01_QHA_July_Online

FINANCE FOCUS
SALES SLOWING IN A COMPETITIVE MARKET
AS WE HEAD TOWARD THE BACK-END OF 2021 SALES OF HOTELS AND ACCOMMODATION VENUES
CONTINUE TO HAPPEN, ALTHOUGH AT A SLIGHTLY SLOWER RATE THAN THE PEAK AT THE END OF 2020.
QHA REVIEW | 46
Off Markets Hotel Group Business Director Chris
Cameron said the trend was particularly noticeable in
regional areas.
“The hotel market Regionally has slowed somewhat,”
Mr Cameron said. “The level of interest from late 2020
to now has dropped off.
“The big guys are eating into the market and buying
multiple hotels in the same towns. They are also
paying top dollar with unheard of acceptable yields for
some assets.
“The smaller hotels with minimal gaming are attractive
and there is good appetite for these along with
accommodation assets.”
While the bigger players are certainly looking to
expand, Mr Cameron said new operators were
venturing into the market too.
“We see a move with new operators thirsty for
Accommodation assets or Hotel/ Motels and or FGC
Motels and also Management Rights.
“Because of COVID accommodation assets have
become popular again. These assets have had their
best trading year for years because of the drive too
market and no international flying. People are also
embracing the `See Australia’ campaigns and the
marketing and value-add offers has stimulated this
very well.”
Asked what challenges buyers face in the current
market Mr Cameron said competition was fierce.
“There is a big consolidation in the industry with large
corporate and big extended families gobbling up
everything,” Mr Cameron said. “This limits competition
and choice it’s also very restrictive to enter the market
with these buyers taking most or all out.
If people manage to buy a property Mr Cameron said
the next challenge right now was to staff it properly.
“I see staffing as a major problem moving forward with
not enough trained and experienced senior managers
on the ground in these new takeover businesses
and people who also don’t know the local layout and
cultures.
For sellers, Mr Cameron said finding the right buyer
and having time to wait for sales to process was key.
“Ideally you need a very strong buyer with a cash
position or a fair chunk of this. Lending is a slow
process and regionally it is still tough for hotels and
hospitality. Licensing and takeovers are also taking
longer, so if you do sell, be prepared to be paid in five
to six months from contracts being signed.
“Money’s cheap and that’s great, however, I don’t see
a lot of bankers or major banks doing a lot of loans
regionally or in western towns like they should be
made to do to build these areas. Some towns do not
even have a bank anymore.
“The lending is still very postcode-based. Lending,
in theory, is easier, but still reliant on other assets as
security and the banks are differently lending to the top
tier operators.
“I think we need to see more on-the-ground regional
lending to build business and regional business and
maybe more Government-based regional business
loans.”
Waratah Debt Capital Managing Director Mark Anyon
said finding finance could be a drawn out process.
“In conversation with hotel valuers in recent months
it had been noticed that most of the bank’s chosen
panel valuers are inundated with work. During 2020
most of the banks deferred their requirement to
have their clients revalue their hotels but have now
re-commenced. This has put considerable strain on
settlements and created drawn out transactions with
valuation reports taking 3-6 months.
“Many hoteliers are willing buyers at the moment but
are unable to enter into transactions with confidence
as they require venues to be revalued so they can
determine their borrowing capacity.
Mr Anyon said his business offered more
accommodating lending terms than the industry is
accustomed to and may be able to help buyers in this
instance.
As for the longer-term outlook, Mr Cameron is upbeat.
“I think the next two years you will see a lot of new
movement in the accommodation market as those
markets grow regionally and show excellent returns,”
he said.