01 Dec 2023
Words John Miller Informer 109

A motelier’s journey

Australian Accommodation Property Group’s Gareth Oakley reflects on his more than three decades in motels from making beds to making money running a portfolio.

Gareth Oakley
Australian Accommodation Property Group

Gareth Oakley’s long career in the motel industry began in 1989 when he was in Year 10. His parents built the family’s first motel, the 22-room Victoria Lodge Motor Inn in Portland, about four hours’ drive southwest of Melbourne along the Victorian coast. Oakley got his start making beds, and then later as relief manager eight times a year during term holidays when he was at college. Thirty-four years on, the family still owns Victoria Lodge as a passive motel investment.

Today, as Managing Director of Australian Accommodation Property Group, which runs a successful portfolio of several motel freehold investments, Oakley says he doesn’t get sentimental about business decisions. Letting go of Victoria Lodge might be a little different though.

“I guess when the decision comes, that one may be emotional,” he says. “However, that’s likely some time off yet.”

As well as Victoria Lodge, Australian Accommodation Property Group owns the passive freeholds of the 28-room Albury Burvale Motor Inn, the 70-cabin Chinchilla Tourist Park, the 31-room Karinga Motel and the 36-room Emerald Explorers Inn, the latter bought through ResortBrokers’ Chairman Ian Crooks. The group has previously owned motels in Geelong, Warragal, Gympie and the Clare Valley. 

“Our investment focus is motel freeholds,” says 50-year-old Oakley, who is based on the Gold Coast. “Other groups operate lease holdsand freehold going concerns, but we’re a bit different in that we only buy motel freehold investments. We’re not opposed to buying freehold going concerns if they meet our criteria, but our primary focus is on investment properties.

“We look for the fundamentals of lease length, quality of the lease – that is to say, the obligations on both tenant and landlord — and, of course, yield. We have minimum standards we need to achieve at purchase, and we also assess what’s achievable over a five- to 10-year timeframe in terms of rent and potential resale value.”

Having cut his teeth working for the family motel, Oakley undertook a three-year Advanced Diploma in Hospitality Management, graduating in 1996. This led to his first front-of-house position as night manager for the 4-star Lakes Hotel Resort in Adelaide from 1995 to 1997 where he worked while completing his studies. He later worked, also as night manager, from 1997 to 2000 for the then Rydges Carlton in Melbourne.

“As night manager, you are it,” says Oakley. “There’s no one else onsite until 6.30 am. That’s seven hours by yourself. So, you’re really kept on your toes. That’s manning reception, checking guests in, doing concierge, counting cash from all the bars, putting it in the safe, setting room-service trays up, basic housekeeping, in-house security and reconciling the days takings. 

“You also learn customer service skills and dealing with the public. You’re dealing with different clientele, a lot of people. People who are angry because their room isn’t ready, or they’re upset because their room isn’t up to the standard they were expecting. That’s where having that grounding can take you forward into running your own motel.

“If you don’t have the right demeanour or the right customer service skills to deal with people, then you’re going to come across as either abrasive or with no authority.”

Oakley credits these early experiences with helping to make him a more astute and effective investor.

“It helps as landlord to understand what your operators are going through,” he says. “I can almost anticipate issues coming up and show a bit of compassion when it’s needed because I’ve been there and gone through it.”

In terms of advancing from working in a motel to becoming an owner of one, Oakley says it helps to have worked your way up through the ranks. 

“Most motel investment owners started off as leaseholders and then progressed to a freehold going concern,” he says. “This then leads to them selling off the lease and retaining the freehold. Buying a freehold is a substantial investment and it’s generally only later in life that you have that type of money behind you.

“Before buying a leasehold it’s preferrable you have exposure to having worked in a motel, whether it’s as a receptionist, housekeeper, cook or whatever, so you know the mechanics of how a motel works. Some motel operators fail where they haven’t had exposure to it, or they think it’s easy to run a mum-and-dad motel.” 

After working for Rydges, he spent almost a decade with Harcourts in Geelong as a commercial real estate agent. He continues to provide consultancy services to his old firm when required.

“As an agent, I was dealing with considerably more properties, landlords, tenants and solicitors on a daily basis,” he says. “Having the experience of being able to read and interpret leases and legislation I’ve taken into my current role as motel investor. This is crucial when analysing the viability of new properties.” 

He says the experience as a commercial real estate encouraged him to switch from being a seller to becoming a buyer/investor.

“It helps as landlord to understand what your operators are going through.”

“After a time, I could see there was scope to develop the ideas I had for setting up an investment entity. It just seemed the right time to step away after 10 years running the commercial department at Harcourts to focus on the motel side of our investments. So, that role gave me the confidence, experience and knowledge to move forward with what I’m doing now.”

Oakley says another ingredient to succeeding as a motel investor is to read widely.

“My reading habits haven’t changed in quite some time,” he says. “Every morning, I read a number of industry newsletters, both hospitality and general finance ones.” 

Quarterly publications such as Informer, REIT updates and reports from valuers also form part of his reading habits.

“So, it’s not only staying in touch with what’s happening in the motel sector but the wider property market and economy as well,” he says. “I take it all in, then form my own judgement on what I think is going to happen.” 

Important to succeeding as a motel freehold portfolio manager is to use experienced industry professionals, says Oakley.

“Speak to brokers, speak to your accountant and, most importantly, seek advice from an experienced hospitality solicitor,” he says. “That’s true whether you’re buying a freehold investment or a leasehold. I can’t emphasise that last part enough because I’ve been on the other side of deals where the other party has used a solicitor without motel leasing knowledge, and invariably transactions are held up due to that inexperience. Liquor licences, lease extensions and lease transfers are all areas that benefit from dealing with a solicitor who has industry experience.” 

Reflecting on his more than three-decade career, Oakley says he’s still enjoying the journey.

“I enjoy the variety of the work,” he says. “Every lease is different. Every property is different. It’s the challenge of being ahead of the game and choosing the right property and having the knowledge so that you can make sound decisions. It’s not a nine-to-five job. That’s what I find interesting, and I like to think I know what I’m doing.” END