“Don’t leave it to chance”
Some enjoy a “little flutter” now and then, while others prefer a “serious punt.” Whether it’s a high-stakes game of poker or flipping a coin to settle a dispute, it’s a gamble either way.
In business, a gamble can mean not properly preparing for a sale before going to market. Leaving it to chance and hoping for a good outcome is too risky. Even a little planning and preparation by a seller can significantly improve the odds of a better outcome. For example, when selling a car, a thorough cleaning inside and out will fetch a higher price and sell faster than a car that has “wash me” on the rear glass and the engine winds before it finally starts. The price a prospective buyer is willing to pay for a well-prepared offering will be much higher. This preparation helps to stack the odds in the seller’s favour.
Motel business sales are no different. With customers coming through the door daily and the support of a good booking system with quality reporting, preparing for a sale should, in theory, not require a major effort. The daily operations often contribute to the ongoing preparation for a future sale, even if inadvertently. Once the decision to sell is made, if this ongoing preparation has been done, it will simply be a matter of compiling all the information to present to the relevant party.
Providing a professional presentation of a motel business and its physical property to a prospective buyer adds credibility and helps create a smooth process. This approach avoids constant delays that can lead to angst, more questions, and potentially distrust. It confirms that the business is being operated well and ensures a seamless transition for the new owner, making their life easier and preventing them from inheriting
Qld Tourism & Hospitality Brokers
someone else’s problems.
Every seller wants to achieve the highest price, in the shortest time, with the fewest issues. This can only be achieved through thorough preparation before the business or property goes on the market. This preparation involves not only the physical asset but also the business asset and what relates to it.
The preparation of the buildings includes completing any renovation works or repair and maintenance matters, keeping the lawns and gardens manicured, and renewing old painted surfaces. On the business side, preparation includes several aspects, with the main focus on financial matters. Sellers who have all their financial statements up to date and occupancy and accommodation data readily available will present professionally to potential buyers. Compliance, and everything that goes with it, is another crucial area, encompassing items such as an asbestos report, pool safety certificate, signage agreements, online contracts/ agreements, customer contracts/agreements, telecommunication agreements, food licence, and liquor licence.
A good way to start preparing for the sale of a motel business is to put yourself in the buyer’s shoes. Before offering a motel to the market, gather and prepare the information that you, as a buyer, would expect to see. Look at the sale process
from the buyer’s perspective rather than just the result. Identify the important items any prudent buyer will require and present these professionally. Often, a potential sale can be jeopardised during the initial enquiry or just before the contract of sale is due to settle if the seller is not fully prepared. This can be a very costly mistake if a contract falls through at the last minute due to poor preparation. There is no excuse not to be fully prepared for the questions one knows will be asked, as opposed to trying to avoid them and hoping they don’t eventuate.
Once the decision to sell a motel is made, focus on the most important factors that will influence the buying decision. Avoid spending time or money on areas that won’t attract potential buyers or satisfy their buying motives (again, think like a buyer).
Determine what information will influence a buyer to act, and make sure you have control over these aspects.
Documentation
Have all the relevant documentation and information prepared, available, and in an accurate and well-presented format that a buyer acting reasonably should expect.
To avoid unnecessary delays, ensure the following information is ready to go at the stroke of a key before offering a motel to the market:
Accountant’s Profit & Loss Statements: the last three years will be requested. All other important information aside, a motel’s value is a direct reflection of its profitability.
Monthly income split up by department for the last year, including accommodation, restaurant, bar, tours, and so on.
Current tariff schedule: including the last time they were increased and by how much.
Council property rates notice: the last two received.
Latest insurance policy; including policy premium.
Online status: social media presence as well as online booking options.
Plant and equipment list: a comprehensive list of all chattels sold with the business; including beds, televisions, fridges, kitchen equipment, and so on. These are tangible assets seen as holding a high value.
Lease or rental agreements: chattels under lease, road signage agreements, and more.
Lease document: if the business is a leasehold tenure, not inclusive of the land and buildings.
Occupancy rates: average occupancy rate per month for the last year.
A list of recent property improvements: Refurbishment and large maintenance items should always be documented and available.
External party agreements: Copies of agreements with external parties such as chain affiliations, service providers, booking agencies, etc.
Employee details: Basic numbers for each are enough early on. Including cleaners, reception, management, food and beverage, and so on.
General information: On the daily operations, such as the booking system, social media, office hours, employee details and so on.
Buildings & chattels
Cleanliness is important every day in a motel business, whether a potential buyer is inspecting the property or not.
Cleanliness goes a long way in making an impression, whether a motel is young or old, a clean and tidy motel tells the story that it is being looked after.
Fix any issues or problems with the land, buildings, or plant and equipment (chattels). Potential buyers do not like sellers attempting to pass on their problems due to lack of investment and care.
Motels with good quality presentation always achieve higher sale values as buyers can see they will not need to invest additional capital immediately after settlement. If a buyer believes that $100,000 will need to be spent due to neglect, the offer made will be discounted by more than that. Minor items often make all the difference, such as small repair and maintenance issues being completed.
Major cost items commonly raised as concerns by buyers can deter them from paying the asking price or making an offer at all. These include the absence of split system air conditioners, poorly painted surfaces, damaged or dated cabinetry, old or damaged floor coverings, sagging beds, and bathrooms in need of full renovation (e.g., showers, tiles, vanities).
Marketing
Some say, “You cannot sell a secret.” However, this doesn’t mean you should broadcast to the world that ‘Morgan’s Motor Inn is for sale’. The market is everchanging, and what worked a year ago may not work now. In a quiet market, sellers and their brokers need to be proactive with their marketing initiatives to attract potential buyers. It’s crucial to be aware of confidentiality and protect the goodwill of the business by only dealing with genuine, qualified buyers.
Target market: When determining the target market for a product, consider factors such as the value of the business/ property, the locality, the size (number of units in the complex), the sales income, the size of the residence, and the various products offered by the motel (e.g., food and beverage, unit types, conferencing facilities). Reaching the target market through the right marketing initiatives will attract the right buyer’s attention.
Creating a competitive market
allows the seller to obtain the highest price possible and ensures a smooth sale process through spirited bidding. While some sellers prefer not to advertise a motel for sale to maintain confidentiality, many do not want the name of the business, or photos of the property disclosed publicly. This leads to the concept of an off-market campaign.
An off-market campaign involves not advertising to the masses that a business or property is for sale. Instead, the broker makes direct contact with known potential buyers. Both parties understand the heightened level of confidentiality expected in such a process. Depending on the market conditions, this can be an excellent way to achieve a good selling experience.
Internet: Any successful marketing campaign must include online marketing options. The first place a potential buyer will look for a motel is on the internet. This is a costeffective marketing method that remains accessible long after a newspaper has been discarded. Online platforms allow for detailed descriptions of the business and numerous photos of the property, which can significantly attract a potential buyer’s attention. After all, a picture tells a thousand words!
Qualification process
Qualifying potential buyers is an absolute requirement, albeit a challenging and sometimes uncomfortable task when offering a motel to the market. Providing confidential business documentation to an unqualified buyer is a concern. Only a fully qualified buyer can complete the transaction. If a buyer lacks the funds, the genuine intent to buy, or the ability to buy, there is no point in sharing confidential information about the motel business with them. No one wants their personal information and business goodwill—such as major client lists, suppliers, contracts, agreements, and other data—accessible to competitors or individuals who may misuse it. Many sellers underestimate the importance of confidentiality. Protecting the
business’s goodwill is crucial to maintaining its value. Therefore, sellers must ask potential buyers difficult questions in a manner that is neither intrusive nor argumentative, which is not as easy as it sounds.
Going through the process of providing confidential information, conducting inspections, and signing contracts, only to find out that the contract falls through because the buyer cannot finance the transaction, is a waste of the seller’s time and money. It is often difficult for a seller to speak candidly with a potential buyer. However, time and money can be saved at this stage of the process by thoroughly qualifying and requalifying the buyer.
Motel industry specialists
Agent: Any agent can claim they can sell a motel (or any property or business). However, the key question is whether they can achieve the highest price and ensure a smooth transaction. Only specialists who are fully qualified, accredited (business brokers should be fully accredited with the REIQ), and have extensive experience in motel accounting, sales, and legal matters within the industry, along with a proven track record of successful motel sales, should be considered for the job if the goal is to obtain the highest sale price, minimise costs, and ensure a smooth transaction.
Don’t assume that the agent who provides the highest sale price appraisal is the best person for the job. They are most likely not the right person. For example, having an agent who does not specialise in selling motels provide an appraisal may result in the highest appraisal value, but that is not the goal. Listing the business for sale at an overly high price can result in the property sitting on the market without attracting buyer interest. To what end? The result will be a lower sale price and higher costs throughout.
Other professionals: Including: accountants, motel brokers, financiers, and solicitors.
Make the right decision based on thorough research and preparation. Employing specialist professionals in these roles is crucial. Simply put, failing to do so can cost a seller thousands of dollars and cause significant grief and frustration. When considering engaging a professional for the sale of your motel, always ask relevant questions. This ensures you choose the right person for the job and protects your interests throughout the process.
Key questions to ask include:
• What motel sales have you personally handled, and over what period?
• How many years have you been specialising exclusively in the motel industry?
• Do you work full-time selling motels, or only part-time due to other business interests/involvement?
• What are your formal qualifications?
• Can you provide references from those within the industry?
• Are you fully accredited with the relevant industry authority?
The sale of a motel (or any business) involves many more moving parts than the sale of other property types. Potential buyers are looking for various factors, such as a strong business, future potential for growth, quality presentation, the business’s history, and the honesty, integrity, and trustworthiness of the seller (particularly regarding financial statements). Other important considerations include the size of the residence and cash flow.
In contrast, an investor looking to buy an industrial shed is primarily interested in the lease details, rental income, and the structure’s condition. They have little or no interest in the current owner’s trustworthiness or the historical financial background. These matters are crucial to a business buyer, as the seller is relied upon for much more than just offering the property to the market. The seller’s credibility can be paramount to the transaction.
COASTAL FREEHOLD MOTEL
Situated in a high profile location, close to the town centre and beautiful tropical beaches is this recently renovated, well presented 12 unit motel. Set on approx. 1,800sqm, the complex includes a 2 bedroom residence, inground swimming pool and bbq area. The accommodation only business is easily operated by one person or a couple. FY24 Occupancy circa 68% with a high Net Profit and an excellent ROI available.
12 Accommodation Units Whitsundays FREEHOLD $1,295,000 * Outline is Indicative Only
ABSOLUTE BEACHFRONT VILLAS AND RESORT BUILDING
Situated in an absolute beachfront location and o ered for sale are 9 villas and the main resort building. Each villa includes 2 bedrooms, bathroom, kitchen, living area and patio. The main resort building of approx. 731sqm comprises reception, restaurant, bar, function room and two bedroom residence. Resort facilities include pool, spa, gazebo, onsite parking, in an absolute beachfront location, 10 minutes to the Mackay CBD.
9 Two Bedroom Villas & Main Resort Building Mackay FREEHOLD $1,800,000 + GST if applicable
BEACHFRONT LEASEHOLD MOTEL & TOURIST PARK
Situated in Tropical North Queensland, this motel & caravan park has spectacular ocean and island views. Set on approx. 6 acres with esplanade and highway frontage, the property o ers a diverse range of accommodation options including 28 beachfront motel units, 12 park view motel rooms, 6 studio rooms, co age, 15 cabins, 89 caravan sites and 2 bedroom owners/managers residence. The business has a proven track record of year on year increase in profitability and shows an outstanding return a er management. Operated under management. Commencing rent only 19% of Turnover. O ers a 30% ROI.
New 30 Year Lease Offered
Tropical North Qld
LEASEHOLD $1,595,000
INLAND COUNTRY QUEENSLAND MOTEL
Situated on the main highway of a small inland town, is this very solid freehold motel complex. The business is easily operated by one person or a couple, o ering a high profitability for the owner. The complex includes 15 ground floor motel units, commercial kitchen, separate 3 bedroom residence and large shed set on approx 4,000sqm with spare land for expansion of more units. A consistent 75% occupancy and low operating overheads assist to maximise profits. Net Profit circa $294,009 with a high 23.5% ROI.
15 Units Inland Qld
FREEHOLD $1,250,000