of town and 5 minutes to the train station > Room to increase tariffs > Turnover increased last 3 years > Consistent occupancy and sound repeat business > Strong bottom line > Minimal maintenance as all the hard work has been completed by the current leaseholder > Expenses = 39% of turnover and profit = 61% of turnover (first 6 months in line with industry benchmark) FINANCIALS NET PROFIT: $292,970 PRICE: $975,000

REF: LH004076

EXCLUSIVE

Lindsay Cooper BROKER

M. +61 418 711 047 E. lindsaycooper@resortbrokers.com.au

BRISBANE QUEENSLAND P. +61 7 3878 3999 RESORTBROKERS.COM.AU

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EDITORIAL

HOW TO INCREASE YOUR

DIRECT BOOKINGS REDUCING YOUR RELIANCE ON OTAS

Many people don’t realise their website is the most influential marketing tool they have. When people book online, even when through an OTA, it is most often the property’s website they visit for information on the facilities, to view photos and to read past guest reviews.

GIVEN this new consumer reality, it is imperative that a property’s website is optimised to convert these visitors into paying guests, increasing their direct bookings.

SO HOW CAN YOU OPTIMISE YOUR WEBSITE TO INCREASE DIRECT BOOKINGS? Make booking at your property easy - Make sure your booking mechanism is simple, visible, and most importantly the booking is able to drop directly into your PMS, to ensure no overbookings are made and revenue opportunities are optimised.

Throw away your enquiry forms Most people expect to book whenever they choose, so making them enquire first will drastically reduce conversions on your website. Some website providers build in enquiry forms by default, so make sure you ask why this is being done? Not only does it result in fewer direct bookings, but they may be syphoning YOUR data! Linking directly to your booking form will allow

your potential guests to view your availability, rates and promotions all in the one place, enabling them to book there and then.

Don’t send your guests packing – It is important to keep your guests on your website. Linking to external websites may send them on a journey of no return. They may get caught up in a new search and forget to come back, or they may get distracted by another property that may pop up when directed off your site.

Ensure your site is ‘mobile’ friendly - Responsive websites adjust the layout of your website using fluid templates, ensuring your website is optimised for viewing on all devices i.e. desktop, any form of mobile or tablet.

By creating a responsive website, you will ensure the best user experience regardless of the device.

Expedia’s website traffic is now over 40% via mobile and 1 in 4 transactions are completed by people on the go. With over 50% of all internet viewing done on a mobile device/ tablet, a key ranking criteria in the

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 testimonials or incorrect contact 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.

Keep page load times to a minimum - Don’t bore your customers, people don’t like to wait for web pages to load. Most people have an approximate 3 second tolerance. Websites with a faster page speed will often also rank higher in internet search results.

Create engagement on your site – Customers love to interact with websites that have active content providing the latest specials, competitions and relevant information about activities they can get involved in both at your venue or in surrounding areas. Links to your property’s social media profiles may also help generate engagement.

Whatever you do, the aim is to keep customers engaged on your site.

The longer you keep them there, the more likely they are to make a booking and to come back to your site.

“So you need a new website, but what should you look for/avoid when choosing a website design company?”

Choose a provider that understands the accommodation industry.

The accommodation industry is complex when it comes to bookings, so RESORTBROKERS.COM.AU

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EDITORIAL

“One of the most important considerations when sourcing a website provider in the accommodation space is to make sure they can integrate your booking form with your PMS and Channel Manager, ensuring your stock is always kept current eliminating overbookings, and optimising revenue opportunities” SYLVIA JOHNSTON, SENIOR EXECUTIVE - HIRUM SOFTWARE SOLUTIONS

Make sure the provider uses an ‘open platform’ so you can make changes to your website whenever you choose.

It is critical to ensure your website provider builds your website using an open platform like WordPress, which allows you to edit content with ease, without relying on a third-party to make changes.

Using an open platform also means should you need to change provider at some point in time you are not locked

into a proprietary platform - after all it’s yours.

Use a provider that will allow you to own your website outright Some providers offer to provide you with a relatively cheap or free website in exchange for a percentage of booking revenue. This may at first seem attractive, however what many accommodation providers don’t realise is that is much cheaper to pay an upfront fee rather than paying a

commission model (% of bookings) where you are locked into an on-going cost beyond a reasonable payback period.

Do not use travel agents to produce your website If using a travel agent to produce your website be mindful as to how they capture data from your site.

Travel agents tend to host the booking form on their servers, enabling them 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 data and can hold the details of all people that have either contacted you or booked with you.

As outlined above, a property's website is critical to the number of direct bookings they receive. Whilst there are many pitfalls to avoid, if you do your research and are fully aware of potential downfalls, there is no reason why you cannot build an effective website for your property 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 represent a major tourism, leisure and maritime asset on Australia’s east coast.

• 20.8ha marina basin, fuel dock & travel lift 99-year lease (to 2098) • 4.1ha of commercial land & buildings - Freehold Strategically positioned midway between Brisbane and Cairns, at the edge of the Great Barrier Reef, Mackay Marina and waterfront Marina Village sit at the southern gateway to the famed Whitsunday Passage and Islands.

The precinct includes a 479-berth marina for vessels up to 50m, fuel dock, waterfront village of bars, restaurants and shops, ample parking and amenities, shipyard, hardstand, and is home to the award-winning 4.5-star Clarion Hotel*.

• MIA Marina of the Year 2014 and 2006 • Proven performance – $3.2M average nett profit last 3 years • Official international Port of Entry with onsite Customs & Quarantine • Expansion & growth potential * not included in the sale

NETT PROFIT: $3,200,000

EXPRESSIONS OF INTEREST CLOSE FRIDAY 11 NOVEMBER, 2016 TRUDY CROOKS NATIONAL SALES MANAGER M. 0477 882 210

RESORTBROKERS.COM.AU

GLENN MILLAR SENIOR BROKER M. 0412 277 804

RESORTBROKERS.COM.AU

17

MR

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 an island paradise but didn’t know how, then stop dreaming.

You’ve found it! You can have your very own island business 75 minutes from Brisbane.

This is an incredibly rare opportunity to live and work on beautiful Moreton Island and own an established accommodation and sales business. After 18 years the current operators have decided to put their lucrative holiday letting business on the market and settle into retirement.

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 business. However, if the island lifestyle of fishing, surfing, boating, snorkelling, 4WD driving is too much then you can opt to employ additional staff for cleaning and maintenance.

> Consistent year on year growth > Huge upside via scope for additional letting ` appointments > 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 on to show you the ropes FINANCIALS NET PROFIT: $111,133 PRICE: $295,000

REF: MRB004402

BRISBANE QUEENSLAND P. +61 7 3878 3999

EXCLUSIVE

Shane Wynhoven

Steve Campbell

M. +61 424 174 592 E. shanewynhoven@resortbrokers.com.au

M. +61 407 220 668 E. stevecampbell@resortbrokers.com.au

BROKER

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RESORTBROKERS.COM.AU

BROKER

FH

Rare 60 room freehold motel in Albany, Western Australia A landmark in the area and referred to by West Australians as the 'whale motel' which originated back in the early whaling days. The highway location captures drive by business and allows guests close proximity to town. Albany has a strong corporate and leisure market and is seen as a safe haven.

The exceptional purchase price works out at under $42,000 per room and is underpinned with just over 1.5 hectares of prime freehold land.

We have costed a significant refurbishment at around $1m 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 is only 39.5% and nearly half of what refurbished motels run at in this area.

> $560,000 net profit based on industry averages > Investment underpinned by freehold real estate > The current owner of 40 years has left room for growth > Just over 1.5 hectares of main road freehold with high volume of drive-by traffic > 2kms to the city centre > Excellent mix of corporate and leisure guests FINANCIALS TURNOVER: $1,446,040 PRICE: $2,500,000

REF: FH004469

PERTH WESTERN AUSTRALIA P. 1300 665 966

EXCLUSIVE

Steve Dawson

Ian Crooks

MANAGING DIRECTOR - AUSTRALIAN BUSINESS SALES

MANAGING DIRECTOR - RESORT BROKERS

M. +61 408 550 441 E. steve@abs-info.com.au

M. +61 411 171 648 E. iancrooks@resortbrokers.com.au RESORTBROKERS.COM.AU

19

LH

Newly renovated rooms and relisted to sell!

Location, location, location! Amazing opportunity to secure a 14 room motel in Hamilton, Brisbane. Guests can do everything on foot or via easy access to the City Cat, bus and train. The business has strong repeat clientele, with an increasing Facebook presence. All rooms have been recently re-decorated and the yards are low maintenance. For the best return, this property is ideal for an owner operator.

EXCLUSIVE

> Good corporate trade such as QLD Cricket & SRS > Good quality and great location > Newly decorated rooms and minor bathroom upgrades > TripAdvisor awards > Strong occupancy

FINANCIALS

Nathan Eades BROKER

M. +61 448 339 920 E. nathaneades@resortbrokers.com.au

NET PROFIT: $149,032 PRICE: $573,200

REF: LH004364

BRISBANE QUEENSLAND P. +61 7 3878 3999

MR

Competitively priced business with great returns Beachside Resort is a well-established holiday resort overlooking Buddina Beach on the Sunshine Coast. It is located in the largest development area on the Sunshine Coast. Local development either planned or under construction includes the Sunshine Coast University Private Hospital, a Ramsay Health Care project and the massive 738 bed Sunshine Coast University Hospital. The demand for short term accommodation is going to increase dramatically!

> Very little competition in surrounding suburbs > Good repeat business and forward bookings > Long agreements in place > Consistent year on year growth with opportunity for further growth in the corporate market > Additional income available from the one bed unit next to reception (not included in profit for sale)

FINANCIALS

Caroline Harrison BROKER

M. +61 403 372 134 E. carolineharrison@resortbrokers.com.au 20

RESORTBROKERS.COM.AU

NET PROFIT: $340,600 PRICE: $2,380,000 BRISBANE QUEENSLAND REF: MR004328 P. +61 7 3878 3999

LH

The gateway to the Riverina, New South Wales The leasehold offering of a 23 room AAA rated 3.5 star motel with licenced in-house restaurant boasting a full stainless steel commercial kitchen. The motel is on a large block with dual street access making it easy to cater for coaches and heavy vehicles requiring off street parking. The family friendly motel units open onto a private courtyard area complete with salt water pool, heated spa and BBQ area.

> Consistent year on year growth and opportunity for further growth > Owners committed elsewhere - experienced staff to assist with transition > Spacious/modern living accommodation > Less than 2 hours from Canberra > A great turnkey operation > Brand new 30 year lease on offer FINANCIALS

Andrew Rendall BROKER

M. +61 412 635 344 E. andrewrendall@resortbrokers.com.au

NET PROFIT: $123,825 PRICE: $470,000

REF: LH004395

SYDNEY NEW SOUTH WALES 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 located on Swanston Street in the heart of Melbourne’s CBD. The rent to turnover ratio is very good and it is a very easy business to operate. This business sits nicely in the Melbourne market with its key strength being its location; within walking distance to Fed Square, Myer, David Jones, Regents Theatre etc.

Don’t hesitate, or you may wait years for another to come up.

EXCLUSIVE

> Accommodation only business > Low rent to accommodation turnover > Fantastic three bedroom managers residence with large roof top terrace overlooking the city > Opportunity to renovate/develop top floor > Perfect to run under management > Extremely easy business to operate FINANCIALS

Stuart Charles BROKER

M. +61 458 588 472 E. stuartcharles@resortbrokers.com.au

NET PROFIT: $366,279 PRICE: Offers over $1.28M

REF: LH004369

MELBOURNE VICTORIA P. +61 3 9347 3100

RESORTBROKERS.COM.AU

21

EDITORIAL

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, founder and managing director Jonathan Hallinan has been constantly inspired by luxury, whether it is found in the detail of fashion, the permanence of architecture, or the experience of an artefact.

"Through collaboration with 22

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partners at the forefront of global design, culture and art," he says, "every BPM project responds to more than the constraints of its location and environment. The goal is always to go further, to create a highly sensory, engaging and memorable experience for everyone who uses and interacts

with their buildings."

Hallinan purchased his first property in the Melbourne suburb of Bentleigh aged just 19, after completing his carpentry apprenticeship. Through diligent management of the renovation and subdivision process, including his own

involvement on site, he doubled his investment in just 18 months.

The result solidified his passion for development and Hallinan has worked towards increasingly larger projects ever since. BPM now has more than 2,500 apartments under development for a combined value in excess of $1.4 billion.

The latest and largest is the $300 million Shadow Play at Melbourne’s Southbank, a landmark mixed-use development incorporating 470 apartments, retail and a hotel. But that does not signal an abandonment of the smaller, boutique projects that earned BPM its early success.

Also in various stages of delivery are a range of projects in Melbourne and Brisbane, ranging in size from 40 to 142 apartments.

“We see it as an opportunity to apply the same luxury approach and design aesthetic typically associated with our boutique properties to larger scale projects” Hallinan says. “Moving forward, our higher density projects will appeal to residents looking for an holistic approach to living rather than just an apartment.”

BPM’s current pipeline highlights Hallinan’s instincts for prime and emerging locations. In Melbourne, projects are underway in Richmond (Light Edge, 44 apartments), South Melbourne (Night Fall, 45 apartments and retail) and Southbank (Shadow Play, 494 apartments).

In Brisbane, the company is active in the inner suburbs of West End (Escent, 142, Highline, 140, and Black Fold, 40 apartments), Fortitude Valley and Toowong (White Dawn, 48 apartments). Upcoming developments are slated for Melbourne CBD and Collingwood in Victoria and another large-scale project for Brisbane.

“I constantly seek sites in locations with a strong coffee and food culture,” Hallinan says of his approach to location scouting.

“This is because, where there is a passion for coffee and food, there are passionate people who have a deeper understanding and appreciation for the things they love. Identifying locations that appeal to successful, passionate people and producing developments that encourage their sense of community will result in property growth that is far beyond any traditional market forces.”

Beyond the bricks and mortar, Hallinan’s vision is to form and nurture a brand that stands for more than purely their exceptional properties.

“I believe that we need to deliver a far more intelligent form of social and cultural engagement, which is what the ‘BPM World’ is all about,” he said.

Venture to BPM’s website, and you will discover a luxe and sensuous online environment where every element is deftly designed to communicate the BPM values and essence. It extends to a signature fragrance and a biannual RESORTBROKERS.COM.AU

23

EDITORIAL

broadsheet and blog that provide forums for dialogue exploring and celebrating luxury in all its incarnations.

“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

developers to create a more compelling value proposition for purchasers.”

To that end, BPM will continue

to strive to create and deliver “the extraordinary, through courage, attention to detail and an unwavering commitment to excellence.” END

“Traveling – it leaves you speechless, then turns you into a storyteller.”

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.AU

They Say

BREAKTHROUGH ON

MOTEL VALUATIONS

Back by popular demand….

ALMOST THREE YEARS AGO, WE RAN A SPECIAL FEATURE REVEALING A BREAKTHROUGH IN SHORT-TERM MOTEL LEASE VALUATION, DEVELOPED BY RESORT BROKERS AUSTRALIA IN CONJUNCTION WITH OUR PROFESSIONAL ASSOCIATES (INFORMER, ISSUE #73, DEC 2013).

SINCE THEN, THIS NEW APPROACH HAS BEEN VERY SUCCESSFULLY IMPLEMENTED, MAKING SHORT-TERM LEASES VIABLE AND VALUABLE, AND PROVIDING BENEFITS FOR BOTH OPERATORS AND LANDLORDS. SO, IN RESPONSE TO REPEATED REQUESTS, WE ARE PLEASED TO RE-PUBLISH THIS COMPREHENSIVE FEATURE. NEW motel valuation formulas developed by an expert panel of industry professionals have the power to boost investment confidence for all stakeholders and provide a secure footing for growth in the motel sector.

Presented for the first time at a conference convened by Resort Brokers Australia, the new methods provide systematic calculations to

determine a fair price for motel lease extensions, and to value short-term motel leases.

“We have come up with logical models that finally put some science and certainty behind these grey areas of motel valuation,” said Resort Brokers Australia managing director Ian Crooks. “Now it is vital they are embraced by the whole industry.

“As the accepted standard, they

will 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,” he said.

“I spoke with Ian Crooks at Resort 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.

Disputes were increasingly inevitable.”

Crooks was already considering the emerging issue. Afterall, he had years before pioneered the now common system of motel leases, introducing the concept of splitting motels into separate freehold investment and leasehold business opportunities.

Into the expert mix then came Tony Rossiter, a Director of Holmans and specialist in accounting, taxation and financial planning for accommodation industry clients.

“Knowing how critical the issue was, we set about collaborating over probably an 18-month period to consider the matter and come up with solutions,” Burrough said.

“Now we have the solutions, we need to educate and convince everyone – lessees, landlords, banks, and other professional advisors – of the wisdom of these formulas and their potential to be a great boon to the whole industry.

“Not only will they be valuable benchmark tools to underpin investment certainty, they will reduce the need for protracted RESORTBROKERS.COM.AU

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EDITORIAL

negotiations and lessen the likelihood of disputes.”

Resort Brokers’ conference was attended by a cross-section of motel industry identities, including many valuers active in the sector. Burrough said the response was very positive.

“A great many questions were asked, and there was broad acceptance that we have made very important progress in the right direction.”

CONSISTENT APPROACH VITAL TO PRICE LEASE EXTENSIONS A valid system for pricing motel lease extensions has finally been developed to provide business certainty for operators and fair reward for property landlords.

The much-needed price calculation model, developed by Holmans partner Tony Rossiter, in consultation with Resort Brokers Australia and Hillhouse Burrough McKeown, directly relates the value of the proposed extension to the profitability of the leasehold business.

According to Rossiter, the lack of a generally accepted method for calculating extension values has caused uncertainty for all parties, with the potential to destabilise the industry.

“With no consistent methodology applied, premiums paid for additional years have varied widely, with landlords taking differing approaches, or just setting a price they’ve heard was paid elsewhere, even though it bears no relation to their property,” he said.

“In picking figures, there seems to have been little regard for the motel size or indeed the profitability of the business. I’ve seen prices range anywhere from nil to $70,000 per year.

“Such inconsistency is detrimental to everyone – landlord, lessee and the wider industry.”

Holmans’ new model recognises the unique nature of a motel lease, compared to other commercial property leases. A formula to facilitate motel lease extensions is vital because the motelier’s business is inextricably linked to the premises.

“A motel freehold can really only

have one purpose – operation of a motel,” Rossiter said.

“The goodwill of the business is location-specific, the tenant has goods and chattels tied up in the premises and, at expiry, they can’t simply move and start up elsewhere. So it is vital leaseholders have a sound basis for negotiating with landlords for an extension.

“An extension has value to the operator because it provides them with the opportunity to generate additional profits over the period of the extension.

“So the amount they pay must be a direct function of the value the extension creates in terms of future profits and current capital appreciation, not simply a random amount nominated by the landlord,” he explained.

“The price must fairly recompense the landlord, recognising there is an opportunity cost to them for granting the extension, while providing sufficient financial incentive for the tenant to 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

Step 2: Determine the capitalisation rate appropriate

Step 4: Calculate 45%* of this amount as the value of

leasehold motel business. This should be done on a consistent basis, applying accepted industry standards for calculating profit on a ‘for sale’ business. for the business (ideally done by a valuer). Divide the Adjusted Net Profit by the capitalisation rate to determine the value of the motel lease.

by the lessee, and multiply by the number of units.

Reduce the value of the motel lease by the value of chattels to determine the Goodwill Value of the lease.

the premium for the lease extension.

(* 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%

HERE'S HOW IT WORKS Let’s look at an actual example. This calculation applies to a 25-unit motel where 15 years remain on the original 25-year lease. The maintainable Adjusted Net Profit of the leasehold business is $200,000, and the capitalisation rate is 30%. Chattels are valued at $2,000 per unit. The lessee is seeking a 10-year extension.

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= VALUE OF LEASE LESS VALUE OF CHATTELS

$666,667.00 $50,000.00

(25 UNITS X $2,000) = GOODWILL VALUE OF LEASE

$616,667.00

DIVIDE BY ORIGINAL LEASE TERM (25) MULTIPLY BY LEASE EXTENSION PERIOD (10) =

$24,666.70 $246,667.00

X 45% = VALUE OF LEASE PREMIUM

$110,000.00

THEREFORE, THE VALUE PER YEAR OF THE LEASE EXTENSION EQUALS $11,000

THE TABLE BELOW SHOWS THE CALCULATED OUTCOMES OF THIS MODEL AT VARYING LEVELS OF ADJUSTED NET PROFIT, IF ALL OTHER VARIABLES REMAIN THE SAME.

MAINTAINABLE ADJUSTED NET PROFIT

LEASE EXTENSION VALUE PER YEAR

$100,000

$5,100

$150,000

$8,100

$200,000

$11,000

$300,000

$17,100

$600,000

$35,100

TIMING IS IMPORTANT Timing is important to the correct application of this model.

Holmans recommends the optimum window for seeking an extension is when the lease has between 15 and 20 years left to run.

“In our experience, it is unusual for a tenant to seek a lease extension when they have an existing term in excess of 20 years,” Tony Rossiter said. “At that stage, we expect a lease extension would be worth less because it is not necessary for business certainty.

“Conversely, if fewer than 15 years remain, the value of an extension would likely be more than determined by our model, because the lessee has greater need for the extension.

“With each year that goes by without an extension, the underlying value of the lease diminishes at an increasing rate,” he said.

“Which is why our collaboration with Resort Brokers has also yielded a vital solution for valuing short-term leases.”

PRICE CONSISTENCY CLEARS THE WAY FORWARD Adoption of these logical formulas for motel lease valuations will be the catalyst for improved relations between leaseholders and landlords. With price consistency will come options for everyone.

Adoption of these logical formulas for motel lease valuations will be the catalyst for improved

relations between leaseholders and landlords. With price consistency will come options for everyone.

“Both landlords and lessees grapple with the issue of lease extensions,” said Resort Brokers MD Ian Crooks. “Now the question of price has been resolved, the path to sound business decisions can be much clearer.”

Should a landlord be averse to granting a lease extension (perhaps for redevelopment or family succession reasons), the leaseholder now has the reassurance of a sound short-term lease valuation formula when it comes time to sell.

When a landlord agrees to an extension, with the fair market price clearly defined, both parties are well placed to make sound financial decisions and payment arrangements.

Should the property be in need of an upgrade (eg. new bathrooms), one option would be to finance the project using the money paid for the lease extension.

“Then, as part of the lease extension arrangements, there may be an agreement whereby the lease document is varied to state that, on completion, rent will increase by an agreed percentage of the total upgrade cost,” Crooks said.

“So, if $300,000 is spent by the landlord on improvements, annual rent might go up by 10% or $30,000 a year.”

Rent adjustments also provide an option to spread the cost of the lease extension for the leaseholder, and avoid potential tax implications for a landlord receiving a lump sum payment in a single period.

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EDITORIAL

FORMULA MAKES SHORT-TERM LEASES A VALUABLE OPTION Short-term motel leases will remain viable and valuable thanks to a new valuation formula that protects capital investment and returns, while allowing for goodwill or capital growth.

Resort Brokers Australia and fellow industry experts, financial advisors Holmans and solicitors Hillhouse Burrough McKeown, say the valuation method must be embraced industry-wide to strengthen the long-term viability of motel leasing.

“As a lease term shortens, dropping below the 20-year mark, goodwill begins to erode,” advises Resort Brokers’ sales manager, Trudy Crooks. “Presently there is no protection against this because there hasn’t been a logical and widely accepted method for valuing shorter leases.

“Our approach will underpin and strengthen the industry. It will protect novice motel buyers from paying too much for a depreciating lease and, at the same time, will make short-term leases appealing investment options comparable to longer leases.”

The starting point had to be the already widely recognised formula for calculating the sale price of a standard 30-year lease, ie. based on the net profit capitalised at an agreed rate, depending on the location and standard of the property.

“Most leases are sold on a 30% return,” Ms Crooks said. “In desired CBD locations it may be 26 to 30%, while regional locations can show 32 to 40%.

“So we start by calculating the price of a lease as if it were a standard long lease, then divide that price by the number of years remaining on the lease in question. This is vital as buyers look at many different properties, and motels with shorter leases need to be easily compared to those with longer leases.”

The second step addresses a key issue for buyers – the desire to achieve capital growth.

“People buying a business obviously want an annual return, but most also expect to be able to sell the business for more than they paid for it. In the case of short leases with a diminishing term, that is unlikely,” she said.

“So, to be appealing and comparable to other investments, the short-term lease needs to be valued

so it shows a greater annual return in lieu of capital appreciation.

“It means you can buy a shorter lease, make bigger returns and, although you sell for a lesser value, you are just as well placed as if you bought a longer lease, made a smaller return, and sold at a higher price.”

Resort Brokers’ new valuation method for short-term leases will open opportunities for people with less capital to invest in motels with much higher turnover and net profit, where the price of a longer lease on a comparable property would have been out of reach.

“This makes short leases great cash flow businesses with strong appeal to a wider market,” Ms Crooks said.

By dividing what we know would be the value if it was a long lease by the number of years remaining, you arrive at a figure representing the extra profit a buyer should earn to compensate for the decreasing value of the asset.

“While they sell for less in the end, they have banked their capital growth along the way.”

Subtracting the ‘extra’ annual return from the total net profit reveals the new ‘true’ business profit of the short lease. Finally, you capitalise

METHOD SHOWS REAL VALUE FOR BUYERS

Here are two examples illustrating how the short-term lease valuation method is applied: - EXAMPLE 1 -

In 2013, a motel lease with 12 years remaining shows a net profit of $150,000 p.a.

Step 1: If this were a new 30-year lease, based on the

$150,000 net profit, capitalised at 30%, the business would be worth $500,000. (net profit divided by cap rate)

Step 2: Divide $500,000 by remaining 12 years = $41,666 p.a. (extra profit earned)

Step 3: Subtract $41,666 from $150,000 to ascertain the new ‘true’ net profit = $108,333

Step 4: Capitalise the ‘true’ net profit of $108,333 @ 30% to calculate short lease value.

SHORT LEASE VALUE = $361,110

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- EXAMPLE 2 -

In 2018, this motel lease has 7 years remaining, and achieves a net profit of $150,000 p.a Step 1: If this were a new 30-year lease, based on the

$150,000 net profit, capitalised at 30% the business would be worth $500,000. (net profit divided by cap rate)

Step 2: Divide $500,000 by remaining 7 years = $71,428 p.a. (extra profit earned)

Step 3: Subtract $71,428 from $150,000 to ascertain the new ‘true’ net profit = $78,572

Step 4: Capitalise the ‘true’ net profit of $78,572 @ 30% to calculate short lease value.

SHORT LEASE VALUE = $261,906

for valuing shorter leases, will mean buyers can see the opportunity to bank gains during the life of a shortterm lease.

In our examples, the leaseholder who buys in 2013 for $361,110 can sell in 2018 for $261,906 – roughly $100,000 less than the original purchase price.

But, along the way, they have ‘put

BANKING GROWTH ALONG THE WAY The average stay in motel businesses is 4-5 years. So, while you may happily buy a 20-year lease, by the time you sell, without an extension, the value will be starting to erode.

Implementing this new formula

Experienced hospitality management 1834 Hotels offer a management solution for small to large hotel investments. Management services include complete operational management, strategic sales, marketing and revenue development. Management services can be tailored to suit owner requirements and varying stakeholder structures.

away’ extra profits (capital growth) of $41,666 p.a. for five years – a total of $208,330 or double the price drop.

This, added to the 2018 sale price, shows they have actually realised a total of $470,236.

Having paid $363,000 in 2013 … that figure demonstrates a very solid gain. END

1834 Hotels is an experienced hospitality management company specialising in holistic management of city hotels, large regional motels and resorts.

OUR SERVICES INCLUDE: • • • • • • •

Operational management Human Resources support Financial reporting F&B and kitchen management Marketing support Revenue and distribution management Corporate and leisure sales development

• • • • • • •

Performance monitoring Full stakeholder management Property development Ability for hotels to remain unbranded Cost/expense controls Access to group purchasing Full bookkeeping management

Andrew Bullock Chief Executive Officer Andrew@1834hotels.com.au

Leigh Kentwell General Manager Leigh@1834hotels.com.au

If you are interested in discussing our hotel management services, please get in contact with us on (08) 8267 3397 1834hotels.com.au

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29

LARGE EXISTING MLR. NO REAL ESTATE TO BUY!

PREMIUM PRODUCT IN THE HEART OF THE WELL ESTABLISHED PRECINCT OF PORTSIDE The offering of the management rights to Promenade, Flare & Loft represents an outstanding opportunity to secure a portfolio of businesses with a high net income close to $600k p.a., without the requirement to expend valuable capital on non-income producing real estate.

Going concern 'business only' management rights of this scale in Brisbane are extremely rare and we recommend your serious consideration of this high quality offering.

This group of management rights for these adjoining buildings, located in this vibrant area of Brisbane that has seen significant recent urban renewal, would suit an array of buyers including owner operators, syndicates and corporate brands.

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The businesses have a track record of providing solid returns to the current operators whilst offering an opportunity for growth moving forward given that there are almost 40 units controlled by outside agents.

The units in these buildings have the benefit of a near city location, many with outstanding CBD and Brisbane River views, fantastic amenity with the shops, services and cinema directly within the Portside complex, as well as generally being larger than many of the competing offerings in the area.

Given these strong fundamentals the complex enjoys high occupancy and consistent tenant demand. Having such a high quality offering will undoubtedly make the incoming purchasers role much more straight forward.

CONTACT US: This is a rare opportunity to purchase a large scale business with NO associated real estate. This bolsters the return on your investment and is particularly if you are intending to operate in conjunction with other management rights businesses.

NETT PROFIT: $582,418 PRICE: $3,378,024

TIM CROOKS NATIONAL OFF THE PLAN SPECIALIST M: 0422 208 450 E: timcrooks@resortbrokers.com.au

GARETH CLOSTER BROKER M: 0423 182 766 E: garethcloster@resortbrokers.com.au

RESORTBROKERS.COM.AU

31

FH

CBD boutique freehold accommodation, bar and restaurant with future multi use!

Resort Brokers present a pure commercial opportunity. The external refurbishment will be complete within weeks. A focus on a central accommodation offering will provide a surplus of return on its own. You may choose to implement efficiencies to the existing bar and bistro operation, or your vision may involve utilising the ample space with retail or commercial office sectors. In addition, a strata of the two buildings a genuine option for you.

The Kempsey Hotel is situated on the Pacific Highway approximately 460kms north of Sydney on the NSW Mid North coast, long regarded as the commercial centre of the rich Macleay River Valley. Occupying an amalgamated 2,327sqm site, the hotel benefits from a strong retail location flanked by ALDI, Coles and a mixture of specialty retailers which complement the hotel’s general trading activities. Kempsey council has undertaken a town centre beautification process which has assisted in a CBD retail and accommodation spike.

Obviously, the property has been priced to sell quickly, so your haste in inspection is certainly encouraged.

> 29 well-kept ensuite rooms with ample secure off street parking > Well renowned bar and bistro > Located in the retail / commercial heart of Kempsey and across the road from Kempsey Central > Currently run under management with significant opportunity to increase trade through multiple revenue centres > Single bar operation – in need of wage efficiencies > Recent external refurbishment nearing completion > Strata opportunity of existing building > Immediate accommodation upside with alignment to internet booking partners FINANCIALS NET PROFIT: $187,425 PRICE: $995,000

REF: FH004397

EXCLUSIVE

James Carrick BROKER

M. +61 400 664 065 E. jamescarrick@resortbrokers.com.au 32

RESORTBROKERS.COM.AU

SYDNEY NEW SOUTH WALES P. +61 2 9904 8224

RESORTBROKERS.COM.AU

33

EDITORIAL

THE MANY FACES OF THE TOURISM INDUSTRY CONTINUING OUR SERIES PROFILING THE MANY FACES OF AUSTRALIAN TOURISM AND ACCOMMODATION INDUSTRIES, WE INTRODUCE YOU TO THE LEADERS AND INNOVATORS, CHARACTERS AND CANNY OPERATORS OF OUR INDUSTRY. THESE ARE THEIR STORIES.

PETER BARGE

chaser of challenges and change for the better HAD IT NOT BEEN FOR THE VIETNAM WAR, OR AT LEAST A FIERCE OPPOSITION TO AUSTRALIA’S ROLE IN IT, THE TOURISM PROPERTY SECTOR MAY NEVER HAVE HAD ONE OF ITS MOST DYNAMIC LEADERS. NOT THAT PETER BARGE WOULDN’T ALWAYS HAVE EXCELLED, SIMPLY THAT HIS TALENT AND BOUNDLESS ENERGY MIGHT EASILY HAVE BEEN DIRECTED ELSEWHERE. recognised with the inaugural HICAP honest, it was the only course I could THE former Global Chairman (Hotel Investment Conference Asia find that started later in the year.” and CEO of Jones Lang LaSalle (JLL) Pacific) ‘Trailblazer Award’. Presented Fast-forward nearly five decades, Hotels and JLL Asia Pacific Chairman selectively to eminent individuals and the young activist turned and CEO launched his illustrious who embody a trailblazer’s spirit, the accidental hotel manager is reputed career in the hotel, tourism and real award honours ‘success in leading the across several continents as one of estate sectors with a Certificate in industry in new directions Hotel and Catering and to new levels, and Management “…TEACHER, HOTELIER, CONSULTANT, contributing to the hotel from East Sydney COMMUNICATOR, MARKETER, BROKER, MANAGING industry at large.’

Technical College in But to speak of Peter the late 60s.

DIRECTOR, CEO, CHAIRMAN, NON-EXECUTIVE DIRECTOR, Barge only in terms of his But he admits it FATHER, HUSBAND, PIG FARMER, PERMACULTURIST, hotel-related successes is was not a deliberate MEDITATOR, AUTHOR, FOOD AND WINE APPRECIATOR, to only tell a fraction of his vocational choice.

AND GENERAL ALL ROUND ‘GOOD BLOKE’.” story. Here’s how long“I was at Sydney time friend and colleague Uni studying TONY SOUTH Tony South (current Chair Arts Law, and of Tourism Australia) the Vietnam War introduced Peter at the 2009 the hotel and property industries’ was on,” he says. “I became heavily Trailblazer Award presentation: most accomplished and innovative involved in protesting and, you could “…teacher, hotelier, consultant, achievers. say, very distracted from my studies. communicator, marketer, broker, Before retiring from JLL in 2010, So, after I was kicked out of Sydney managing director, CEO, chairman, Peter’s industry contribution was Uni, I went to East Sydney. To be 34

RESORTBROKERS.COM.AU

non-executive director, father, husband, pig farmer, permaculturist, meditator, author, food and wine appreciator, and general all round ‘good bloke’.”

So let’s unpack that intriguingly eclectic description.

For a number of years in the early 70s, Peter worked in catering and hotel management, including stints at Sydney landmark, the ChevronHilton King Cross, and Canberra’s then premier hotel, the Lakeside International.

In 1976, he was all set to head for Fiji to work on a new hotel opening when its developer went bankrupt.

At the time, PM Gough Whitlam had helped to fund South Australian Premier and avowed gourmet Don Dunstan’s dream to build a worldclass hotel and food school at Regency Park.

“The first principal was a very close friend and former teacher,” Peter recalls. “He’d already offered me a job, but I turned it down go to Fiji, so when he heard Fiji fell through, he asked me again.” So Peter became a teacher, lecturing in the South Australian Hotel Management programme for four years.

That period, four years, becomes a recurrent theme in the story of Peter’s career. It’s as though he took the term ‘leap’ year literally, leaping off into new pastures at regular four-yearly intervals. “I get bored,” he explains simply.

Moving on from academia in 1979, his next endeavour was as a founding partner of HRC (Hotels, Restaurants & Clubs) Consultants, which quickly excelled nationally in the fields of hospitality design, management consultancy, and emerging technology at the dawn of the new computer age.

Enter Tony South, an accountant whose firm had the Australian and New Zealand rights to the name Horwath, which was and remains the brand behind one of the world’s leading hotel, tourism and leisure consultancies. Horwarth and Horwarth was looking for growth opportunities.

So, within four years of launching HRC (there it is again), a joint venture, Horwath HRC Services, was born (1983) and, for the next four years, Peter was managing director and a Horwath & Horwath partner. The

timing could not have been better.

The early 80s marked the onset of a hotel and resort investment phase the likes of which Australia had never seen. Peter’s team quickly built the largest specialist hotel consulting practice in Australia, working closely with the major hotel brokers of the day, Jones Lang Wootton (as it was then) and Colliers Hotels & Leisure.

With the four-year mark looming, and the property boom gaining momentum, Peter was keenly attuned to the stark difference between his earning power as a consultant and that of the brokers. “I worked out the real money was in broking. We were

paid hourly, only selling time.” Peter was ready for his next challenge.

He moved into brokerage in 1987, as a partner in Colliers Hotels & Leisure. It was the time of the rise of Japanese investment, and of immense opportunity. Peter and his partners, Bill Cross and Stephen Burt, were soon setting records for transactions across Australia and the Pacific.

To this day, their A$540 million sale of the Southern Pacific Hotel Corporation to the Pritzker family in 1988, involving some 30 hotels across six countries, remains one of his most memorable. “It was incredibly complex. We were all learning,” he says. “A deal of that size had never been done before.”

But there was no stopping the ‘four-year itch’. In 1990, Peter and his partners left Colliers to launch TransAct Hotels. It flourished,

competing head on with the big agencies, soon opening offices in London and New York, signalling his first overseas posting.

So successful was TranAct, it soon attracted the attention of global giant Jones Lang Wootton (founded 1783), and the upshot was a merger to form JLW TransAct in 1992. Peter agreed to stay on as CEO … just for four years, naturally.

The opening of a Singapore office saw him move there in 1994, to head what was now JLW Hotels, a company about to sweep the world, integrating broking, advisory, consulting and valuation under a global umbrella.

For the first time in his career, Peter outstayed his four-year deadline, to remain with JLW, subsequently Jones Lang La Salle (JLL), for two decades. But, he insists, in ever changing roles. True to form, Peter’s history with the company is punctuated with new appointments, roughly every four years.

JLW’s merger with US property giant La Salle Partners saw him continue in the role of CEO of JLL Hotels in 1998 and join the global management board of the company. “(In 2001) I was asked to go to America to not only run the global hotel business, but to head up the US Corporate Real Estate business.

“Then the CEO position for the entire Asia Pacific business became available. I actually ended up doing that for five years, even though I only wanted four.” Next stop – Chairman, JLL Asia Pacific.

When Peter finally retired from JLL in 2010, the company’s Chief Investment Officer, Ian Mackie, had this to say in his farewell speech: “… no-one has brought to the firm more new ideas and initiatives, launched more programmes, courses, ventures and new businesses, redesigned and remodelled more departments, business lines and business functions … or done more to expand and improve the firm’s commitment to, and implementation of, diversity, corporate ethics and business culture.”

So that explains the first half of Tony South’s earlier description. But “pig farmer” and “permaculturist”?

While managing to live in New York and Singapore twice and Chicago once, and rising to oversee RESORTBROKERS.COM.AU

35

PACKED HOUSE for MLR SEMINAR

PETER SAYS THE OVERARCHING THEMES THROUGHOUT HIS LIFE AND CAREER HAVE BEEN CONSTANT CHANGE, AN ETERNAL QUEST FOR NEW CHALLENGES, AND ENGAGING WITH TALENTED YOUNG PEOPLE TO KEEP HIM MOTIVATED AND ENTHUSED. 16,000 staff spread across 56 Asia Pacific offices and 13 countries, Peter somehow married “the hard edge needed to manage a New York-listed public company while still practicing lifetime interests in meditation, permaculture and sustainability.”

Since 1994, he and his writer wife Kinchem Hegedus have owned Jamberoo Valley Farm, a 26ha working permaculture farm 120km south of Sydney in Jamberoo, which also nurtures cattle, sheep, pigs, chickens and a few ducks, and operates as a farm-stay with 25 beds heavily booked by international visitors.

Amused former JLL colleagues tell of Peter’s mischievous practice of naming his pet pigs after staff members, who were sometimes delighted but very often appalled at the prospect of a porcine namesake.

In Bali, he has taken a great interest in supporting permaculture ventures and providing guidance as Chairman of Trustees for the Green School, an international school with 400 students from 35 different countries. Its innovative approach to teaching, which focuses on sustainability through communityintegrated, entrepreneurial learning in a wall-less, natural environment, attracts 10,000 visitors a year.

Peter has plenty of other interests in Bali on the go, including various real estate projects, a wholesale bakery, and a new bar concept he’s soon to open in Seminyak with partner and mate, David Horivitz, a former Hilton and Southern Pacific Hotel executive and JLL colleague.

Peter and Kinchem have two children, Billy Barge, 16, at a sports 36

RESORTBROKERS.COM.AU

school in Sydney and Shannon Barge, 24 who has a practice in Nutritional Medicine.

Every member of the family, he says, is a complete “cricket tragic”.

So, what else would Peter and Billy (a talented fast bowler) do? Become certified cricket bat makers, of course, and launch their own manufacturing business, Vandal Cricket. “It’s a meditative process, making a cricket bat,” Peter insists.

In his ‘spare’ time, Peter has authored or edited a number of books from the Art of Hospitality Series, now in its 10th reprint, to his latest Winning with Transglobal Leadership (McGraw-Hill, 2012), which took close to four years to research and write with three PhD co-authors.

He chairs or sits on a number of local and international boards, including the technology board of leading point of sale systems company H&L, which has 2,500 hospitality clients Australia-wide.

And he provides strategic advice and CEO coaching across a number of industries including tourism, hospitality, retail and real estate.

Peter says the overarching themes throughout his life and career have been constant change, an eternal quest for new challenges, and engaging with talented young people to keep him motivated and enthused.

Tony South put his success down to: “ … his incredible energy, his true ability to think outside accepted norms, to take a different tack, his creativity, his sense of humour and an endlessly enquiring mind.”

FOOTNOTE: Peter Barge is engaged by Resort Brokers Australia as an executive mentor and coach.

The ongoing appetite for information on the MLR industry was highlighted when Resort Brokers Australia recently presented another of its popular ‘Management Rights Made Easy’ seminars on the Gold Coast.

THE event, the fifth conducted by our team in the coastal tourism hotspot, attracted a record attendance of more than 70 guests.

“These informative sessions are primarily held for the benefit of newcomers to the management rights industry but, as usual, some experienced operators also attended because there is always something new to learn,” said Resort Brokers senior Gold Coast Broker, Alex Cook.

Hosted by accommodation software specialist Hirum, in their Arundel training facility, the seminar included presentations by management rights finance expert, Paul Grant of Mike Phipps Finance, and specialist industry law professional, Trent Pevy of Pevy Lawyers.

Taxation and business structure were covered by accommodation industry specialist accountant, Tony Rossiter of Holmans, while Alex Cook provided insights into current management rights market activity and performance.

“These seminars are growing in popularity, and we have had some very positive feedback from those who attended,” Alex said.

The next ‘Management Rights Made Easy’ seminar on the Gold Coast is scheduled for March 2017. END

MLR

made easy

Hillhouse Burrough McKeown Lawyers

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37

LH FACING RESIDENT MANAGERS & CARETAKERS

Leasehold apartment hotel offering with long tenure, excellent profitability and growth An opportunity to become part of the internationally respected Quest Apartment Hotel franchise. Quest Moorabbin comprises 30 dual key apartments which can be configured to provide 60 hotel apartments. The apartments include a range of studio, one, two and three bedroom fully self-contained apartments.

Additional facilities include a reception and entrance foyer, conference room, gym, BBQ and outdoor dining area, guest laundry, various storage rooms, manager’s office, back of house facilities and separate male, female and disabled amenities. The improvements are sited on a larger land holding of 8,806 sqm with 42 car spaces located on site.

The vendors have recently completed a rent review and a five year extension to the initial term of the lease was agreed. The lease is now 10 years from 28/3/16 with 4 x 5 year options.

Negotiations for freehold owner renovations have been completed, money is held in trust and works has commenced.

> 2016 Finalist – Quest Franchisee of the Year (VIC/TAS) > Member of highly regarded Quest Apartment Hotel network > Enjoying significant growth in occupancy, income and profitability > Constructed and opened in May 2011 > Opportunity to secure additional leasehold apartments > Refurbishment to be finalised prior to settlement FINANCIALS NET PROFIT: $621,702 PRICE: $2,700,000

REF: LH004392

EXCLUSIVE

Jim Chapman

VICTORIAN STATE MANAGER

M. +61 413 444 782 E. jimchapman@resortbrokers.com.au 38

RESORTBROKERS.COM.AU

MELBOURNE VICTORIA P. +61 3 9347 3100

FH

The freehold of an award winning boutique resort with restaurant and art gallery Ulladulla Guest House is a premium five star rated property in the centre of a busy tourist town, with a beautiful elevated position overlooking Ulladulla harbour. This elegant property combines luxury boutique style accommodation with a multi award-winning restaurant and highly rated fine arts gallery.

The resort style property has everything on site – solar heated salt water swimming pool and spa, lounge bar, business centre and conference room and a large day spa and health club, with all rooms and facilities beautifully maintained and refurbished.

The onsite licensed 60-seat Elizans Wine and Mezze Bar Restaurant specialises in serving the best of local and imported wines, fresh seafood and local artisan produce.

Guests have the choice of dining outdoors on a large verandah overlooking tropical gardens and pool, or beside an open fireplace in the cosy lounge.

> 5 star boutique resort on 2900sqm block with central position > 3 income streams generated through accommodation, licensed restaurant and commercial gallery > Award winning 60 seat licensed restaurant > 9 luxury suites all recently refurbished > Conference room and facilities > Solar heated salt water pool in private tropical gardens, internal gym, sauna and spa > Private 1 bedroom unit with spa for the owner/manager

Located in a quiet street with easy access, central position and landscaped tropical gardens, the property is popular with both the business traveller and tourist alike. Offering nine spacious luxury suites and a private onsite one bedroom spa unit for the owner / manager. Ulladulla Guest House presents stylish boutique style accommodation at its best.

FINANCIALS NET PROFIT: On Application PRICE: $1,650,000

Russell Rogers BROKER

M. +61 416 166 909 E. russellrogers@resortbrokers.com.au

SYDNEY NEW SOUTH WALES

REF: FH004389

RESORTBROKERS.COM.AU

39

SOCIAL

GOOD TIMES OFFICE LAUNCHED IN STYLE BROKERS AND SPECIAL GUESTS FROM ALL OVER AUSTRALIA GATHERED IN BRISBANE FOR THE RESORT BROKERS AUSTRALIA MID-YEAR CONFERENCE AND UNVEILING OF THE COMPANY’S STYLISH NEW HEAD OFFICE. IT WAS A FITTING LAUNCH FOR RESORT BROKERS’ FRESHLY RENOVATED HEADQUARTERS IN BRISBANE’S VIBRANT WEST END BUSINESS DISTRICT.

Together

The not so long & the short of it, Tim Crooks & Len Booth

In good company, Steve Campbell & Nathan Eades

Architects with style, Peter North & Alice Witt

Gareth Closter & Daniel Green, blue sky thinking

Ian Crooks has his audience enthralled

Peter Barge & Trudy Crooks, deep in conversation

Desmond-Dekker (aka Des Fagg) having a laugh Alex & Carla Cook step out in style 40

RESORTBROKERS.COM.AU

Ian & Karin Crooks find a guest to look up to

Finance whizz Sheryl Pascoe swans around

Damien Windle... checked in for the party

Interior designer, Morgan Braithwaite, & Lynn Booth make a stylish duo Marissa Maslin, 'the treasurer' pays attention

Ian Crooks and James Carrick joke around

Martin Sammut takes account of the situation 'Don King' of the furniture world, Dennis Clark, centre stage with Trudy & Tim Crooks

Beauty and the bubbles, Brook Kelly

New Gold Coast broker, Paul Muller, meets the crew

Trent Pevy lays down the law Here's trouble ‌ Shane Mullins & Andrew Rendall

Shane Wynhoven & Alex Cook get down to business Our communications queen Catie Langdon and partner Tom Anthony

James 'JC' Carrick toasts the occasion

Office creation dream team, Alice Witt, Jess Reynolds & Peter North

RESORTBROKERS.COM.AU

41

MR

Off the plan m’rights just 6kms from Melbourne CBD MoPo provides an opportunity to secure a brand new residential management rights business, ideally positioned in thriving Moonee Ponds. Featuring 126 apartments with 107 in the letting pool, the strong interest in residential and short-term accommodation is being driven by the demand for residential accommodation close to the CBD.

EXCLUSIVE

> 25 year agreements with $66,000 caretaking salary > 2 bed, 2 bath manager’s residence with a car park > Ideally positioned in northern Melbourne suburb providing easy access to the CBD & Tullamarine Airport > Due for completion in April 2017 > Ground floor reception/office available for lease (initial rent $28,500 p.a.)

FINANCIALS

Tim Crooks

NATIONAL OFF THE PLAN SPECIALIST

M. +61 422 208 450 E. timcrooks@resortbrokers.com.au

NET PROFIT: $591,335 proj.

PRICE: $2,090,000 MELBOURNE VICTORIA REF: OTP004417 P. +61 3 9347 3100

MR

Elegant Essendon off the plan management rights Due for completion in May 2017 is Alexa Park Residences, comprising 90 spacious one, two and three bedroom apartments with 77 anticipated in the letting pool. The management rights are offered with a spacious two bedroom, two bathroom ground floor apartment with an additional storage facility. The apartment boasts street frontage and access.

EXCLUSIVE

FINANCIALS

Jim Chapman

VICTORIAN STATE MANAGER

M. +61 413 444 782 E. jimchapman@resortbrokers.com.au 42

> Ideally positioned in northern Melbourne suburb providing easy access to the CBD & Tullamarine Airport > 25 year agreements with $50,600 caretaking salary > City views from higher apartments > Brand new, high quality apartment complex suitable for short-term accommodation > Ground floor reception/office available for lease (initial rent $31,200 p.a.)

RESORTBROKERS.COM.AU

NET PROFIT: $379,640 proj.

PRICE: $1,350,000 MELBOURNE VICTORIA REF: OTP004420 P. +61 3 9347 3100

LH

Renovated motel needing an owner operator A sensational opportunity to secure a larger motel in one of Victoria’s best motel towns. Located in the commercial centre of Sale, IBIS Styles and conference centre boasts 30 recently refurbished units, with a variety of room configurations to suit all tastes and budgets. The rent is low, the lease long and the residence is a large three bedroom stand-alone house. It’s been run under management for years and would therefore benefit from hands-on owner operators.

> Consistent growth over the last 5 years > Expected growth over the coming years with major projects and activity in the region > Good rent to revenue ratio > Extensively renovated > Upside under an owner operator structure > Located in one of Victoria’s best motel towns FINANCIALS

Stuart Charles BROKER

M. +61 458 588 472 E. stuartcharles@resortbrokers.com.au

NET PROFIT: $212,842 PRICE: $710,000

REF: LH004371

MELBOURNE VICTORIA P. +61 3 9347 3100

LH

Tree change motel you’ve been dreaming about 36% return leasehold in the quaintest town in Queensland; that’s after rent and all expenses of course! The motel is located close to schools, hospital and all conveiniences. It is a 30 minute drive to a large regional town with private hospitals, schools, theatres etc. Due to the fact that the town is a stopover and not a destination for most, the owners are afforded a fair bit of free time during the day. All the rooms have recently been refurbished and present beautifully.

EXCLUSIVE

> Perfect husband and wife business > Excellent highway position and halfway to the Whitsundays from Brisbane > Consistent performer for over 16 years > Member of a major chain > Small dining room for in house guests serving home style meals > Undercover parking with extras for boats etc.

FINANCIALS

Len Booth BROKER

M. +61 438 139 422 E. lenbooth@resortbrokers.com.au

NET PROFIT: $212,184.31 PRICE: $589,500

REF: LH004379

BRISBANE QUEENSLAND P. +61 7 3878 3999

RESORTBROKERS.COM.AU

43

MR

Your office on the beachfront = lifestyle A rare opportunity exists for a couple to live in luxury and enjoy the location and friendly environment of this medium rise in Mermaid Beach. Immaculately presented both inside and outside, Albatross North offers both a lifestyle and potential to increase the net profit. Built in 1983, this complex comprises on a total of 21 units (10 holiday, 6 lock ups, 1 permanent (outside agent), 4 owner occupiers). The 10 holiday units are managed in the on-site letting pool.

Jenny Sorenson BROKER

M. +61 475 089 468 E. jennysorenson@resortbrokers.com.au

44

RESORTBROKERS.COM.AU

> Absolute beachfront property - guests walk straight onto the beach > Ultra-modern 2 bed/2 bath manager’s residence > Good upside potential through lock-ups > Flexibility of office hours (or contactable by phone) > Recently re-painted and spalling work completed > Low maintenance > High quality units in letting pool FINANCIALS NET PROFIT: $151,800 PRICE: $1,600,000

REF: MR004426

BRISBANE QUEENSLAND P. +61 7 3878 3999

EDITORIAL

REPAIR & REPLACEMENT - WHAT’S

MISSING?

BY RYAN JOHNSTONE – PEVY LAWYERS

IT’S been well over a decade since an industry specific motel type lease was introduced to the market. We often see variations of the ‘industry lease’ translated across a number of accommodation settings such as hostels, guest houses and tourist parks, but in general the lease has served the industry well for many years. As with just about any legal precedent though, the passage of time delivers up new circumstances which might not have been contemplated

when the template was put together – commercial realities, downturns and booms, changes in the law, and community expectations just being some factors. As a consequence, we are always coming across new ways in which additional value can be added to the position enjoyed by both landlords and tenants alike.

One of the most active components of a motel type lease are the repair and replacement provisions.

Undoubtedly the queries we get most

from our operator clients concern whose responsibility it is to repair or replace a certain piece of infrastructure or equipment. A typical Monday morning at Pevy Lawyers often involves burying our heads in a lease determining “who repairs the pool” or “who replaces the air conditioner”.

The reality is most standard motel type leases lack sufficient detail to afford them the absolute clarity they need to establish repair and replacement responsibilities.

In conjunction with some industry stakeholders, we have developed a comprehensive schedule that neatly sits at the back of a standard motel type lease document. The idea of the schedule is not new, but its extensiveness and categorisation of certain aspects of a motel or other accommodation business asset is. A partial example is detailed below:

LANDLORD REPLACEMENT RESPONSIBILITY

TENANT REPAIR & MAINTENANCE RESPONSIBILITY

TENANT REPLACEMENT RESPONSIBILITY

Yes

Yes

ITEM

OWNERSHIP

LANDLORD REPAIR & MAINTENANCE RESPONSIBILITY

Office equipment

Tenant

No

No

Yes

Yes - within the building once exiting the wall cavities

Yes

No

Underground pipes

Landlord

No

Yes – from property boundary to the entry into the building and within the concrete slab and wall cavities

Swimming Pool

Landlord

No

Yes

RESORTBROKERS.COM.AU

45

A schedule of this type needs to be adapted specifically to the accommodation asset – no two schedules will be the same. Detail can be added where needed, as seen with ‘underground pipes’ in the schedule above. Whilst benchmarks have been established with respect to ownership, repair and replacement, there are always exceptions.

Whilst we have successfully assisted a large number of landlords and tenants to introduce a dedicated repairs and replacement schedule into their existing lease, there is no doubt that negotiation of such a schedule is much more easily achieved before a formal landlord / tenant relationship has been established. Adopting a schedule in an existing lease is often difficult because a major item requires repair or replacement which can colour the manner in which a landlord or tenant negotiates.

It is also important to understand that there are still some limitations in

46

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these schedules – there will almost always remain to be some differing opinions on whether an item requires maintenance or has arrived at the end of its life and needs replacing. We see this often with just about every type of motel infrastructure, from grease traps and air conditioners, to shower systems and electrical conduit.

Feedback to date also indicates that the schedule has proven extremely beneficial for Star Rating Reports where upgrading or upkeep are enforced.

In adopting a dedicated repairs and replacement schedule, some key points also need to be considered: - I f you don’t own an item, you can’t depreciate it.

-W hat are the costs involved with repair of each item?

-H ow often is the item used and how important is its upkeep to the value of both the freehold and leasehold components of the motel/accommodation business?

- What are costs involved with replacement of an item?

- If there is a forced buyback provision in the lease, the landlord will, at the end of the lease, be required to buy back any items of property it does not own?

- Is it fair or commercial for the landlord or tenant to pay for a certain item?

Remember to consult your lawyer about the best way to formalise any changes to your lease (if necessary) once you’ve done the necessary market research and agreed a schedule with the other party to the lease.

Pevy Lawyers are leaders in the provision of legal services to the Australian accommodation industry, and would be delighted to assist you with your next transaction or consult with respect to your existing accommodation industry operation. www.pevylawyers.com.au | END

EDITORIAL

TAKING THE NEXT STEP.

ARE YOU READY?

BY MIKE PHIPPS - MIKE PHIPPS FINANCE HUMAN ambition is an interesting thing. Even while confronting the terror and stress of a new role or business venture many of us are already thinking about the next step.

I reckon it's all part of our innate survival instinct ingrained into us as a species. I'll bet that even while our distance Neanderthal cousins were dragging that Brontosaurus back to the cave they were already planning the next hunting expedition and perhaps some improved techniques and a more effective and efficient conquest. All the better to improve ones lifestyle and avoid the risk of becoming dinosaur poo!

This thirst for improvement and the next big step is certainly alive and well in the management rights industry.

The vast majority of our clients, having mastered the day to day management skills inherent in successful business operation, inevitably turn their thoughts to the next step up. For some they can sell their existing business and have the fire power to go bigger by themselves.

However, for many operators there is frustration as they build the necessary skills to operate quite large businesses but lack the equity to go it alone in a big high net profit property.

This dynamic can lead to a disconnect between skill sets and business size where the business operator is arguably over qualified but lacks the financial capacity to step up to the sort of business they are qualified to operate. In fact, the same can also apply to salaried on site managers. They develop strong skills and drive value within the business while creating no additional wealth for themselves.

Fear not, I have a plan. Just as there are experienced management rights operators looking for the next opportunity there are investors looking for somewhere to place their spare cash. Hopefully somewhere that might yield a better return than bank interest, property or shares. Given the abysmal returns in many asset classes that wouldn't be hard.

So, how might all this work?

Typically an operator or an investor will approach us and express some interest in purchasing a management

rights. They may have one in mind or they may simply be on the hunt.

They will seek our input in terms of funding options and in many cases ask us to help manage the acquisition process end to end. We are seeing many investors using self-managed super funds to invest albeit these types of decisions are obviously taken in conjunction with independent legal, compliance and tax planning advice.

The operator of the rights is referred to as the managing partner (typically a husband and wife team or similar) and is paid a salary package by the partnership. This will usually consist of a cash component and the use of the managers unit in which to reside. In most cases an allowance is made to cover relief for 4 weeks holiday and utilities and levies associated with the managers unit are paid by the partnership. Reasonable supporting labour costs are allowed in the budget and a working capital reserve is also maintained.

On top of the salary the managing partners receive a return on their equity investment. If they are 20% shareholders in the partnership they will receive an equivalent distribution of profits after bank interest and liquidity provisions. It is important not to confuse the salary paid by the partnership with the working partners investment dividend. They are two entirely different matters and should never be combined to reflect a total income. Doing so distorts the real RESORTBROKERS.COM.AU

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return as there is a return for labour and a separate return on equity.

They are totally different matters albeit investors love the idea of the managing partners having skin in the game. I hate that expression but it serves its purpose in this context!

Equity calculations are pretty simple. We take the total purchase price, add costs and working capital allowances, take off bank debt and the balance is the required equity.

Most investors will look at their slice of the total equity pie, analyse their likely cash return and convert that to a return on equity figure. Provided the return is appropriate for the perceived risk in the deal, investors are likely to proceed.

As you can see the managing partner essentially has a dual role.

On the one hand they are investors in the ownership of the asset and on the other hand they are employees of the partnership. I use employee as a broad term, it may well be a contract arrangement but you get the idea.

I can't talk about this subject without a word on debt and gearing.

At present interest rates are low

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so the miracle of leverage plays a big part in the success of these transactions. In this case what we are talking about is the ability to borrow at 5% variable rates and acquire an asset that may well be showing a 14% return on investment and an 18% return on equity. Clearly the more of that 5% money you can get your hands on the better the return on equity will be. However, a word of caution. We do not support the concept of fearless gearing, nor do we believe that rates will stay low forever. Prudent borrowers will always plan for interest rate fluctuations, cyclical trading conditions and some volatility in asset values.

It's fair to say that there's a lot more to these transactions than I can cover in this forum. If you would like to know more or are contemplating the next big step give me a ring. END Disclaimer: This article does not constitute investment advice. We are not financial advisors nor do we hold an AFSL. The percentages and concepts used are for illustration purposes only and should not be relied upon in any manner.

Parties contemplating the purchase of any business or any investment should consult their professional advisors.

COUNTDOWN to NEW INDUSTRY PORTAL LAUNCH A new online source of the latest news from the accommodation sector in Australia and New Zealand is set to launch. The Hotel Conversation is an exciting new initiative by digital publisher ShwartzWilliams, the people behind The Real Estate Conversation and RETalk Asia.

The niche accommodation business and property portal and media hub will cover hotels, motels, resorts and management rights, featuring latests news, transactions, trends and expert opinion.

And it promises to feature the industry’s leading figures including agents, owners, operators, property developers, architects, builders, interior designers, valuers, lawyers and accountants.

So keep you eye out for The Hotel Conversation - coming soon to a computer screen near you. END

Boutique Hotel - Perth Western Australia This soon to be constructed 64 key serviced apartment hotel is ideally located on the fringe of Perth CBD. The hotel will consist of the first four floors with a residential component above. This is a great opportunity for a boutique or branded operator to enter into the Perth market in a sought after location.

The offering will include the following opportunities: Option 1: Purchase the Freehold and brand and operate as you wish. Detailed financial projections indicate a net profit circa $1.9m once fully operational.

Option 2: Purchase the Leasehold and secure branding rights for a period of 30 years. Detailed financial projections indicate a net profit circa $1.045m after rent and all expenses.

Option 3: Purchase as Freehold Passive Investment fully leased for 30 years with experienced operators. Annual rent of $855.000 once fully operational.

To be developed by Finbar Group Limited, ASX listed and Western Australia’s largest and most trusted apartment developer with an enviable track record having delivered 29% of apartment builds in inner Perth since 2000.

Located near the major corporate sector of the CBD in close proximity to many major financial institutions, BHP and Rio Tinto and numerous other ASX listed and private companies. > 60 studio apartments and 4 accessible studios > Undercover parking, 22m heated pool, fully equipped gymnasium, sauna and outdoor dining facility > Multipurpose conference facility with kitchen and restroom facilities > Office and reception located on ground floor EXPRESSIONS OF INTEREST CLOSE 5PM 7/11/16 N.B. A Detailed Information Memorandum and Data Room access will be made available on request.

EXCLUSIVE

Glenn Millar

Steve Dawson

M. +61 412 277 804 E. glennmillar@resortbrokers.com.au

M. +61 408 550 441 E. steve@abs-info.com.au

BROKER - RESORT BROKERS

MANAGING DIRECTOR - AUSTRALIAN BUSINESS SALES

RESORTBROKERS.COM.AU

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large international brands with huge marketing teams and budgets.

However, the beauty of targeted digital marketing is that when done professionally, you can win the battle! This can be achieved through a targeted digital strategy, reaching your niche market and building your clientele fast, whilst only costing a fraction of the commissions you have been paying to OTA’s.

The advantages of generating direct bookings are clear:

HOW ACCOMMODATION OPERATORS

CAN MAXIMIZE PROFIT MARGINS

1. SAVE ON COMMISSIONS

BY AARON YOUNG - AARON YOUNG CONSULTING INCREASING direct bookings is the answer to maximising profit and control of your property.

It should be a high priority goal for every owner or manager of holiday accommodation, whether it be a hotel, resort or apartments.

The reasons for this are clear; commission paid to online travel agents (OTAs) range between 15% 20%, this reduces your overall profit

dramatically, not to mention that you are losing brand awareness and control. Focused and specific digital marketing means you skip the middle man, and ultimately increase, not only your profit but also your client database and ability to generate return and referral business.

As an independent accommodation facility it can be daunting to try and compete with

It’s simple, paying less on commission means higher revenue and a higher profit margin for you and your business.

2. PROTECT YOUR AVERAGE NIGHTLY WEEKLY RENT OTAs such as Booking.com operate on a commission model, so a reduction in your nightly price does not greatly affect their revenue.

For example a price reduction of

BELOW IS THE OUTLINE FOR A SUCCESSFUL DIGITAL MARKETING CYCLE

SNAPSHOT: key questions and statistics on current performance

01

02

05

STRATEGY: strategy: how are you going to market on different platforms? (Social media, adwords) what refinements are required to increase seo ranking and website converstions?

ANALYSE & ADJUST: weekly & monthly audits are performed, and constant adjustments are made

03

04 ACTION: implement The plan

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GOALS: set key performance goals. i.e.

What percentage of direct bookings would you like to generate?

EDITORIAL

ENSURING PROFIT

$50 per night only reduces their commission by $7.50 - $10, while you lose the remaining $40 $42.50. Furthermore, OTA’s rank and prioritise hotels according to the bookings generated, or a hotel must increase the commission paid to guarantee a higher ranking. In short, OTA sites can be become an all out bidding war, forcing hotels to lower their nightly price and/ or increase commission to retain ranking and visibility. By increasing direct bookings, you can reduce your reliance on OTA’s and safeguard your profits, all while still being competitive in the market.

3. BUILD YOUR OWN BRAND The ultimate goal is that people visit your site directly before visiting OTA sites. Direct bookings mean your customers will spend less time looking at OTA sites and at your competitors.

With many OTA’s not providing you with the customers direct email or contact details it is now much harder to retain customer loyalty. With all communication going through the OTA's website/contact centre, unfortunately this means that the bookings are the OTA’s customer, not yours. Growing your own database via direct bookings enables you to actively market, ensuring repeat business as well as being able to offer special deals (without losing commission) to maintain occupancy over yearly low season periods. to get in touch visit: aaronyoungconsulting.com.

from ADVERTISING FORMS PART OF NETT PROFIT

BY JOHN MAHONEY - MAHONEYS IT has been an unwritten rule for many years amongst accountants, and probably valuers and banks, that a manager cannot make a profit from advertising levies or at least if the manager does, that profit is not taken into account when assessing the net profit of the business.

The rationale for the rule is that monies paid to the manager for advertising is to reimburse the manager for advertising expenses incurred by the manager. So if there might be anything left over from what the manager has collected after meeting the advertising expenses, that excess belongs to the owners, not the manager who must account in some way to the owners for that.

The rule makes some sense, or at least it did in the past where advertising took the form of paid advertisements in newspapers, magazines, brochures and other publications. However in today’s world advertising consists of much more than that. For example a manager’s website is a critical tool in advertising, marketing and promoting a complex. A modern, sophisticated and attractive website can generate significant increases in occupancies and returns to owners.

Developing, maintaining and utilising a website and partaking in other social media promotions and activities are just some of the labour intensive work that a manager does to advertise, market and promote a complex. Whilst any actual expenditure on a website designer and a software provider would be properly regarded as expenses, there is a huge component of labour (by the manager or the manager’s staff) that cannot be classified as an expense and therefore not paid for from the conventional concept of advertising expenses.

The impact of that is twofold if advertising is treated as an expense from which the manager cannot profit. Firstly the manager, not the owners, must meet those labour costs. Secondly such costs will reduce

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the net profit, which in turn will reduce the value and sale price, of the business.

I have consistently maintained that if advertising is treated not as an expense to be reimbursed but as part of a service of advertising, promotion and marketing to be provided by the manager, then these adverse impacts are overcome. Where the letting appointment is properly structured in this way, the manager is providing an overall service which involves expenditure by the manager and the provision of labour, time and effort.

Where advertising is treated in this way there is no need to account separately to owners or others for any actual expenditure. All advertising levies collected belong to the manager and any excess above what might be actually expended should be taken into account for profit calculation purposes.

It is important that the fee or charge be properly described, that the POA Form 6 is properly completed and that there is proper disclosure of these things in the letting appointment (as for example in the ARAMA addendum drafted by Mahoneys).

Whilst I am aware that accountants continue to take a conservative approach to this issue and are reluctant to accept that a manager can make a profit from advertising levies, I am confident that their position is slowly changing. I am also confident that if advertising, promotion and marketing are part of a “bundled” fee or charge as contemplated in the various articles I and ARAMA have published recently (where most of the manager’s fees, charges and commission are bundled into one all-encompassing percentage amount), there will be general acceptance by accountants of profits from these activities.

I have worked with a large number of managers who have moved to the bundling concept for their letting appointments. The success they have enjoyed, and the rewards this will bring them when they sell (and not just from the higher profit generated through dealing with advertising this way), convince me that this trend will continue. END

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STRATA LIVING THE HOTBED OF COMPETING INTERESTS

by Col Myers of Small Myers Hughes IN nearly all strata schemes, there are different groups of stakeholders all with competing interests. Each of these groups has their own agenda In nearly all strata schemes, there are different groups of stakeholders all with competing interests. Each of these groups has their own agenda of what they want from the strata scheme, and what they are willing to do or sacrifice to make that happen. At a glance many of these groups may appear to have similar interests, but as with many relationships, similar interests often part ways at the gate to personal interest.

In an average strata scheme you will generally find the following parties with a vested interest in the operation of the scheme: the Developer; the Owners Corporation; the Executive Committee; the Resident Building Manager; the Strata Manager; owner occupiers; investor owners; selling agents; tenants; prospective buyers; prospective tenants; and mortgagees.

The list reads like an extremely cluttered Cluedo board (with interesting and memorable locations

such as Stairwell, Car Park and Lift Foyer). A discussion paper issued some time ago by the NSW Government highlighted this raft of competing interests. In this article, I want to highlight some of the issues at play with just a few of these parties.

DEVELOPERS It was noted by the NSW Government that the most often cited example of competing interests is between developers and owners.

The law has been changed a number of times over the years to reduce the control of developers and to require more information be handed over once a scheme is up and running. However, many owners still believe that developers exercise too much control over the building, either directly or indirectly, to the owner’s disadvantage.

Owner groups have argued that developers take only a short-term interest in the buildings they develop and move on as soon as all units are sold. The down-side is that the developer’s knowledge of the building

construction and structure is then lost.

In my view, developers need to ensure that three things happen when they complete a building: 1. the building is properly constructed so that later owners are not besieged by building defects; 2. that an appropriate long-term management structure is put into place for the benefit of owners; and 3. they make a profit from the exercise!

If developers can achieve points 1 and 2, then owners should not begrudge a developer achieving point 3. Understandably, when points 1 and 2 are not achieved owners may be justified in holding a different view towards point 3.

OWNER OCCUPIERS V INVESTOR OWNERS Each State’s strata legislation sets out the rules on how buildings are to be managed and administered over the duration of their life. They also set out some basic principles as to how owners are to deal with each other on a day-to-day basis. These rules are then in turn augmented by the by-laws registered for that building. The problem is that even with all these rules in place they simply cannot address all of the competing interests within the scheme that in some instances affect occupants on a daily basis. Most notably the conflicts between owner occupiers and investor owners (and their tenants), which can have a very different view on what is best for the building.

The prevailing view by owner occupiers is that investors are only interested in the short-term and in maximising their rental return.

Investors are viewed as disinterested in the day to day matters of the scheme and less inclined to spend money on maintenance as they do not live in the building and are more concerned with keeping levies low. Except of course when they are planning to sell and that foyer refurbishment and external painting will do wonders to the sale price.

The NSW Government at one stage actually considered an option to give resident owners two votes at an AGM in recognition of their higher stake!

A building that only allows short term occupancy is quarantined from

the competing interests held by owner occupiers and investors as there will only be investor owners. As this limits the developer’s ability to sell units in the building (and may not fit within zoning requirements), it is less common for a developer to develop a building that only allows for investor owners.

And for this reason, amongst others, it means most buildings will harbour one or more owner occupiers who harbour the views above (whether rightfully or not).

MANAGING CONFLICT In my view, if we are going to have buildings that continue to have a mix of owner occupiers and investor owners, it is in the interest of the building to have someone who can exert some control and influence over the conduct of the parties for the better of the building. This is where a Resident Building Manager can step up and be a great asset to the building as they can unify the investors towards common goals that benefit the building and which may also align with the goals of the owner occupiers (of which the

Resident Building Manager happens to be one). A Resident Building Manager is uniquely placed, as their own personal interests overlap with the personal interests of both owner occupiers and investors.

No matter how jaded the owner occupier, or scrooge like the investor, neither can deny that the Resident Building Manager is personally interested in maintaining the building to a high standard to increase the chance of higher rental returns, which is a win win for all concerned. The same cannot be said for offsite letting agents.

Owner occupiers and investors alike do themselves a disservice if they overlook the benefit of making the most of the personal interests they share with the Resident Building Manager and instead foster an environment that is hostile to the Resident Building Manager. END

THE LOW DOWN ON

DOWNSIZING & UPGRADING

BY MIKE O'CONNOR

IT TAKES A SPECIAL BLEND OF OPTIMISM TO HAND SOMEONE A SIGNIFICANT SUM OF MONEY IN EXCHANGE FOR AN ASSURANCE THAT IN TWO YEARS TIME, THEY WILL DELIVER SOMETHING THAT DOES NOT EXIST. IT'S now two years since we contracted the downsizing virus, the symptoms of which include a sudden reluctance to mow lawns, trim hedges and maintain swimming pools.

You also tire of lengthy cab rides to and from your favorite bars and restaurants, trips made longer by the tendency of you and your partner to fall asleep on the way home and wake up when the driver is halfway to Alice Springs.

"Sell the house,” whispers the downsizing virus, "and move to an apartment in the inner city.”

So we found an apartment or at least a very nice model of a building which would one day exist if enough people could be convinced to put down a 10 per cent deposit on their dream.

Having done this, the trick now is to sell the house in which you are living.

In theory, you sell your existing property and move seamlessly into the apartment which will rise from the ground and welcome you in two years time In theory, yes. In practice, this will never happen. Here’s a tip. If the real estate agent you have engaged to sell RESORTBROKERS.COM.AU

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EDITORIAL

your house starts saying to you: "The market’s changed”, start looking for a new agent.

After hearing this for four months and despairing of ever selling, we changed agents. The new one sold it on the first day and had three parties vying for it.

Lesson learnt? Not all agents are created equal.

It then dawned on us that thanks to the spectacular success of our agent, we now had nowhere to live as the apartment was still six months away.

We’d become so accustomed to constant failure that we were totally unprepared for success.

We’d have to rent. I found a place and stupidly thought all I had to say was: "We’ll take it.’’

References. They wanted references from our previous landlord.

"I haven’t rented a place in 30 years,” I said. "We own everything.”

This caused some consternation.

Renting to people with no references was not allowed.

They wanted bank statements, passports, driver’s licences and copies of tax returns.

"I only want to rent the apartment,” I moaned, "not borrow money to buy the entire building.”

"References,” they said. In the renting business, it seems people who 54

RESORTBROKERS.COM.AU

own everything are looked upon with suspicion.

At last, after filling out several reams of paperwork, we were judged as being suitable to become tenants.

The other small quandary we faced was fitting the contents of a two storey, five bedroom house into a three bedroom apartment.

So THAT’s what they mean when they talk about downsizing.

We had a garage sale and I can still remember the moment I sold my 10 year old Victa mower for $10.

I was free! I’d been liberated.

"What about those?” said my wife, pointing to a row of containers on the garage bench.

"Pool chemicals,” I said. "They’re a gift for the new owner. I will never maintain a swimming pool again.”

Will I miss fishing toads out of the filter box? Probably not, although I did enjoy using a shovel like a catapult and flinging them into the neighbour’s yard.

We sold a lot of stuff, gave some away, and kept the basics for the apartment.

I had expected my wife to have some sentimental reservations at this wholesale disposal of household memories.

Then I realized that if we got rid of all the old stuff, we’d have to get

new stuff for the new apartment and that she’d have a lovely time buying a complete new collection of stuff.

"What about the washing machine?” I said. "There’s nothing wrong with it.”

"It would look out of place. We have to get a new one,” she said.

More than two years after signing the contract, we have the keys and so we’ve moved in and living happily ever after, right?

Not quiet.

The blind and curtain man has been and after several weeks of indecision, colors and fabrics chosen.

Then the wardrobe and kitchen cabinet fitter-outer woman came followed by the people changing the laundry to accommodate a wine fridge.

Then came the man who builds entertainment units that cost more than a car and so on it went.

The suitably modified apartment should be ready next month and I have warned my wife that I will not be moving for another 10 years.

One of the ideas of moving was so that we could walk to bars and restaurants.

By the time we move in I’ll be so exhausted I’ll have to pay someone to carry me down the street and deposit me carefully on a bar stool. END

FH

Incredible Eco Retreat just metres from the beach in Port Stephens The spectacular Wanderers Retreat is set on a stunning 1.6 hectares of unspoilt bushland, with 12 fully self-contained cottages. The eco-resort offers a variety of accommodation options including couples studios, one and two bedroom apartments, treehouses and an incredible spacious four bedroom beach house. This property is self-rated four star, with steady occupancy, perfectly placed within pristine koalainhabited bushland and just 400m to the patrolled surf beach.

> Picturesque location just 2 hours drive from Sydney > A breeze to operate (no F&B) > Room for expansion with existing approvals > Genuine lifestyle business with a fabulous residence that can equip a family > Strong repeat business > Eco friendly sustainable accommodation

With plenty of room to expand, the property has DA approval for construction of a further nine cottages, of which five have a current ongoing building approval.

NET PROFIT: On request PRICE: Expressions of Interest over $3,000,000

Perfectly suited for a management couple, this property has a two storey, three bedroom, two bathroom residence, with outdoor entertaining areas and lush surroundings. The business is easily run by a couple and offers an enviable lifestyle and income for those looking for a viable business.

FINANCIALS

REF: FH004428

EXCLUSIVE

Shane Wynhoven BROKER

M. +61 424 174 592 E. shanewynhoven@resortbrokers.com.au

SYDNEY NEW SOUTH WALES P. +61 3 9347 3100 RESORTBROKERS.COM.AU

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new state legislation based on the information we have received from the New South Wales Office of State Revenue. This will assist with any questions investors may have regarding these changes.

LEGISLATION CHANGES

STAMP DUTY CHANGES - MUST-KNOW FACTS FOR NSW BUSINESS BUYERS

BY DAVID BURROUGH – HILLHOUSE BURROUGH MCKEOWN

GOOD NEWS FOR NSW BUSINESS BUYERS. STAMP DUTY, WHICH CAN BE A SIGNIFICANT TRANSACTION COST, HAS BEEN ABOLISHED IN NSW ON THE SALE OF BUSINESS ASSETS OTHER THAN REAL PROPERTY. STAMP duty can be a costly component of transactions. Prior to this change, it would have amounted to more than $40,000 payable on a contract for the sale of a NSW business with a purchase price of $1 million.

The NSW Office of State Revenue announced that a number of duties will no longer apply from the 1st of July 2016. They include mortgage duty, business asset duty and marketable securities duty.

This article deals principally with changes to the duty on sale of business transactions.

The change means that mortgages executed on or after the 1st of July 2016 or further advances made on mortgages made on or after this date (irrespective of the date of the mortgage) are not liable for duty.

Below is a summary of the 56

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Under the new state legislation, stamp duty will not be payable on the following types of business assets from the 1st of July 2016: • the goodwill of a business (if the business supplied or provided services in New South Wales to a customer of the business) • Intellectual property that has been used or exploited in New South Wales • A statutory licence or permission under a Commonwealth law if the rights under the licence or permission have been exercised in New South Wales • A statutory license or permission under New South Wales law (for example a taxi licence) • A gaming machine entitlement as according with meanings outlined within the Gaming Machines Act 2001.

The changes to business duties outlined by the Office of State Revenue impact the sale of any business assets that occur on or after the 1st of July 2016. The benefit of the abolition of stamp duty on business assets applies only to contracts exchanged after the 1st of July 2016.

There are strong anti-avoidance provisions in that a replica contract executed on or after 1 July 2016, replacing a contract executed prior to 1 July 2016, is liable for duty, as is a contract exchanged after 1 July 2016 pursuant to an option to purchase the property entered into prior to 1 July 2016.

In a typical business sale where the vendor of the business owns plant and equipment, goodwill, statutory licences and the business enjoys the benefit of an interest in a lease of the premises, no stamp duty will usually be payable on the sale of the business.

Where the arms-length vendor and purchaser of the business agree that the value of the interest in the lease (still a dutiable asset after 1 July 2016) is of nominal value, then the provisions of Section 26 of the Duties Act will

UPDATE

likely apply where, if the dutiable assets of the transaction amount to less than 10% of the sale price, then the Chief Commissioner may disregard the value of the goods in the transaction.

The parties to the transaction should seek expert advice to confirm that the interest in the lease is of nominal value. Stamp duty of only $10.00 will be payable (minimum duty under Section 273 of the Act).

APPORTIONMENT In circumstances where a purchaser is buying land and buildings, goodwill and plant and equipment, stamp duty is payable on the value of the land and buildings and the plant and equipment.

If no apportionment can be agreed, it may be advisable for the purchaser to obtain a valuation of the plant and equipment prior to stamping the document so that duty will be assessed on the value of the land and buildings and the plant and equipment as contained in the valuation. This will also assist the purchaser in establishing his depreciation schedule post-settlement.

Purchasers should bear in mind that, where the land and buildings and the business are being purchased by separate but related entities, the provisions of Clause 25 of the Act will aggregate the contracts for the purpose of assessment of duty, resulting in duty being assessed on the value of the land and improvements and the value of the plant and equipment. END

They Say “Travel is the only thing you buy that makes you richer.”

UNKNOWN

THREE 4X4S WHEELED OUT FOR DROUGHT AID AFTER

BUSH CYCLING EVENT RAISES $150,000 THREE SHINY NEW 4WDS HAVE BEEN OFFICIALLY HANDED OVER TO VOLUNTEER DROUGHT AID ORGANISATION 'AUSSIE HELPERS' THANKS TO THE PEDAL POWER OF RIDERS ON A 3-DAY, 260KM CYCLE THROUGH QUEENSLAND’S WESTERN DOWNS. THE event, Team Nissan Dealers K’s 4 Aussie Farmers, eclipsed its target to raise more than $150,000 in late August when 45 riders and 15 support crew hit the roads between Dalby, Tara, Miles and Chinchilla.

So it was a proud bunch of cyclists and organisers who gathered for a ‘recovery’ barbecue in Brisbane on October 9, to present three brand new Nissan Navarra 4WDs to Aussie Helpers founders, Brian and Nerida Egan.

Event organiser Helen Debenham said the inspirational efforts of Aussie Helpers provided the impetus for the event.

“When we asked Brian Egan what we could give him with the funds we raised, he said he desperately needed more vehicles to enable his volunteers to travel the vast distances to reach the many isolated farmers struggling to survive this record-breaking drought.

“These people are proud and hardworking farmers who don’t want to ask for help, so a visit and sharing a cuppa over the kitchen table with a trained volunteer can be the simple thing that gives them the strength to continue,” she said.

So, on August 26 the 60-strong contingent set out to cover 260kms over three days, stopping in towns by night, and sustained along the way by service clubs and supporters including the Lions Club of Dalby, Dalby Coffee Club, Tara Anglican Guild Ladies and the Condamine Isolated Childrens Parents Association (ICPA).

“These groups fed our riders and support crew in spectacular country style,” Helen said.

Joining major sponsor Team Nissan Dealers to make the K’s 4 Aussie Farmers event possible were generous supporters including Resort Brokers Australia, Harvey Norman, Vault Accountants and Financial Advisors, Opteon Property Group, Knight Frank, Suncorp, PwC Australia, HD Events and Perle Creative.

“We are privileged to have some big name corporate sponsors getting behind the event, which to me speaks volumes about their appreciation of the plight of our farmers.

“To have reached our fundraising target is such a credit to everyone involved.”

Fundraising continued until September 30 so some fuel cards could also be presented to Aussie Helpers with the vehicles, Helen said.

Aussie Helpers was founded in 2002 by Brian and Nerida Egan.

Now, with just 40 volunteers, two paid administrative workers and no government assistance, Aussie Helpers provides emotional and practical support to struggling farmers in drought-declared regions from Longreach to Walgett and all points between.

The Team Nissan Dealers K’s 4 Aussie Farmers ride has evolved from its forerunner, K’s 4 Country Kids, an annual fundraising cycle that supported sick children.

After 10 years of successful events that raised almost $2 million for the Leukaemia Foundation and Royal Queensland Children’s Hospital, the passionate team of charity bike ride organisers turned its attention to the drought-ravaged bush. END RESORTBROKERS.COM.AU

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MR

A wonderful opportunity presents itself in one of Brisbane’s northern suburbs This property in the northern suburb of Murrumba Downs is just 21km from the heart Brisbane CBD. This a business with opportunity for upside, containing 75 units in the complex 64 of which are in the letting pool.

The first class managers residence is spacious and is built to make life very comfortable and easy for the incoming manager. It has an attached and exclusive office space allowing the owner to run their business professionally and with no distractions.

This complex is suited to many types of buyer, whether that be a first time purchaser with a family or an experienced operator looking to grow another business and live onsite.

The demand for complexes such as this is always strong as they provide the perfect balance between a secure and strong business and an enviable lifestyle.

> A solid $84K BC salary > Wonderful location - shops within walking distance > Easy and manageable caretaking duties > Lifestyle living > Massive manager's residence > Exclusive modern office space > Great net profit and opportunity for further growth FINANCIALS NET PROFIT: $257,474 PRICE: $1,750,000

REF: MR004381

EXCLUSIVE

Brent Staker BROKER

M. +61 410 344 344 E. brentstaker@resortbrokers.com.au 58

RESORTBROKERS.COM.AU

BRISBANE QUEENSLAND P. +61 7 3878 3999

Are You The Onsite Manager?

We’ll Market Your Listings EVERYWHERE (for just one VERY low annual fee and ZERO commissions!)

Plus your own, FREE, custom designed website

Everything you need to sell and rent inside your complex and out!

Property Marketing Services National Tenancy Blacklist Screening All Forms, Contracts and Paperwork Searches on RPData and PriceFinder

ZERO COMMISSION! Call 07 3868 4047, or visit TheOnsiteManager.com.au RESORTBROKERS.COM.AU

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FH

Coastal caravan park with plenty of up-shot This is a great opportunity for a motivated couple/family to take this park to the next level. There is room for extra infrastructure – cabins and more powered sites to enhance the operation of this park. The park has a main office/ reception building with an ablutions block to cater for all guests. The reception is attached to a comfortable residence that provides modern appliances and easy operation.

> Great exposure located on the main arterial road into Cooktown > Consistent year on year growth > Opportunity for further growth > Spacious and modern living accommodation > Extra land for further sites and cabins > Increased tourist numbers to Cooktown in the last couple of years making it a must see destination FINANCIALS

Shane Mullins

NET PROFIT: $120,000 PRICE: $1,100,000 + SAV

BROKER

M. +61 447 185 001 E. shanemullins@resortbrokers.com.au

REF: FH004393

BRISBANE QUEENSLAND P. +61 7 3878 3999

MR

Luxury boutique Noosa resort It is difficult to do justice to this unique property in a single report. Your viewing of picturepointterraces.com.au will confirm the exceptional quality of this property. Better still, your personal inspection will be most rewarding. The manager’s residence is of a calibre rarely offered. The two bed, two bath apartment, like those offered as luxury guest accommodation, affords exceptional residential style and comfort and includes a vast private Jacuzzi terrace.

EXCLUSIVE

> One of the top resorts in Noosa Heads > 9 of 12 luxury ocean facing apartments in letting pool > Stunning ocean views from all apartments > Superb resort facilities - heated pool, sauna, gym and guest arrival/departure lounge > Office, linen room and huge storage area on exclusive use for manager > Substantial body corp salary $61,189 ($4706 per lot) FINANCIALS

Glenn Millar BROKER

M. +61 412 277 804 E. glennmillar@resortbrokers.com.au

NET PROFIT: $249,000 PRICE: $2,200,000

REF: MR004271

BRISBANE QUEENSLAND P. +61 7 3878 3999

RESORTBROKERS.COM.AU

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LH

High performer hotel in Queensland’s Gulf The Purple Pub Normanton is an iconic country hotel with all the trimmings. With an annual turnover of $2.5m+ in accommodation and F&B, and a further $10m+ turnover in gaming, this country hotel a lot to be desired. Income is derived from hotel operations (F&B), 17 motel rooms and liquor barn. The comfortable motel style accommodation adjoins the hotel and is just a stroll across the garden to the pub’s outdoor restaurant.

EXCLUSIVE

> Normanton is the major commercial centre of the Carpentaria Shire situated on the Norman River > Consistent year on year growth with opportunity for further growth > Currently operated mostly under management > Experienced staff to assist with transition > Recently refurbished gaming room in 2015 FINANCIALS

Shane Mullins BROKER

M. +61 447 185 001 E. shanemullins@resortbrokers.com.au

NET PROFIT: $700,000 PRICE: $1,750,000 + SAV

REF: LH004354

BRISBANE QUEENSLAND P. +61 7 3878 3999

LH

Luxury leasehold resort in Broome, Western Australia Being Broome’s newest and most unique boutique accommodation “The Billi Resort” has been featured in many articles in high end travel publications and is highly rated on Trip Advisor. Wedding parties or corporate clients can book out the whole complex which can then be themed to suit.

From the sublime architecturally designed two bedroom villas, to the stunning luxuriously fitted out safari tents, this resort epitomises Broome.

EXCLUSIVE

FINANCIALS

Glenn Millar

in conjunction with Australasian Business Sales WA

M. +61 412 277 804 E. glennmillar@resortbrokers.com.au 62

> Featuring 8 x two bed villas, 1 x studio, 3 x luxury king safari tents and 3 x luxury queen safari tents > Dedicated managers residence > Located in the prime tourism precinct of Cable Beach, named in the world top 10 beaches > No.1 in Broome on Trip Advisor

> 12 weddings already booked for 2017 > New 30 year lease

RESORTBROKERS.COM.AU

NET PROFIT: $236,000 PRICE: $900,000

REF: LH004418

PERTH WESTERN AUSTRALIA P. 1300 665 966

FH

Freehold caravan park just 1 hour from Darwin Under instructions from the vendors the property is to be sold as both parties have reached retirement age. The current owners have managed to get every tourist bus to stop on their visit to popular attraction Litchfield National Park, and are happy to share their secret. The park facilities include a shop with general supplies and takeaway food, in-ground pool, sealed car park, BBQ area, beer garden, guest laundry, male and female amentities and recently installed solar EXCLUSIVE

> Under the same ownership for 14 years > 4 single cabins (with bathrooms), 4 budget rooms (no bathroom), 4 single ensuite motel rooms, 34 powered sites and 28 unpowered sites > Minimal staffing required > Opportunity to increase overall value of the business > 2 hectares, 7900 square metres > Expressions of Interest required by 1st December 2016 FINANCIALS

Ian Crooks

MANAGING DIRECTOR

M. +61 411 171 648 E. iancrooks@resortbrokers.com.au

NET PROFIT: $192,602 PRICE: Offers Invited DARWIN NORTHERN TERRITORY REF: FH004046 P. 1300 665 966

MR

Picturesque complex, residence and location The complete package and a little piece of paradise - Little Cove, Currumbin. The location, grounds and units all contribute to this beautiful lifestyle business. One of the many plus’ is the newly increased body corporate salary approved at the latest AGM, and the newly topped up agreement expiring in 2035. The complex consists of 36 units with 13 in the on-site letting pool, (7 short-term /holiday basis and 6 permanent rental), with an extra holiday unit during the Christmas holiday season.

> Large modern 2 bed, 2 bath managers residence with office attached and on title > Security gated complex > Heated pool, spa, sauna, BBQ areas and Foxtel > Lots of repeat business with growth opportunity > Uninterrupted views of Currumbin Beach and Gold Coast > Supportive body corporate and proactive committee > Good mix of permanent and holiday letting FINANCIALS

Jenny Sorenson BROKER

M. +61 475 089 468 E. jennysorenson@resortbrokers.com.au

NET PROFIT: $172,322.11 PRICE: $1,320,000 BRISBANE QUEENSLAND REF: MR004427 P. +61 7 3878 3999 RESORTBROKERS.COM.AU

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EXPRESSIONS OF INTEREST

SECURE THIS LARGE-SCALE, PRIME MANAGEMENT RIGHTS Producing income as soon as March 2017!

Resort Brokers Australia is excited to exclusively present this outstanding management rights opportunity in one of Brisbane’s most sought-after precincts. Consisting of two stages under one body corporate, allowing a 6 month break to fill the first tower (Laguna) before the expected completion of the second tower (St Tropez). Brand new 25 year agreement with an outstanding body corporate salary of $466,400 + GST. This duo of stylish towers, totalling 424 apartments, is part of a prestigious precinct, an oasis of stylish inner-city living less than 1.5km from the Brisbane CBD. Both rising 20 storeys above a stunning lagoon pool and water features, this is where tranquillity and city lifestyle meet.

Superbly positioned to enjoy city views, the buildings have prime position within walking distance of the buzzing James Street and Gasworks Plaza shopping and dining destinations. Laguna and St Tropez are 100% pre-sold and are under construction, the first of the two towers anticipated to be completed in late March 2017, followed by stage two later in the year. Surrounded by a smorgasbord of restaurants, cafes and amenity including some of Brisbane most fashionable precincts.

You could start your day with a brekky at Buzz café in the Gasworks before wondering down to James Street for a little shopping, followed by a coffee or lunch at Harvey’s. Finish your day looking at Brisbane's best homewares.

PROJECTED NETT PROFIT: $1,002,556 EXPRESSIONS OF INTEREST CLOSES: 11th November 2016

TIM CROOKS NATIONAL OFF THE PLAN SPECIALIST M: 0422 208 450 E: timcrooks@resortbrokers.com.au

GARETH CLOSTER BROKER M: 0423 182 766 E: garethcloster@resortbrokers.com.au

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RESORTBROKERS.COM.AU

T O CO M MI A N R G K ET

D L SO T U O

D L SO T U O RESORTBROKERS.COM.AU

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FH

Location...tick! Lifestyle...tick! Longevity...tick!

History...tick!

If you are looking for the perfect hotel business to buy there are some important boxes to be ticked, such as location, lifestyle, longevity and history.

The Julia Creek Hotel (known locally as the “Top Pub”) is steeped with history and is well known for its friendly welcome, great service and restaurant.

The hard work has already been done here - fully renovated and air-conditioned with bar, beer garden and both private and public meal areas.

The business has 12 fully renovated country style airconditioned guest rooms on the second level opening onto wide verandas with views over the town, plus three donga accommodation facilities. The owner’s residence is located above the hotel and is fully self-contained.

> 20% growth over three years > Experienced staff for easy transition > Recently refurbished with no money to spend > Opportunity for further growth > Consistent trade making a profitable hotel > Commercial kitchen with private and public dining areas FINANCIALS NET PROFIT: $175,905 PRICE: $850,000 + SAV

REF: FH004291

Des Fagg BROKER

M. +61 427 849 119 E. desfagg@resortbrokers.com.au 66

RESORTBROKERS.COM.AU

BRISBANE QUEENSLAND P. +61 7 3878 3999

LH

Prestigious Quest Apartment Hotel leasehold in the Perth beachside suburb of Scarborough The opportunity to become involved with Australasia’s most successful Apartment Hotel franchise group. The leasehold interest of Quest Scarborough offers the prospective purchaser a boutique 38 serviced apartment hotel property.

Consisting of an array of spacious studio, one and two bedroom (interconnecting) apartments with fully equipped kitchens (studios have kitchenettes), bathrooms, laundry facilities (excl. studios), open plan living and dining areas, Wi-Fi, DVD players and quality furniture and fittings.

Additional facilities include an outdoor pool, BBQ area, conference room, expansive reception including manager’s office with three work stations, staff kitchen, luggage room, guest laundry and secure basement car parking.

Scarborough is a coastal suburb of Perth approximately 14km northwest of the city centre in the City of Stirling. With a population of over 215,000, the City of Stirling is the largest local government by population in the state.

> Award winning apartment hotel business > Excellent mix corporate and leisure guests > Member of Australasia’s largest apartment hotel

franchise group > Close to Scarborough Beach and the new Beachside Ocean Pool > 29 year lease from May 2016. Market Rent FINANCIALS NET PROFIT: $988,842 PRICE: $3,950,000

REF: LH004444

EXCLUSIVE

Jim Chapman

VICTORIAN STATE MANAGER

M. +61 413 444 782 E. jimchapman@resortbrokers.com.au

PERTH WESTERN AUSTRALIA P. 1300 665 966 RESORTBROKERS.COM.AU

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3 FANTASTIC MANAGEMENT RIGHTS ON QUEENSLAND’S SUNSHINE COAST All offers will be considered Fairseas Apartments would be perfect for the first time buyer looking for a steady income or alternatively a couple wanting to semi-retire to the coast.

Having a three bedroom managers’ apartment means it would also be ideal for a family with children where one of the partners could run the business and the other could have an outside income stream. This is how the business is currently run. > Majority of units in the letting pool with only 1 resident owner > Well-presented neat complex in a relaxing beach front position > Great body corporate committee > Popular holiday destination with lots of repeat business > Each unit has it’s own lock up garage FINANCIALS

NET PROFIT: $78,000 | PRICE: All offers considered

REF: MR003951

Lifestyle, location and income Bali Hai Apartments are centrally located on Noosa Hill only 600m from Hastings St and Main beach and 400m to Noosa Junction business, shopping and entertainment district. The 12 large two and three bed apartments have fantastic views over Noosa and have had numerous upgrades completed over the past two years. All the apartments are in the holiday letting pool. The building has also been upgraded with new paint, paving, balustrades and external blinds giving the property a fresh new appearance thanks to a very proactive body corporate. > 2 bed 2 bath fully renovated manager’s unit with fantastic views > Steady growth in occupancy and plenty room for more > Net profit shown is to February 2016 - it will be higher with increase in occupancy FINANCIALS

NET PROFIT: $159,818 | PRICE: $1,329,000

REF: MR004058

Ocean views from every room This small but prime located complex resort is in an unsurpassed position, commanding one of the best locations on the Sunshine Coast, right opposite one of the Sunny Coast’s most popular patrolled beaches.

The complex comes with secure undercover parking, a coffee shop on site, ocean and lift access to all floors. Easily run by one person, Coolum Baywatch also has body corporate approval to live off site. > Strong growth potential as current occupancy is only 56% > Prime ocean facing location never to be built out > Potential to work with owners and the body corporate with ongoing refurbishment > Opportunity to secure more units in letting pool FINANCIALS

REF: MR003738

NET PROFIT: $105,000 | PRICE: Open to offers

CONTACT

Glenn Millar

Tyler Millar

M. +61 412 277 804 E. glennmillar@resortbrokers.com.au

M. +61 411 271 761 E. tylermillar@resortbrokers.com.au

BROKER

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BROKER

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Staying Ahead of the Challenges Join the Accommodation Association of Australia.

The Accommodation Association of Australia is your national industry representative body, and best placed to manage all the challenges the industry faces.

“The Association gives us the security… with a tremendous amount of support and advice in time of need.”

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“The multitude of benefits far outweigh the minimal membership fee of joining the Accommodation Association.”

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BRISBANE, QUEENSLAND MANAGEMENT RIGHTS BROKER

AGENT PROFILE

Jessica Wilkie

OUR AGENTS PRIDE THEMSELVES ON THEIR LOCAL KNOWLEDGE. THEY EACH LOOK AFTER A GEOGRAPHICAL PATCH, AND GROW TO KNOW IT INTIMATELY. WE FEEL THIS ADDS GREATLY TO THE CONFIDENCE WITH WHICH A PROPERTY CAN BE SOLD. IN THIS FEATURE WE WILL GET SOME THOUGHTS ON THEIR LOCAL AREA AND WILL ALSO LEARN A BIT ABOUT THEIR PERSONALITIES. HOW LONG HAVE YOU WORKED AT RESORT BROKERS AUSTRALIA? I have been at Resort Brokers since February 2016 (9 months) WHAT IS YOUR BACKGROUND? I have had a predominately sales background across a variety of industries including weddings and events, education and retail. I have graduated in business management, human resources management and event management studies, all of which gave me skills I draw on every day. I grew up in Brisbane, although I spent seven years living and working in Melbourne. After many adventures down south, I finally returned home in January this year to join Resort Brokers, and I haven’t looked back since.

TELL US ABOUT YOUR MY AREA I am lucky enough to cover the Brisbane Southside, from West End and South Brisbane to Logan, and everywhere in between. It is quite a wide and varied area, which makes each day different to the one before. I enjoy both the cultural diversity and the diverse range of management rights available across my territory.

Most suburbs are easily accessible from the M1 Motorway, which makes getting around to see clients a breeze. From the inner city apartment complexes with rooftop pools and city views to the well-manicured suburban townhouse complexes, the Southside of Brisbane has something for everyone.

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TELL US ABOUT AN ISSUE WITH A SALE THAT YOU HAVE OVERCOME AND WHAT YOU LEARNT FROM THAT? I quickly came to understand that clear communication and problem solving are very important skills in this job. The biggest issue I overcame to successfully achieve a sale was when I needed to work very closely with my vendor and purchaser to negotiate the deed of assignment with a very challenging body corporate.

Keeping a positive relationship between all parties makes the whole process much easier and more enjoyable. Working with industry specialist accountants and solicitors is a must. It is also important not to be swept up in the emotion of the sale process, particularly if there are stressful issues to handle, and to make all decisions from a commercial perspective.

WHAT HAS BEEN YOUR BIGGEST SUCCESS SINCE STARTING AT RESORT BROKERS AUSTRALIA? My biggest success would be securing my first listing for high profile Melbourne-based developer BPM of a new West End management rights, after only being with Resort Brokers for two months. Following the success of that sale, I have been appointed to sell the management rights for BPM’s next three developments in Brisbane.

Very exciting times ahead!

WHAT ANNOYS YOU? Negativity and lack of integrity annoy me. There is always a solution to every problem if you look hard enough. As a broker, people must be able to rely on your word. If you break that, you lose all integrity and credibility. Nobody wants that.

WHAT DO YOU LOVE? I love surfing and fishing on weekends - basically any activity in or around the water. I come from a large family, so we get together a lot, which is always great fun. I also love to cook for family and friends, and just relax at home.

Lastly, I know it may sound cheesy, but I love our amazing workplace culture. Never have I worked in such a great team environment where everybody is so supportive and encouraging. We work very hard, and sometimes we also play hard. It is always a lot of fun!

DO YOU HAVE A NICKNAME? Jessicat, Jess, Jesso WHAT TO YOU DO IN YOUR SPARE TIME? I spend my weekends at the Sunshine Coast surfing and unwinding at the beach after a busy week of work. I love to go out fishing, trying to catch a feed for dinner (unfortunately I’m usually unsuccessful). I keep fit working out in the mornings and enjoy a run or walk in the evenings. I ensure that I balance it out by indulging in delicious food and wine at the latest bars and restaurants around Brisbane.

SOLD PROPERTIES

RESORT BROKERS AUSTRALIA HAS SOLD AND SETTLED 146 PROPERTIES SINCE THE 6TH JANUARY 2016. WE HAVE A FURTHER 82 UNDER CONTRACT.

FREEHOLD MOTEL BOWEN, QLD

LEASEHOLD MOTEL BALLARAT, VIC

MANAGEMENT RIGHTS BURLEIGH, QLD

SERVICE APTS LEASEHOLD BELla vista, NSW

MANAGEMENT RIGHTS NEWSTEAD, QLD

MANAGEMENT RIGHTS STANTHORPE, QLD

MANAGEMENT RIGHTS TOOWONG, QLD

INVESTMENT MOTEL GOULBURN, NSW

OFF THE PLAN MR CANNON HILL, QLD

freehold MOTEL WARRAGUL, VIC

MANAGEMENT RIGHTS CONTARF, QLD

MANAGEMENT RIGHTS SURFERS PARADISE, QLD

freehold MOTEL lismore, qld

investment motel west wyalong, nsw

MANAGEMENT RIGHTS CARRARA, QLD

FREEHOLD MOTEL EDEN, vic

LEASEHOLD CARAVAN PARK CONJOLA, NSW

MANAGEMENT RIGHTS perigion, qld

LEASEHOLD MOTEL GRIFFITH, QLD

SERVICE APTS LEASEHOLD GEELONG, VIC

FREEHOLD MOTEL LUCINDA, QLD

INVESTMENT MOTEL GUNNEDAH, NSW

MANAGEMENT RIGHTS BROADBEACH, QLD

LEASEHOLD MOTEL HEATHERBRAE, NSW

MANAGEMENT RIGHTS CAIRNS, QLD

MANAGEMENT RIGHTS PORT DOUGLAS, QLD

LEASEHOLD MOTEL MERIMBULA, NSW

MANAGEMENT RIGHTS WOOLLONGABBA, QLD

SERVICE APTS LEASEHOLD PERTH, WA

MANAGEMENT RIGHTS BRISBANE, QLD

LEASEHOLD MOTEL PORT MACQUARIE, NSW

LEASEHOLD BACKPACKERS BOWEN, QLD

MANAGEMENT RIGHTS CAIRNS, qld

MANAGEMENT RIGHTS SOUTH BRISBANE, QLD

MANAGEMENT RIGHTS BUDERIM, QLD

RESORTBROKERS.COM.AU

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LOOKING TO REACH THE ACCOMMODATION AND TOURISM INDUSTRY? WHY NOT ADVERTISE HERE. YOU WILL SEE A RANGE OF INDUSTRY SPECIALISTS ARE ADVERTISING IN OUR WIDELY READ INFORMER. CIRCULATION - 9,500 - MAILED HARD COPIES & 15,500 - SENT DIGITALLY IF YOU WOULD LIKE A COMPANY ADVERT ON THIS PAGE PLEASE CONTACT: CARLA COOK: 0467 600 611 OR EMAIL US CARLACOOK@RESORTBROKERS.COM.AU Qualifications

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RESORTBROKERS.COM.AU Owen has worked in the valuation industry since 2002 and specialises in going concern

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ALL PROPERTY TYPES QLD & NSW

M 0404 473 100 E grant2466@bigpond.com

M 0458 416 484 E lauren@realstrategix.com.au

Please note: this is simply a directory service that we provide to assist you, should you choose to go on holiday or take a break, we recommend you interview and qualify all managers yourself before hiring.

For a full directory, please also refer to our website www.resortbrokers.com.au

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75

EXCLUSIVE LISTINGS

76

DESCRIPTION

REF

LOCATION

Simply The Best Freehold Lifestyle Caravan Park In Queensland

FH

Warwick

Golden Opportunity In Far North Queensland!

MR

Yorkeys Knob

Business Only MR In Beautiful Kelvin Grove Urban Village

MR

Spectacular Broadwater location for a stunning Holiday Business

PROPERTY TYPE

NETT PROFIT

SALE PRICE

Short Term

$145,407.00

$1,065,000.00

32

Permanent

$130,000.00

$895,000.00

Kelvin Grove

33

Permanent

$83,809.00

$425,000.00

MR

Biggera Waters

32

Permanent

$138,004.00

$1,160,000.00

True Queenslander Style In The Heart Of Port Douglas!

MR

Port Douglas

18

Permanent

$269,454.00

$1,595,000 (including unit)

Permanent Caravan Park - One Hour From Melbourne

LH

Drouin

Short Term

Absolute Beachfront Holiday Management Rights - $534K

MR

Surfers Paradise 108

Permanent

Luxury Hotel - Fully Refurbished Passive Investment

INV

Corowa

3

Short Term

$1,100,000.00

Quest Rockhampton - First Time on the Market!

LH

Rockhampton

44

Short Term

$2,045,000.00

Holiday Management Rights On The Broadwater

MR

Southport

49

Permanent

$178,500.00

$615,000.00

Near New Permanent Complex Business Only Option

MR

Little Mountain

62

Permanent

$165,000.00

$868,000.00

Near New Management Rights, Netting $250,000. This Property Has It All!

MR

Murrumba Downs

75

Permanent

$257,474.00

$1,750,000.00

Cash Cow In The Gulf

LH

Normanton

25

Short Term

$700,000 +

$1,750,000 +SAV

A Huge Return On Investment Not To Be Missed!

MRB

Woolloongabba

101

Permanent

$317,000.00

$1,620,000.00

Newly Redecorated Rooms & Relisted To Sell

LH

Hamilton

14

Short Term

$149,032.00

$573,200.00

Rent roll of scale - New West End Development

OTP

West End

Permanent

$191,456.00

$421,203.00

Rare Development Opportunity Port Macquarie CBD Waterfront Freehold Motel

FH

Port Macquarie

24

short Term

$325,000.00

EOI

Melbourne CBD

LH

Melbourne

39

Short Term

$366,279.00

Offers over $1,280,000

Business Only Opportunity Returning 19.5%

MRB

Woolloongabba

44

Permanent

$134,000.00

$685,000.00

True B&B Leasehold Motel with Consistent High Occupancy

LH

Toowoomba

15

Short Term

$240,126.00

$769,000.00

Tree Change Motel Showing 36% Return After Rent and All Expenses

LH

Gin Gin

16

Short Term

$212,184.00

$589,500.00

10 Minutes From the Highway, A Million Miles From Nowhere

FH

Murphys Creek

Short Term

$331,000.00

$2,200,000 + SAV

Country NSW Motel New 30 Lease, 24 Rooms Highway Frontage

LH

Narrabri

Short Term

$179,373.00

$630,000.00

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NO RMS/ UNITS

24

$480,000.00 $534,522.00

$3,815,000.00

DESCRIPTION

REF

LOCATION

NO RMS/ UNITS

PROPERTY TYPE

NETT PROFIT

SALE PRICE

Tasmania; A Diamond Investment in the Apple Isle

INV

Port Huon

9

Short Term

$186,531.00

$1,000,000.00

Close to Sydney CBD - 20 Year Lease

LH

Camperdown

37

Short Term

$410,209.00

$1,650,000.00

Freehold Investment on the Coast

INV

Lucinda

20

Short Term

-

$1,862,500.00

Leasehold Apartment Hotel Offering Long Tenure, Excellent Profitability and Growth.

LH

Heatherton

30

Short Term

$639,346.00

$2,700,000.00

CBD Freehold Accommodation Plus Bar and Restaurant with Future Multi-use!

FH

Kempsey

29

Short Term

$187,425.00

$995,000.00

Island Living at Its Best – The Ultimate Lifestyle Business

MRB

Moreton Island

29

$111,133.00

$295,000.00

Leasehold at 140% Return on Investment

LH

Townsville

47

Short Term

$172,525.00

$120,000.00

Exceptional Inner City OTP Under Construction with River & City Views

OTP

Newstead

200

Permanent

$690,084.00

Expressions of Interest

North Gold Coast Permanent MR Plenty of Upside!

MR

Coomera

42

Permanent

$92,881.00

$750,000.00

Brand New Permanent Management Rights in Southport

MR

Southport

50

Permanent

$125,000.00

$1,114,000.00

Rare & Exceptional Great Barrier Reef Island

FH

Cairns

102

Short Term

$2,700,000.00

Expressions of Interest

South Burnett Leasehold Motel, Only 2 hours from the Sunshine Coast

LH

Nanango

20

Short Term

$340,663.00

$595,000.00

Blue Chip LH Resort in Iconic Destination and Prominent Position

LH

Cable Beach

15

Short Term

$236,000.00

$900,000.00

Rare Melbourne Short Term & Permanent MR - Under Construction

OTP

Moonee Ponds

126

Mixed

$591,335.00

$2,090,000.00

Rare Melbourne Short Term & Permanent MR - Under Construction

OTP

Essendon

90

Mixed

$379,640.00

$1,350,000.00

Incredible Eco Retreat Metres From the Beach in Port Stephens

FH

Port Stephens

12

Short Term

$290,000.00

Expressions of Interest

Strong occupancy, 25 lease, Coastal Fringe Motel

LH

Gympie

18

Short Term

$207,000.00

$725,000 +SAV

Freehold Country Pub NSW , Will Suit Couple

FH

Emmaville

10

Short Term

$100,000.00

$550,000 + SAV

Brand New Lease for a True Owner Operator

LH

Annerley

15

Short Term

$140,093.00

$549,384.00

Huge Opportunity for Owner/ Operator

FH

Rockhampton

60

Short Term

$416,009.00

$3,500,000.00

Leasehold Opportunity Apartment Hotel in Major NSW Rural City.

LH

Griffith

68

Short Term

$1,360,000 (EBI $160,000)

Inner City Corporate Cairns

MR

Cairns

20

Permanent

Expressions of Interest

Leasehold With Over a Million Dollars Profit

LH

West Perth

64

Short Term

$1,045,000 projected

Expressions of Interest

Freehold Investment with $872,000 Year 3 Rental Income

INV

West Perth

64

Short Term

$872,000 projected

Expressions of Interest

New Boutique 64 Room Perth Hotel in Prime Location

FH

West Perth

64

Short Term

$1,900,000 projected

Expressions of Interest

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77

DIRECTORY meet our team...

INTRODUCING RESORT BROKERS AUSTRALIA’S NATIONAL TEAM OF ACCOMMODATION BUSINESS AND PROPERTY BROKERS. WE ARE THE INDUSTRY EXPERTS AT YOUR SERVICE IN EVERY STATE AND TERRITORY.

Ian Crooks

Trudy Crooks

Tim Crooks

MANAGING DIRECTOR NATIONWIDE

SALES MANAGER NATIONWIDE

OFF THE PLAN SPECIALIST NATIONWIDE

M +61 411 171 648 E iancrooks@resortbrokers.com.au

M +61 477 882 210 E trudycrooks@resortbrokers.com.au

M +61 422 208 450 E timcrooks@resortbrokers.com.au

Alex Cook

Carla Cook

Nathan Eades

BROKER NORTH GOLD COAST & SURFERS & QUEST

MARKETING MANAGER NATIONWIDE

BROKER BRISBANE

M +61 467 600 610 E alexcook@resortbrokers.com.au

M +61 467 600 611 E carlacook@resortbrokers.com.au

M +61 448 339 920 E nathaneades@resortbrokers.com.au

Gareth Closter

Jessica Wilkie

BROKER SOUTH BRISBANE

BROKER BRISBANE

BROKER SOUTH BRISBANE

M +61 410 344 344 E brentstaker@resortbrokers.com.au

M +61 423 182 766 E garethcloster@resortbrokers.com.au

M +61 401 003 023 E jessicawilkie@resortbrokers.com.au

Brent Staker

Neville Littleton

78

Ian Dore

Glenn Millar

BROKERS NORTH BRISBANE

BROKER NORTH NSW & GOLD COAST

BROKER SUNSHINE COAST

M +61 407 727 194 E nevillelittleton@resortbrokers.com.au

M +61 412 752 238 E iandore@resortbrokers.com.au

M +61 412 277 804 E glennmillar@resortbrokers.com.au

Tyler Millar

Caroline Harrison

Shane Mullins

BROKER SUNSHINE COAST

BROKER SUNSHINE COAST

BROKER FAR NORTH QUEENSLAND

M +61 411 271 761 E tylermillar@resortbrokers.com.au

M +61 403 372 134 E carolineharrison@resortbrokers.com.au

M +61 447 185 001 E shanemullins@resortbrokers.com.au

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Chenoa Threlfall

Des Fagg

Lindsay Cooper

BROKER FAR NORTH QUEENSLAND

BROKER NORTH QUEENSLAND

BROKER WEST QLD & NTH NSW

M +61 403 143 151 E chenoathrelfall@resortbrokers.com.au

M +61 427 849 119 E desfagg@resortbrokers.com.au

M +61 418 711 047 E lindsaycooper@resortbrokers.com.au

Brendon Phillips

Jenny Sorenson

Lynne Booth

CADET NORTH GOLD COAST

BROKER SOUTH GOLD COAST

BROKER CENTRAL QUEENSLAND

M +61466 346 373 E brendonphillips@resortbrokers.com.au

M +61 475 089 468 E jennysorenson@resortbrokers.com.au

M +61 408 704 778 E lynnebooth@resortbrokers.com.au

Len Booth

James Carrick

Shane Wynhoven

BROKER CENTRAL QUEENSLAND

BROKER MID NORTH & NORTH WEST NSW

BROKER GREATER SYDNEY, CENTRAL TABLELANDS & HUNTER

M +61 438 139 422 E lenbooth@resortbrokers.com.au

M +61 400 664 065 E jamescarrick@resortbrokers.com.au

M +61 424 174 592 E shanewynhoven@resortbrokers.com.au

Russell Rogers

Andrew Rendall

Jim Chapman

BROKER SOUTH COAST, NSW

BROKER CENTRAL NSW

VICTORIAN STATE MANAGER QUEST SPECIALIST - NSW, VIC, SA & TAS

M +61 412 635 344 E andrewrendall@resortbrokers.com.au

M +61 413 444 782 E jimchapman@resortbrokers.com.au

M +61 416 166 909 E russellrogers@resortbrokers.com.au

Stuart Charles

Ray Ironside

BROKER WEST VICTORIA

BROKER TASMAINIA

M +61 458 588 472 E stuartcharles@resortbrokers.com.au

M +61 418 130 364 E rayironside@resortbrokers.com.au

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79

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