Published on 09/05/2021 by Any Business.Com.Au

Business Opportunities Abound Before Tourism Takes Over

As the country continues to recover from the COVID pandemic, so too does the Australian tourism industry, providing a number of attractive long term investment opportunities across a range of niche categories.

Despite the obvious coronavirus set backs, regional tourism has maintained a reasonably strong presence and now more than ever is powering ahead.

Michael Philpott from MRSales and Tourism Brokers (Specialist Business Brokers) is one of a number of national business brokers seeing strong recoveries and growth opportunities on a national scale for both domestic tourism and the accommodation sector.

"With a number of baby boomers reaching retirement, huge opportunities exist to purchase stable income producing businesses throughout Australia, facilitating a change of lifestyle from urban areas to country locations," he explained.

"Buying a business is buying a job or jobs in a lot of instances and creating an opportunity to get ahead, advance and set yourself up. The businesses have proven structures, operational processes and staffing in a lot of instances and if you follow the basics, traditionally you will do well."

With Australia catering for a purely domestic tourism market that is taking shorter, more frequent breaks, it seems strong growth is being experienced throughout rural Australia at the moment.

Mr Philpott believes that when international borders open and full scale tourism resumes, because of Australia's unique geographic setting, an influx of international guests will "further stoke" the local economy and compliment the thriving domestic market.

"Australia is safe and well positioned to capitalise on the booming accommodation and tourism related industry that is to come," he added

Motels a Great Place to Start

Motels are one component of the accommodation industry offering a mixture of income and cashflow driven motel leases (where you own the business and lease the premises) to motel operational freeholds where you own the business and the operational property from which you operate through to motel investments, where you own the building and lease out the premises to a tenant that has the business and pays rental.

"Motel Leases, usually starting with a 30-year term, is sold to an operator (lessee) who conducts the day-to-day management of the business and often lives onsite," Mr Philpott explained.

"When they get larger, they can be placed under management and owned by investors or syndicates. As typically is the case in the accommodation industry, the lessee is a mum and dad or couple operating the property as their own boss, they aim to build occupancy and tariffs for maximum net profit.

"They're responsible for all operating costs and pay the property owner an annual rent for the use of their land and buildings. While lease documents vary, generally the leasehold operator is responsible for the supply and upkeep of all 'chattels' needed to run the motel."

With a number of businesses experiencing declines in revenue throughout the Covid environment, savvy operators were able to reposition, re-evaluate and in many cases update facilities for guests during the down time, according to Mr Philpott.

"A number of metropolitan areas and businesses are dependant upon international visitors for conventions and conferences, organised tours, gambling and entertainment etc. and are still being impacted across these categories.

"Regional accommodation however is still enjoying incredible growth on the back of value add guest experiences such as enhanced cleaning and better check in/check out processes."

Tourism in Australia

Tourism is a significant economic driver in Australia and accounts for 6.8% of employment in Victoria and accounted for 5% of the Victorian Economy in 2019-2020 year. Similar proportions apply throughout the country.

Data from Tourism Research Australia's International and National Visitor Surveys show that the North Coast is regional New South Wales' (NSW) number one destination for domestic overnight visitors and visitor expenditure currently, as Queensland (QLD) continues to battle COVID related restrictions.

"Queensland however is now on the cusp of a tourism boom, as is Victoria, and now is an ideal opportunity for you to capitalise," Mr Philpott said.

"Properties and businesses are being sold on current trading levels that did dip and are now growing. That has created opportunities.

"In the year ending September 2020 (the most recent statistics available) NSW's North Coast welcomed 10.9 million overnight and day trip visitors (down 26.4% year-on-year) who generated $3.6 billion in visitor expenditure (down 26.8% year-on-year) for the local visitor economy."

Prior to the pandemic (the year ended December 2019) the North Coast received 15.3 million overnight and day trip visitors who generated $5.2 billion in visitor expenditure.

The most recent statistics show that 70 percent of the visitors to the NSW North Coast come from within the state.

Adult couples formed the major visitor segment. Almost 90 percent travelled there by car and their preferred activities were eating out (60%), going to the beach (52%), visiting friends and relatives (40%), Sightseeing (28%) and going to pubs and clubs (27%).

Mr Phillpott said the numbers were significant and that the sector in general was recovering well.

"In March, Virgin Australia launched flights between Melbourne and Ballina/Byron Bay in a boost for business and leisure travellers and that has further expanded the market. Huge opportunities exist on the Eastern Seaboard with recent sales confirming the high demand."

Mr Philpott said the old adage of "The Coast is for show and the country is for dough" had never been more true today.

"Motels have continued to sell throughout the Covid period and even more so recently. The returns in country locations can be greater than 40% in some instances and along the coast closer to 25%."

Management Rights

As for Management Rights, where you are the caretaker and on site manager, they can be similar to motels but offer so much more and are primarily in the cities and beachside locations, according to Mr Philpott.

"Management Rights are in more modern Strata titled property where you often own the unit and some other real estate in addition to the business. Management Rights can be for long term and short term accommodation as well as many other areas," he said.

"Management Rights are an area highly regulated/protected by legislation in Queensland and in most other areas, making them very popular as they also provide a home with employment/income. The banks love this area a lot and finance is readily available."

Business Buying Assistance

Tourism Brokers and MRSales offer a number of training initiatives for people wanting to explore the Motel, Management Rights, Hotel, Caravan Park and related tourism industries and they provide ongoing support and industry information/assistance on a regular basis.

They work together with well qualified industry experienced professionals that for an initial consultation and will provide some input free of charge for new people uncertain and contemplating joining the accommodation/tourism industry.

"We want to add value, help the industry grow and have an abundance of information available that we are only too happy to share," Mr Philpott said.

"Collaborating with an industry leading businesses for sale platform such as AnyBusiness.com.au means that we can work together to link business and employment opportunities for new and existing entrants to capitalise on."

AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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