Informer Issue 90 by Resort Brokers

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AUSTRALIAâ&#x20AC;&#x2122;S BEST ACCOMMODATION INVESTMENT SHOWCASE

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inside ...

LANCEMORE GROUP PROFILE

CHINESE MILLENNIALS

Entrepreneurial spirit and a hotel operator ahead of its time

A new generation of traveller is reshaping our market

MAKING LIFE DIFFICULT

GAINING YOUR FULL LICENCE

When ‘efficiency’ and ‘compliance’ initiatives don’t result in change for the better

Why better qualifications give managers an earnings edge

F E AT U R E : M I N D H OW YO U G O

ELECTION YEAR BUDGET

Why you need a healthy mindset to succeed in business

What’s in it for the accommodation industry?

R E G U L A R F E AT U R E S

58 74

ON THE MARKET

MARKET ACTION

Trudy Crooks discusses interesting developments in the accommodation market

Significant sales and listings grabbing the headlines

AGENT PROFILE

SOLD PROPERTIES

Meet Glenn Millar, one of our most successful brokers

See some of the properties Resort Brokers Australia has sold recently

RELIEF MANAGERS

MEET OUR TEAM

Taking a holiday? Need a manager? Find one here

Resort Brokers Australia’s national directory

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Preface //

WELCOME TO ‘WE SAY, THEY SAY’ A REGULAR FORUM FOR THE EXCHANGE OF VIEWS, NEWS & IDEAS.

ON THE UP

ICrooks

IAN CROOKS MANAGING DIRECTOR

new financial year always gets us thinking about our economic future, our personal situation of course, but particularly the broader economic climate, which is beyond our control but has so much impact on our hip pocket. My feeling is that the ‘green shoots’ we’ve spoken about in recent editions are now growing stronger roots, and we can expect positive sentiment to increase as a result. I know the delivery of the Federal Budget now seems a distant memory, but I was encouraged by what it offered. The centerpiece was increased infrastructure spending, always a growth catalyst, along with planned reductions in both personal and company tax, and a crackdown on the black economy. All good news. It was soon followed by strong 3.1% annual GDP growth figures, in part due to better than expected mining commodities prices and business spending prompted by a rise in corporate profits. More positive signs. As I write this, the Senate had passed the Coalition’s income tax cut package so, from July 1, low and middle income earners will start to

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enjoy the phase one tax break of about $530 a year. The next hurdle for the government will to get its plan to cut the corporate tax rate from 30% to 25% for all businesses through the Senate. What I’m getting at is that, when the economy is on the up and people are feeling more positive, they begin to consider buying their own business, or upgrading the one they have. They take the brakes off. That’s what we are now seeing, rising demand from buyers, and that’s great news for sellers. On top of this, tourism numbers continue to grow strongly across the country. Rising occupancy rates and improved revenue per available room (RevPAR) are showing up

on operators’ books, making it the perfect time to sell. Buyers see healthy trading figures but also expect more upside ahead. I would urge anyone thinking of taking advantage of these conditions to think about timing. From now, you have about 8 – 12 weeks to prepare, as the best time to sell is always the Spring season. It’s when positive sentiment seems to really blossom. While on the subject of the Budget, I do want to make a particular point about the welcome crackdown on tax avoidance by foreign multinationals. We really need to get serious about this. I read last month about a landmark study that found multinational corporations are

they say “Capital city accommodation has seen high occupancies for the year ending January 2018. Hobart, Sydney, Melbourne, the Gold Coast and Cairns reported strong results of over 80 per cent (STR Global, Ltd). This demand has significantly improved the hotel sector’s Revenue Per Available Room (RevPAR) in recent years and is expected to continue to rise, with Deloitte Access Economics projecting growth of 3.1 per cent by 2019.”

By the numberS // IMPRESSIVE AC C O M M O DAT I O N PERFORMANCE

Y E A R TO D AT E APRIL 2018+ RevPAR

AUSTRALIA AUSTRALIAN TRADE AND INVESTMENT COMMISSION

tourisminvestment.com.au

shifting roughly $16 billion in profits out of Australia into tax havens every year. That’s a massive amount of missed tax revenue. Immediately after the Budget measures were announced, our industry champion Richard Munro and the AAoA were on the front foot, welcoming the move to force offshore online travel agencies (OTAs) to pay their fair share of tax. He reminded us that the two dominant OTAs, the “global behemoths” that command almost 85% of online accommodation bookings in Australia, employ very few people here and pay virtually no tax in this country. “It’s high time that these wrecking balls of Australia’s accommodation

industry start paying their way instead of robbing hard-working local accommodation businesses of revenue, costing Australian jobs,” he said. Their fierce lobbying on this front continues. So, while I’m at it, I want to say all accommodation owners and operators must become members of the AAoA. They are the voice of your industry, as ARAMA is for the management rights sector. Our cover story is an important one. I attended the Real Estate Institute of Tasmania’s recent conference and was very impressed by speaker Isla Gillespie, who made us all realise our ‘mental fitness’ is as important to business success, if not more so, than physical fitness. Read about Lancemore Group, a family hotel company that turned tragedy into opportunity and has made a tremendous contribution to Australia’s fine accommodation market. Our brokers have contributed some great insights, including on the changing Chinese market and major infrastructure investments driving the Sunshine State, plus there’s great news for South Australian commercial property investors. Market insights, news, top tips, industry experts and educated opinion … there’s so much in these pages to keep you informed and inspired. End //

$148.85 (+4.1%)

ADELAIDE

$133.62 (+5.3%)

BRISBANE

$105.92 (+1.3%)

MELBOURNE

$162.07 (+0.8%) Source: +STR, Australia and New Zealand Hotel Review, April 2018 tourisminvestment.com.au

WE’D LOVE TO HEAR FROM YOU: CARLACOOK@ RESORTBROKERS.COM.AU

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M otel L easehold Ref // LH005330

Popular Rockhampton Motel in prominent position and close to CBD

Located close to restaurants and cafes, this apartment motel consists of 22 motel units and 16 apartments of different configurations. The property features a very popular, separately owned and operated on-site licensed restaurant, open for lunch and dinner seven days a week, complimentary WiFi and Foxtel, guest laundry facilities, 40 car parks mainly undercover, along with an attractive pool and BBQ area (popular with guests in the summer months). The property is in good repair and has been well maintained with upgrades of carpet, mattresses and soft furnishings. A long standing arrangement with Singapore Armed Forces has been finalised with a 5 year contract for accommodation making this a very attractive investment. Located on the main thoroughfare heading north or south through Rocky the Cosmopolitan has a very prominent exposure to visitors and travellers alike. The varied size and configurations of the apartments make this property a very inviting stopover for families and guests seeking self catering living (both short and long term).

›› No breakfasts supplied, this is an opportunity

Rooms

22 Years

›› Mixed use property with studio motel units and self-contained apartments ›› Extensive repairs and maintenance, inc. external painting, have been undertaken by the landlord ›› 3.5 star self rated ›› Long 22 year lease ›› Enjoys 61% occupancy ›› New owners have a choice of two or three bedroom apartment

NETT PROFIT: $276,506 Turnover: $804,469

PRICE: $776,000

L e N B ooth BROKER +61 438 139 422 lenbooth@resortbrokers.com.au 6

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R ockhampton

H otel L easehold Ref // LH005340

HOTEL LEASEHOLD OPPORTUNITY MELBOURNE CBD

If location is a key factor in the decision to purchase then this opportunity ticks all the boxes. The hotel is ideally positioned at the western end of Bourke street within the complimentary Melbourne CBD tram zone. The business consists of a 4-star rated independent hotel of 50 rooms, studios and apartments over 5 levels. Additional facilities include reception, restaurant, guest laundry, administration offices, relaxation room, housekeeping storerooms on 4 levels, small staffroom and ground level secure car park at the rear. The units generally include small kitchenettes with basic cooking facilities and are fully furnished to a highest standard. The business caters for a range of corporate and leisure clients with overall occupancy approaching 90%. Annual sales have exceeded $3,000,000 for the past 4 years with adjusted nett profit of over 20%. The lease has a total tenure of 24 years from 1st January, 2018, with annual rent increases of 3.5% and market review every four years. The current vendors operate the business under management with a 24 hour reception.

›› Operated under management with 24hr reception

Units

24 Years

›› Total leasehold tenure 24 years from January 2018 ›› Independent operation – opportunity for purchaser to re-brand ›› 50 units mixture of hotel rooms, studios, one and two bedroom apartments ›› Licensed restaurant on-site ›› Ideally positioned in Melbourne CBD, close to Crown Casino, Etihad Stadium, Southern Cross Station and Melbourne retail facilities ›› Well maintained to a quality 4-star standard

NETT PROFIT: $675,900 Turnover: $3,375,563

Price: Price on application

J im C hapman V ictorian S tate M anager +61 413 444 782 jimchapman@resortbrokers.com.au

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F reehold G oing C oncern Ref // FH005289

European Style Ski Lodge in the Heart of Jindabyne

Rooms

Bed

Bath

Vikas Lodge is a well-established, family owned travel venue in the heart of New South Wales snow country. This charming lodge offers fabulous views over Lake Jindabyne and the Snowy Mountain Ranges, with close access to the ski fields, alpine waterways and wilderness walking trails. Currently specialising in school, college and sports club bookings locked in year to year and offering a secure base income. Another source of income is derived from in-house ski and clothing hire and sales, with an extensive range available. The lodge offers 47 rooms with 170 beds ranging from doubles to dorm-style accommodation. A commercial kitchen and restaurant caters for up to 250 diners, together with a fully licensed bar and spacious communal lounge area with open fireplaces and games room. This is a popular alpine lodge with established trade and great returns, with multiple opportunities to expand. The business is currently trading only in the ski season. However, the region now attracts travellers and wilderness lovers well beyond the ski season. As such, there is ample opportunity to tap into this leisure market for business growth.

›› Present owners have run for three decades

Manager’s Residence

›› In the centre of Jindabyne with superb regional views ›› 47 spacious guest rooms with 170 beds over two buildings ›› Group travel specialists ›› In-house ski shop and ski hire business ›› Restaurant with commercial kitchen and cool room catering for 250 ›› Enormous potential to grow the business further

NETT PROFIT: $414,625

Expressions of Interest

R ussell R ogers BROKER +61 416 166 909 russellrogers@resortbrokers.com.au 8

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J indabyne

MANAGEMENT RIGHTS Ref // MR005119

Vendor Wants All Offers Submitted

9.5

Units

Letting

Years

Carrington Court Apartments is a stunning property located on the beachfront strip in the ever-popular Gold Coast suburb of Main Beach. There are currently 18 units in the on-site letting pool, 11 on a short-term/holiday basis and 7 on a permanent basis. The quality of the property and the facilities it offers are second to none, including a heated pool, spa, sauna and gym. The complex has been lovingly maintained over the years and presents as a modern, near-new building. Considerable upgrades and refurbishment work has taken place in recent years including work to the lobby. With over $450k currently sitting in the sinking fund, the purchaser of this business can rest assured that the building will maintain an impeccable presentation for years to come. Carrington Court presents a rare opportunity to purchase a quality holiday property, located in an absolutely prime Gold Coast location, with considerable scope to grow the bottom line and value of the business.

›› Quality property with first-class facilities

Bed

Bath

Manager’s Residence

›› High standard of apartments in holiday letting pool ›› Absolutely prime location in Main Beach ›› Considerable scope to grow letting pool and bottom line of business ›› Lovely, manager’s residence with private outdoor space ›› Managers have consistently topped up agreements back to full term ›› Great body corporate and committee relationship

NETT PROFIT: $213,600

PRICE: $1,399,000

P aul M ueller BROKER +61 439 255 507 paulmueller@resortbrokers.com.au

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O ff T he P lan MANAGEMENT RIGHTS Artist impression

Ref // OTP005341

Artist impression

SIGNATURE BROADBEACH ELEVATED REFINEMENT, PRIME BEACHSIDE LOCATION On offer is a rare opportunity for a top-tier, short-term operator to acquire the management rights to a purpose-built apartment hotel prior to construction, maintaining scope to work with the developer on fit-out, branding and investor relations. Designed by Rothelowman, the soaring 35 level tower will have a mirror-like facade designed to orient the 252 one, two and three bedroom apartments towards the beach, all with expansive ocean views. From the stately arrival point, with porte-cochere and upscale lobby, to the ‘The Deck’ – an entire podium level including 50m infinity edge pool and array of facilities – luxury and quality will be clear throughout. Located in the Gold Coast’s most stylish and upmarket suburb, Signature is within a short walk of patrolled beaches, Star Casino, Pacific Fair, Gold Coast Convention Centre and G:link stations. With surging domestic and international visitors to the Gold Coast, and the restricted development pipeline of new holiday properties, now is the time to secure the prize asset that is Signature Broadbeach.

Artist impression

35 Levels

252 Units

25 Years

›› Incredible momentum with over 100 apartments sold in just 6 months ›› High-end, purpose built apartment hotel ›› 35-level high-rise comprising 252 apartments ›› Opportunity for operator input on fit-out, operational space and brand standards ›› On title - reception, office and storage space ›› 50m pool, expansive lawn, teppanyaki grill, theatre, lounge, private dining, gym, spa and sauna ›› Brand new 25 year caretaking / letting agreements ›› Walking distance to beach, parks, Casino, Convention Centre, Pacific Pair and G:Link ›› Construction completion due late 2020 EXPRESSIONS OF INTEREST CLOSING 5PM ON Friday 10 August 2018 Price expectation $15M+

T im C rooks O ff the plan S pecialist

A lex C ook BROKER

M. +61 422 208 450 E. timcrooks@resortbrokers.com.au

M. +61 467 600 610 E. alexcook@resortbrokers.com.au

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B roadbeach

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IN THIS SERIES OF ARTICLES, WE PROFILE LEADING SHORT-TERM A C C O M M O D AT I O N O P E R ATO R S – T H E I R O R I G I N S , G R O W T H , MARKET POSITION, AND FUTURE PLANS.

Editorial // L A N C E M O R E G R O U P

Alamanda Palm Cove

Long before the terms ‘boutique hotel’ or ‘lifestyle hotel’ entered the modern hospitality lexicon, an enterprising Melbourne couple risked all to pursue a market they instinctively knew was there. Born of an entrepreneurial spirit and a deep appreciation for quality, Lancemore Group was a fine hotel operator before its time.

- Lancemore group

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Today the name Lancemore, derived from the group’s very first property, is synonymous with six of Australia’s leading boutique hotels and conference and event destinations, along with an award-winning winery, critically acclaimed restaurants and indulgent spas. Yet before the pioneering company began in the mid-1980s, tourism and hospitality were not part of its founders’ business plan. Peter Clark ran a substantial management consulting firm, and his wife Jan had been in fashion and design. Theirs is an entrepreneurial story that started

with what some warned was a foolhardy idea. Add the heartbreaking loss of family homes to fire, and their tale becomes all the more powerful and poignant. Peter and Jan believed in their instincts, rolled up their sleeves and made it happen. Son Julian, now CEO of the industry-leading Lancemore Group takes up the story. “They actually came to it from a customer perspective,” he reflects. “As facilitators, they did a lot of training, but there really were no suitable facilities then. “Conferencing had emerged as part of the hotel industry, but usually just in basic meeting rooms with no natural light. So they saw an opening and started looking for a property to create a purpose-built venue.” Then, while holidaying abroad, disaster struck. A bushfire destroyed their house and that of their parents on the family’s 111ha property at Kilmore, north of Melbourne. From that tragedy sprang the next chapter. “They realised the family property actually fulfilled many of the criteria they were hoping for: a charming

destination close to Melbourne and close to Tullamarine airport,” Julian said. “So they decided to build there.” What rose from the ashes was Lancemore Hill, a stunning regional conference and wedding destination carefully and expertly designed for the purpose. Launched in 1986, it was the genesis of the Lancemore collection of boutique hotels and lifestyle facilities. Consider the timing, though. Interest rates were 18 per cent, regional tourism was little understood, and the 1987 stock market crash and early 90s recession were soon to follow. “I remember Dad saying, ‘I can’t believe we succeeded, but I never thought we’d fail’,” Julian reveals. Succeed it did. Lancemore Hill generated “stunning returns” throughout the 80s and 90s, expanding from 50 to 71 rooms in 1991. So, thoughts turned to opening a second property. Again Peter and Jan’s astute market instincts kicked in. They noted a trend in the UK and Europe for grand

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To p t o b o t t o m : l i b r a r y n o o k , l o b b y , S i g n a t u r e R o o m

country houses to be turned into boutique hotels, augmented by great food and wine experiences. They could blend what they’d done at Lancemore Hill with the boutique hotel concept. Again, Julian says, they walked that fine line between ‘visionary’ and ‘crazy’. In 1996, despite no real hotel sector experience, they bought a stunning 12ha property with established gardens and a vineyard on the Mornington Peninsula. There they built Lindenderry at Red Hill. The classic country house hotel, surrounded by spectacular coastal landscapes and celebrated food and wine producers, captured the emerging experiential tourism market. The next addition to the collection came about in 2001 when winemaker Brown Brothers approached the Clarks to establish luxury accommodation across the road from their Milawa vineyards in Victoria’s northeastern high country.

THEY (THE RESTAURANTS AND VINEYARDS) ARE PART OF THE BIGGER PACKAGE – THE UNIQUE, PERSONALISED EXPERIENCE LAVISHED ON GUESTS

Immediately seeing the potential of a location surrounded by dozens of vineyards and wineries, they bought the land and established Lindenwarrah at Milawa, a chic boutique hotel at the heart of a region famed for breathtaking landscapes and fine produce. By now, the Lancemore Group was well and truly in command of the regional boutique hotel space. And, with their passion for hospitality, they’d also begun instinctively to satisfy the market’s growing appetite for culinary and sensory experiences. That first 20 years, driven by Peter and Jan, laid the foundation for what would become an intergenerational company. Enter Julian who, to that point, “never had any intention nor desire to work in the business.” He’d forged a career in corporate strategy and financial services, mostly with big multi-nationals. But, after living in London and observing global tourism industry trends, his interest grew. “Let’s face it, if you can’t be passionate about what we do, especially at the high end, there’s something wrong. It has its challenges, but it has great rewards.” Julian and his parents agreed he’d join the company for a 12-month trial period. It worked and, by age 28, he was CEO. Fatefully though, again the timing was tough. The GFC hit. “It was a baptism of fire, but I came through all the stronger for it,” he says. Julian reviewed the Lancemore operation and knew he’d need to pursue a different growth strategy. To this point, the business had run its own race, expanding opportunistically

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Lindenderry Red Hill

and investing heavily in bricks and mortar. “To grow further, we needed to go asset light. As a family business, there’s a limit to how much you can grow owning freehold. My strategy was to pick up management agreements to select properties to grow the operation.” The Mansion Hotel & Spa at Werribee Park joined the collection in 2010 by way of a long-term lease. Just 30 minutes from Melbourne CBD, grand guest rooms set in 19th century estate gardens are paired splendidly with fine dining and lavish spa facilities. Next came Alamanda Palm Cove in 2014, the as yet Victoria-focused group’s first foray into Queensland. The only hotel in Palm Cove (just north of Cairns) with uninterrupted beach frontage, Alamanda is set for a $3 million makeover to ensure it continues to offer the ultimate in ‘barefoot luxury’. Soon to follow, in 2015, was Larmont Sydney by Lancemore, which would undergo an extensive refurbishment and 27-room extension. A landmark of avant-garde Potts Point, it’s a stylish CBD fringe haven for corporates and travellers alike. With its roots in conferencing and events, and now a leader in luxury regional tourism, Lancemore Group has also put exceptional F&B at the heart of everything they do. Acclaimed restaurants – Merlot (Lindenwarrah at Milawa) Joseph’s (Mansion Hotel & Spa), Nu Nu (Alamanda at Palm Cove) and Linden Tree (Lindenderry at Red Hill) add to their bottom line. But more importantly, they are part of the bigger package – the unique, personalised experience lavished on guests. So too are the vineyards, café’s and cellar doors, including the 5-star James Halliday-rated Lindenderry Wines, and their premium pampering spas. The family’s upscale Lancemore Collection continues to renew. Recently, Lindenderry relaunched after a multi-million refurbishment. Now a similar makeover of Lancemore Hill nears completion. There’s also been another pioneering move, this time

into asset management. Julian is growing the business as a ‘white label’ hotel management company, operating properties under either an independent brand or in conjunction with a franchise. He negotiated agreements with Choice Hotels’ CKS Sydney Airport Hotel in 2015 and the privately-owned Yarra Valley Lodge in 2016. More are in the pipeline. “The model is extremely successful in the US, which is the world’s most mature hotel market,” Julian says. “But it’s not really happening here in a formal way. “The Australian market is starting to understand the benefits to franchise owners of expert management. When we started, we were told it wouldn’t work, but we think it will, particularly as we demonstrate runs on the board.” Ten years after joining the family enterprise, Julian Clark is one of the industry’s most active advocates, holding numerous leadership and board positions on peak bodies including Tourism Australia and the Accommodation Association of Australia. Though not yet 40, he is now the consummate hotelier. But still with the family’s characteristic entrepreneurial flair and gutsy determination. That means a two-fold commitment involving ‘head’ and ‘heart’: “to run a successful business, and also to make it one we are proud of. Family is important. It explains why we run the sort of business we do, one where caring about detail and quality really matters.” That may also explain why the Lancemore Group is one of the most awarded boutique hotel operators in Australia, particularly as voted by past guests, from readers of Luxury Travel magazine to users of TripAdvisor. And, as they look ahead, always with an eye to opportunity, they also celebrate their past. The original property, Lancemore Hill, is known to them simply as “The Farm”. Held with great affection, and enjoyed by four generations of the family, it remains a special gathering place. End //

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N AT I O N W I D E SPOTLIGHT

upturn BOOKED IN

That tally was made up of 143 management rights sales, which is a phenomenal result for our specialist brokers in this market, and 72 sales of hotels, motels, resorts and caravan parks. It is the first time our management rights sales have outnumbered other property categories almost 2:1. I have to say this is due to two factors: our determined focus on building our management rights team, and their tremendous efforts to successfully build our market leadership in the management rights space, especially in off-the-plan transactions. TRUDY CROOKS N AT I O N A L S A L E S M A N AG E R

appy Financial New Year! And I’m sure it will be. After another year of growth in FY17, Resort Brokers has charted a course for even bigger and better performance in 2018-19, with particular focus on the regions and market segments poised for upturn. Resort Brokers Australia achieved a strong 10 per cent annual increase in sales volume for the 2017-18 financial year, recording 215 accommodation and hospitality property and business settled sales in the period. Annual total sales value was close to $350 million.

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NEW YEAR FOCUS With the success of that strategy bedded down, our emphasis will now return to the freehold and leasehold motel market. And I believe the time is right to expand our activity and resources in this sector, particularly in some regions that have seen very little movement over recent years. Among the key areas we have targeted to recruit topflight brokers are the Hunter Valley – Newcastle region, Albury – Wodonga, and Tasmania, which is experiencing a very strong upswing in its tourism economy. While I’m talking about specific market segments and regions, I thought I’d take you on a ‘Cook’s tour’ of markets around the country, looking at activity levels and outlooks. Nationally, our move to scale up our service in the traditional hotel category has quickly borne fruit.

On The Market // 2 0 1 7 / 1 8 E O F Y R E S U L T S

2017/18 Wrap Up

215

$$350mil

143

accommodation businesses sold (10% increase)

total sales value

management rights sold

REGIONAL HOTSPOTS The Gold Coast, of course, is going gangbusters in the wake of the Commonwealth Games, which has been the catalyst for a massive pipeline of infrastructure investment. Strong growth in visitor numbers and the resulting impressive trading figures operators are showing create the perfect environment for doing deals. The Sunshine Coast, as we reported in our last AROUND THE COUNTRY issue (Fortune Shines on the Sunshine Coast by Glenn South Australia, where we lifted our profile and service Millar), is similarly benefiting from major infrastructure capability only relatively recently, is going very well. There investment and rising visitor spending. is tremendous diversity there and, with fewer properties Further north, we are starting to see green shoots in split to create leasehold operations, there are some the Rockhampton, Mackay and Townville regions, on the outstanding freehold going concern opportunities. comeback after weathering cyclones and a post miningIn Victoria, demand is high and we are writing a lot of boom slowdown. business, having welcomed some excellent new additions to And Far North our broking team. Queensland is really Of particular note flying. Our Cairns is our success in taking FOCUS SET TO RETURN TO THE FREEHOLD AND office has handled 18 the management rights LEASEHOLD MOTEL MARKET sales in the past year model to Melbourne, worth $22.5 million, as with several high owners take advantage profile developers of buoyant market conditions to sell or trade up. appointing Resort Brokers. Finally, the Northern Territory has long been a happy Most recently, we’ve worked on the sale of the rights hunting ground for Resort Brokers. It always has some to two new landmark towers, Avant in the CBD and the very exciting opportunities for buyers prepared to head to 100-storey Australia 108 at Southbank. the Top End where they are rewarded with great returns. We’ve also been instrumental in successfully completing I’m encouraged to hear, as our visitor economy matures a couple of the first management rights sales to take place in and is balanced by a lucrative corporate market, Territory Sydney for a long time. operators are reporting the high seasons are extending and Meanwhile in Queensland, the traditional home the high-low swings are now less pronounced. of management rights, media talk about an apartment All in all, there is a lot for all of us to look forward to oversupply in Brisbane has tended to give a false impression as we launch into 2018-19. In particular, we expect to see of the market. You might think this would have a knock-on higher numbers of motel sales, given improving conditions effect on the value of businesses, but we are not seeing that. in regional areas, and our greater coverage of NSW and Actually demand for properties remain high and so do the Victoria. So let’s get cracking! End // multipliers buyers are prepared to pay. Already market leaders in management rights and, as the acknowledged experts on leasehold operations, our new hotel division jumped out of the blocks to handle some high profile deals, including the Art Series Hotels portfolio, Canberra Capital Executive Apartment Hotel (Madison Suites Canberra) and Aire West Perth (now Sebel).

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Market Action // S I G N A T U R E B R O A D B E A C H

Artist impression

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Artist impression

MARKET ACTION FROM A LANDMARK NEW MANAGEMENT R I G H T S O F F E R I N G TO AN IDYLLIC WEDDING D E S T I N AT I O N , D I V E R S E A C C O M M O D AT I O N LISTINGS ARE D R AW I N G W I D E S P R E A D I N T E R E S T. A N D A M A J O R PA R K SA L E UNDERLINES THE STRENGTH OF THE C A R AVA N PA R K A N D MHE MARKET ACROSS THE COUNTRY.

LITTLE TO SELL SIGNATURE MANAGEMENT RIGHTS

Resort Brokers Australia is taking the management rights to Little Projects’ first Gold Coast development, the $210 million Signature Broadbeach apartment tower, to market. An expressions of interest (EOI) campaign by off-the-plan specialists Tim Crooks and Alex Cook is creating competition among operators eager to claim the trophy 35-storey property. The upscale apartment tower enters the market at a time of surging visitor numbers and upbeat predictions that the Gold Coast is entering a new ‘golden age’ of tourism. For sale are the letting and caretaking rights to the 252-apartment Philip Avenue building plus associated real estate including reception, office and back-ofhouse facilities. Due to go ahead next year for completion in late 2020, Signature Broadbeach will lure visitors and permanent residents with lavish amenities that span the entire podium level. Boasting a 50m infinity edge pool along the northern edge of the building, ‘The Deck’ includes private lounge and dining spaces integrated with the pool area, an outdoor barbecue and teppanyaki grill, cinema, gym, spa, sauna, steam room and lawn area. The project is being developed by major

Melbourne-based Little Projects, headed by former Toll Holdings boss Paul Little, in a joint venture with experienced property development and project delivery company, KM Develop (KordaMentha). Featuring a mirror-like façade reflecting sun, sea and sky, it has been designed by Rothelowman architects and SJB Interiors. “Its premium location in Broadbeach, which has become the tourism and lifestyle epicentre of the Gold Coast, and high-end design and finish will make the ultimate destination,” Tim said. “A future operator will have the opportunity to work with a stylish property and enter the market at a time of impressive growth in both the domestic and international visitor markets,” he said. “We are intentionally taking the management rights to market early, prior to construction, so the future operator has the opportunity to partner with the developer and have input on operational matters, apply their brand standards, and act to optimise investors’ returns.” Signature Broadbeach will feature 49 one-bedroom, 192 two-bedroom and 11 three-bedroom apartments, all with ocean views and high-end finishes. Little Projects development director, Leighton Pyke said: “It is important we find the right buyer for the management rights, the operator best able to provide a level of service excellence commensurate with the premium standard of the development, for owners, residents and guests.” Resort Brokers Australia is conducting a five-week EOI campaign closing on 5pm AEST, Friday 10th August 2018 End // I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

Market Action // M I D G I N B I L H I L L E C O R E S O R T

Midginbil hill ecoresort - an ingenious business model with a postcard setting.

AFTER FORESHADOWING A SURGE IN THE C A R AVA N PA R K MARKET IN OUR APRIL EDITION, WE CAN HAPPILY REPORT DEMAND IS RUNNING H O T. A M A J O R S A L E HAS JUST SETTLED IN V I C TO R I A .

MULTI-MILLION DOLLAR BLUEGUM PARK SALE

The multi-million dollar sale of an indemand permanent residential park in outer Melbourne is indicative of keen demand in the caravan park and MHE market across the country. Blue Gum Residential Park at Beaconsfield on Melbourne’s southeastern outskirts was sold by Resort Brokers’ Damien Loorham on behalf of Wimpole Properties Pty Ltd for more than its original list price, achieving a final sale price of $4.38 million. It was bought by a private investment group with experience in the accommodation parks sector. “This was a great buy of a community park catering for affordable housing in a strong growth corridor where

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record prices have recently been paid by developers chasing residential development opportunities,” Damien said. Blue Gum Residential Park covers approximately two hectares, providing 133 cabin and manufactured housing sites lining landscaped streets, with a guest laundry, barbecue area and twobedroom manager’s residence. Turning over more than $1 million per annum and operated under management, the freehold going concern had recently expanded with five new cabins and still has room for up to 15 more. “Of note is that the park sold with 100 per cent occupancy and a waiting list,” Damien said. End //

COUNTRY GETAWAY WEDDINGS – A LUCRATIVE NICHE MARKET

TRIPLE BOTTOM LINE BEAUTY: MIDGINBIL HILL ECORESORT

Just listed exclusively by Resort Brokers Australia is the kind of opportunity that comes along once in a lifetime. Midginbil Hill EcoResort is a unique package combining high returns, prized position and an idyllic lifestyle. Southern Gold Coast and northern NSW broker, Greg James, says Midginbil Hill in the Tweed Valley, just an hour from the Gold Coast and Byron Bay, combines an ingenious business model with a postcard setting. “It’s difficult to highlight any one of its exceptional attributes above another,” he says. “The phrase ‘triple bottom line’ comes to mind – financial, social and environmental benefits. This ticks every box.” The property has operated as both working farm and accommodation destination for more than 40 years, initially catering mostly for school camps. In recent years, the business model has been refined to focus on ‘weekend away weddings’, which are largely DIY affairs for the guests, and school camps that provide mid-week occupancy. “The formula is ingenious and highly lucrative, turning over $1 million-plus per annum since 2016, and virtually selfsustaining. The owners work part-time and take eight weeks travel leave every year,” Greg said. “This is a secure high nett business, heavily booked out two years in advance, with low operational demands and undoubted room for growth.”

Recently, seven luxury glamping suites were added, which now earn in excess of $3,300 per week/wedding. More could be added. The wedding reception meals and alcohol sales are not currently handled by the operators, so there’s scope to dramatically lift F&B turnover, if you wish to change the formula. “There’s also scope to develop further caravan and camping facilities, trim operating costs, and expand farm operations,” Greg said. “The property can also carry 60 head of Angus cattle, which could generate cattle sale income of approx. $15,000 per year. To top it off, there’s an existing asset also included – a commercial hardwood plantation that will be ready for harvest in three to four years. Midginbil Hill covers 96.3ha (238 acres) and includes motel-style, glamping and bunk house accommodation totalling 128 beds, a fully registered campground, country barn venue with commercial kitchen, homestead with guest and dining facilities, and various outdoor wedding and entertainment settings. Facilities include a heated pool, all-weather tennis court, six dams, two permanent creeks, and a 3brm + office manager’s residence. Nett income for FY18 is projected to exceed $480,000. The asking price is $4.6 million. End // I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

MANAGEMENT RIGHTS Ref // MR005358

A true lifestyle business on the glorious Broadwater, Gold Coast

16 Years

Letting

Bed

Bath

›› One the Gold Coast's best residential buildings ›› Great security of income through sizable BC salary ›› Absolutely prime location overlooking Broadwater ›› Arguably the best manager's residence you will come across ›› Great scope for additional income though on-site real estate sales ›› A true lifestyle business - solid salary , low workload and a fantastic unit

NETT PROFIT: $296,000

PRICE: $2,930,000

A lex C ook BROKER

P aul M ueller BROKER

M. +61 467 600 610 E. alexcook@resortbrokers.com.au

+61 439 255 507 paulmueller@resortbrokers.com.au

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

Manager’s Residence

Aqua is one of the Gold Coast's most iconic residential buildings, and sought-after addresses. Rising to 19 levels, it consists of 104 high-end apartments plus 19 commercial lots at its base. Facilities include 25m lap pool, Zen garden and teppanyaki grill overlooking the stunning Broadwater. Along with a full-size tennis court, gym, sauna, theatre and more. With an income approaching $300K and 15 apartments in the on-site letting pool, the business focus is on the generous BC salary. The workload is easily managed with no set office hours and an allowance for cleaning assistance. There’s also tremendous upside potential to earn extra income through on-site apartment sales. The manager's office is a commercially-zoned real estate office with the option of prominent street signage. Aqua's manager's residence is second-to-none with huge open-plan living, wrap around balcony and water views. This is one not to be missed.

104 15 Units

gold coast

F reehold going concern

GOLD-PLATED MT PANORAMA ACCOMMODATION & EVENTS CENTRE Offered is a major accommodation, events and education destination covering 11ha on Bathurst’s famed Mount Panorama. With multiple income streams and unique market position, this is a major tourism and hospitality asset in a vibrant regional city just 200km from Sydney. Extensive accommodation caters for diverse markets from school excursions to prestige motor racing teams: a modern 20-room motel, luxury 6-brm residence, self-contained cabins and dormitory lodges. A brand new $2m function centre (700 pax), with facilities including auditorium, bar and alfresco area, is the biggest of its kind in regional NSW, drawing very strong forward bookings. With a working replica Goldfields Village, the property is an accredited school excursion destination attracting more than 20,000 students p.a. This established business runs like clockwork. Additional facilities include a museum, shop, heritage-style wedding venue, and extensive dining and catering facilities.

300 700 pax

Hectares

Beds

Function Centre

›› Prime Mt Panorama land holding and unique, high-income business ›› $1m+ nett before new function centre revenue included ›› Major event destination and school market leader ›› Cash cow with multiple income drivers ›› Exceptional potential for accommodation & hospitality growth ›› Proven management and staff keen to continue ›› Vacant possession available

NETT PROFIT: $1,100,000

PRICE: $7,900,000

T R U D Y C R OO K S N AT I O N A L S A L E S M A N AG E R

IAN CROOS MANAGING DIRECTOR

+61 477 882 210 trudycrooks@resortbrokers.com.au

+61 411 171 648 iancrooks@resortbrokers.com.au

B AT H U R S T

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

F reehold G oing C oncern Ref // FH005342

High NetT Deluxe Rainforest Retreat Narrows Escape Rainforest Retreat is a multi-award winning, 4.5-star, eco-certified retreat, on the beautiful Sunshine Coast’s Blackall Range, just four minutes drive to the charming village of Montville. This freehold property comprises 6 fully self-contained, secluded pavilions and an in-ground saltwater pool, nestled in 2.947 hectares of rainforest, and a spacious well appointed manager’s residence. The 6 luxury pavilions are uniquely located to take advantage of forest vistas, overlooking the babbling stream, providing the delicate sights and sounds of tumbling water throughout the year. Established in 1996, the current owners have been operating the complex for the past 11 years, with well-established, streamlined systems in place for smooth transition. Healthy forward-bookings, 20% of trade from international visitors via established overseas agencies. Occupancy rates between 80-85% all year around make this the most sustainable business and the best performing retreat in the region.

Bed

Bath

Manager’s Residence

›› Multi award winning business ›› Certificate of Excellence from TripAdvisor ›› Liquor licence in place ›› Advanced Eco Tourism Certified ›› Stunning 3 bedroom manager’s residence

NETT PROFIT: $320,000

PRICE: $2,900,000 WIWO

G lenn M illar BROKER M. +61 412 277 804 E. glennmillar@resortbrokers.com.au 24

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M ontville

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billing and support. You collect the $$$. It’s why gigafy’s WiFi solutions are found in more than 12,000 apartments (including

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YOUR BUILDING COULD BE MAKING YOU MORE!

High tenant satisfaction and retention Increased management rights resale value Easy switch between permanent and short-term uses

gigafy.com.au

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I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

Editorial // F R O M A B R O K E R S P E R S P E C T I V E 26

T H E C H I N E S E M I LL E N N I AL

Chasing our share of a multi-billion dollar market

T R A V E LL E R :

BY GLENN MILLAR SENIOR BROKER

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travelled to China for the first time recently. Naturally, I wanted to visit the iconic sites. But i was also eager to see for myself what is so widely reported in the media – China’s growing world influence and the impact the burgeoning Chinese middle class will have on tourism in Australia.

learned these millennials are far less interested in the organised tour-style holidays favoured by their parents’ generation. Instead, they want to travel independently and are seeking out new and authentic experiences. So, perhaps it is time to reassess any preconceived ideas we may have about the Chinese market. Rightly or wrongly, our views tend to be based on the past and even What an eye-opener it was. Naively, I expected China to current wave of Chinese travellers. be less progressive than I found it. In particular, it was These groups have concentrated their activities in apparent today’s younger generation is a new breed that capital cities and coastal hot spots like the Gold Coast will have a significant effect on our tourism sector. and Far North Queensland. They take side trips to In discussions with our two tour guides, it became headline attractions, perhaps the Great Barrier Reef or apparent the most important rising market for Australia Australia Zoo, and they stay in traditional hotels. is the Chinese millennial. So, who are these future Their itineraries have often been organised by tour travellers, and what do they want? operators with the goal of seeing as much as possible International industry consultants China Travel in the shortest time, a practice that often manifests Outbound* tell us, because of China’s past ‘one child in behaviour Australians might perceive as pushy, policy’, they have been treasured not only by their impatient and demanding. parents, but two sets of grandparents, whose entire Perhaps it’s a product of growing up under Mao Tse financial and emotional resources are concentrated on a Tung and the ‘cultural revolution’. For much of their single child. lives they This were subject means, to tight compared restrictions to older and a lack of generations, freedom or Chinese opportunity. CHINESE TRAVELLERS HAVE EMBRACED THE millennials So, now ‘ M O R E ’ M E N TA L I T Y : T H E Y ’ R E T R AV E L L I N G are privileged they’re MORE, SPENDING MORE TIME ON TRAVELLING, and indulged. making up for T R AV E L L I N G TO M O R E L O C AT I O N S , H AV I N G They are lost time. also more The first MORE EXOTIC EXPERIENCES AND, adventurous significant I N E V I TA B L Y , S P E N D I N G M O R E . and worldly rise in than their international Chinese International Travel Monitor (CITM) parents, inbound and well tourism to educated. Australia There are began most more than 100 universities in Beijing alone, and many famously with Paul Hogan’s ‘shrimp on the barbie’ study in foreign universities worldwide. campaign. Since then we’ve seen various markets surge Research suggests more than half of Chinese – the Japanese in the 80s, Middle Eastern travellers in millennials plan to holiday for longer periods and spend the 90s. more money on travel in the future. China has been our latest and greatest growth A recent study by the Singapore Tourist Board market. In fact, for the first time in April this year, China estimates that Chinese millennials will soon spend overtook New Zealand as our largest inbound visitor upwards of US$14,000 (AUD$18,500 approx.) each on market. (Source: Australian Bureau of Statistics (ABS) travel annually. Last year, luxury millennial tourists We saw a record 1.39 million Chinese visitor arrivals were already averaging around US$65,000 on travel for the year ending February 2018, an increase of 13.2 annually. per cent on the previous year. Reports describe Chinese millennials as “the most But consider this, that figure represents only 0.1% important demographic in the world today.” Hard to of China’s total residential population, and Australia argue with when you know they already make up around receives just 1.5% of all Chinese tourists travelling two-thirds of Chinese outbound tourists and, by 2020, abroad. are expected to number 300 million. Still China has been our most valuable inbound So, this growing force in the Chinese outbound tourism market since 2011, with visitors spending a market is travelling far and spending big. But what are record $10.4 billion in the year ending December 2017. their characteristics and wants, and how can you attract Under Tourism Australia’s strategic plan, that figure is them to your establishment? set to jump to $13 billion by 2020. In conversation with our millennial guide, who Trade Minister Steven Ciobo says China's increased at 27 years old had already visited 10 countries, we prosperity is forecast to fuel another trebling of visitor I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

numbers over the next decade to 3.9 million by 2026-27. But, in contrast to the Chinese travellers we’ve known to date, these will be more independent, adventurous and affluent. Priorities are shifting, with many Chinese tourists now preferring leisure, adventure and ecotourism to shopping. So, in this regard, I believe we are entering a new phase in the growth of Australian international inbound tourism. According to Hotels.com’s annual Chinese International Travel Monitor (CTIM), Chinese travellers have embraced the ‘more’ mentality: they’re travelling more, spending more time on travelling, travelling to more locations, having more exotic experiences and, inevitably, spending more. For post-90s millennials, Australia is still viewed as an exotic destination that offers experiences they can’t find at home, with many nominating beaches, the Great Barrier Reef, farms the Outback, and quokkas on Rottnest Island as mustdo experiences. This means exciting prospects for the management rights and serviced apartment industry and operators of smaller regional accommodation who have been largely unable to compete in the bulk tour market. Now, there are definite opportunities to forge new pathways to maximise opportunities arising from this emerging next-generation Chinese market. But the resources necessary to promote our unique offering and build equity in regional tourism are not insignificant. It is a challenge, should we choose to accept it, that our industry will need to pursue collectively. Still, that doesn’t mean you can’t take your own steps to capture a slice of this massive market. As part of this feature, I’ve included a case study from one Noosa operator who cleverly tapped into another niche market – the education visitor. The success they’ve enjoyed, with a relatively small but targeted effort, should inspire other small and independent accommodation operators to give it a go. End //

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CASE STUDY: I V O R Y P AL M S R E S O R T N O O S A V I LL E

Ivory Palms Resort is a large resort on Queensland’s Sunshine Coast. About four and a half years ago, we needed to fill rooms, particularly in our slower seasons. We wanted to do this without discounting. After looking at our domestic markets, we decided to explore overseas markets. One of our issues was that the booking agents generally charged a high rate, and our intention was to increase our owners’ returns. There was a quiet buzz about China. Visit Sunshine Coast (our regional tourism body) was running a course in Mandarin, and I thought it would be a good idea to learn the basics. The course included information on China and its traditions. This was very useful. After completing the course, I met with an Australian couple that was interested in bringing students to the Sunshine Coast. They would create a school integration programme and the

Chinese children would stay with their own families here at Ivory Palms Resort while attending a local school. This programme started with four families three years ago. Now, twice each year, we have about 30 families stay with us for a month. We worked out their needs fairly quickly. They all feel the cold a little more than we locals. And they must have a rice cooker, because they eat rice at least twice per day. We immediately purchased 40 rice cookers and we have them in each room for arrival. We created a compendium in Mandarin, which includes basics regarding our resort, tours, restaurants and shops. A local Aboriginal group does a half-day show for each group to gain an understanding of part of our culture. My daughter is learning Mandarin at her school. I asked her to go out to the jumping pillow and say ‘hi’ to the Chinese kids shortly after they’d arrived. She was nervous

Featured Properties //

B U S I N E S S - O N LY, O F F -T H E - P L A N IN BEACHSIDE HOTSPOTS

RARE PAIR RIPE FOR

T and I watched as she approached and greeted them in Mandarin. They all got excited and replied ‘G’day!’ It turns out that 90 per cent of Chinese people speak English. They do like it when we try to communicate in Mandarin, almost like we become good friends instantly. Since the families have been coming, they have been leaving some wonderful reviews. As a result, we have now linked with Ctrip in China and we have our own product listed in Mandarin. This works well as an OTA, and it is improving constantly. One of the best things about approaching international markets is that their high seasons are our low seasons and we can smooth out our slower months. So far, it has helped our owners improve their returns. ZÀI JIÀN ( GOOD-BYE) GEOFF HUSSIN, RESORT MANAGER IVORY PALMS RESORT

wo exciting new gold coast management rights, in two of the city’s hottest beachside lifestyle precincts, have entered the market off-the-plan as a single potential-packed proposition. This rare dual, business-only opportunity ticks all the boxes. The rights to Neo Mermaid Beach and Acqua Palm Beach, are offered as a package through Resort Brokers Australia by quality developer Cru Collective, with construction of Neo well advanced and Acqua underway this month (July 2018). Neo, in Peerless Avenue, will be a striking nine-level addition to the Mermaid skyline, with 32 apartments, rooftop terrace and ground-floor coffee shop. Acqua, in ‘Palmy’s’ Third Avenue, will rise to seven storeys, with 62 apartments and an impressive range of lifestyle amenities. Exclusive agents Tim Crooks and Todd Warner say the staggered delivery of the luxe new apartment buildings (Neo in Q3 this year, Acqua in mid-2019) is just one of many factors making this an ideal proposition for experienced operators. “This type of dual offering is genuinely hard to come by,” Tim said. “We know what experienced operators look for and this package fits the bill on

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

so many levels. “They can buy the rights to two brand new, business-only operations simultaneously, with delivery assured but neatly staggered for a smooth establishment phase and rental supply / demand management,” he said. “Then, of course, there are the premium beachside locations, stunning range of product to drive tenant demand, proximity (10km) for easy dual operation, and new 25-year agreements with no requirement to own real estate.” “Add to that the quality of the apartments and lifestyle facilities in each project,” Todd says. “Plus a letting pool realistically projected to be around 60 of the total 92 units, and you have the recipe for a highly profitable pairing. “Both properties are east of the highway. Memaid Beach, where you can walk to Broadbeach shops and dining, G:link and Pacific Fair, is one of coast’s most coveted residential locations. “Palm Beach, now with some of the coolest cafes, bars and eateries, and just a short walk from Currumbin Alley, has emerged as one of the strip’s hottest addresses,” he said. Neo is attracting investors with its mix of one, two and three-bedroom apartments, some with coastal views, lightfilled open plan interiors, stylish finishes and private balconies. It includes a rooftop terrace for outdoor entertaining and relaxation, private residential lobby, and in-house coffee hub. Acqua’s two and three-bedroom apartments will be just 20m from the beach. The style is sophisticaqted modernity, with high ceilings, polished stone, high-end appliances and impressive balconies. Enticing facilities include an elevated pool in the landscaped atrium, fitness centre, rooftop deck and yoga terrace with panoramic ocean views, and a ground-floor café. Domain listed Acqua as the sole Gold Coast development on its recent ‘three of the best’ list. “While there’s no need to purchase real estate in either building, there is of course the option to buy an apartment should the manager wish to live onsite or as an investment,” Tim said. “Local operators will see this as a lucrative add-on to their existing business, while experienced managers will relish the opportunity to run these buildings with ease, as they’re are just 20 minutes apart and could be operated from the dedicated manager’s office in Acqua.” The projected total annual nett profit of Neo and Acqua sits well above $315,000 and the combined business price is $1,428,658. End // 30

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Editorial // B Y M I K E P H I P P S

Why Does Everything Have To Be So Damn Difficult? For those of you who may still think the photo I use in some articles is current, it is not. The look of shock on some faces when we first meet suggests that it might be time to update said image and nothing confirms my retreat into older age more than recent events. Yes, it’s true. The Managing Director and I have purchased a caravan. But Mike, you’re too young I hear you cry.

iraculously we have just completed our maiden voyage without killing each other or needing to brief counsellors or lawyers. We had a ball, not least because my parents, who are in their 80s, accompanied us in their van and seemed to take great delight in seeing us adjust to life on the road. They are an amazing couple coming up for 60 years married and they still cycle and play tennis. Even fitted in at the Byron pub! Of course, all good things must come to an end, and we are back home and coping with the day to day issues of life. Having spent a couple of weeks living in a very small yet simple space with no real need to interact with the modern world I find myself wondering... when did things get so complicated and just plain hard? It seems to me that in my game there are two key drivers within the banks (and most other large corporates) that are working in concert to make things more difficult and slower than they need to be. The first is something we see in a lot of larger companies and it’s got a very misleading name. Efficiency. We are introducing a new process to aid efficiency. We are closing your local branch in an efficiency drive. Calls will be taken by our wonderful staff in Mumbai in our relentless quest for efficiency. Loan security documents will be prepared offshore etc etc etc. It’s all garbage of

course. Efficiency is corporate speak for cost cutting and the consumer be damned. The challenge for all companies is that they are judged on their share price and return to shareholders with little value placed on service. Better to use up the consumers time sitting on call waiting than have sufficient staff to actually pick up the phone. Better to have a talented banker desk bound and stressed out of his or her mind than provide sufficient support for them to do a good job. I could go on but you get the picture. A while back the banks, in an effort to introduce further efficiency, adopted an automated valuation quote and instruction process. We reckon its added, on average, two weeks to the time needed to get our hands on a management rights valuation report. So, look at a 4 week valuation period as a minimum and you won’t be disappointed. Used to be two weeks. Gotta love efficiency! And, because banks are cutting staff and no one on the front line can make a decision any more, allow another two weeks for an approval and Letter of Offer. That’s 6 weeks if everything goes perfectly. Not long ago finance dates were set at 28 days, now we are advising clients to work on 48 days minimum, that’s a 70% increase in the time it takes from contract to formal documented finance approval. It’s not unusual for us to encounter people who have been waiting months for an answer from their bank on a credit application. Gotta love efficiency. So, that’s driver number one in the game. The second, and I suspect soon to be #1 contributor to this sorry state of affairs is compliance. We live in an age and culture of zero personal responsibility, so we need lots of rules and laws to protect us against both ourselves and our fellow citizens. I’ve travelled a bit and I think we might be the most nanny state centric place on the planet. In most countries, including Australia, it takes maybe 10 blokes (it’s always blokes) to do a bit of roadwork, fill in a few potholes, that sort of thing. Anywhere else that’s a couple of workers on the stop / go signs and 8 people swinging shovels. Not here though. Here we have 8 people on the signs and 2 people on the tools. Gotta love compliance. It’s the same idea in finance and, post banking enquiry, it’s going to get worse. Just as our law makers assume we can’t drive through some road works without a cast of thousands supervising us, they also believe we can’t make decisions for ourselves regarding our finances. The laughable level of disclosure and documentation banks must provide has led to very simple financial products and services being delivered with mountains of paperwork, Product Disclosure Statements and the like. Who reads all that stuff? We do, when it’s for a client, but let me tell you, when it’s my own personal matter I check the summary page and throw the rest in the bin. Bet you do to. The sad fact is that in an effort to protect the poor misinformed consumer we are simply delivering an impenetrable blizzard of rules, paperwork and... compliance. Great result if you are in my profession; the more complicated the process, the more value a finance broker adds. Here’s a thought. Why not spend the money saved through efficiencies on consumer education? Surely if we all understand how finance works we can make educated decisions and think for ourselves. Whoops, what a silly idea. Next thing they’ll be cutting the numbers of stop / go people on the assumption that we all have a driver’s licence. It will never work. On a parting note, the van is on the footpath and available via Air BnB. Should prove a nice little earner. End // I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

NSW SPOTLIGHT

Editorial // B Y C O L M Y E R S

NEW SHORT-TERM HOLIDAY LETTING REGULATIONS FOR

NSW

he NSW Government has announced a new a regulatory framework to govern the short-term holiday letting industry. Short-term holiday letting has rapidly expanded in recent years due to the growth of online booking services such as Airbnb and Stayz. The new framework will include new planning laws, an industry Code of Conduct and new provisions for strata scheme by-laws. MANAGEMENT RIGHTS INDUSTRY CONCERNS Whilst the new laws are directly aimed at owners letting their properties through companies like Airbnb and Stayz, there is a real concern that the Management Rights industry is going to get caught up in the cross fire under these new regulations. PLANNING LAWS New planning laws will allow shortterm holiday letting under certain conditions. If the host is present, they can use their home for short-term holiday letting all year round as exempt development. That is, they do not need to submit a development application to local council. If the host is not present, that residence can be used for short-term holiday letting up to 180 days per year in Greater Sydney, with 365 days allowed in all other areas of New South Wales. Councils outside Greater Sydney will have the power to decrease the 365 day limit to no less than 180 days per year. CODE OF CONDUCT A mandatory Code of Conduct will be introduced that will apply to anyone involved in providing or using short-term holiday letting, including hosts, guests, online platforms, and letting agents. This Code will apply to Management Rights operators. The Code will establish the ‘2 strikes and you’re out’ policy. Hosts or guests who commit 2 serious breaches of the Code within 2 years will be banned for 5 years. Platforms and letting agents (including Management Rights Operators) will not be permitted to offer services to anyone, or any dwelling, that is listed on the exclusion register.

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A strike will include any behaviour which unreasonably interferes with a neighbour’s quiet and peaceful enjoyment of their home. The Code will establish a complaints system, which will be available to neighbours of shortterm holiday letting premises, strata committees and owners corporations. Complaints will be assessed by independent and impartial adjudicators, approved by the Commissioner for Fair Trading. Adjudicators will be required to make decisions on evidence and after giving both complainants and respondents a chance to put forward their case. Strikes will be recorded on an online register to ensure that guests and/or hosts cannot ‘platform shop’. Platforms and property agents will have to check the register before taking on new customers. Failure to do so may result in significant penalties of up to $1.1million for corporations and $220,000 for individuals. NSW Fair Trading will have powers to police online platforms and letting agents. STRATA SCHEMES Strata scheme management laws will be amended to clarify that by-laws can prohibit short-term holiday letting, but only for lots that are not a host’s principal place of residence. That is, if a host is genuinely sharing their home unit, they will still be able to use a spare room for short-term holiday letting, and will be allowed to let out their principal place of residence while they are away on holidays. These change of by-laws will require a 75% majority to be passed. WHEN WILL THE NEW FRAMEWORK START? The introduction of the new framework will require changes to existing laws which must be approved by Parliament. The Code will be developed in consultation with Government agencies, and industry and community groups during 2018. The reforms will be reviewed a year after they commence. End //

P O W E R PA I R : K I R S T E N L O W I S ( L E F T ) J O I N S R E S O R T B R O K E R S - B U S Y F N Q B R O K E R , C H E N O A DA N I E L , T O P R O V I D E E V E N G R E AT E R S A L E S P O W E R A C R O S S T H E T R O P I C A L N O RT H .

NEW KIDS ON

THE BLOCK Resort Brokers Australia continues to grow to meet the demands of a thriving market and deliver first class service across the sector.

ew brokers are handpicked for their talent, drive and enthusiasm. And, while experience is valuable, recruits are also equipped with extensive specialist training and resources. The qualities we most value are determination and tenacity, attributes we certainly found in these three appointments expanding service to Victoria, Far North Queensland and the national Quest network.

Damon Lunardello B R O K E R // W E S T E R N V I C T O R I A

A sales and hospitality professional for more than 25 years, Damon Lunardello brings his considerable skills and knowhow to Western Victoria to assist accommodation operators and investors through a region he happily declares as his own family’s destination of choice. Damon’s management experience spans Australia, New Zealand and the UK, across all facets of the industry. He has managed hotel portfolios, restaurants, bars, gaming rooms, sales teams and accommodation, including company-owned, leasehold and strata operations, gaining expertise in business acquisitions and sales, new builds, major refurbishments and rebranding. His real estate sales expertise dates back to 2001 in inner Melbourne, where he trained with some of the best in the business.

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Introduction // N E W K I D S O N T H E B L O C K

Damon Lunardello...

Specialist training also anchored his hospitality career, and these days he gives back to his alma mater, William Angliss College through regular speaking engagements and a place on the course advisory board. Damon has also held industry positions on the boards of the HMAA and Holmesglen Industry Advisory Board. His impressive career in the sector has included roles with national and global brands including Radisson, Park Plaza International, Bayview International, Quest Apartment Hotels and TFE Hotels. While with TFE, his awards included ‘Hotel Manager of the Year’ across more than 50 properties. Those credentials, added to Resort Brokers’ superior resources and national market leadership, assure sellers and buyers throughout Western Victoria of truly exceptional service and advice.

K i rst en Low i s B R O K E R // FA R N O R T H Q U E E N S L A N D

Kirsten Lowis is a passionate and committed business enthusiast and has been a business owner for many years, specialising in valuations and sales. Born and raised in North Qld, where her family all still live and work, she brings valuable expertise and local knowledge. After successfully launching, operating and ultimately selling her Townsville-based business brokerage, Kirsten relocated to Cairns to join Resort Brokers, serving accommodation owners and investors across the Tropical North. This dynamic go-getter has extensive skills and experience vital to vendors and buyers. 34

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handpicked for their talent, drive & enthusiasm

Liz Galea N AT I O N A L Q U E S T A P A R T M E N T H O T E L S B R O K E R

With a background in marketing and PR, she went on to be a fully licensed real estate agent and was the first woman to complete the Registered Business Valuation Certificate with the Australian Institute of Business Brokers in 2010. Kirsten’s drive led her to launch Townsville’s first business-focused magazine, Zoom in Business and, as founder / director of a business coaching company by the same name, has acted as a leader, mentor and motivator for hundreds of business people. Her disciplined approach combines business acumen, effective communication, presentation and determination to help her clients. Her considerable experience in buying, growing, valuing and selling successful businesses is now keenly focused in the accommodation sector. Kirsten is driven by a desire to see NQ business owners operate profitable and saleable businesses. And she is especially proud of her own daughter who, aged just 18, has launched her own fashion design business.

Liz Galea rejoins Resort Brokers Australia to work alongside long-time Quest Apartment Hotels expert, Victorian State Manager, Jim Chapman, in preparation for his retirement. Liz has immediately stepped in to manage Quest sales in Qld–NT, and is travelling Australia to introduce herself to all Quest operators. There couldn’t be a more ideally qualified and experienced professional to step into this dedicated Quest role. She brings specialist expertise gained over a career immersed in the accommodation industry, including as a Quest franchisee and successful broker. And she is back at Resort Brokers after previously excelling with us in sales for a number of years. Liz embarked on her hospitality career by first joining Melbourne’s grand Hotel Windsor, and went on to become a sales executive with Le Meridien. From there, she joined Quest Serviced Apartments’ corporate office in 2001. This laid the ideal foundation for Liz to pursue her own business aspirations. She became a multi-franchisee of both Quest Potts Point (2008 – 2011) and Quest Beaumont in Kew (2005 – 2014). Now she will build Resort Brokers Australia’s valued relationship with Quest, fostered since 2003. Our agency’s detailed understanding and experience of the Quest model saw us appointed in 2014-15 as ‘preferred broker’. Backed by such deep experience, Liz’s Quest clients can be assured she knows their business inside out. Building strong and lasting relationships is her strength. On a personal note, Liz has two daughters, so swimming, soccer and gymnastics keep her busy. She jokes the girls have also helped sharpen her negotiation skills. End // I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

M otel L easehold Ref // LH005206

Tenterfield’s Peter Allen Motel Leasehold with an Increasing ROI

Rooms

Year Lease

Bed

Bath

Bearing Tenterfield’s most iconic name and a growing ROI (40%+), the Peter Allen Motor Inn is named after one of Tenterfield’s most famous sons and is internationally recognised. Take advantage of the name and grow this business even further. Ideally located, it is the first motel on the left heading South (from Brisbane and Casino) and is in the center of town. The Peter Allen not only attracts visitors passing through this historical region, but also repeat business clients as well as groups and tourists exploring the natural beauty of the New England Region. The leasehold owners are very reluctant sellers who are only selling because of health issues and are willing to consider any genuine offers. The motel can be easily run with an active couple however, they are currently being assisted by experienced staff who will ensure a smooth transaction.

›› Increasing year on year growth

Manager’s Residence

›› Fantastic 40%+ ROI ›› Experienced staff to assist with transition ›› Spacious / modern living accommodation ›› Long lease terms ›› Extremely well positioned ›› Reluctant seller with increasing trade ›› Occupancy 66.49%

NETT PROFIT: $168,00

PRICE: $420,000

G reg J ames BROKER M. +61 416 247 068 E. gregjames@resortbrokers.com.au 36

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T enterfield

F reehold going concern O r L easehold Ref // FH005323

Go west – Two motels operated as one business

Rooms

Bed

Located in the home of the outback, Western Queensland is where will you find these two motels operating as one business. This is a great freehold opportunity for those looking to secure a consistently high nett profit in a vibrant country town. The Wagon Wheel Motel has 10 rooms that have been upgraded with 16 rooms at a 2.5 star standard. Complementing the Wagon Wheel Motel is a 60 seat restaurant adjacent to reception with fully stocked bar and a commercial kitchen. There are 20 further seats outside. The restaurant caters to in-house guests and is well supported by local dining. The Cloncurry Motel consists of 15 rooms; all bookings are operated from the Wagon Wheel reception. In-house guests have access to the facilities at the Wagon Wheel Motel. Also on offer is a pool and spacious four bedroom airconditioned residence attached to the reception for the ease of service. Both motels have Foxtel and Wi-Fi connected. The property is perfect for an owner/operator looking for a consistent solid income with a strong client base. This property is also on offer as a leasehold opportunity.

›› Possibility for a brand new lease

Manager’s Residence

›› Offering two motels in one line ›› Additional income – rent on office at Cloncurry Motel ›› Opportunity for further growth ›› Experienced staff to assist with transmission ›› Spacious living accommodation and cottage

NETT PROFIT: $575,118

PRICE (Freehold): $3,200,000 PRICE (Leasehold): $800,000

D es F agg BROKER M. +61 427 849 119 E. desfagg@resortbrokers.com.au

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Preferred Supplier // VA L I D I U M I N S T I T U T E

TOP REASONS FOR A MANAGER TO GAIN

full licence A RESIDENT LETTING AGENT LICENCE IS REQUIRED TO OPERATE A MANAGEMENT RIGHTS LETTING BUSINESS. BUT WE’RE SEEING MORE MANAGERS UPGRADE THAT QUALIFICATION TO A FULL REAL ESTATE AGENT LICENCE. HERE’S WHY.

s the Australian Resident Accommodation Managers Association (ARAMA) states, in order to operate management rights, managers are required to complete six education modules, covering such things as financial management, trust accounts, legal and ethical matters, property leasing and tenancy agreements. Once completed and assessed by a registered training organisation, provided you meet the criteria stipulated by the relevant state government authority, you’ll be licensed to rent out and manage units on behalf of owners, collect rents and operate a trust account. But a Full Real Estate Agent Licence takes a bit more work. For a start, there are at least three times as many modules to study. Once you’ve completed the course and been granted your licence, though, you’ll have much more scope to control and grow your business. In addition to your usual letting duties you can list, show and sell properties within your complex without having to work through an outside agency. “This is an increasing trend within the industry as it provides an avenue for greater annual income, by way of commissions,” said Victor James, who runs Queenslandbased Registered Training Organisation, Validum Institute. “Given the strength of the relationships managers

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build with owners and occupiers, they’re perfectly placed to sell their properties. Furthermore, owners generally prefer to appoint someone who knows the complex and has a good rapport with them.” Resort Brokers’ management rights specialists have seen first hand the greater control fully licensed managers have over their letting pool. Many cite the ability to target investor buyers when marketing units for sale, helping to maintain or boost their letting pool. “And let’s not forget the importance of increasing your industry knowledge,” said National Sales Manager, Trudy Crooks. “You invest a lot in your business, so educating yourself makes sense. “It always pays dividends to know your industry well, to stay abreast of relevant legislation, and continue your training and professional development.” Victor says, at Validum, those who already have a Resident Letting Agent Licence or qualification can simply study an ‘upgrade course’, which credits units of competency already attained. In Queensland, the Office of Fair Trading issues real estate licences. In other states, check with your local Real Estate Institute or peak industry body for requirements. These professional bodies often also offer training courses, along with TAFE and approved training organisations such as Validum. End //

ABOUT VALIDUM INSTITUTE

Validum Institute is a highly reputable, Brisbane-based registered training organisers and assessors specifically for the Queensland real estate profession. All courses are Office of Fair Trading compliant and nationally recognised across Australia and New Zealand. For further information: validum.edu.au

RESORT BROKERS

Special Offer Wan t to s t art you r re sid e nt le t t ing ca re e r or u p g ra d e you r q u a lifica t ion? CA L L VA L I D U M I N S T I T U T E TO DAY O N ( 0 7 ) 3 1 9 3 5 2 7 0 RESIDENT LETTING AGENT COURSE - $495* (RRP $699) UPGRADE TO FULL LICENCE FROM RLA - $899* (RRP$1195) COMPLETE FULL REAL ESTATE AGENT LICENCE COURSE - $1395*(RRP$1999) code: Resort Brokers VIP / *Offer Ends December 31st 2018.

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QLD SPOTLIGHT

QUEENSLAND

TAKE A STATEWIDE INVESTMENT TOUR

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Editorial // F R O M A B R O K E R S P E R S P E C T I V E

INFRASTRUCTURE GROWTH …UNDERPINNING QUEENSLAND’S TOURISM GROWTH WEIPA

YOUR LOCAL BROKER //

DES FAGG

CAIRNS

QUEENSLAND

TOWNSVILLE - $250M 25,000-seat North QLD Stadium - $80M Townsville Airport redevelopment - $450M The Hive mixed use residential, commercial and tourist facility (planned) - $126.5M Bruce Highway upgrades

TOWNSVILLE

MACKAY

YOUR LOCAL BROKER //

ROCKHAMPTON LINDSAY COOPER

DA R L I N G DOW N S & W I D E B AY - $200M Brisbane West Wellcamp Airport - $1.6B Toowoomba second range crossing - $233M Warrego & Bruce highway upgrades - $17.5M Mon Repos Turtle Centre & Conservation Park redevelopment REGIONAL & OUTBACK QLD - $36 million Regional Tourism Infrastructure & Experience Development Program - $23M Waltzing Matilda Centre, Winton - $2.2M Australian Workers Heritage Centre upgrade, Barcaldine - Qantas Founders Museum new Super Constellation display (ready 2020) 41

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SUNSHINE COAST

TOOWOOMBA

BRISBANE GOLD COAST

YOUR LOCAL BROKER //

CHENOA DANIEL

YOUR LOCAL BROKER //

LEN BOOTH

CENTRAL QUEENSLAND - $75m Capricorn Highway duplication - $20m new Rockhampton Art Gallery - Keppel Cove bought by Yuexing Group for mixeduse tourism development KIRSTEN LOWIS

FAR NORTH QUEENSLAND - $176M Cairns Convention Centre expansion - $550M Nova City apts / mixed use development - $50M Cairns Aquarium & Reef Research Centre - $21M Wangetti Trail, Palm Cove to Port Douglas

YOUR LOCAL BROKER //

GLENN MILLAR

M AC K AY - W H I T S U N DAY - $582M Lindeman GBR Resort redevelopment - $252M Shute Harbour Marina development - $500M Mackay Ring Road - $900M Mackay Airport 20-year expansion plan

YOUR LOCAL TEAM //

NATHAN EADES

GARETH CLOSTER

JESS WILKIE

BRETT STAKER

SUNSHINE COAST - $813M Bruce Highway widening - $430M new Maroochydore City Centre - $347M Sunshine Coast Airport expansion - $450M Actventure active lifestyle & theme park

BRISBANE - $3B Queens Wharf Integrated Resort & Casino project - $1.3B Brisbane Airport Second Runway - $5.4B Cross River Rail - $5M allocated to formal business case for Brisbane Live

JANE FANG

YOUR LOCAL BROKERS // GOLD COAST - $400M Commonwealth Games legacy infrastructure - $2B Star Gold Coast masterplan - $3B Light Rail network (ongoing) - $1B Jewel Towers, Surfers Paradise PAUL MUELLER

TODD WARNER

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ALEX COOK & TIM CROOKS - SENIOR QUEENSLAND BROKERS

T IT’S WIDELY ACKNOWLEDGED T H AT TO U R I S M I S A P R I M A R Y ENGINE OF ECONOMIC GROWTH IN QUEENSLAND. INFRASTRUCTURE DEVELOPMENT, IT CAN BE SAID, IS THE FUEL F O R T H AT E N G I N E . A N E W WAVE OF PUBLIC AND P R I VAT E I N F R A S T R U C T U R E INVESTMENT IS SET TO PROPEL OUR VISITOR ECONOMY FORWARD OVER THE COMING YEARS. TIM CROOKS N AT I O N A L O F F T H E P L A N S P E C I A L I S T

ourism is a $25 billion industry in Queensland, directly and indirectly employing 225,000 people and generating $56.4 million per day in overnight visitor expenditure. (Queensland Government, Advancing Tourism 2016-20). Recently, Resort Brokers Australia has been liaising with Queensland’s Department of Innovation, Tourism Industry Development and the Commonwealth Games, looking at initiatives targeted to grow tourism, specifically by attracting new and improved tourism infrastructure. Through our participation in events including the Northern Australia Investment Forum and Tourism Investment Attraction luncheon held during the Gold Coast 2018 Commonwealth Games, we’re familiar with several targeted programs designed to boost infrastructure delivery. Some were again highlighted in the state’s recent 201819 Budget which committed to a $45.8 billion infrastructure spend over the next four years. Importantly for the regions, 65% will be spent outside Brisbane. Funding examples include $330m support for the Great Barrier Reef, $36m Regional Tourism Infrastructure and Experience Development Program, a $50m package for island rejuvenation, and $10m for Outback tourism infrastructure. Of course, transport and roads is a huge priority, and $4.217 billion is dedicated to this, including a long-awaited duplication of the Sunshine Coast rail line, the Toowoomba second range crossing, and vital upgrades to the Pacific and Bruce highways. Queensland currently has a $2.2 billion-plus pipeline of airport and cruise facility upgrades, with the wider $14 billion infrastructure investment pipeline across key focus

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areas including mixed-use developments, hotels, leisure and entertainment attractions and island resorts. With an eye to the future, the state government in collaboration with regional authorities has also identified a ‘wish list’ of projects imperative to drive tourism growth in specific areas. Examples of investments identified as vital, in addition to access infrastructure, include things like a substantial land-based reef day trip terminal in the 1770 region, a $195 million waterfront promenade project in Townsville CBD to connect dining, entertainment, cultural and retail precincts, and a Global Tourism Hub for Tropical North Queensland for which Expressions of Interest have been invited. I recently attended a Tourism Investment Briefing by Deloitte Access Economics Partner and National Tourism Lead, Adele Labine-Romain. She outlined robust growth forecasts for Queensland’s tourism economy: growth of 3.4% per annum in domestic trips and 6.9% p.a. in international trips over the short to medium term. Global economic growth continues to be driven by Asia, and Queensland is perhaps best positioned to exploit that burgeoning market, particularly as the low Aussie dollar is making us an attractive destination in terms of price. But most critical of all will be the extent to which we continue to provide better access, new and refreshed attractions, and sufficient new and regularly upgraded accommodation to appeal to the full market spectrum, from great value offerings to sophisticated high-end establishments. To give you a sense of the exciting infrastructure outlook for Queensland, we’ve prepared a map (p.39) highlighting key projects, both public and private, either just completed or in the pipeline. There are many more, too numerous to detail here, but this selection is indicative. It certainly should instil confidence and encourage further infrastructure investment into the future. End //

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Editorial // B Y N I C K B U I C K

DOS & OF EFFECTIVE ONSITE MANAGEMENT T H E F I N A L I N S TA L M E N T I N A T W O PART SERIES OUTLINING KEY S T R AT E G I E S F O R E F F E C T I V E O N S I T E M A N AG E M E N T. T H E O N S I T E M A N AG E R IS A COMPREHENSIVE ONLINE P R O P E R T Y P O R TA L D E D I C AT E D SPECIFICALLY TO THE MANAGEMENT RIGHTS INDUSTRY.

DON'T// OVERSTEP BOUNDARIES

There’s a fine line between being proactive and being a busybody: know your boundaries and rights, and don’t overstep them. Some managers take it too far, letting themselves into other people’s lots without the required notice or justification, or taking it upon themselves to enforce body corporate rules without consulting anyone first. If you spot an issue or think you need to file a notice of breach, follow the rules. Always report to the body corporate and seek approval before taking any action. Aside from it being the right thing to do, you’ll also be safe in the knowledge that they’ll have your back if you encounter resistance or noncompliance. Naturally, some owners and tenants will also feel uncomfortable if you’re constantly nosing around. While this is hard to avoid when you’re trimming lawn edges or cleaning stairwells, keep in mind that some people like their privacy.

DO// GROW YOUR LETTING POOL

n our last issue, we discussed how, when running a management rights business, it’s easy to get so caught up in the day-to-day that you forget you’re not just an employee doing a job, but in fact a business owner and investor.

If your reason for going into management rights was to enjoy a better work-life balance, to semi-retire, or to build a nest egg from your letting pool income, then there are simple steps to help achieve those goals. Part 1 of our ‘dos and don’ts’ for more effective onsite management covered being clear about what your duties are, communicating effectively with unit owners, keeping detailed records, and getting on top of your finances. So, here are our final recommendations.

DO// B E

Rental commission is the biggest earning factor you can directly influence, which is why it’s so important to follow the points above. Playing by the rules, being proactive in your communication and doing your best to keep the scheme running smoothly will ultimately give the other lot owners a good reason to pass their rental management over to you. After all, you already know the complex like the back of your hand, you know how to sell it, and if you’re doing a great job for the other landlords in your letting pool, word of mouth will spread. You’ll be hard pressed to find an external property manager who can come close to servicing the tenants as well as you can, so make the most of your position. Stay up to date with market prices in your area and adjust them quickly (with the owners’ approval, of course), learn the pros and cons of each individual lot, and invest in some decent photography. Be fast and responsive (and affordable) with your maintenance call-outs, be thorough with rental application reference checks, and keep accurate records of all communication. You’ll be a shoe-in.

T H E O W N E R S C O R P O R AT I O N ’ S E Y E S O N T H E G R O U N D

As a contracted service provider reporting to the body corporate, it’s your job to report any breaches or wrongdoing in a timely manner. This doesn’t only apply to partiers or parking infringements. It also includes any maintenance or caretaking issues affecting common areas. In practice, this means being proactive. Do your regular inspections in your letting pool and stay well aware of any

structural problems, before they become huge money pits. Roofs, gutters, leaks and other slow-progressing damage might not be easy to spot if you’re looking at it every day but, if you’re keeping records and performing all the correct inspections (or having someone perform them for you), then you could just save the scheme – and yourself as a member owner – a lot of money.

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DON'T//

DO//

T R E AT N O N - C L I E N T S D I F F E R E N T L Y

UPSKILL OR LOOK INTO OTHER P R O F I TA B L E S I D E S E R V I C E S A N D REVENUE STREAMS

They say management rights is a “people business”, and it is. But sometimes this goes the wrong way. Some onsite letting agents have been known to treat non-clients a little differently – knowingly or unknowingly – especially when it comes to maintenance requests, handling complaints, or just saying ‘hello’. The best argument for treating everyone with the same priority is that the people who aren’t in your letting pool are your single biggest chance for building your rental management income: they’re your prospective clients, and you won’t win them over by giving them the cold shoulder.

If you’re not already licensed in real estate sales, think about doing the extra training. Just as you’re better placed than external agents for managing rentals, you’re also better placed for selling. You know all there is to know about the scheme (maintenance issues, potential future costs, rental yields, vacancy rates, etc), so it makes sense to use this knowledge. For mixed and short-term complexes, there’s also the possibility of extra income from offering side services, such cleaning, car hire, linen hire, tour bookings, and other affiliate/ commission-based partnerships you can run with nearby businesses. .

A SUCCESSFUL BUSINESS IS ONLY AS GOOD AS THE SUM OF ITS PARTS, SO TRY TO TICK AS MANY OF THE BOXES AS YOU CAN.

DO//

DON'T//

B E T H E B O D Y C O R P O R AT E ’ S FINANCIAL ALLY

LOSE SIGHT OF THE BASICS

Your role is likely different to that of a strata or body corporate manager (i.e. you’re not responsible for administrative tasks) but, by understanding what the body corp needs, when it needs it and in what format, you’ll be growing your reputation – and, in the long run, your potential rent roll. It’s about adding value. If you can offer support where the body corp needs it, you’re making yourself indispensable. As an asset to the smooth running of the complex, you’ll not only improve your image in the eyes of the owners and tenants, you’ll also strengthen the ongoing value of your business.

It’s all very well trying earn bonus dollars, but it won’t matter if your business isn’t the well-oiled machine it should be. Focus on the basics first: know your duties and the legislation, keep accurate records, communicate regularly, report consistently, and help the committee and body corporate by giving them the information they need to make decisions. Play to your strengths – people skills or record keeping - and let that guide your management style. But, every now and again, remind yourself: a successful business is only as good as the sum of its parts, so try to tick as many of the boxes as you can. When it’s time to extend or sell your management rights, your future you will thank you. End //

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Quality Built, Multi Award-Winning Freehold

Units

Bed

Bath

Resort Brokers Australia is delighted to present to market this multi-award winning freehold going concern motel. Constructed in 2003 with quality in mind, this property consists of 18 units and includes a 3-bedroom timber cottage built circa 1916, known as Townsend House, which can accommodate up to 8 people and is currently being utilised as a B&B and conference facility. Currently being run under management with 6 casual cleaners, this business is perfect for a hands-on couple to run or an investor to continue to run under management. If you are looking for lifestyle with very little left to do, look no further and just move in.

›› Consistent growth year on year ›› Excellent business mix with 55% tourism & 45% corporate ›› Opportunity for further development (STCC) ›› Spacious 3-bedroom manager’s residence, private yard & undercover parking

F reehold G oing C oncern

Ref // FH005314

Manager’s Residence

NETT PROFIT: $350,000

PRICE: $2,500,000

K elli C rouch BROKER +61 410 441 750 kellicrouch@resortbrokers.com.au

P enola

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MANAGEMENT RIGHTS Ref // MR005300

‘1 The Esplanade’ says it all – Position! Position! Position!

122 31

Rooms

Bed

Bath

Boasting premier beachfront position with clifftop views overlooking the bay, this beautifully presented destination resort has it all – high returns, growth potential and lifestyle plus. The Waves, Phillip Island’s popular and best-located accommodation, enjoys a year-round tourist market. Cowes Beach and the main street cafes and shops are just metres away. Only 2hrs from Melbourne, it’s a perfect weekender or last minute getaway. Phillip Island’s major attractions, including the world-famous Penguin Parade, The Nobbies, Seal Rocks, the Motorcycle Grand Prix and World Superbike Championships also drive high demand. The current owner operates the business under management with 31 apartments in the letting pool, suggesting obvious growth opportunities. A spacious 2-bed, 2-bath manager’s apartment plus generous associated real estate are included on title. Alternatively, the business-only is offered for $695,000 with the commercial real estate, (manager’s unit, lobby, reception, office, meeting/conference room) secured on a 25-year lease.

›› $300,770 nett profit

Letting

Manager’s Residence

›› Includes $795,000 in real estate (on title) ›› Over 34% ROI on business price ›› Turnover in excess of $1.3M ›› 122 apartments in total ›› Unbeatable waterfront location

NETT PROFIT: $300,501

PRICE: $1,490,000

D amien L oorham BROKER M. +61 409 399 932 E. damienloorham@resortbrokers.com.au 48

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P hillip I sland

MANAGEMENT RIGHTS Ref // FH005314

Gold COAST HOLIDAY Management rights - $550K NET Built over seven levels around a unique, central void with lush tropical plants, water features and transparent roof, The Atrium Resort is a great opportunity to acquire a holiday business with a significant profit level, in the beautiful and ever-popular suburb Broadwater. The property boasts top class facilities including a stunning roof top area with expansive Broadwater views, heated pool, spa and BBQ area, as well as ground floor pool, saunas and tennis court. Current manager is selling reluctantly for medical reasons - good upside potential for dynamic, hands-on operators.

Rooms

Letting

Bed

Bath

Manager’s Residence

›› True holiday management rights with majority of units in short-term pool ›› 66 apartments, with 46 managed in the onsite letting pool ›› Agreements recently topped up to 21 years ›› Prime location directly on the Broadwater ›› Unique property with several recent on upcoming upgrades NETT PROFIT: $550,000

PRICE: $3,470,000

A lex C ook BROKER M. +61 467 600 610 E. alexcook@resortbrokers.com.au

P enola

Management Rights Law Specialists Australia Wide Our trusted team of legal experts, led by Col Myers, draws on over 30 years experience to get you the best possible outcome. Although our full suite of services is more comprehensive, particular expertise covers: - Buying & Selling - Structuring - Variations - Renewals - Establishments - Licences & Letting Appointments - Advice on all Body Corporate Issues - GST, Stamp Duty and Tax - Exit strategies - Dispute resolution - Legal due diligence reports

Contact us today to find out how we can assist you; P: +61 (0)7 5552 6666 M: +61 (0)417 620 516 E: cmyers@smh.net.au W: smhmanagementrightslawyers.net.au

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

MANAGEMENT RIGHTS Ref // MR004935

Prime Resort With Stunning Vistas Over The Pacific Ocean

Rooms

Letting

Years

Bed

Bath

This stunning property takes prime position on the hill overlooking the Trinity inlet. The breath-taking view is uninterrupted across the ocean all the way to Green Island and beyond. The opportunity exists for a motivated vendor to take the business to the next level and significantly increase occupancy and nightly tariffs to optimize the profit. Perfect for a hands-on operator to continue with the room renovations that are currently underway by existing management. Amaroo at Trinity Beach consist of 38 rooms. 24 are single rooms with an additional seven dual key rooms for families or couples. The dual key ability allows the manager to capitalises on room demand depending on the seasons and market trends. The price is set to meet the current market and entice a motivated person who is ready to move now. This opportunity will not last!

›› Up-shot for a motivated operator to capitalise on enhanced trading patterns in FNQ

Manager’s Residence

›› Location, position and the Coral Sea views ›› With a compact letting pool, current owners are experiencing great ROI’s ›› Experienced and dedicated vendor to help with transition ›› Year on year increase in profit ›› Renovated apartments in letting pool with further renovations underway ›› Beautifully appointed manager’s apartment ›› Opportunity for further business growth

NETT PROFIT: $219,388

PRICE: $1,195,000

C henoa D aniel BROKER

K irsten L owis BROKER

M. +61 403 143 151 E. chenoadaniel@resortbrokers.com.au

M. +61 428 499 620 E. kirstenlowis@resortbrokers.com.au

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

T rinity B each

MANAGEMENT RIGHTS Ref // OTP005316

Rare opportunity to secure Two beach side luxury Off the Plan developments

Units

Letting

Years

This type of dual proposition is genuinely hard to come by. These two luxury beach side developments, Acqua and Neo, are a short 20 minute drive from each other. Situated in the highly desirable Mermaid Beach (Neo) and Palm Beach (Acqua), these business only permanent management rights businesses present the perfect add on business for the experienced operator. Neo is well underway, due for completion in November 2018, with Acqua to follow with completion due August 2019. These off the plan developments will be highly sought after, due to their incredible beach side locations, amazing design and luxury facilities. With no requirement to live on site, very manageable care taking agreements and a great BC salary and projected nett profit position. You really will need to act fast to ensure you don’t miss out on this incredible off the plan business opportunity on the Southern Gold Coast.

›› Rare opportunity to secure 2 x OTP luxury beach side developments ›› No requirement to live on site or buy property business only ›› Brand new 25 year agreements ›› High nett profit opportunity $317K (combined projection) ›› Highly desirable sought after beach side suburbs Mermaid Beach & Palm Beach ›› Fantastic office space exclusively for manager at Acqua - Palm Beach ›› Very manageable care taking duties with a great BC Salary $135k

NETT PROFIT: $317,594

PRICE: $1,418,658

T odd W arner BROKER

T im C rooks O ff the P lan S pecialist

M. +61 438 170 763 E. toddwarner@resortbrokers.com.au

M. +61 422 208 450 E. timcrooks@resortbrokers.com.au

G old C oast

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

MANAGEMENT RIGHTS Ref // MR005318

Cracking Management Rights Opportunity in Taigum

125

1.5

Townhouses

Letting

Years

Bed

Bath

Manager’s Residence

An exciting opportunity in the North Brisbane suburb of Taigum. Taigum is a popular rental suburb and offers easy access to schools, hospitals, local cafe precincts and shopping centres. On offer is the management rights of 2 townhouse complexes containing 125 units with 52 units in the letting pool. There is also a spacious 3 bedroom, 1.5 bathroom manager’s residence. The business has long term agreements in place and a secure body corporate salary of $189,432 per annum from a nett profit of $264,498 with upside potential for increases in letting pool numbers (17 outside agents).

›› Large stable body corporate salary ›› Potential to grow letting pool from 17 outside agents ›› Experienced operators to assist with transition of new operators ›› Long term agreements and minimal caretaking duties ›› Great rental location near CBD in North Brisbane

NETT PROFIT: $264,498

PRICE: $1,750,000

J ane F ang BROKER +61 402 399 613 janefang@resortbrokers.com.au

T aigum

MANAGEMENT RIGHTS C aretaking only

Ref // MRC005276

RARE CARETAKING ONLY ON BULIMBA RIVERFRONT

Units

Year

Perfect entry-level proposition for a new operator or an existing manager seeking an easy add-on with just 26 apartments to manage within this exclusive high quality estate. The rare “caretaking-only” agreement gives the incoming manager enormous flexibility with the added bonus of there being no requirement to reside on-site or own real estate. Be quick to secure this primely located, small but solid business in Bulimba, just minutes’ away from the vibrant Oxford Street commercial district.

›› Any letting appointments secured are pure profit with nothing to pay ›› Brand new 10-year term ›› No set office hours and no real estate to buy ›› Easy duties including looking after pool, gardens and mooring spaces

NETT PROFIT: $32,500

PRICE: $135,000

B R E N T S TA K E R BROKER

T im C rooks O ff the P lan S pecialist

+61 410 344 344 brentstaker@resortbrokers.com.au

+61 422 208 450 timcrooks@resortbrokers.com.au

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

BULIMBA

Management rights and motel experts EXPERIENCE COUNTS We have a team of specialists, covering management rights and motel businesses. GET THE RIGHT ADVICE Donâ&#x20AC;&#x2122;t put your accommodation industry investment at risk. Our industry knowledge is second to none.

Frank Higginson & Amy Oâ&#x20AC;&#x2122;Donnell

+61 7 3193 0500

CONTACT US Receive the best information in your industry. Subscribe today to receive continual practical, useful and relevant content. Visit www.hyneslegal.com.au/subscribe info@hyneslegal.com.au

www.hyneslegal.com.au

Hynes Legal are panel lawyers for the peak industry body: Australian Resident Accommodation Association ARAMA I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

MANAGEMENT RIGHTS Ref // MR005304

3.9x multiplier on a solid business!

8.5

Units

Letting

Years

Bed

Bath

Modern resort style living in a fantastic complex right on the city reach of the Brisbane River in Auchenflower. This property is easily managed and has strong and consistent letting targeted at young professionals and families. Featuring 41 units with 13 in the letting pool with strong upside potential. This complex offers a lavish and spacious office that would rival any on-site office in the country. An arsenal of caretaking equipment supplied by the body corporate gives any operator a walk up start in this riverfront complex. The current vendors have left this building in great condition and the clearly outlined duties are rewarded with a supportive body corporate and strong caretaking salary of over $1,700 a lot per year. With the added security of owning a manager’s unit, this two bedroom apartment, which has been fully renovated, provides a luxurious and comfortable residence within the scheme. This property has 8.5 years left on a standard module and the owners have already commenced the process to have the agreements topped up to full term.

›› Huge caretaking salary over $1,700 per lot

Manager’s Residence

›› Solid foundation to continue to grow into a long term business ›› Experienced or first time operators encouraged ›› High rents which have been unaffected by supply issues in other suburbs ›› Supportive Body Corporate with strong top up history

NETT PROFIT: $108,051

PRICE: $1,171,400

N athan E ades BROKER +61 448 339 920 nathaneades@resortbrokers.com.au 54

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

A uchenflower

MANAGEMENT RIGHTS Ref // MRB005338

Business only in Newstead! Very low maintenance!

Units

Letting

Years

Genuine business-only management rights in the heart of Newstead - no need to buy real-estate or live on-site. Wonderful flexibility for the incoming manager as there are no set office hours. Extremely low maintenance building – rooftop entertainment area, but no pool, gym or any mowing! The building consists of 48 stunning one and two bedroom apartments, with 35 in the letting pool. There is room for growth with seven outside agents! This is the perfect opportunity for a first time buyer, or for a local savvy operator looking to increase their portfolio and earn additional income. A sizable and fully equipped office is on the ground floor. The development was completed in May 2016 and has lengthy 23 year caretaking and letting agreements which will give an incoming purchaser great security. The building offers a fresh and modern feel, with a bright urban design and industrial textures. The apartments are open plan, the kitchen and bathroom designs are contemporary and stylish.

›› Business only management rights in the heart of Newstead ›› New complex - just over two years old ›› No need to live on-site ›› Body Corporate salary adjusted to 3% or CPI (whichever is greatest) ›› Opportunity for further growth – 7 outside agents ›› Low maintenance – no pool, gym or mowing ›› Stunning one and two bedroom well-proportioned and designed apartments. ›› Large fully equipped office for your exclusive use

NETT PROFIT: $110,617

PRICE: $575,208

J essica W ilkie BROKER

G areth C loster BROKER

+61 401 003 023 jessicawilkie@resortbrokers.com.au

+61 423 182 766 garethcloster@resortbrokers.com.au

N ewstead

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

M otel L easehold Ref // LH005102

STRONG TRADING MOTEL, RICHLY DIVERSE INCOME STREAMS

Units

Years

Bed

Bath

A large portion of the bookings are from crews and work groups coming to the region on contracts. This includes shutdown work for the coal mine and nitrate plant, road and railway crews, construction workers, relief staffing for the quarry and seasonal work in relation to the grain silos and cotton gin. They have also gained occupancy from overflow at Biloela during the power station shut downs. More recently, a major driver of the business has been the gas industry. A local provider began ramping up acquisition, supply and maintenance this year and has confirmed this will continue in the years to come. The majority of guests are long-term, staying weeks or months. This is due to the Dawson Valley’s diverse industry and gas field which was the first commercial coal seam gas operation in Australia when it began producing coal bed methane gas in December 1996. The property is currently under management and has been very successful. However, on-site managers have the ability to make instant decisions and control all aspects as well as to build relationships with locals and prospective clients.

›› Rent is set at 26% of turnover – a very manageable and fair way of adjusting rent

Manager’s Residence

›› Beautifully presented to travelers and workers ›› Small buffet-style dining room caters for 20-30 people per night ›› Tariffs for long-term clients are discounted as are the services (more info in IM) ›› Costs of OTA’s bookings are minimal because of direct bookings

NETT PROFIT: $407,400

PRICE: $1,140,000

LENNY BOOTH BROKER

LINDSAY COOPER B roker

+61 438 139 422 lenbooth@resortbrokers.com.au

M. +61 418 711 047 E. lindsaycooper@resortbrokers.com.au

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

M oura

F reehold G oing C oncern Ref // MR005351

Incredible opportunity to secure a slice of paradise

Houses

Bed

Bath

Looking for a sea change to one of Queensland’s most iconic island hot spots? This amazing opportunity on Stradbroke Island will be sure to make you look twice. Beach Boys Beach Houses is a beautifully presented and unique opportunity just 30 minutes from the mainland. Not everyday do you get the chance to secure freehold land on a magnificent island with a FREE business included in the sale. The houses and land will be sold on valuation and the vendors will consider all reasonable offers. With a total of three fully self-contained, exclusive resortstyle beach houses, all immaculately presented, private and spacious, this island lifestyle will suit everyone. Offering a total of 10 bedrooms, 6 bathrooms and 2 outdoor showers across these 3 award-winning homes. A small on-site management accommodation is available on-site should you wish to rent out the three houses to grow the nett profit. A truly wonderful opportunity to live the Stradbroke Island lifestyle or simply run the business from afar and enjoy a solid nett profit. This opportunity will not last so move quick!

›› Three amazing beach houses, strata titled, all secure on one large block ›› Short-term accommodation business or permanent rentals – your choice ›› Increasing nett profit ›› Opportunity to live off-site ›› Freehold land ownership moments from the beach ›› Close to shops, beaches and transport ›› Freehold business netting 100k+ with purchase ›› A perfect sea change opportunity for an astute buyer

NETT PROFIT: $100,000 (approx.)

PRICE: $2,500,000 ONO

N athan E ades BROKER

B rent staker BROKER

+61 448 339 920 E. nathaneades@resortbrokers.com.au

+61 410 344 344 brentstaker@resortbrokers.com.au

S tradbroke I sland

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

Editorial // F E A T U R E A R T I C L E

MIND HOW YOU GO why mental fitness has to be a business priority MOST OF US KNOW THE IMPORTANCE OF GOOD PHYSICAL HEALTH. BUT DO WE EVER STOP TO THINK ABOUT BEING MENTALLY FIT FOR THE THINGS WE WANT TO ACHIEVE? WE SHOULD. IT TAKES A HEALTHY MINDSET TO SUCCEED IN BUSINESS.

signs and then, mostly, it’s about self-care. Yes, you can t’s a simple, logical proposition. But still people self-care, if you are prepared to prioritise your mental struggle with the term ‘mental health’. When wellbeing. discussing ‘physical health’, most will relate it to being “What I see is that most people don’t necessarily know fit and active. Yet the ‘M’ word is usually associated what’s wrong. They know they’re not functioning well, but with negative, even extreme conditions and behaviours. they think if they try harder – get up earlier, work later, do So, from the outset, let’s define the concept of mental more – it will help. There’s a flurry of activity, but actually wellbeing … let’s call it mental fitness. Put simply, when you less output,” Isla says. are mentally fit, you can function better, achieve more and “Most push too much. In the case of physical fitness, do it more easily. it’s OK to push yourself. But not for Just as we do in the physical mental fitness. If you push too hard, sense, we should always be you just get more stuck, like a 4WD striving for mental health and digging deeper into the mud. You fitness. But most of us can’t get need to pull back and take care.” our head around that concept A great strategy is to be aware of says Isla Gillespie, a psychologist how well you are doing, when you do who counsels and coaches best, when you feel most in control business people to understand of daily life and work demands. Then and manage mental wellbeing.* T H I N K O F M E N TA L F I T N E S S try to lengthen those periods. “If you don’t understand the A S A C O M P E T I T I V E S T R AT E G Y , “Many people realise they do fine concept, you don’t know when OR A BUSINESS SUCCESS first thing, they get up, go through mental wellbeing is not there,” S T R AT E G Y . the routine to get going, but then she explains. “In reality, Beyond hit stumbling blocks and lose focus. Blue tells us, at any one time, one That’s when we need to calm the brain down.” in five adults will be suffering from mental health issues. Another problem is that we often normalise signs and Those numbers are concerning for so many reasons. symptoms like stress and headaches. We hide behind But, in this context, let’s just consider the impact on the ‘everything’s fine’ defence, ignoring the ups and commercial enterprise – on people in the business sector. downs as though they don’t happen, until they become What it means, Isla says, is that we end up with unmanageable. ‘presenteeism’ (the opposite of absenteeism), where people Asked about the plethora of practices and treatments are at work but are not firing on all cylinders and are not widely promoted to help get us back on track – meditation, achieving well. This impacts severely on productivity and mindfulness, professional intervention among them – Isla growth. says they are valid and effective techniques. So, business people should actually think of mental But, in reality, the answers are probably much more fitness as a competitive strategy, or a business success fundamental and simple. strategy. Running a business takes a lot of energy, strength “Most of the priorities are things we all know, but and dedication. You need to focus on mental fitness to build don’t do: exercise, healthy eating, drinking plenty of water, your business. reducing alcohol consumption and smoking,” she says. Step one, Isla advises, is to learn what mental wellbeing “Prioritise these and you’ll be amazed how quickly you is. The sooner you recognise the signs of flagging ‘fitness’ can get back on track, be more relaxed, energetic, calm and levels, the sooner you can get back on track. in control. Then decision-making becomes easier.” “You need to challenge your thinking, be aware of the

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

Editorial // F E A T U R E A R T I C L E

No business person can afford to ignore strategies proven to reduce stress and sick days, improve focus, concentration and creativity and increase resilience.

There is a great deal of scientific evidence supporting the link between exercise and cognitive function, between physical fitness and mental fitness. A report of the World Health Organisation (WHO)** described mental health as “… a state of wellbeing in which the individual realises his or her own abilities, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to his or her community.” It concluded: “Mental health is an indivisible part of general health and wellbeing.” Another technique Isla recommends is to think about where you are spending time and exactly what you are doing. If you are mentally fit, you can set priorities, delete the unnecessary and unwanted intrusions and distractions of modern life. “When you are actually working, are you achieving?” she asks. “There’s a big difference between opening hours and ‘time on’.” Another top tip for mental fitness is to get good quality sleep. “An astounding one third of the population have sleep issues. And, if you are tired, you are not in the game. “Don’t let work or screens rule your bedtime. Prioritise sleep over work or tidying up last minute odds and ends. If you consistently go to bed at a set time, things will get easier. The benefits of sleep, in particular, are aweinspiring.” And another thing: those of you in the accommodation industry, whose business so often is to convince everyone else to take holidays, need to heed your own advice. Just ask yourself, would I be better at what I do if I was relaxed, refreshed and raring to go? The bottom line is, you don’t take short cuts with your business, so don’t take short cuts with yourself. Don’t let your personal life, leisure time and relationships suffer. Strong relationships and life balance will actually help your business thrive. As a businesswoman herself, Isla says, “I take care of me in order to be on my game, in all aspects of my life, not just business.” No businessperson can afford to ignore strategies proven to reduce stress and sick days, improve focus, concentration and creativity and increase resilience. So important is mental fitness to productivity, innovation and growth, that Isla predicts, in 10 years, every organisation will have a “wellbeing manager”. When it comes to mental wellbeing struggles, the stigma has to go, because “everybody gets their turn,” she said. “If not you, a friend, or family member, or colleague, and if you know the signs and understand how to achieve and maintain mental fitness, you will understand how to help yourself, and help and support others. “Ultimately, if we teach people early how to stay well in the first place, instead of trying to help once it gets too hard, we’ll actually save lives.” * Isla Gillespie, Purple Apples Pty Ltd – M. 0419 378 639 ** A Report of the World Health Organisation in collaboration with the Victorian Health Promotion Foundation and the University of Melbourne (2005). Editors: Helen Herrman, Shekhar Saxena, Rob Moodie

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

F reehold INVESTMENT Ref // MR005351

High return 11.5% Freehold Investment An Oasis in the outback. The current lessees have been here for 10 years making this a very secure and profitable long term investment. Featuring a range of accommodation, catering to all markets, including 35 powered caravan sites each with their own en-suite, set in lush grounds with plenty of cool shade. 36 cabins and 86 motel rooms of various configurations. Resort facilities include two pools, three BBQ areas, camp kitchen, function and meeting room and on-site laundry. The Savannah Bar and Restaurant provide a relaxing environment for diners enjoying the air-conditioned comfort of the main restaurant or the more casual atmosphere of the poolside al fresco bistro. The property also features a well appointed three bedroom managers residence. The town of Katherine is the fourth largest in the Northern Territory, situated 320km south-east of Darwin on the beautiful Katherine River. Katherine is often called the ‘Crossroads of the North’ as it is located on the junction of the Stuart Highway linking with the north and south and the Victorian Highway to Western Australia. Rare opportunity be quick.

Rooms

Cabins

Powered Sites

›› Showing an 11.5% return ›› Situated on 7.5 acres of prime land ›› Experienced long term tenants in place ›› Set in the heart of Katherine 320km SE Darwin ›› Diverse style of quality accommodation catering to all markets

RENT: $875,460

PRICE: $7,610,000

T R U D Y C R OO K S N AT I O N A L S A L E S M A N AG E R

K elli C rouch BROKER

+61 477 882 210 trudycrooks@resortbrokers.com.au

+61 410 441 750 kellicrouch@resortbrokers.com.au

K AT H E R I N E

I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

O ff T he P lan MANAGEMENT RIGHTS

Ref // OTP005293

200M TO BEACH! NEW PERMANENT BUSINESS-ONLY – HIGH NETT Profit

Units

Letting

Years

Genuine beachside off the plan management rights with brand new 25 year agreements. No requirement to live on-site or own real estate. No set office hours. Operators can conveniently manage this mid-rise building with ease from the ground floor office and reception area with use of the on-site storage facilities. Boutique contemporary 8-storey building with superb facilities including swimming pool. Limited supply of new permanent rentals in the area ensures high occupancy from quality tenants. Combine the best of both worlds with this highly profitable business and enjoy the relaxed lifestyle that resonates throughout Kirra.

›› ›› ›› ›› ››

Realistic investor profile with 51 of 73 already sold Under construction and due in October 2019 New 25 year agreements with easy caretaking duties Stunning beachside location in Kirra’s heart Excellent amenity within walking distance

NETT PROFIT: $221,122

PRICE: $1,004,301

T odd W arner BROKER

T im C rooks O ff the P lan S pecialist

+61 438 170 763 toddwarner@resortbrokers.com.au

+61 422 208 450 timcrooks@resortbrokers.com.au

C O O L A N G AT TA

MANAGEMENT RIGHTS Ref // MR005346

Beginner opportunity in Upper Mt Gravatt with 3 bedroom unit

Units

Letting

Years

Bed

Bath

This opportunity is a great starter business for industry beginners or a perfect add-on opportunity for a local operator. Tenants are living in a safe and secure gated, yet low maintenance complex located within the booming growth area of Upper Mount Gravatt. The sizeable three bedroom, two bathroom manager’s unit with single lock-up garage has been semi-renovated and repainted internally. There is the option to live offsite and earn a total income of $59,440. Combination of lifestyle and flexibility, with no set hours and walking distance to all the wonderful amenity that Mt Gravatt and Garden City have to offer!

›› ›› ›› ››

Manager’s Residence

Earn $1,350 per lot per annum Option to live off-site Secure body corporate salary Lifestyle permanent complex with limited caretaking duties ›› Opportunity for income growth

NETT PROFIT: $59,440

PRICE: $551,700

J essica W ilkie BROKER +61 401 003 023 jessicawilkie@resortbrokers.com.au 62

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

U pper M ount G ravatt

Seminar 2018

Gold Coast

Management Rights Made Easy

This informative, informal and interactive event is aimed at newcomers to the management rights industry. Our team of industry experts will be on hand to share their extensive experience, answer your queries and put you on the path to success! 5.30pm on Tuesday 7th August 2018 at HiRUM Software Solutions, 2/8 Technology Drive, Arundel, Gold Coast An introduction from Larry Seburn, Sales Representative from HiRUM Software Solutions, the leading management rights software specialists in Australia. then... Meet Your Expert Panel

Mike Phipps Finance

Pevy Lawyers

Holmans Accountants

Resort Brokers Australia

Mike Phipps is one of Australia’s foremost accommodation industry finance professionals, with over 30 years’ experience. Mike provides commentary on the state of the management rights industry and available finance options. You really will learn secrets the banks won’t tell you.

Trent Pevy acts for more new entrants to the management rights industry than any other lawyer. Trent will highlight the importance of specialist due diligence in purchasing, as well as sharing his top five pitfalls to avoid throughout the contract process and settling your business.

Tony Rossiter has conducted income verification reports for buyers on hundreds of management right businesses across Australia. Tony will provide the inside track on dissecting a profit and loss statement, as well as how to best structure your business.

Todd Warner is our Gold Coast management rights sales specialist. With Resort Brokers the market leader, he has handled many sales of both holiday and permanent complexes. Todd will provide current market insights and discuss where the best investment opportunities can be found.

M otel L easehold Ref // LH005329

Calling All Large Leasehold Buyers - Low Rent With Revenue On The Up!

Rooms

Years

Bed

Bath

Resort Brokers Australia is excited to welcome to our stable this exceptional large lease business proposition. Without rival in the current market, this opportunity is ripe for the picking – ready to reward its new owners for the significant refurbishment investment and thorough internal business preparation undertaken by its current operators over the past few years. The unique large-scale business offers the astute operating couple, family or investment group a range of genuine, top level revenue growth opportunities. Among the highlights are the ability to build annual group bookings, to increase occupancy, and ongoing repeat corporate guests utilising the one-stop-shop facilities this destination provides. A renowned chef at the Frog & Toad Restaurant is attracting growing patronage among loyal local and visiting diners. The fully-equipped function and conference centre seats up to 200, catering for conferences, weddings, events, corporate meetings, seminars, birthday and anniversary celebrations, and even provides clubhouse options for sporting and recreation groups.

›› Large nett profit, record low rent ratio (indexed by CPI only), long 27.5 year lease

Manager’s Residence

›› 60 refurbished 3.5 star rooms – new beds, linen, carpets, décor, aircon and more ›› Accommodation configured to handle corporate, groups and large families ›› Genuine upside in multiple revenue streams due to vendor’s strategic approach and exit timing ›› Conference centre, bar and kitchen adds to the exciting mixed-use business ›› 50-seat restaurant with state-of-the-art kitchen has attracted renowned local Head Chef

NETT PROFIT: $472,450

PRICE: $1,575,000

J ames C arrick BROKER +61 400 664 065 jamescarrick@resortbrokers.com.au 64

RESORTBROKERS.COM.AU | I S S U E N O . 9 0

T amworth

Management Rights and 5 freehold units in near new complex Located in the stunning Sunshine Coast Hinterland, boasting breathtaking views across the coast, luxury accommodation and a stunning upscale restaurant, in a stylish, architect designed building, ‘Altitude on Montville’ represents a rare opportunity to secure a high performing, investment that’s only 18 months old and still to realise its growth potential. Altitude has been the vision of the local Sunshine Coast owner-developer, and attention to detail and design integrity has been paramount; the complex is eco-friendly, aesthetically striking and well located within walking distance to one of the hinterland’s most beloved villages, Montville. There is no requirement to reside on site and no fixed office hours in the agreements. All 23 units have a high level of fit out which is standard throughout the complex. The current operator still owns 11 units in the complex, five of which will be included in this sale,comprising of four fully furnished studio apartments, a managers one bedroom unit and the office/reception on title. ›› The agreements are in the accommodation module with 23 years + to run. ›› Purchaser will also have significant depreciation benefits with this offering. ›› Upscale restaurant/bar conference facility externally operated. ›› No requirement to reside on site, no fixed office hours. ›› Mix of fully serviced studios, along with two and three bedroom apartments.

NETT PROFIT: Circa $444,000

PRICE: $3,500,000

G lenn M illar BROKER

+61 412 277 804 glennmillar@resortbrokers.com.au

M ontville , Q L D I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

SA SPOTLIGHT

SOUTH AUSTRALIA STAMPS OUT STAMP DUTY ON COMMERCIAL PROPERTY TRANSACTIONS

Editorial // A D A M L U D L O W - F I N L A Y S O N S L A W Y E R S

S OU T H AU S T RAL IA HAS AB OL IS HED S TAMP D U TY O N COMME RCIAL PROPERTY PUR C HAS ES . IN L IGHT OF T HE R E L U CTANCE OF EAS T COAST L EGIS L AT U RES TO FOL L OW SUI T , S OU T H AU S T RAL IA MU ST NOW B E ACKNOW L E DGED F OR W HAT IT HAS B ECOME – A HYPER- COMPET IT IVE TAX JU RIS D ICT ION FO R COMME RCIAL PROPERTY INV ES T ME N T.

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hile purchasers of residential land have been favoured by regulators in recent times, buyers of commercial property in South Australia should now be similarly enthused by the abolition of the stamp duty previously payable on such transactions. While purchasers of residential land have been favoured by regulators in recent times, buyers of commercial property in South Australia should now be similarly enthused by the abolition of the stamp duty previously payable on such transactions. From 1 July 2018, the liability to pay stamp duty on transfers of “non-residential”, “non-primary production” real property (known as “qualifying land”) will no longer apply in South Australia. This represents the close of a three-staged process (first announced in the 2015-16 SA State Budget) whereby stamp duty payable on commercial, industrial, and mining land has been progressively phased out, culminating in the blanket abolition of the duty payable on benefitting transfers from 1 July 2018. To put these reforms into context, the duty payable on the transfer of commercial property worth $1 million prior to 7 December 2015 was $48,830 – not an insignificant sum when contemplating the short-term viability of a project. As of now, the duty payable on the same transaction will be nil. Stamp duty payable on commercial property was

previously levied in South Australia at a maximum rate of 5.5% of the purchase price – as it continues to be in Victoria. Notwithstanding these much-welcomed concessions, registration fees will remain payable to the Lands Titles Office upon any transfer. Nevertheless, when coupled with the recent removal of stamp duty payable on “non-real property” transactions in South Australia (i.e. the sale of goodwill, trading stock, nonfixed plant, and intellectual property licences), purchasers of any business comprising the sale of qualifying land will be rewarded by the scheme. The final phase of cuts should also be well received by vendors. Prospective buyers have been observed to be delaying commitments to property investment over the past few years, anticipating the further duty cuts brought about with each phase (the first having commenced from 7 December 2015). Now that duty has been abolished entirely from 1 July 2018, vendors can expect greater interest from retail purchasers, corporate developers and investment consortiums alike looking to expand into, or consolidate positions in the South Australian market. Of course, as is generally the case with any developments in the tax space, the duty cuts are not free from various technicalities, all of which must be properly understood before the benefits can be responsibly procured. Section 105A of the Stamp Duties Act 1923 (SA) provides that duty will only be avoided on conveyances or transfers of qualifying land where the relevant instrument

(i.e. the contract for sale) is executed on or after 1 July 2018, regardless of the date of settlement. There are consequences under anti-avoidance provisions for those attempting to artificially structure past and present transactions in order to take advantage of the timing of the lower rates. Further, there are complexities in the legislation with respect to the application of the concessions to mixeduse developments – these being particularly material for participants in South Australia’s accommodation and tourism industries, where project land is often used for a variety of purposes. Given the public revenue losses highlighted by critics of the scheme (this being the Eastern States’ primary justification for retaining traditional duty arrangements), there is of course no guarantee that the abolition will continue indefinitely. Being a big believer in local industry and commerce, it is hoped that the final cut will achieve its goal, reducing transaction costs and providing renewed investor zeal for South Australian investment opportunities. Should you have any queries, please do not hesitate to contact the writer. End // For further information: adam.ludlow@finlaysons.com.au This article is intended as commentary only. Finlaysons makes no warranties as to the accuracy of its contents, and it does not constitute legal advice. Readers should seek professional advice before acting in relation to any of the matters considered above.

Editorial // B Y J O H N M A H O N E Y

UNCERTAINTY AROUND

SHORT TERM LETTING

or a variety of reasons we have in recent months fielded many enquiries about short term lettings. Some clients have wanted to prevent Airbnb, some have wanted to stop long term residential usage of motel approved units and some have wanted to start a short term letting operation in a permanent residential building. We hear all sorts of reasons why short term lettings should be banned or allowed â&#x20AC;&#x201C; it does or does not comply with the by-laws, my neighbouring building does it so I must be able to or my building is class 3 which precludes long term usage.

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I thought it might be useful to set out some basic principles that govern this vexed issue: 1. The class of the building is irrelevant. A class 2 building and a class 3 building can both be used for either short or long term residential use. 2. The first place to start looking is the planning or development approvals for the complex. That will tell you which use is lawful and which is not. 3. A planning approval can be changed to allow for other residential uses. That works both ways â&#x20AC;&#x201C; a short term approval can be changed to allow for long term or both short and long term. Likewise a long term approval can be changed to allow for short term or both short and long term.

4. Changing an approval might be very easy or it could be quite difficult - that depends on the planning scheme and how that impacts on the complex. Town planning advice should be sought. 5. You do not have to change the use of all units in the complex. The consent of the owners of the units for which the use is proposed to be changes will be required. 6. Sometimes the consent of the body corporate will be required to an application to change a planning approval. Advice should be sought about the particular circumstances. 7. In Queensland if a building can be used for any sort of residential purpose (short or long term), a by-law cannot limit the type of residential use to which units can be put. 8. However a by-law can impose a condition that a unit cannot be used for any unlawful purpose which indirectly could preclude a unit being used for short term lettings if that is not lawful. Such a by-law could be enforced.

9. A letting agreement with the resident manager can lawfully impose a restriction on the manager letting out units for certain periods of time. 10. Short term lettings are also regulated by the managed investment provisions of the Corporations Act and specific advice should be sought about the implications and requirements of that if you are proposing to move into short term letting.

These principles are a general guide only and as always advice tailored to the individual circumstances should be obtained.

Experts in Management Rights law Mahoneys law firm has represented the Management Rights industry and the Australian Resident Accommodation Managers Association (ARAMA) for more than 25 years.

With offices in Brisbane and on the Gold Coast, Mahoneys’ Management Rights team regularly: • Acts in the sale and purchase of management rights • Develops strategies to approach bodies corporate to secure new agreements • Attends and addresses body corporate meetings • Handles dispute resolution matters • Prepares letting appointments or special conditions • O ffers general advice and assistance on all management rights issues.

For advice from one of our Management Rights experts, call: Brisbane: +61 7 3007 3777

Gold Coast: +61 7 5562 2959

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By the numberS cont. // Y E A R TO D AT E APRIL 2018+ RevPAR

CAIRNS

$117.23 (+4.5%)

CANBERRA / ACT

$133.39 (+1.2%)

SYDNEY

$203.70 (+0.2%)

GOLD COAST

$162.66 (+16.7%)

DARWIN

$81.92 (+15.4%)

HOBART

$164.03 (-4.6%) Source: +STR, Australia and New Zealand Hotel Review, April 2018 tourisminvestment.com.au

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Editorial // B Y F R A N K H I G G I N S O N

MOTEL LEASES & RENT

he single biggest expense in a motel business is the rent, and what we see occasionally is the position where the rent has increased slowly over time to a point where it is out of sync with the market. It is coming up more and more as an issue in the motel industry.

It is also an issue that sometimes comes up in the management rights industry â&#x20AC;&#x201C; but in reverse (for example, where the agreement provided for a caretaking remuneration with fixed 5% increases over a 25 year term). These style of increases are generally unsustainable for bodies corporate and more often than not are negotiated away by a manager at some point. Similarly rents that have increased in line with CPI only, will at some point need to be checked.

build the business then they do not necessarily want to be rewarded for that effort by paying more rent; • They often do not want to provide all their financial information to the landlord. FROM A LANDLORD’S PERSPECTIVE; • they want some certainty of income, so the concept of a rent which could decrease is not often welcomed; • often the landlord is not privy to the financial information of the tenant, and so cannot see the writing on the wall, so to speak; • if the fall in revenue is as a result of poor management on the part of the tenant, why should that impact on the landlord’s revenue?

We are not accountants, nor do we express to be, but the consistent rule of thumb that we are told applies to a successful motel business is that the largest fixed overhead – being the rent – should not be more than around 30% to 40% of the operating revenue. When it gets higher than this, the financial pressure starts to build and that pressure can be akin to the frog in the pot. Put it in and keep turning the temperature up slowly, and the frog doesn’t know it is boiling until it is too late. Financial pressure that builds over time is like that. If you get a short, sharp hit you know about it, but if it drags out over time, every month becomes a grind. As a general rule, in most motel leases the rent goes up by CPI every year regardless of external circumstances of the market. If your town or region starts to struggle economically, then your rent will almost certainly increase as a proportion of your revenue but your

income may go down. Motel leases are different to most long term retail or commercial leases which usually have market review provisions built into them – usually at the time an option is exercised – but sometimes just during the term of the lease. This allows the rent paid by a retail or commercial tenant to be reviewed to what the market rent is at the time of the review. Sometimes these leases have caps and collars in terms of the maximum movement that can be applied to that market rent – be that a fixed sum or a fixed percentage. Often motel leases do not have a market review clause in them. The reasons for that can be easily debated from both sides of the fence: FROM A TENANT’S POINT OF VIEW; • i f there is a market review then the rent should be able to go both up and down – that is what a true market review is; • i f the tenant has worked hard to

So if your motel lease does not have a market review (like most don’t) what do you do? The first thing is to recognise there is an issue. If things are not working financially, get some external advice. That is not necessarily from us (yet) but you should start with your accountant or financial adviser. When you are under financial pressure it is easy to lose objectivity about where you are and what you need to do. Some hard number crunching is usually where you need to start. Once you have done that, you can assess what it is you need to do, and here is where the art is. It then becomes a commercial negotiation between yourself and your landlord. For the most extreme of cases (which are rare but do happen), it might be that the combination of too much borrowing and a completely cratering market (perhaps along with new competition) means that by any definition the motel business you have is simply unsustainable. The walk away option is Armageddon, but if the business is fundamentally broken, then that is what it is. There is nothing worse than working for everyone else in the deal, like the bank and the landlord, and having nothing for yourself. Flogging dead horses is no good for anyone, especially when you are the horse. There are a range of issues that flow from that in terms of dealing with banks and personal solvency issues, which can be brutal. But in our experience knowing you have a I S S U E N O . 9 0 | RESORTBROKERS.COM.AU

problem, and then dealing with it in the best way possible, is all you can do. What is absolutely certain is that if nothing changes, nothing changes. You need to do something. Most banks (especially in these times of a Royal Commission) are being increasingly less vindictive about personal action against borrowers after a business goes bad. Landlords are usually the same. Why throw good money after bad? Assuming it is not all over, the easy answer is to ask the landlord to reduce the rent. That sounds good in theory but is harder in practice. The value of the freehold investment to a motel tenant is largely tied back to the income paid by the motelier and the tenure of the lease itself. If you reduce the rent paid, the landlord’s capital value will be affected the next time they have a valuation – or go to sell the freehold. The other thing is that the landlord might already be squeezing every last cent out of the property to fund their lifestyle or other commitments. Reducing the rent for them might be difficult in light of their other expenses. It helps to know the landlord’s position before you ask, so having some form of personal relationship with them is good business insurance. Of course, the counter argument is that a landlord would much rather have a tenant in there paying rent as opposed to a vacant property or a motel they need to manage themselves. If the reality is that the market has changed substantially, then that might be a bitter pill they have to swallow. It can be a help or a hindrance if the landlord is a former motelier of the property you are running. They will know the market, and may think it is simply poor management on your part. They may also know that you are good operators and are being buffeted by factors beyond your control. Either way, you need to start that conversation if you are in trouble. The longer term issue is how the industry deals with the risk of rent running ahead of whatever the magical benchmark may be. Our solution is true market reviews, which will take agreement from both sides of the fence. It is commercially accepted in every other leasing market, and for the sake of the sustainability of the industry, we think the time has come for the motel industry to join the club. End // 72

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Editorial // B Y D A V I D B U R R O U G H

THE MOTEL LEASE:

MORTGAGES & DEEDS This article continues with our discussion in relation to Deeds of Consent, which will be required by financiers in almost all circumstances where the financier does not have the security of real property. As we mentioned in our previous article, the Deed of Consent is often negotiated (sometimes extensively) before being executed by the Landlord.

Below is a table of the various concerns often raised by Landlord's and the corresponding responses.

LANDLORD’S CONCERNS

RESPONSE

The financier may appoint an operator unsuitable to the Landlord

Invariably this operator must be acceptable to the Landlord as an assignment of the lease by the financier will take place pursuant to the terms of the lease

The Landlord will have no say in the appointment of a new operator

The terms of the transfer must be in accordance with the Lease

The financier will run the complex without regard to the Landlord

The Financier will be required to comply with all the terms of the Lease

The Landlord should not execute any document that it is not legally obliged to sign

This type of agreement is a commercial fact of life for Motel Leases. Every year many landlords sign these agreements

Having a financier involved necessarily means time delays in dealing with the operator

The financier will agree to act as promptly as possible in the terms of its security

The financier’s operator may not have any experience in operating a motel

The financier generally will only engage highly competent professional operators. The financier will have the same motivation to maximise the profit of the business to ensure that it is sold for the highest possible price. To this end the landlord can be assured the financier will install a professional and experienced operator

Acknowledging the financier’s rights will cost the Landlord money

The covenants between the financier and the Landlord mean that the financier must meet any extra costs incurred as a result of the operator’s default.

The Landlord is losing its rights of termination.

The Landlord’s rights of termination are still available if the financier declines to rectify the breaches

The Landlord is losing its rights against the operator

The Landlord’s rights as against the operator remain intact so that the operator may be sued by the Landlord for breach of lease. Some agreements contain an express clause acknowledging this

If the financier enters into possession then they should be responsible for all breaches of the Lease (even those caused before the financier entered possession)

This is asking the financier to be responsible for an unknown liability and in effect guarantee the obligations of the tenant (something which the financier will never agree to). The Landlord will continue to have rights against the operator for any past breaches

The financier is able to remove the Chattels leaving the Landlord with nothing to run the Motel

In the rare circumstance that the financier needs to exercise their rights under the agreements they will want to negotiate to sell the Chattels back to the Landlord (this is the simplest way for the financier to obtain the most value for the Chattels). Once the Landlord buys the Chattels back he is able to appoint an operator to run the motel business, build that business up and then sell the business to a new leasehold operator (generally at a profit to the Landlord)

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Editorial // B Y T O N Y R O S S I T E R

s happens every year, the eyes of the business world tuned in for one night in May to listen to the Treasurer; Scott Morrison, as he delivered his third Budget in what is an election year. Confirming many of the pre-budget leaks, the main budget announcements came as no surprise with modest tax cuts and a range of measures to promote jobs and growth. The message promoted by the Government is that it is focused on bringing the budget back into surplus. Bolstered by increased revenue of $21.4 billion since Christmas from improved tax receipts from both Companies and Individuals, the budget outcome looks more certain than ever before. So whatâ&#x20AC;&#x2122;s in it for the Accommodation Industry? INCOME TAX CUTS Never before seen, the Government has laid down a seven year plan addressing personal tax rates. The first step in the plan is immediate tax cuts for middle and low income earners in the form of a non-refundable tax offset of up to $530.00 per year. The offset will be available for four years between 2018-19 and 2021-22, and will be given back to taxpayers after they lodge their tax returns. The second step in the plan is to guard against income tax bracket creep by increasing the threshold of the 32.5% tax bracket from $87,000 to $90,000 from July 1 2018. From July 2022, the 32.5% income tax bracket will increase again from $90,000 to $120,000. In the third step of the plan, the Government will remove the 37% income tax bracket in a bid to simplify the tax system. At the end of the seven year plan the vast majority of Australians will be paying tax at a rate of 32.5% on any income they earn between $41,000 and $200,000. Although modest, the initial tax cuts provide a real tax saving for many Management Rights owners, and possibly more importantly improves the likelihood of the average taxpayer deciding they can afford their next holiday at your resort. CRACKDOWN ON OVERSEAS ONLINE HOTEL BOOKINGS In a change that will likely bring a smile to local accommodation booking

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FEDERAL What does it mean for the Accommodation Sector?

NO AUSTRALIAN A C C O M M O D AT I O N PROVIDER COULD ARGUE WITH A POLICY T H AT S E E K S T O C L I P THE WINGS OF THE CURRENT OFFSHORE BOOKING AGENT DUOPOLY.

service providers, the government has announced a plan to recoup $15 million by making offshore online booking providers calculate their GST turnover in the same way as local businesses. This measure will come into effect from 1 July 2019 and apply to sales made on or after that date, as long as all the states and territories agree to the proposal. Currently unlike GST-registered business in Australia, offshore sellers of Australian hotel accommodation are exempt from including sales of hotel accommodation in their GST turnover. This means they are often not required to register for and charge GST on their mark-up over the wholesale price of the accommodation. This exemption was introduced in 2005, when most offshore sales of Australian Hotel

infrastructure and capacity building projects in regional areas. This includes $45 million to improve tourism-related infrastructure, supporting demand driven projects that ensure the benefits are multiplied across the tourism sector in the regions. The BBRF has two streams â&#x20AC;&#x201C; the infrastructure projects stream (construction of new infrastructure, or the upgrade or extension of existing infrastructure) and the community investments stream (new or expanded local events, strategic regional plans, and leadership and capability strengthening activities) In addition, the Budgetâ&#x20AC;&#x2122;s focus on new investment in roads and bridges is a welcome measure to address urban congestion. It was important for the Budget to support infrastructure projects that are ready to commence, so the productive benefits can take hold in the short to medium term. The government has offered up a $24.5 billion package, with several specific projects rated as a high priority by Infrastructure Australia. Each project will have a positive impact on productivity, and will help residents, motorists and businesses save time. In addition the Government will allocate $535.8 million over five years from 2017-18 to protect the Great Barrier Reef from climate change and pollution.

Rooms were to foreigners booking through offshore operators and the online booking market was small. Who could have imagined how this market has grown over the last thirteen years! Removing the exemption will level the playing field by ensuring the same tax treatment of Australian hotel accommodation whether booked through a domestic or offshore Company. Sales that occur before 1 July 2019 will not be subject to the measure even if the stay at the hotel occurs after that date. Accommodation property operators should keep a close eye on the detail as legislation is formulated around this proposal. No Australian Accommodation provider could argue with a policy that seeks to clip the wings of the current offshore booking agent duopoly.

THE $20,000 WRITE-OFF WILL BE EXTENDED AGAIN! The Federal Government has extended the $20,000 instant asset write-off for small business entities for those with an aggregated turnover of less than $10 million. The extension applies from 1 July 2018 and runs for the 12 months ended 30 June 2019. While the extension of the depreciation concession is welcomed, it is disappointing that after now extending this concession several times the government has not taken the opportunity to lock the concession in for future years. INFRASTRUCTURE SPENDING The Government has committed $206.5 million over four years from 2018-19 for round three of the Building Better Regions Fund (BBRF), to support investment in community

INDUSTRY IMPACTS In all, the Budget produced mixed results for the accommodation sector but the net outcome should be considered to be positive for the Accommodation industry. Certainly the current Government appears intent on growing the economy by promoting employment and providing support to small business owners. We should see a boost in consumer and business confidence as a result of personal tax cuts and business incentives which is likely to lead to increased demand for both corporate and leisure room nights around the country. End // For further information: holmans.com.au The information, opinions or conclusions provided above are generic in nature and do not express individual advice or recommendations. You should always consult a suitably qualified professional before taking any course of action outline above.

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Regular Feature // B R O K E R P R O F I L E

REVISITED

GLENN MILLAR SENIOR BROKER – SUNSHINE COAST

HOW LONG HAVE YOU WORKED AT RESORT BROKERS? I joined Resort Brokers in March 2005, at Eastertime, so I’ve recently passed the 13-year mark. I believe that makes me one of the company’s longest serving brokers.

OUR AGENTS PRIDE THEMSELVES ON THEIR SPECIALIST INDUSTRY EXPERTISE AND THE DETAILED LOCAL KNOWLEDGE THEY HAVE ACCUMULATED ABOUT THE GEOGRAPHICAL TERRITORY THEY COVER. IN SOME CASES, THAT INTIMATE KNOWLEDGE HAS BEEN GAINED OVER MANY YEARS, MAKING THEM THE REGION’S UNDISPUTED MARKET LEADER. IN THIS ISSUE, WE HEAR FROM ONE OF OUR AGENCY’S MOST SUCCESSFUL BROKERS.

specialist field. Consequently, I am fortunate to have been appointed to sell the rights to many of the region’s iconic properties.

WHAT WAS YOUR BACKGROUND? I have been involved in the hotel and resort industry since I was 19. I began my career in the 1970s with the Tourist Hotel Corporation of New Zealand before moving to Australia in the 1980s. I held numerous positions that culminated in being appointed General Manager with a large international hotel group. Then, in the mid 80s, I entered the management rights sector, running complexes from Port Douglas to the Sunshine Coast.

CAREER HIGHLIGHTS WITH RESORT BROKERS AUSTRALIA? I have been honoured to have a number of awards presented to me, recognising my achievements, including the Management Rights Broker of the Year Award in 2007 and then every year from 2011 to 2015. Being named overall Top Sales Consultant of the Year in 2009/10 and again in 2014 were definite highlights. I’m also very honoured to have recently been appointed to an advisory panel with the Australian Resident Accommodation Managers Association (ARAMA).

TELL US ABOUT YOUR REGION AND SPECIALTY? I am based on Queensland’s beautiful Sunshine Coast, where I have sold many landmark properties, often two or three times over. I have also been involved in sales across Queensland and of major properties in Tasmania and Western Australia. I focus on boutique and high-end, high-netting management rights businesses. This includes operations that have additional components such as restaurants, day spas and conference facilities. There are few brokers who understand this market, certainly not to the degree needed in such a

BIGGEST SALES SUCCESSES? Top of the list has to be setting the then record price for management rights with the sale of Soul Surfers Paradise to Mantra Group, a record that has since been set again by Resort Brokers. Other stand-out sales over the years have included the recent $12.5 million sale of a 64-unit freehold CBD hotel in West Perth to a Singaporean investor, and the sale of the 128-unit former Peppers Pier Resort, which became Oceans Resort & Spa at Hervey Bay. I currently have more than $23 million worth of management rights businesses under contract.

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MOST IMPORTANT TRENDS IN THE INDUSTRY RIGHT NOW? We are again starting to see private equity firms investigating the management rights model, with a number of new players entering the industry. The purchasing power of these firms, large investor groups and corporate buyers means we can expect to see them dominate the higher end, making it much harder for ‘mum and dad’ investors to gain a foothold in the larger management rights offerings. WHAT DO YOU LOVE ABOUT BEING A BROKER? I am a fervent believer in the management rights model and I take great pleasure in assisting managers to exit their business with a sound capital gain and in guiding both new and experienced operators into exciting opportunities. WHAT LIES AHEAD? I look forward to many more successful years in the sector, and to staying on top of the rapid changes we are currently seeing across the industry. I feel we will see closer scrutiny of resident management by body corporate committees and consequently the need for managers to be much more proactive in communications with all stakeholders, including and most importantly unit owners. I can also see a time when agreement term topups will be tied to performance.

Regular Feature // S O L D P R O P E R T I E S

SOLD PROPERTIES RESORT BROKERS AUSTRALIA HAS SOLD AND SETTLED 137 PROPERTIES SINCE THE 6TH JA N UA R Y 2 0 1 8 . W E H AV E A F U R T H E R 1 4 2 U N D E R CO N T R AC T.

SERVICED APARTMENT LH

MANAGEMENT RIGHTS

MOTEL LH

MANAGEMENT RIGHTS

MOTEL LH

MANAGEMENT RIGHTS

OFF THE PLAN M.R.

FREEHOLD

FREEHOLD GOING CONCERN

MANAGEMENT RIGHTS

OFF THE PLAN M.R.

LEASEHOLD MOTEL

MANAGEMENT RIGHTS

L ea S E H O L D M O T E L

MANAGEMENT RIGHTS

LEASEHOLD MOTEL

MANAGEMENT RIGHTS

LEASEHOLD MOTEL

OFF THE PLAN M.R.

MANAGEMENT RIGHTS

LEASEHOLD MOTEL

MANAGEMENT RIGHTS

LEASEHOLD MOTEL

MANAGEMENT RIGHTS

FREEHOLD GOING CONCERN

SERVICE APARTMENTS L.H.

MANAGEMENT RIGHTS

SERVICE APARTMENTS L.H.

LEASEHOLD MOTEL

Campbelltown, NSW

Noosa, QLD

Varsity Lakes, QLD

Wagga Wagga, NSW

Caloundra, QLD

Deception Bay, QLD

St Lucia, QLD

Emerald, QLD

Robina, QLD

Woollongong, NSW

Southport, QLD

Murray Downs, NSW

Maroochydore, QLD

Port Douglas, QLD

Taree, NSW

Kimba, SA

Kiama, NSW

Tathra, NSW

Bridgeman Downs, QLD

Wonboyn Lake, NSW

MANAGEMENT RIGHTS

Stones Corner, QLD

Forest Lake, QLD

Tannum Sands, QLD

Taree, NSW

Melbourne, VIC

Yeppoon, QLD

Maitland, NSW

Chermside, QLD

Echuca, VIC

Beenleigh, QLD

Cairns, QLD

LEASEHOLD MOTEL

Kilcoy, QLD

Lismore, NSW

Emerald, QLD

Holbrook, NSW

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Regular Feature // R E L I E F M A N A G E R S

RELIEF MANAGERS P L E A S E N O T E : T H I S I S S I M P L Y A D I R E C TO R Y S E R V I C E T H AT W E P R O V I D E TO A S S I S T YO U . S H O U L D YO U C H O O S E TO G O O N H O L I D AY O R TA K E A B R E A K , W E R E C O M M E N D YO U I N T E R VIEW AND QUALIFY RELIEF MANAGERS YOURSELF, BEFORE HIRING. NB. YOU’LL FIND MORE MANAGERS LISTED ON OUR WEBSITE: RESORTBROKERS.COM.AU/BUY/RELIEFMANAGERS

RAMON SPIDLA

S teve R eynolds

B arry & L esley R oberts

Motels, Resorts & Caravan Parks Nationwide

Management Rights & Motels Brisbane, Gold & Sunshine Coast

Motel Nationwide

0402 255 078 rayann3010@hotmail.com

0413 614 936 steve.managementrightsrelief@gmail.com

0428 422 456 lez.baz@bigpond.com

LLEW & TRISHA POINTON

M arion & P eter K eulen

M ichael S tirling

Resort & Motels Nationwide

Caravan & holiday parks Nationwide

Management Rights, Resorts & Motels QLD & NSW

0400 035 359 llewp@tpg.com.au

0411 865 905 marion_keulen@hotmail.com

0437 455 865 stirling6298@yahoo.com

MICHAEL & CAROLYN GREALY

M ike and T eresa T homson

N anette M ortimore

Motels, Hotels & Caravan Parks QLD, NSW & VIC

Motels Nationwide

Management Rights Brisbane

0437 697 772 cmgrealy@optusnet.com.au

0419 174 221 info@mitemgt.com.au

0419 707 773 nanette.mortimore@gmail.com

PAT R I C I A L AV E R T Y

P aul & J ane H ansen

P eter & J anine T empleton

Motels & Resorts QLD, NSW & VIC

Caravan Park & Villa QLD, NSW & VIC

Caravan Park & Motels Nationwide

0478 611 202 patricia_laverty@hotmail.com

0438 877 932 happycamperparkmanagement@gmail.com

0408 178 130 tempy7@bigpond.com

P H I L L I P & S H A R Y N S TA L L M A N

R ob & L yn K een

R owena & P at M agee

Motels Nationwide

Management Rights QLD & NSW

Motel & Caravan Parks NSW & VIC

0428 931 589 pjstal@bigpond.com

0406 884 343 roblynkeen@gmail.com

0437 232 227 rowenamagee@hotmail.com

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All Property Types Nationwide

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0437 455 865

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K aren & R obert N isbet

K arla H arding

Motels & Caravan Parks NSW 0408 000 554 mackas@gmail.com

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All Property Types Nationwide

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0404 473 100 grant2466@bigpond.com

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