Multiples down but hopes up in North Queensland
By Grantlee Kieza OAM, Industry Reporter
Broker Antonio Curulli says he has sold more North Queensland Management and Le ing Rights (MLR) contracts in the last six months than in the previous three years. A er a slow spell, business is looking sunny. Curulli is dropping business multipliers to create bigger returns for prospective buyers. Despite the challenges of cyclones, COVID-19, and rising interest rates, North Queensland still o ers more value for MLR investors than almost anywhere else in Australia.
“Management rights were pretty much on the nose after COVID-19, with the holiday market being fickle and the threats over accommodation modules cutting terms,” said Curulli, broker at MR Sales. “But there was pent-up supply that came onto the market, and we’re seeing some good-value properties with annual profits of $300,000 to $500,000 and multiples in the threes, showing a 30 percent return. Properties in North Queensland with a four-plus multiple aren’t getting much of a look-in at the moment, but there are a lot of properties with multiples of three. They’re the ones we feel are good buying for people.
“Some rights holders in North Queensland have done quite well with rising real estate prices – some real estate has gone up 50 percent since COVID-19. This gives us a chance to revalue the property. We’ve been able to adjust the numbers so vendors could get their asking price while offering a much more competitive business valuation on the management rights.”
Cameron Wicking from Mike Phipps Finance has been speaking with clients in Townsville and says they are upbeat. “They think that the last two and a half years have been very strong – the best they have had in the 10-plus years they have been operating in Townsville – off the back of investment into the town and surrounds,”
Wicking said. “The government has increased spending for defence, and the Star Group has just completed building the largest tavern in Queensland in Townsville, so there is an air of optimism within the community that things are looking up. They shared a similar sentiment regarding Airlie Beach and Cairns benefiting from government-subsidised flights, but also noted that they think bookings have dropped off since then for these two areas.”
Port Douglas had a rough six months after Severe Tropical Cyclone Jasper just before Christmas, but Mike Phipps, Director of Mike Phipps Finance, shares the optimism of Matthew Cork, president of Tourism Palm Cove, that the region has a sunny future. The government provided subsidised flights to assist in getting people back to Far North Queensland after Jasper, but Port Douglas missed out on the benefits, as the flights were direct to Cairns, and the road to Port Douglas was cut for a long time. Cairns and Airlie Beach both saw a significant boost from this. Cork said forward bookings were softer than they should be for this time of year, with the closure of Bonza Airlines likely having an impact. But while the length of stays might have shortened, he said sentiment around Port Douglas was actually “pretty good” with operators positive about what was on the horizon.
Among those positive operators are Andrew and Cindy Tingate, who were lured to Port Douglas after spending many holidays there. The region was a stark contrast to the frosty, snow-covered Mt. Baw Baw Alpine resort
in Central Victoria, which they managed before moving north. Andrew and Cindy have been running Garrick House for a year and have met many guests, couples and families, who have been holidaying at the property, not just for years, but for decades on end. There are 18 apartments at the property, with 16 short-term holiday rentals in the letting pool, which Andrew said was the ideal size for their husbandand-wife operation. “We love the lifestyle and the work here,” he said. “There’s always a positive vibe around Port Douglas. People love it, and we do our best to make sure our guests have a wonderful experience here.”
Calvin Bailey Management Rights (CBMR) has 29 years of experience in the Tropical North accommodation industry, specialising in the MLR business, and Bailey remains optimistic about the future of the sector in the north. “Cairns and the surrounding areas have always been able to reinvent themselves and will continue to do so, as they did after COVID-19 and the flooding earlier this year, resulting from Cyclone Jasper, our first cyclone since 2011,” he said.
Antonio Curulli
Cameron Wicking
Mike Phipps
Calvin Bailey
Andrew and Cindy Tingate
Garrick House
“We are now back to a vibrant tourism hub and well known as ‘the gateway to Asia.’ International tourism is again rapidly returning.” Bailey said Cairns enjoyed having the seventh-busiest airport in Australia, which welcomed more than 5 million passengers a year. Presently, the international terminal is undergoing a $55 million redevelopment.
“Inquiry levels for MLR businesses are quietly returning, and the recent level of buyer interest is very encouraging, as is the quality level of the buyers.” He said MLR business sales over the last two years had been mainly holiday properties. CBMR had 17 properties listed for sale in the north, and the eight most recent sales have totalled more than $17 million, with the highest being $5 million. He said he and his team had achieved multipliers of between 2.8 to five times the average net profit.
“Recently, CBMR has also settled several investment unit sales, and currently has five MLR properties that are under offer, at contract, or have just settled.”
He said, “We have been impressed by the quality of new buyers who recognise the value of obtaining an MLR business at a reasonable price in this area, and you will notice that these
generally offer a better deal and multiplier than that being asked in South East Queensland. You are getting more resort for your dollar up here and the prospect of a greater yield. Apart from our fantastic destination, value for money is perhaps our region’s biggest management rights business advantage over South East Queensland, where prices, especially on the Sunshine Coast, have gone up dramatically.”
Antonio Curulli says motel stock in North Queensland has gone up in price and subsequently come down in yield, putting management rights “in a far better light.”
He says good properties will always be in demand, but those with profits of less than $100,000 a year remain slow to sell, especially at a time of high interest rates.
“Those properties are a semi-retirement, lifestyle position. Banks see rights yielding below 12.5 percent on gross assets as lifestyle and those above 12.5 percent on gross assets as commercial. But if the multiples decrease a little bit, they become quite attractive for banks.”
Among the properties Curulli has sold was the Palm Villas in Palm Cove, which was sold
on a multiple of 2.8. “The vendor had decided that the price of the real estate had gone up so much he could take a lower multiple, and we were inundated with buyers,” he said.
He is currently marketing the York Apartments at Yorkeys Knob. “It’s great buying, with a three-bedroom unit, fully refurbished apartments, and absolutely beachfront with a six-digit annual income. It’s selling for $795,000 with a multiple of 2.1. It’s a semi-retirement opportunity with a good income in a beautiful location on the beach. We’ve also got Waterfront Terraces on the Cairns esplanade. It’s a modern hotel-style resort that’s showing a net of $300,000, and the managers don’t have to live onsite. That’s priced at $1.4 million with a 22 percent return on investment and 21 years left on the agreement.”
Cairns-based accountant Robert Cuda, from Caatz, says North Queensland has probably a greater proportion than anywhere else of management rights operators who have been at their properties for many years. “I’ve seen some people who have been in business for 15 to 20 years,” he said.
“Theirs are the properties transacting at the moment.” Cuda said during the COVID-19 pandemic, there were very few transactions, and it has since taken a couple of years to get the net profits of properties “up to a reasonable level to demonstrate to the market that there is consistency in those levels.” He said the lower multiples in North Queensland compared to South East Queensland represented great value but also the risk of the “ebbs and flows of tourism being a discretionary spend.”
“The lower multiples present a great opportunity for investors because you do get a better return on your money here,” he said. “The visitor numbers have been quite positive since COVID-19, and we haven’t had a lot of new stock, which adds to the good occupancy levels. Port Douglas had the cyclone, and that dented numbers from December to May, but forward bookings look good. In great weather, there’s no better place to be.”
Robert Cuda
Cairns
Des Fagg, who has represented ResortBrokers in North Queensland since 2014, points out that the MLR sector in North Queensland is mainly concentrated in popular beach locations such as Airlie Beach, Port Douglas, and Palm Cove, which predominantly have short-stay accommodation businesses.
“Outside of local buyers, North Queensland has proved popular with corporate operators and syndicates looking for a wider geographical spread and/or higher ROIs generated by purchasing at significantly lower multipliers,” he said.
“Management rights businesses in North Queensland typically sell at multipliers of one to 1.5 times, less than an equivalent in South East Queensland. The attraction of North Queensland’s imperishable natural attractions and lower multipliers has led to some significant MLR sales for ResortBrokers. This includes Dreamtime Resorts acquiring Drift Palm Cove and Verandahs Port Douglas. Drift was sold on actual/part projected profits of between $1 and $2 million for about $8 million, inclusive of extensive real estate. At Hotel Group, which holds the MLRs for nine accommodation assets in the Whitsunday region, recently purchased the MLR for Grand Mercure Apartments Magnetic Island through ResortBrokers. Additionally, Property Vine, which has several North Queensland properties in its portfolio of 14 MLRs, recently bought two MLRs in Airlie Beach through us as well.”
Geoff Ellis from North Queensland Management Rights says a lack of business confidence exacerbated by high interest rates still weighs heavily on the MLR market in his region. “It’s nothing to do with the destination, which has always been outstanding,” Ellis said. “It’s nothing to do with the tourism industry and the profitability of the businesses because most of them are showing better trading results than they’ve done in years. Most have bounced back well after COVID-19, and it hasn’t let up. The trading, the industry, and the destination are all terrific, but business confidence around the nation is down, cost of living is an issue, along with interest rates and inflation.”
Frank van der Heijden from Resort Sales agrees, adding that while the market for management rights is improving in North Queensland, interest rates are likely keeping a lot of buyers on the sidelines.
“But the confidence will come back,” Ellis said. “Buyers don’t go away; they just hibernate.
I’ve got some buyers that I’ve been talking with for three or four years, and they’re just waiting for the right opportunity.”
Among the Airlie Beach management rights properties, Ellis is marketing the Portside Whitsunday Apartments, the Azure Sea Whitsunday Resort, the Shingley Beach Resort, and the Mango House Resort. “At Portside and Mango House,
both vendors have been there for a long time, and they’ve done very well,” he said, “but they’re at retirement age, so they are motivated to sell for genuine reasons.”
Based in Agnes Water, Ronnie Slebos from CRE Brokers recently facilitated the sale of management rights for a high-rise in Mackay, listed at $750,000. With his own experience in owning and operating a management rights business, Slebos understands the crucial role brokers play in guiding both buyers and sellers from contract to settlement. He personally travels as far as Airlie Beach for inspections, noting that despite facing challenges like Cyclone Debbie and COVID-19, businesses in Airlie Beach have financially recovered.
Ronnie Slebos
Des Fagg
Geoff Ellis
Frank van der Heijden
Airlie Beach Photo by Nicolas Weldingh on Unsplash
Slebos remarked, “There’s no reason why any property in Airlie shouldn’t sell, but there are quite a few available at the same time.”
His colleague Peter Sagner agrees: “Management rights north of the Sunshine Coast, Brisbane, and Gold Coast regions require more patience from vendors to secure qualified buyers. This is most likely due to the higher population density of the South East corner and the sample number of MLR business buyers available from that population. Beyond that, the MLR business model is possibly less familiar beyond the South East pocket of Queensland. The businesses I have been involved with in the north perform quite well, and from a buyer’s perspective, the lower multipliers mean you get more bang for your buck.”
Alex Stagg, from McDonald Business Brokers, says there remains a lot of demand in North Queensland for accommodation businesses, especially for some of the bigger freehold motels. “We had one in Port Douglas, By The Sea, which was on the market for just a week before it went under offer,” he said. “In the last month, there are a lot of signs indicating that there is a lot more activity coming. We’ve had more inquiries and more offers in the last four-week period than probably we’ve had all year. People do want to get into the North Queensland market, but so much of it is very tightly held. With the big freehold hotels and motels, no one wants to give them up because they’re making too much money. But there are a lot of opportunities. We are marketing The Speewah Country Tavern. It is just past Kuranda, up the range from Cairns. It’s such a magnificent property, and it just hasn’t been getting the traction of what we would have thought. It’s a motel, tavern, and general store, with fuel out the front. It’s a beautiful property, and it’s listed at just over $2.1 million.”
Alex McCowan, from Accom Valuers, says he has been busy with valuations in North Queensland all year. “A lot of the turnover is in the smaller businesses, either short term or permanent,” he said. “The multipliers of those with a net profit less than $300,000 have seen some decrease, we’re seeing from low threes up to 3.8 times. But there have also been some bigger deals in Cairns, northern beaches and Port Douglas area. The larger properties with a net profit over $500,000 have attracted up to 4.3 times, and another at Palm Cove with a Net Operating Profit over $1.4 million sold at a multiplier of 5.0 times back in late 2022. Some of the
confidence for management rights has come back, but the market is nowhere near the size of the Sunshine Coast or Gold Coast, where deals are happening every day. Still, there are a lot of smaller deals in North Queensland around the $100,000 net profit, which are more suited to ‘lifestyle’ type purchasers.”
McCowan said there had been a flurry of property sales in Port Douglas in 2022 and early 2023 with the management rights for Mandalay reaching a five-times multiplier with a Net Operating Profit of over $800,000. “There’s now a ‘significant player’ moving into the management rights market,” he said, “with assets in Townsville, the Sunshine Coast, and Airlie Beach. They’ll probably look to Port Douglas later. Having them buy two large MLR businesses in Airlie confirms it’s going to hold up its values.”
Peter Ward, the director of Ward Commercial, said he had always enjoyed “a very special affinity” for Airlie Beach since the mid-1970s when he watched the cane toad races at the original Airlie Beach Hotel. “On a professional basis, whilst based on the Sunshine Coast, from 2003 we visited Airlie Beach and surrounds frequently, having negotiated 10 sales, mostly management rights but two significant freehold properties as well,” Ward said. “In 2022, Ward Commercial relocated to Yeppoon, and in 2024 teamed up with Brad Sobott from the highly regarded Taylors Real Estate in Airlie Beach to jointly market all types of accommodation properties, but mainly management rights. Obviously, the COVID-19 era and subsequent years created many unprecedented challenges, but we see the market being steady with improvement over the longer term. We currently have four management rights/caretaker properties (one of which has already been sold), plus a high-quality freehold accommodation asset listed, and
these in the main are attracting good inquiry, which gives us confidence for the future.”
The new National Director of Ras360, Nathan Eades agrees and says there is a great deal of confidence returning to the North Queensland accommodation market, so much so that they have appointed North Queensland local Shane Croghan to oversee sales there.
Shane Croghan joins Ras360 from ResortBrokers, where he started in 2019, notching up notable sales, including the management rights to Drift at Palm Cove, one of Far North Queensland’s largest and most soughtafter luxury beachfront residences. The business was bought in December 2022 by Dreamtime, one of Australia’s foremost resort management groups. He also covers the motel and caravan park market and has an extremely strong track record in these asset classes.
Croghan also spent a decade operating three of his own management rights businesses: the 80-unit Whitfield Waters from 2010 to 2013, the 54-unit City Park Gardens Apartments from 2010 to 2015, and Mid City Luxury Suites from 2016 to 2019.
Eades said: “The management rights market and accommodation market, in general, in the north have bounced back quite strongly. It’s good buying up there, and the multipliers in the management rights sector have always been historically softer than Brisbane and the SEQ market. So particularly with the high net assets, the return on investment is always very attractive.
“Lifestyle is another big factor, which is evidenced by the strong migration from
Peter Ward
Nathan Eades
Peter Sagner
Alex Stagg
Alex McCowan
Shane Croghan
Port Douglas beach and ocean on sunny day, Queensland
southern states to SEQ and regional Queensland. The Townsville, Mackay and Whitsunday markets have always had a strong drive and fly-in market, whereas the Cairns market is predominantly a fly-in market. The recent announcement that Cathay Pacific is about to open flights back into the area, offering a direct link between Hong Kong and Cairns, also provides an opportunity for strong revenue growth for the region.”
Cairns-based Danny Adams from North Queensland Lending has spent 40 years in finance and says the management rights opportunities in his region are in stark contrast to the state’s southeast.
Much cheaper real estate and more profitable businesses are almost as compelling as the Great Barrier Reef and the Daintree Rainforest.
“Our real estate in the north is still not out of hand,” Adams said. “It’s still possible for someone to buy a management rights business in North Queensland and get a very comfortable two-bedroom, two-bathroom manager’s lot in the $500,000 range with a management rights business for $1 million underpinning that and with a three to 3.5 times multiplier. That’s a very good deal. Banks are very much on board here and very eager to lend for MLR businesses.
There is good activity as far as sales. We’re not blowing the world away at the moment, but there is a steady stream of sales, and they range from very small permanent complexes to multi-million-dollar properties.
“I’m seeing activity from Airlie Beach right through to Port Douglas, which includes Cairns and Palm Cove in between. There is a steady level of inquiry from genuine buyers at varied levels. People are trying to come in at entry-level to get that first building with a view to getting something bigger in four to five years. They are learning the ropes of the MLR industry with the intent to make a lifelong career. Then there is genuine inquiry at the upper end with
people who already have industry experience with motels or hotels. In some instances, it’s the corporates. Everyone buying into MLR business in the north is getting a good deal, and I haven’t seen one multiplier that would make me worry. Lower multiples mean a more profitable business.”
Adams said the north had enjoyed two good holiday seasons after COVID-19 with an influx of domestic visitors and now international travellers, who are coming back in droves.
“At Port Douglas, it’s hard to get a seat for a coffee in the morning,” he said, “and a lot of those visitors are from overseas. The future is looking good.”
Danny Adams
Port Douglas
Contact: Geo Ellis, 0432 790 959 geo ellis@nqmr.com.au
Contact: Calvin Bailey, 0414 889 593 calvin@cbmr.com.au
Curulli, 0432 790 959 tony@mrsales.com.au
Chenoa Daniel, 0403 143 151 chenoa@resortbrokers.com.au
Clifton Beach, QLD
Contact: Craig Johnson, 0493 108 073
Contact: Calvin Bailey, 0414 889 593
