Hotel Market Overview

Magann O’Rourke Loader is actively involved in valuing hotel assets throughout Regional NSW and we maintain contact with all active brokers servicing this market to ensure we are keeping abreast with market sentiment and the latest sales transactions.

Brokers are confirming an increasing number of sales in recent times and a diminishing number of impaired assets being marketed either directly by the owners or alternatively under receivership at the direction of their bankers.

As a general comment on the hotel market, until the last 12 months there has been a considerable weakening of demand for hotels over the past three (3) years following a very bullish period when yields for all three interests in hotels fell well below historical levels. The market was largely driven by the corporate sector that was very active in purchasing and leasing hotels Australia wide.

Overall the hotel industry has been threatened on a number of well publicised issues over the past few years, with attacks on responsible gambling and consumption of alcohol, smoking bans from July 2007 and a rise in anti-social behavior associated with the industry.

The NSW Parliament on 9 November 2011 passed its ‘Three Strikes and You’re Out’ legislation which has been introduced to target rouge operators who continue to commit the most serious offences under the States Liquor Act. Hotel operators, particularly those with a heavy reliance on entertainment/late night trade will need to be vigilant to ensure that staff complies with the laws to ensure that the venue is not adversely affected by these new laws.

We have recently analysed a number of going concern ‘non-distressed’ regional hotel assets showing between 13% and 20%, with a number of larger transactions being negotiated over the past 12 months. The results of this analysis is supported by our discussions with the various active brokers in the hotel market.

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