We are all about the accommodation sector

80 Pages·2016·12.87 MB·English

#84 | OCTOBER 2016
A U S T R A L I A ’ S N O . 1 | T O U R I S M & B U S I N E S S
INFORMER

We are all about the accommodation sector
MANAGEMENT BREAKTHROUGH BRAND INSPIRED
RIGHTS GROWTH SOLUTION BY LUXURY
MLRs gain ground in our Short-term motel We profile rising Melbourne
accommodation landscape valuations revisited - based developer, BPM
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WE SAY, YOU SAY, 24 SOCIAL PAGES
THEY SAY
N Resort Brokers' mid-year
A regular forum for the
conference saw the launch of
exchange of views, news
BREAKTHROUGH ON our smart new Brisbane HQ
& ideas
MOTEL VALUATIONS
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We revisit the formula
making short-term leases
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8 viable and valuable
S
DOWNSIZING &
MANAGEMENT
34 UPGRADING
’ RIGHTS GROWTH
Mike O'Connor presents
T Hotel group demand is another witty take on
increasingly underpinning
MANY FACES: accommodation matters
growth in the sector
PETER BARGE
A
An accidental career start
for one of the tourism
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22 property sectors most
H
dynamic leaders
STAMP DUTY
INSPIRED BY LUXURY CHARGES
W Creative BPM is building a Must know facts for NSW
brand steeped in quality, business buyers
beauty and the exotic
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PREFACE
WELCOME TO ‘WE SAY, YOU SAY, THEY SAY’ – A REGULAR FORUM FOR THE EXCHANGE OF
VIEWS, NEWS & IDEAS.
WE SAY
MANAGING

growth
SINCE our last edition, the lately. When economic growth data
Federal election returned the Turnbull was released in September, headlines
Coalition government, albeit with the highlighted strong 3.3% GDP growth.
slimmest majority. Naturally, there Actually, Australia’s GDP
was some nervousness about how growth has gone up pretty much
that would work, and a few hiccups uninterrupted for 25 years. But it
early on. doesn’t always feel like that, does it?
But the passing in the first That’s because the measure that
sitting of two major bills, the $6.3 really matters to us is ‘real national
billion savings bill and an amended net disposable income’. That is
superannuation reforms package, our per capita income, adjusted
shows our parliamentarians can work for inflation, excluding earnings by
together to keep us on track. That is, foreigners – or, as one commentator
at least, good news for our economy. explained it, “actual money in
Ian Crooks
Speaking of our economy, there Australian pockets.”
MANAGING DIRECTOR
have been some encouraging figures The good news is, it’s back ahead
4 RESORTBROKERS.COM.AU
They Say
GOLDEN AGE
“To my mind, the greatest reward and OF TRAVEL
Cost to travel from
luxury of travel is to be able to experience
Australia to London
everyday things as if for the first time, to 1947
85 WEEKS PAY
be in a position in which almost nothing
to
is so familiar it is taken for granted.”
2015
1.3 WEEKS PAY
BILL BRYSON - AUTHOR
Flight Centre, The Golden Age
of Travel, 21 April, 2015
Travel tops
online
of where it was in 2008. Many But, it’s not all about management
industries are doing well now, rights. Asset owners nationwide
TOP 3 ITEMS
agriculture, retail and tourism among are taking advantage of the surge in BOUGHT ONLINE
them. Even a recent lift in coal prices, tourist numbers and rising investment BY AUSTRALIANS:
some economists say, could add 2% demand to dispose of quality
to national income this year, boosting properties. 1. Airline tickets
á from 51% to 62%
the budget by close to $7 billion and Resort Brokers has been
kick-starting wages growth. appointed to diverse, large-scale 2. Clothing
á from 51% to 57%
Harvey Norman posted a 30% full listings including magnificent Fitzroy
3. Accommodation
year profit increase on the back of Island Resort on the Great Barrier
á up from 48% to 53%
robust housing and lifestyle markets, Reef and the 479-berth Mackay
and Coles and Bunnings recorded Marina, village and shipyard, both
strong results. Macquarie Group with high profile EOI campaigns.
reaffirmed forecasts in line with its And sometimes, really exciting
record $2 billion 2016 profit. opportunities are offered more
Actually, we are especially discreetly. For example, we’re
pleased to see the giant investment working off-market to sell a rare
bank is now a great supporter of portfolio of seven motor inns, mostly
management rights. It’s no surprise, in prime regional NSW locations, that
on the back of the surge in new promises very lucrative investment
apartment development, national off- rewards for a $20m-plus buyer.
the-plan management rights sales are We are also expanding into the
going gang-busters. South Australian market, appointing
Thanks in no small way to Tim a very experienced sales team there.
Tourism Research Australia,
Crooks’ efforts in establishing and They’ll be working closely with our IVS YEJun16
growing our off-the-plan division, successful Victorian team, and we’ll
Resort Brokers is at the forefront. introduce the new SA brokers in the
We’re seeing huge growth, not just next Informer edition.
in traditional Queensland markets, as Finally, Resort Brokers’ mid-year
we work closely with major Sydney conference at our newly renovated
and Melbourne-based developers, Brisbane HQ was a tremendous
including BPM for whom we’ve success (see P.40). Our two keynote
handled a number of sales (profiled on speakers, global industry doyen Peter LETTER TO
P.22) and GURNERTM. Barge and dynamic Mantra CEO Bob THE EDITOR
Growth in the management rights East, are also featured in this issue.
WE’D LOVE TO HEAR
market, driven to a large extent by And, as always, we bring you some
FROM YOU:
rising demand from hotel operators very informative contributions from
CARLACOOK@
like Mantra, is examined in depth in our valued associates, all consummate RESORTBROKERS.COM.AU
this issue’s cover story. professionals in their fields. ENJOY.
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EDITORIAL
Yet he said the outlook for hotel
room supply growth was forecast
at a modest 1 – 3% p.a. through
to 2022, pointing to a very stable
market in the years ahead.
“I cannot stress enough just how
important Asia will be to our visitor
economy. The world’s economic
centre of gravity is shifting. You
only have to watch the urbanisation
of Asian countries to see what is
fuelling people movement, that is,
how many more people now live
within an hour of an international
airport.
“In the next five years, a
staggering 20% of the travelling
YOU SAY...
population will be Chinese. The
growth of the upper middle class
there is staggering. From 2011 to
2015, Australia has seen 19% growth
per annum in visitors from China.”
At that point, East stressed
Mantra CEO Bob East was a keynote speaker at Resort Brokers
how important it is that Australia
Australia’s recent mid-year conference. Founded 10 years ago, the
frees up our tourist visa application
group (Peppers, Mantra, Breakfree) has gone from a loss-making start
process and fees. Australia
to its latest annual profit of $53.2 million.
competes with other countries for
the lucrative Chinese market and
Mantra today has 127 hotels across Australia, Asia and the Pacific, with
our more onerous visa process will
20,500 rooms under management and more than 5,000 employees. make us less competitive.
His presentation provided a fascinating insight into how such a big On current estimates, we could
accommodation operation is thinking in the current tourism market be welcoming 2 million visitors
environment. Here is some of what Bob East had to say: from China annually by 2025, for a
potential economic impact of $140
"THERE has never been a better ‘boom’. It is Australia’s new reality, billion.
time to be in tourism. I have never given the vast emerging markets in But it is the growth in aviation
seen us receive so much attention – our region. 60 per cent of growth will seat capacity that East says is most
politicians, the industry and the general come from China alone, and then you critical to Australia’s tourism future.
public are all now acknowledging the have all the other growth markets Forecast growth in direct aviation
huge visitor economy contribution to making up the rest.” capacity to Australia underlined his
GDP and jobs growth. East pointed to the latest statistics, upbeat outlook.
“Demand is strong and the outlook Tourism Forecasts 2016, from Tourism According to Tourism Research
is for sustained growth. This not a Research Australia, which showed: Australia’s latest analysis, we are
on track to grow capacity from 22.9
million (YE March 2016) to 36.5
INTERNATIONAL ARRIVALS million by 2024-25. The primary
focus of growth is already evident in
2015-16 2016-17 2017-18 2024-25 current figures.
In 2015-16, capacity from China
7.8 MILLION 8.3 MILLION 8.8 MILLION 12.3 MILLION
to Australia grew 31%, followed by
á 9.3% á 6.7% á 5.9% á 5.6%
Japan at 24.5%. While growth from
Japan is set to reduce, capacity
from China is forecast to continue
to increase by 20.6% in 2016-17 and
10% in 2017-18. Impressive growth
is also forecast in flights from India
DOMESTIC VISITOR NIGHTS
and the Middle East. END
2015-16 2016-17 2017-18 2024-25
Note: Bob East is Chairman of Tourism
328 MILLION 340 MILLION 351 MILLION 423 MILLION
and Events Queensland (TEQ) and a
á 4.5% á 3.8% á 3.2% á 3.1% Board Member of Tourism Australia and
Tourism and Transport Forum (TTF)
6 RESORTBROKERS.COM.AU
NETT P R7OFmIT
2 .
$
Projected FY17
R A R E & E X C E P T I O N A L T R O P I C A L
I S L A N D P R O P E R T Y + P R O V E N T O U R I S M
B U S I N E S S + G R O W T H P O T E N T I A L
Offered for sale for the first time since opening in 2011, Fitzroy Island Resort is a
rare and valuable tourism asset – a fully-operational tropical island resort in one of
the most desirable destinations on the planet.
• 102-room 4.5-star resort hotel Offered with vacant possession, a trophy
• 4.312ha perpetual lease income-producing asset with brand
• 30km from Cairns (45min by Fast Cat) building opportunity. DAs and plans in
• multiple food & beverage venues place for future stages.
• 190-seat Fast Cat ferry operation
• wide range of tourist & leisure facilities All the work is done. Constraints
• extensive supporting infrastructure are overcome. All that lies ahead is
• robust income + growth opportunities opportunity-laden ‘blue sky’.
NETT PROFIT: $2,700,000 (proj. FY17)
EXPRESSIONS OF INTEREST CLOSE 5PM, THURSDAY, 27 OCTOBER, 2016
TRUDY CROOKS SHANE MULLINS
NATIONAL SALES MANAGER BROKER
M. [phone] M. [phone]
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EDITORIAL
MANAGEMENT
RIGHTS GROWTH
… IN AN EVER-CHANGING
ACCOMMODATION LANDSCAPE
MORE THAN 40 YEARS AFTER THE CONCEPT WAS DEVELOPED
IN QUEENSLAND, THE MANAGEMENT RIGHTS MODEL IS FINALLY
GAINING WIDESPREAD ACCEPTANCE AND SUPPORT ACROSS
AUSTRALIA’S DYNAMIC ACCOMMODATION LANDSCAPE. SO MUCH
SO, THAT IT IS UNDERPINNING GROWTH IN THE SECTOR.
IF you required any convincing of plan Management Rights sales
just how far the management rights specialist, Tim Crooks from Resort
industry has come, you only needed Brokers Australia, and Mantra
to scan the programme for this year’s Group’s Executive Director of Asset
5-day peak hotel industry conference Management, Michelle Lalli.
held in Sydney in July.
Reflecting the rise and rise of EVOLUTION
management rights and franchising
in the development of guest One of the most significant
accommodation in Australia, developments in the management and
HotelsWorld 2016 included for the letting rights (MLR) sector has been
first time a special event focused the model’s growing acceptance by
entirely on these important industry what might be termed ‘traditional’
segments. hotel operators.
A panel of experts was “We are seeing branded hotel and
convened to discuss the growth of serviced apartment operators such
management rights, its impact on the as Mantra, Accor and Minor Hotels
accommodation industry in general, begin to dominate the market for
and on the hotel industry in particular. large-scale, high-netting short-term
They included Mantra Group management rights opportunities,”
Development Manager, Richard Crooks said.
Crawford, National Off-the- Mantra Group now has more than
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20,500 rooms under management, security the model offers, Crooks said. Woolloongabba, bought off-the-plan.
including approximately 14,000 via “Because critical operational areas “In buying off the plan, we can
MLR ownership. in the building, like reception, back work with developers from the
As Michelle Lalli explained, the of house, storage and maintenance earliest stage,” Hoswell says. “The
management rights model allows the areas, are usually purchased as Beach Apartments Broadbeach is a
hotel industry to expand and brand- freehold real estate associated with perfect example. This new build will
build with capital-light ownership the management rights business, be the launch of Avani Residences in
structures where supply is needed, the accommodation operator has Australia by Minor Hotels, being one
but could not otherwise be achieved complete control.” of our premium hotel brands.
through the cost structure of a And, he said, more and more “Avani Broadbeach Residences
traditional hotel. developers are realising that selecting will open at the end of next year in
Her colleague described it as a the right operator for their projects time for the Commonwealth Games
“natural evolution” that would take from the outset benefits them by on the Gold Coast. It has been
place wherever there is fractional driving higher returns for their purpose-built to meet the needs of
ownership and a common intent to investors (equals happy customers) both short-term guests and owner
earn a return from investment in and building their development brand occupiers.
apartments. reputation and value. “By working closely with the
Tim Crooks sees first hand the Oaks Hotels & Resorts, a brand developer during construction, we
developer’s role as a catalyst for that of Minor Hotels, was among the first can ensure our operational needs
evolution. He says the scarcity and branded hotel-style operators to are catered for so that we can
cost of suitable hotel sites, plus rising pursue growth via the MLR model. deliver high level short-term guest
development costs are making it “Management rights in Australia experiences as well as cater for
increasingly difficult for developers to are the roots of Oaks Hotels & the needs of the owner-occupiers
get a freehold hotel to stack up. Resorts,” explains Minor Hotels fortunate enough to reside in this
Australia General Counsel and building.”
EVERYONE WINS Commercial Officer, Lachlan Hoswell. Projects need not be solely short-
“Oaks Hotels & Resorts was founded term accommodation properties
“The management rights model is on management rights, it is how either, Tim Crooks says.
OUR EXPERT PANEL
From left to right: Mantra Group Executive Director of Asset Management, Michelle Lalli, Mantra Group Development Manager, Richard Crawford,
Minor Hotels Australia General Counsel and Commercial Officer, Lachlan Hoswell, AccorHotels Vice President Development Pacific, Lindsay Leeser, Resort
Brokers Australia National Off-The-Plan Specialist, Tim Crooks, and Resort Brokers Australia Senior Gold Coast Broker, Alex Cook.
mutually beneficial to all stakeholders we evolved, and we are continuing “The mixed use model allows
– the developer, the unit investors and on that path. We’ve been very developers to make projects viable
the hotel operator,” he says. successful in this space and, though in key inner city locations, introduce
“Developers are able to build and we do look at other operation a range of unit styles, and include
sell the units at residential property models, management rights is still commercial components that add
prices. Operators are able to control a our preferred model for growth in appeal for the hotel, such as shops
large number of keys in prime locations Australia.” and restaurants.
for a fraction of the price of freehold “Operators who secure the
purchase. And lot owners benefit from EARLY INVOLVEMENT management rights over both
quality management driving strong residential and short-term
returns.” Under the Oaks Hotels & Resorts apartments have the flexibility to
Hotel operators interested in brand, Minor Hotels has 50 properties adjust inventory to suit fluctuations
management rights as a means of across Australia and New Zealand and in demand and occupancy rates.
expanding their portfolio are also all but three are management rights. Furthermore, they get a guaranteed
gaining a greater understanding of The latest include Oaks Southbank income from the levies to look after
the high level of control and long-term Melbourne, and Brisbane’s Oaks the common areas and shared
RESORTBROKERS.COM.AU 9
EDITORIAL
facilities like the pool and gym.” access to the benefits from our their increasing market share.
Though management rights is a comprehensive loyalty programme,” “If you look at two of the most
tried and true operational model in he said. noteworthy sales of recent times, it
Queensland, some commentators “We are focusing on opportunities would certainly seem hotel groups
interstate have expressed in Australia where we can improve are becoming increasingly dominant,”
uncertainty about its place in the room revenue through our Cook says, pointing to his sales of
industry, labeling it as a potential branding, distribution and revenue Soul Surfers Paradise to Mantra
‘disruptor’. management, increase the number of and The Beach (Avani Broadbeach
keys under management, and benefit Residences) to Minor Hotels.
ESTABLISHED ADVANTAGES from operating synergies with our “The hotly contested bidding war
existing portfolio.” between the two resulted in a record
But the HotelsWorld panelists price for the sale of an existing
disputed that, saying that far from LOCATION STILL KING management rights in case of Soul,
a disruptor, it was already well and a strong per-key price for Avani
established and largely recognised as But, irrespective of the emerging, Broadbeach Residences.
being part of the hotel industry. The digitalised sharing-economy, the
model has spread from Queensland major imperatives will remain service OTHER PLAYERS
to other states, and from emerging and location.
markets to more mature ones, filling “If your product is superior “That said, though, large, non-
niches to compete head on with to that of the competition, the branded private MLR operators such
traditional models. consumers will find you and you as the Picone Family and Dreamtime,
“With the proliferation of will be rewarded,” Mantra Group’s as well as smaller branded operations
corporatised management rights Richard Crawford said simply. “Any like Ultiqa and Balmoral Group
over the last 15 years, there is little successful strategy has the basic (Oatley family) are still competing
difference to the consumer between guest centric delivery at its heart.” strongly for prime offerings.
the service offering provided by “And, if you are in the right Cook said the Picone's, who sold
traditional hotels or strata-titled location, whether the ownership Chevron Renaissance to Mantra in
hotel-styled offerings,” Lalli said. structure is fractional or a hotel held an off-market deal believed to have
But the panel did warn operators in one line, the consumer will choose broken the Soul price record, had
that strong resourcing in the you regardless of the online channel recently bought two holiday letting
areas of online distribution and
digital marketing will be vital for
all operators wanting to remain
competitive.
And branding was also seen as
increasingly important in an age
where the consumer is bombarded
by ever more choice and “needs some
guiding principles to navigate by”.
“We believe stand-alone products
will increasingly struggle to compete
in this highly competitive digitalised
space where brand recognition
and loyalty programmes are so
important,” she said.
AccorHotels now owns 15
management rights across Australia
with more than 1,300 apartments
and villas operated under the
Pullman, Sebel or Quay West brands. The Beach Apartments (Avani Broadbeach Residences), on the Gold Coast was sold off-the-plan by
Lindsay Leeser, Vice President Resort Brokers Australia to Thailand-based Minor Hotels for a very strong per-key price.
Development Pacific, said the
group is actively looking for more they search and book through,” Lalli MLRs off-the-plan on the Gold Coast.
management rights as they are added. “They picked up the Qube
a scalable business that offers So, will branded hotel-style and Synergy developments in
attractive returns and long-term operators entirely corner the market Broadbeach, and are reported to
operating tenure. for larger management rights have secured two more prime large-
“Strata owners can benefit from offerings in prime CBD and resort scale businesses on the Gold Coast.
AccorHotels’ sophisticated revenue locations? “Dreamtime holds some of
management system, unparalleled Alex Cook, who heads up Resort largest holiday management rights
distribution channels, purchasing Brokers’ Gold Coast management on the coast, including Turtle Beach
power and branding as well as rights team, has direct experience of at Mermaid, Wave Broadbeach and
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