When those who know an industry better than most are actively pursuing more opportunities within, others should take notice.
It is telling when experienced motel owners, operators, investors, and those currently involved within the accommodation industry are looking for more. That is where we are currently positioned.
Those who know the business and are already involved are looking to expand. This is equivalent to the caravan park industry over the past five years or so. Most caravan parks sold by QTHB during this time have been to existing owners of caravan parks. Those looking to expand their portfolios by acquiring more market share, which is generally spread out to attract guests travelling from region to region.
The positivity for the industry and its future going forward is a statement. Strong demand for accommodation from the travelling market fuels the desire for experienced investors to expand and grow. It helps to confirm that for those who are considering entering the motel industry, or those looking to expand their motel interests, the time is right!
The motel industry and market is a fluid environment the same as any. The industry has peaks and troughs, high and low occupancy periods. These ups and downs and different stages of the market offer varying opportunities to those within and those wanting to enter. Selling motels over the past 26 years or so, has given me the opportunity to witness many changes within, and many very different states of the motel and accommodation market and industry during this time. Every region has had its day in the sun at some time and different tenures of ownership have also had their highs and lows. At times the market favours sellers, other times it favours buyers, and for the rest of the time it offers opportunity to all, in one way or another. On many occasions, investors have made their own opportunities that have defied the state of the market.
Picking any market is a difficult thing. If it was easy, everyone would be experts.
“When should we buy or when should we sell, is now a good time or do we wait?”
What we can do is work on the information that is at hand, decide based on the facts and then draw conclusions as to when is the right time to move. A crystal ball would be great to have, but the best we can go on is information.
“The most valuable commodity I know of is information”, Gordon Gekko (Wall Street, 1987). Probably not the best movie character to take a quote from, but it has a relevance here.
Within the current motel market there are some excellent buying opportunities available at present. Many who contact us to discuss buying a motel say that they want something with upside - room to improve. Each business must be assessed to suit the needs of the individual, and one of these needs is to be able to improve it in some way - add value. Changes in local economies throughout the state create buying opportunities. Whether it be, improved business conditions in a region that will allow for future growth, or alternatively a recent decline in demand for accommodation that has created a potential future, buy low, sell high scenario.
Economic turbulence due to national or international issues creates actual or perceived instability. This results in investors being more restrained about entering new industries they are not entirely familiar with. Those already familiar with motels know the long-term strength of the industry and are always looking for acquisitions of good quality motels. This generally does not change, no matter what is happening around the world.
So finally, what makes a good buy opportunity? Genuine motel buyers in the market have continued being active in pursuing motel businesses that offer them the main fundamentals. These include, quality presentation, consistent trading history, good locations/positions, good occupancy rates based on strong room rates. These fundamentals for motel acquisitions do not change. If one of these fundamentals is lagging and there is an opportunity to improve it, that may be of more interest to an investor who can see the opportunity for what it is, rather than seeing it as an issue/problem.