Thinking of buying into the hospitality industry? Then you’ll be pleased to read the results from this year’s Bankwest Future of Business: Focus on Hospitality Report.
The report gives a useful overview of what’s happening in the industry now, and what can be expected in the future. The good news is that hotels and resorts are still Australia’s preferred type of accommodation. Thanks to Australian and overseas travellers that sector is worth around $7.9 billion.
Adding to this optimistic overview, more international visitors are choosing Australia as a destination, with numbers increasing by over 7%. The domestic market has also increased by more than 7%, with domestic travellers increasing their spending by 6.9% across Australia.
Steady Growth Forecast
If buying an Aussie pub is more your idea of living the dream, you’ll be pleased to hear that sector is also doing well. This is mostly due to the fact that pubs are generally offering a much higher standard of cuisine these days. As an alternative to restaurants, pubs are drawing an increasing proportion of revenue from food.
Having said that, restaurants are also doing nicely thank you very much! Revenue is expected to grow steadily in the five years to 2022. This growth is underpinned by several factors, including more diverse food choices, better customer service and the willingness of venues to offer better mid-week deals.
Whilst the forecast is good, prospective buyers shouldn’t be complacent. They will still need to work hard to make their investment work. Overall, Australians have less disposable income and often see dining out or booking accommodation as a luxury. The secret is to offer good quality but affordable options.
It’s a competitive industry for sure, so a strong focus on excellent customer service is essential. It will also pay to think outside the box when it comes to deals and incentives.
There’s a good range of accommodation businesses on the market at the moment. Deciding which one to choose largely comes down to what you wish to achieve. If you are semi-retired and seeking a lifestyle business, then a B&B or small boutique hotel would be ideal. If, however, you have a longer-term plan, a larger hotel, motel or resort would fit the bill.
Do Your Research
Don’t forget that when we talk about the future of the accommodation industry in Australia, we’re also including caravan parks and hostels. A caravan park can be a great investment for a couple or family, often providing a home as well as an income. Management rights are another option.
The best plan is to highlight a few choices and then check each one out. Take a look at the financials, the inclusions, the location and future bookings. Investigate what’s happening in the area. Is tourism a growing industry? Is there a strong economic forecast?
What state is the business in? Can you move in and start trading immediately or will renovations/improvements be required? This should be reflected in the asking price.
And remember, your perfect business is out there somewhere!
Zoran Sarabaca is the principal of Xcllusive Business Sales
Disclaimer: Chan & Naylor takes no responsibility for the accuracy of any research material of contributors to our newsletter. Contributions to our newsletter are meant to be educational only, and Chan & Naylor does not endorse any promotional material promoted in their articles. Readers should do their own research to determine the accuracy of their material.