22 Jan 2026
Words Trudy Crooks Informer

Ch-ch-ch-ch-changes!

As regular readers of Informer will know, ResortBrokers turned 40 this year. The accommodation property market is hotter than ever, as hot as we’ve seen it in four decades of doing business. But I have no doubt we’re in a changing market and if you want to be a richer man or woman, then you’ve got to turn to face the strange, as the man sings.

Rewind a bit. I sold my first motel 23 years ago when I was still at school. Back in those days, price appraisals for motels and hotels were relatively straightforward. (That’s why I could sell a motel after going to school to eat my lunch!). Past performance predicted pricing, yields were stable and buyers largely knew what to expect.

Nowadays, this isn’t the case. Today, yields are tightening, pricing metrics are shifting and a new generation of buyers is reshaping how deals are done. There’s never been a more exciting time to be in the accommodation game.

Across all motel and hotel operating models, yields have compressed dramatically in the last four years — a point ResortBrokers made in our first-ever Motel Report launched a few months ago.

Quality freehold going concerns that once traded at 14–15% are now sitting between 9–10%. Regional assets that used to command 18–20% are now closer to 12–15%. Even in the last 18 months, 12% is hard to find. Leaseholds — long viewed as harder work but higher return — are now averaging around 25–27%, a full five points lower than a few years ago.

For passive investments, anything below 6.5% is now considered excellent. Between 7–8% is standard. That’s a striking change (that word again) from a time when 9–10% was the norm.

I’m talking in general terms here. Of course, yields will vary by asset type and scale. In the last 12 months, ResortBrokers has sold three freehold passive investments at or under 5% but these were in exceptional circumstances.

One of the main consequences of this changing market has been the conversation our broker team is having right across the country with vendors and purchasers around metrics.

One of the metrics traditionally used in our industry was per-key value, i.e. the total sale price divided by the number of rooms. As profits have surged and yields have compressed, per-key rates have significantly increased across the country.

But as strong trade and buyer demand have continued, a property’s sustainability of profit now matters more than its per-key rate. A motel in Brisbane, for example, might generate the same profit as a larger regional property with twice as many rooms. That might look impressive on paper but raises a key question: how sustainable is that level of profitability?

That said, the per-key rate as a metric hasn’t lost all relevance. Let’s just say, it’s a ‘moving’ metric. It can represent value from the sense of replacement cost. But fundamentally it’s more about profitability than per-key.

In today’s environment of rising costs, a tight yield can only be justified when the underlying P&L is robust, i.e., when staffing, maintenance and operating costs have been properly accounted for. If your net profit is genuine and sustainable, buyers will pay really tight yields.

There’s also growing confusion (if not a little deception) around how yields are calculated. The reality is that many deals include factors that distort the numbers, such as landlord-funded capital works or adjusted operating costs. That’s why headline figures like “6.25% yield” which we’ve seen promoted by other agencies (who shall remain nameless), should be treated cautiously. A seemingly tight yield may hide $2 million in deferred maintenance or refurbishment obligations a landlord has agreed to. With freehold investments and freehold going concerns there’s a lot of moving parts that impact yield. This is something buyers should be aware of.

Regardless, the appetite for accommodation assets remains enormous. And the changing market is also bringing new players to the table. While syndication has long been common in management rights, it hasn’t yet entered the motel space. But that may be about to change. With values doubling in some markets over the past decade, the logical next step is portfolio building, i.e., rolling up multiple assets to achieve scale, efficiency and, ultimately, exit opportunities with institutional capital.

If a handful of motel operators can combine assets and double their portfolio size within a year, they’ll be well-positioned for selling at huge multiples to large funds or groups. It hasn’t happened yet, but the conditions are ripe for it. Watch this space.

There’s no denying that today’s accommodation property market is one of changes and contradictions. Yields are tightening, yet prices continue to rise. Per-key values have doubled, yet the metric itself is losing relevance.

Amid these changes, one truth remains: the sustainability of profit is the ultimate benchmark. Not the number of rooms, not the per-key price, but the sustainability of profit. It all comes back to that. END