A claim that "a third of South Island accommodation businesses are for sale" would at first glance appear unbelievable, however there may be an element of truth in this claim in both the North and South Islands.
It would be safe to assume that the majority of "accommodation businesses" for sale are motels. The motel industry is a transient industry with the average motel business turning over every three years. There is an old adage that the average husband and wife motelier will "buy the dream" and spend the first year on a steep learning curve getting to grips with a new motel business venture. The second year is spent trying to get on top of R&M issues, marital relationships and coping with terminal tax. The third year is spent "selling the nightmare!"
This scenario is a little tongue in cheek, however this will ring true for many couples passing through the motel industry.
Motels may be sitting on the market for a little longer than usual, however from what we can observe the number of properties for sale are not too unusual and many are still turning over. Those properties that are well positioned and have keeped up quality standards are still offering an excellent business proposition.
There still seems to be plenty of pragmatic Kiwi couples wishing to enter the motel industry in the belief that they can operate a motel better than the last operator.
By HELEN MURDOCH
The Press
09/05/2009
More than a third of South Island accommodation businesses are for sale as the tourism market battles slow property sales and dwindling bookings.
Graham Langford's Bella Vista Motel in Nelson is among 611 South Island motels, bed and breakfasts, lodges and hotels listed on realestate.co.nz.
Langford has had no serious inquiries for the lease of his motel in the eight months it has been for sale.
"The national downturn in guest nights probably contributes to it," he said.
Richmond's Oxford Court Motels owner, Vicky Hickmott, has received no offers on her business since it went on the market last October.
Bruce Sutton, the owner of the Hanmer Springs Tussock Peak Motor Lodge, said bookings were up on last year, but a sale was elusive.
Solid destination marketing was a key to occupancy rates, he said.
All three owners have been in the industry between five and seven years and want to sell for a change of lifestyle.
Realestate.co.nz chief executive Alistair Helm said there were 611 South Island listings out of about 2100 businesses, compared with 462 listings last May and 213 in May 2007.
Canterbury had the most properties on the market with 208 listings, he said.
Bayleys Canterbury hospitality broker Peter Harris said: "Tough competition, fewer international tourists and budget-seeking New Zealand travellers mean some motel and lodge owners are making only a living wage at best."
He said over-optimistic pricing and a lack of buyers were causing a property backlog.
While some niche businesses were doing well, a surplus of accommodation options meant travellers were spoilt for choice and some occupancy rates were "not that flash", he said.
Motel Association chief executive Michael Baines said the 24/7 accommodation business was expensive to buy into and traditionally had a 30 per cent ownership turnover.
Motel earnings were holding well, despite a 7.6 per cent national decline in bookings in the year to February.
However, the next 18 months would be difficult, Baines said.
New Zealand Hotel Council chairwoman Jenny Langley saidlarger hotels were more recession-resilient because of size and long-term planning.
Smaller, regional hotels were vulnerable unless they had established brand and destination marketing.
"Times are tough and if people were finding it hard before, cashflows will probably be more of a problem now," she said.
Source: Click HERE
