With the TIA announcing that “the boom is over”, accommodation providers across New Zealand are facing a few years of potentially slow growth. But real estate experts are still confident in the accommodation market in Aotearoa.
The New Zealand Tourism market is transitioning out of a period of unprecedented demand, which has resulted in significant financial benefits to the accommodation industry over the past five years. As with anything in life, this growth can’t last forever, and we are now entering a phase of more moderate visitor arrivals growth.
Now more than ever, location and quality are key in deciding where best to invest in accommodation properties. The core markets will always attract strong demand, yet these markets have become expensive places to stay due to an undersupply of accommodation. Visitors are increasingly looking for accommodation in more affordable locations offering similar experiences. New Zealand is blessed in this regard, featuring a number of regional locations with strong demand drivers associated with scenic beauty or world class attractions.
Investors in accommodation properties need to take a long-term view and consider how the demand and supply dynamics for a given location and product might change in the future. This is an exciting time to be part of the tourism industry and there are many fantastic opportunities for success, if you are willing to exercise due diligence.
Having provided hotel valuations for over 13 years in CBRE’s offices in London, Sydney and Auckland, Peter Hamilton is an expert in investment and market advisory to hotel owners in New Zealand and across the South Pacific.
T +64 9359 5419
McCRAE REAL ESTATE
Investors should give serious consideration to whether the investment has been well maintained, and be prepared to pay for a building report to ensure no inferior materials have been used during construction. Check that the building complies with all local authority bylaws, and make sure rates to council or regional councils are not in arrears.
The return on investment is bound to vary depending on the district in which the investment is located. Provincial districts generally have a higher return than highly-populated areas like cities, as there is a greater opportunity for capital gain with a greater demand. Supply and demand create growth with values.
The sustainability of an investment depends on the requirement of the investor. For instance, an investor may be looking at the long-term for a family trust, or a smaller investor might be looking for an individual requiring short-term ownership. If the investments meet their requirements, they can always be sold on at any time. To arrange finance in today’s market, financiers often require seismic reports.
The current commercial market is very strong, particularly for recently constructed buildings with high NBS ratings. McCrae Real Estate are experts in motel leaseholds, freeholds, and investments, with extensive knowledge of buying and selling motel businesses.
T 06 357 7743
SOTHEBY’S INTERNATIONAL REALTY
Over the course of a 15-year career, Sharene Temple has become one of New Zealand Sotheby’s International Realty’s high achievers, with extensive experience in award-winning prestigious sales and marketing of real estate.
Raised in family-owned hotels, Temple has hospitality in her blood, and developed people skills and client service at an early age. She owned her first business at the age of 25 and has sold and marketed a vast array of hotels, lodges, residences, and apartment projects throughout New Zealand. Practicing what she preaches, Temple also received the Home of the Year Award and Special Design Award recently when she built her own home.
As an experienced business professional, Temple spoke of the importance of listening to client’s needs. “Confidentiality is what we are used to in our daily work life,” Temple told Hotel Magazine. “Customers can call us in confidence to discuss listing their hotel privately, or enquire about listings not advertised on the public market.”
T 027 224 6045
2019 marks 35 years since Kelvyn Coffey began specialising in travellers’ accommodation properties. From small beginnings specialising exclusively in motels throughout the South Island, Coffeys now has been in operation nationwide for more than a decade. With ten active and experienced brokers working as a team, the company provides a service second to none for those wishing to buy or sell accommodation properties.
We understand that operators in this industry have invested more than just capital into their business. We appreciate that you may have a strong attachment to your property, having managed, lived in and perhaps grown the business over a period of time. For buyers it is important that the broker has the expert knowledge appropriate to this industry, such as understanding leases, tax matters, financing, valuations, insurance, and so much more.
We have New Zealand covered with brokers throughout the land, but the task is never complete. We are always innovating and looking for ways to add further value to the industry. Potential growth for the company includes finding the right person to head up a Hotels Division to become more involved in that sector of the market. Our systems and methodology would work in Australia: again, it’s a matter of finding the right people.
T 0800 263 339
Bay of Plenty
Selling or buying an accommodation business is one of the most important decisions that you will make in your life. You would therefore want to work with someone who is experienced, someone who is honest and that you can trust, someone who will understand your needs, someone who will give you sound advice and someone with a proven track record.
When you engage Nols Bertram, that is exactly what you will get. Nols has been successfully selling businesses for more than 20 years now and his focus is on motels and accommodation businesses. He possesses a wealth of knowledge and experience to share with you, guiding you step by step through the entire process until you have achieved a successful sale or purchase, whether that means just the business or the freehold going concern.
It’s important that you choose a company that is established in the accommodation industry with a proven track record – LINK offers just that. With offices all over New Zealand and overseas, excellent marketing strategies and packages, LINK is fully equipped to attract suitable buyers for accommodation businesses.
T +64 7579 994
Lindsay Sanes is a professional business broker who has attained numerous successful sales of motel freeholds, motel business leases, motel freehold going concerns, franchised service apartments, sale of hotels and management rights.
Lindsay has an extensive management background in the tourism industry and has held senior domestic and international positions representing global accommodation brands. He has a good understanding of the New Zealand accommodation industry and group branding. He has an extensive network of hospitality industry colleagues as well as motel, hotel, and management rights owners. He is a consistent high achiever from numerous sales.
T +64 9555 6003
Bay of Plenty
Buying into the accommodation industry, an enquiry is often around city versus holiday locations. My experience around Coromandel and the Bay of Plenty has taught me that holiday destinations are as profitable as the city stops.
Summer or seasonal trade at locations offer greater sales of continuous guest nights. The season is often thought of as a downside. Not so, most of your business is created for 9/10 months of the year at premium rates. This allows winter for maintenance and away time for the owner.
With more boutique accommodation available these days and more discerning holidaymakers, B&B accommodation is becoming more profitable. Whether you are looking to buy your first motel lease or an experienced accommodation provider the same research is required – return on investment, quality of chattels, can you add value, length of lease versus freehold options, and the big one: location.
Carron Chote has been in the accommodation industry for over ten years and offers no-obligation conversations on motels, apartment management rights, B&Bs, or contract managers of retirement villages.
T +64 7579 4994