| :: Freehold
Motels |
Buying a Motel in its Entirety. Ever since motels
were first established in Australia in the 1950s,
the traditional model of owner-operation has been
a mainstay of the industry. While motels are now
frequently split into separate leasehold business
and freehold investment components, buying a motel
in its entirety - as a freehold going concern -
remains the preferred option for many operators.
There are considerable advantages to owning and
controlling the accommodation business and the freehold
land and buildings. For the owner / operator, their
motel is both an income generating enterprise and
a substantial commercial property asset. It is a
home and a business, offering security of employment
and investment.
Owning a motel in its entirety requires a substantial
commitment, but the owner / operator is secure in
the knowledge that they are in command, able to
capitalise on the value of their business and property
and reap the rewards.
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| :: Two
Avenues For Growth |
The motel owner / operator enjoys the best of both
worlds. Each motel component - the accommodation
and hospitality business and the commercial property
holding - presents opportunities for growth. The
freehold land and buildings comprise a key commercial
real estate asset that, independent of the business,
can continue rise in value.
Motels are traditionally located on prime real estate,
with excellent visibility and access to main transport
routes and proximity to towns, commercial facilities
and tourist attractions. This provides strong potential
for capital appreciation and, often, the opportunity
for values to rise due to redevelopment or expansion
prospects. Further, the owner / operator is able
to capitalize on the value of the property through
improvements. All the time and money you invest
in the property, on upkeep and improvements, enhances
the value of your asset.
Building Your Own Business While capital gains on
the real estate are likely, the value of the property
also relates to how well the business is run. Here,
again, the owner / operator is in control of his
own destiny. Rather than relying on a lessee to
protect your values by good business management,
you are able to market and build the business for
maximum profit and growth. The two asset components
complement each other - the quality of the property
enhancing customer appeal, and the strength of the
business enhancing the property value. Individually
and jointly, they both enhance your bottom line.
Owner / operators also have flexibility. If you
no longer want to run the business, you can retain
the freehold land and buildings while creating and
selling a long-term, income-earning lease. There
is always the option of freeing yourself from the
operational commitment, realizing a substantial
amount to invest elsewhere, and earning on-going
income from the annual rental. For many, buying
a motel as a freehold going concern, building the
business and then on-selling the lease at an increased
value is a worthwhile growth strategy.
Disclaimer: Whilst all care has been taken in the
preparation of the particulars contained herein,
no warranty can be given and interested parties
must therefore rely on their own inquiries. |
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