Motel & caravan park opportunities in a tight market

Those genuinely looking to acquire an accommodation business or property right now know how challenging it is to find good opportunities.

There is strong buyer demand in the market for motels and caravan parks, with limited supply available. It’s supply and demand at work!

Andrew Morgan’s column was first published in the November edition of Resort News

The main reason is high demand, with more genuine buyers than sellers. By “genuine buyers”, I mean those who are motivated and ready to commit, as opposed to those just starting to look. The heightened level of competitive bidding in the market is driving these buyers to act sooner than they might otherwise need to.

Another factor is that many accommodation business owners are choosing to hold rather than sell, resulting in fewer businesses available and contributing to the tight market. This may be partly because businesses are experiencing solid occupancy rates and income. When things are busy, selling is usually not a priority. Conversely, when business slows down, owners may start considering a sale. However, when trading is good, it’s easy to fall into the mindset that “this will last forever.”

The high volume of recent sales over the past couple of years has also contributed to the scarcity of opportunities now. Demand for motels and caravan parks has been strong for some time, with many properties that were on the market for a short or extended period now no longer available.

With that context, the question is how to find opportunities moving forward.

In this market, there are often more businesses for sale than it appears. Many recent sales have occurred off-market, meaning the businesses and properties are listed but not actively marketed. They won’t show up on websites because they aren’t advertised publicly. Instead, the listing broker offers them directly to existing clients and prospective buyers already in their database.

Off-market opportunities arise for various reasons and provide an excellent way to maintain a level of confidentiality around the business and its sale. Often, businesses listed off-market are sold before most people even know they are available. While this type of sale process does not suit all properties, it can be an excellent method for certain types of businesses and properties.

Another obvious way to source accommodation businesses and properties for sale is through websites. Many people start their search here, with everything accessible at the click of a button. There are numerous websites to broaden one’s search, but relying solely on them may not provide a comprehensive view of the market.

Finally, maintaining regular contact with brokers is essential to see what’s available or coming soon. Work closely with those who are trusted and experienced in the accommodation sector. By making oneself known to specific brokers and working with them to find a suitable business or property, buyers gain access to more opportunities. If the broker knows exactly what a buyer is looking for (and what they want to avoid), it greatly helps in finding the right investment.

To conclude, here’s a real example of a client who was searching for over a year without success. They say patience is a virtue, and that was certainly true in this case.

A long-time client of mine reached out about 18 months ago, wanting to discuss acquiring another freehold going concern motel. They provided their criteria for what they were looking for and what they wanted to avoid. At the time, there was nothing on the market that met their needs, so I asked them to be patient while we worked to find the right property.

As time passed, it did test their patience, but to their credit, they stayed focused. A few opportunities arose, but for various reasons, they didn’t work out. Finally, we were able to source an off-market opportunity that was a perfect fit. They had all their ducks in line and were ready to proceed, which made the entire process go relatively smoothly.

At the end of the day, the buyer found the right property, and the seller was pleased that the business and its details were kept confidential and the sale concluded without fuss. Happy days for all involved!

AccomProperties: Australia’s only marketplace dedicated to selling accommodation business listings. See motel listings HERE

More about the Aussie motel comeback HERE

Andrew Morgan

Andrew Morgan is a Specialist Resort & Motel Broker & Partner at Queensland Tourism & Hospitality Brokers & he writes the monthly Motel Market column for Resort News