2024 Motel market wrap-up: A year in review

I feel like I say this every year at about this time: how quickly the year has gone! The second half of 2024 seemed to disappear before I knew it. Time flies when you’re having fun!

What a busy year it has been. Motels have been, as they say, “the flavour of the month.” Having said that, caravan parks have also had their fair share of admirers. In summary, good-quality businesses have been in very high demand and selling fast.

Those accommodation businesses with an issue or two have been slower to move, which is always the case no matter how strong the market is.

Buyers have come from all walks of life, from those looking at small leases to “buy oneself a job” and be their own boss, to large corporate entities seeking additional regions and market share.

The motel market has continued its usual trend of aligning itself with the state of the motel industry in general. High occupancies and demand for accommodation have driven a strong number of sale transactions. The only real limitation has been the lack of supply, which again aligns with the industry and comes with the territory of strong trading performances. When business is good, selling is often not high on the agenda. However, as I continue to preach year in and year out, this is often the best time to sell.

2024 saw certain regions outperform others for different reasons. The resources sector remained very active. Companies continued to grow, driving demand for workers, which in turn increased demand and room rates.

Government spending also helped drive demand in many areas and industries, leading to increased accommodation needs across the board. Many regional towns benefited greatly from this.

Strong enquiry levels kicked off the new year, with investors eager to find opportunities. At this stage, the level of motels available for sale was reasonable without being good. The balance of potential buyers and available opportunities in the market was shifting. As sales occurred, listings were not being replaced. Motels and caravan parks were clearly being more tightly held.

The second quarter of the year continued to see strong demand from investors. Listings diminished as sales progressed, with genuine sellers reluctant to list their businesses. Transactions involving finance conditions continued to face unnecessary delays. As they say, cash is king, and investors not requiring finance to complete transactions have remained well ahead of the pack in securing and settling contracts. In strong markets, the phenomenon of “back-up buyers” has persisted, where a second buyer is ready to step in if the current buyer cannot complete the contract. This has reflected the ongoing imbalance between willing buyers and limited sellers.

Demand for leaseholds continued to improve, reaching a point mid-year where leasehold demand was rapidly catching up to freehold demand.

Since late 2019, freehold tenure had seen the lion’s share of enquiry. With passive investments being as scarce as hen’s teeth, freehold going concern opportunities were being snapped up by unsatisfied passive investors who changed their scope. They created their own passive investments by either selling the lease or installing management.

Third-quarter activity remained consistent with earlier trends. The migration of motel, park, and resort investors to Queensland from southern states continued. Any business in this sector that had been on the market for an extended period had not sold for a reason. In many cases, addressing issues identified by the market enabled some businesses to eventually sell.

The final quarter of 2024 saw a continuation of these trends, with pent-up demand resulting from many buyers being unable to find suitable assets to purchase. Demand remains unmet, and investors are still seeking other accommodation opportunities.

Looking ahead to 2025, how will this dynamic market play out?

Will we see a continuation of the trends from the last three years, or a shift? At this stage, strong demand and the trading performances of accommodation businesses across the industry appear set to continue. Existing accommodation business owners will seek new opportunities, while those wanting to enter the sector will keep knocking on the door.

Queensland Tourism and Hospitality Brokers (QTHB) appreciate the accommodation industry’s support throughout the year. To everyone in the accommodation sector, we wish you a healthy and prosperous 2025.

This article was first published in the December edition of Resort News out NOW:

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