It’s a wrap: Demand for Queensland motels is strong & growing

In 2022, Queensland’s motel sector saw strong freehold going concerns sales, and increased interest in leasehold tenure according to industry insiders.

High accommodation occupancy rates led to increased room tariffs in 2022, and steady growth for motels is expected to continue in 2023, but some regions are performing better than others.

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The number of Aussies considering a motel for their next trip is up by 75 percent according to recent Wotif figures, showing the motel has certainly made a post-pandemic comeback. Wotif also revealed its top 10 beachside motels in Australia with Queensland and NSW beachside suburbs topping the list.

Wotif Managing Director, Daniel Finch said motels are “no longer just a convenient roadside room to rest your head, the quality of today’s revamped motels is second to none, with recent renovations, great local hospitality, and unique character and charm”.

Andrew Morgan, Motel Broker/Partner from Qld Tourism & Hospitality Brokers, recognises the rise in popularity of motel accommodation and is well placed to detail the motel sector’s sales performance for 2022.

He said: “With 2021 finishing quite strong, once the new year rolled over things picked up where they left off.

“Strong inquiries from genuine funded buyers saw a number of early freehold-going concern sales completed, however overall the first quarter of the year was just a warm-up for what was to come.

Inquiry levels were solid with genuine buyers looking for opportunities.

“A number of motels, resorts, and caravan parks were marked ‘Under Contract’. Strangely, a few of these contracts did not reach a settlement for reasons generally to do with the buyers. Inspection numbers were increasing and those contracts that did not proceed were reinstated with alternative buyers, who had not reacted quickly enough when originally considering the propositions.

“The majority of businesses that gained buyer interest were freehold in tenure, with limited numbers of leasehold sales completed. Inquiry volumes were substantially higher for freehold-going concerns. A trend that followed on from 2021.

“Moving on from the first quarter of 2022 there was much-increased activity throughout the second quarter of the year. There were a strong number of settlements completed across the board including freehold going concerns and some leasehold tenures.

“Inspection numbers continued to be solid and there were increased inquiries for leasehold motels. Where many were having issues gaining finance with non-commercial lending requirements as their impediment, a number of investors were completing contracts by financing the transactions themselves.

“Third-quarter activity continued to grow but did not result in as many settlements being concluded as the previous hectic quarter.

“Contrary to the previous year with border closures still an issue at that time, this year those wanting to move to Queensland from the southern states to invest their money into a motel, resort or caravan park were pushing ahead.

A wide range of smaller through to large-sized accommodation businesses was sought after and although the volume of sales was not as high, there were quite a few larger property transactions completed.

“This was a very positive result for the industry and market and gave confidence to those procrastinating and who were looking like the kid outside the lolly shop.

“The final quarter of 2022 saw a slowing of inquiries, which could be attributed to the lower level of businesses available on the market. With the strong sales concluded throughout the year and many businesses remaining tightly held due to strong trading performances, this does lead to lower inquiry levels.

“Having said that, a number of larger sales were concluded, and the end of the year finished off strong.

“Similar to the end of 2021 last year, a number of these sale transactions saw more than one investor vying for the same business. This results in unsatisfied demand, and those investors are continuing to look for other accommodation opportunities.”

Cameron Wicking, Credit Representative, Mike Phipps Finance, settles management rights and motel finance, he agrees that the motel market performed well in 2022 and expects continued growth throughout 2023.

He told us: “Both freehold and leasehold assets are doing incredibly well. Certainly, those motels in a good location and considered to be a solid asset perform well across the whole market.

“The accommodation industry is experiencing high occupancy levels and RevPAR is solid. We’ve had positive feedback across the sector and many savvy, repeat motel buyers, who know the industry well are seeing the potential and embracing investment opportunities. First-time buyers have been a little more cautious due to the rise in interest rates.

“I predict a strong 2023. The 2022 motel market was very solid compared to 2021, and even regional areas are seeing occupancy rates rise year on year. “

Andrew Morgan also predicts good things for the state of play for motels in 2023. 

He said: “With demand for accommodation businesses looking solid and trading data throughout the industry growing, it all points to good things happening.

“Those already involved in the industry are expected to continue to add to the stable.

“New entrants and first-time owners and operators are eager to get involved on the back of those they know or see, who are already in the accommodation industry enjoying all the benefits it has to offer.”

Read about the humble motel’s comeback HERE

Mandy Clarke

Mandy has over 17 years of accommodation and tourism industry writing experience and is Editor of AccomNews & Resort News, Publisher of SchoolNews & Director of Multimedia Pty Ltd. She is a retired registered nurse with a 25-year NHS career that followed a few unforgettable years in hotel housekeeping.