Action in the West

The motel accommodation sales market over the last twelve months has been a difficult one for most.

The small but genuine buyer market has had little on offer to satisfy what they are looking for and the small but genuine vendor market has not been able to achieve the values that they previously could have. The reasons for this are many, including fear around the state of overseas markets, the lack (or perceived lack in many cases) of funding availability, the volatility within share markets, or just how long it will take for the tourism market to bounce back… and the list goes on.
There does come a point though where the market says it has had enough and those who previously sat on the fence now start to act.
There has been one shining light however over the past twelve months, which has been in the greater western areas of Queensland that are even remotely close to mining activities. We constantly hear the talk of a two-speed economy and towns and accommodation businesses in mining areas have benefited greatly from a high demand for their product on the back of a limited supply available in most areas to satisfy this demand.
The level of sales of motels and accommodation businesses within the mining areas has been strong. What has also been strong are the values achieved for these properties. One example is the sale of an accommodation business at Emerald that, after a good marketing campaign, strong interest being registered and a number of offers being received, the result was a successful sale at $15,000,000. This business and property sold on a solid net yield that reflected where the market was for that particular property at approximately 18.5%.
Some of the marketing campaigns that have been recently completed on such properties have resulted in excess of 30 enquiries each with one property that was marketed in Western Central Queensland achieving more than 50 enquiries and another 45 enquiries. These sorts of enquiry levels for individual properties are high and the strong activity and demand within these areas has been driving the market upwards.
There are in excess of another 10 sales that have or are being completed within the last 18 months that have provided good sales evidence for accommodation businesses in the Western Queensland areas. Yields have ranged anywhere from 14.2% through to 22% depending on the size of the complex and the customer base that the business has derived its income from. Most sale yields have been within the range of 15% to 19%. The wide variation in yields is a result of different variables the market considers for each individual property. One factor that weighs heavily on the market is the business/property’s customer base. A good variety of clientele will result in a sharper yield rather than one that relies on one company/business for the bulk of its income.
Other examples of successful sales at strong values include approximately $8,000,000 in the South East area of the Bowen Basin, $8,000,000 in the Central Queensland area, $4,000,000 (south east) and approximately $2,500,000 in the Central Queensland area.
There are a few properties currently under contract including $20,000,000 for a large accommodation complex in the north east of the Bowen Basin and another at approximately $8,000,000 in the same area. There is one under contract for approximately $3,000,000 in the north east of the Bowen Basin and approximately $2,500,000 in the central west.
All of the above sales mentioned and those properties that are under contract confirm that there is strong activity in the operations of these businesses. High demand for rooms to result in such solid trading levels and the high demand for these accommodation businesses has assisted in creating this activity.

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