01 Jul 2022
Words Trudy Crooks Informer 103

What the end of financial year means for the industry.

“Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.” – G. Michael Hopf, USA Today Bestselling Author.

At the time of writing this column, we are due to settle 303 properties, which represents a 34 per cent year-on-year rise of ink drying on deals. This is cause for celebration as it’s our best year of settlements in our 37 years of business. 

However, do not think this means deals have been easy. There has been, and will continue to be, challenges around the country. As this edition of Informer goes to print, we are facing a 0.5 per cent interest rate hike, the largest in more than 20 years. You would expect this to have a knock-on effect on buyer confidence, however that is yet to be seen.

Unlike many other industries, the returns in our sector, especially Management Rights and leaseholds, sit at between 14 – 30 per cent, unleveraged. This has meant that the demand is still strong to acquire new businesses. Returns at this level provide a lot of protection. Saying that, a large number of our purchasers are attracted not just to the great returns, but the freedom and autonomy that buying an accommodation industry business affords them.

This won’t change, in fact we track our enquiry all around Australia and it appears the appetite to relocate and be your own boss is at all-time high. This is reflected and repeated by industry experts we have spoken with at length in this edition of Informer about the trend of “heading west” and capitalising on the untapped gold which sits in the regions.

However, our recommendation is if you are wanting to sell and not sure when is the most ideal time, the time to go to market is now.

The Management Rights’ industry has definitely witnessed a marked shift with Body Corporates enforcing their authority to ensure the incoming operator is not only financially viable but understands the role and expectations. 

This, along with banks conducting more due diligence than ever before, means deals are taking longer than we have ever experienced. 

This is why we are spending more time than ever ensuring incoming purchasers are undergoing suitable training and utilising industry experts to provide the best advice. It is in the interest of all stakeholders to ensure the easiest transitions and the most successful new working relationships are formed and cemented.

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