Pub accommodation delivers great returns for Hoteliers
Tuesday 19 April, 2016
A renaissance is taking place in pub accommodation. Growing numbers of consumers are seeking different, interesting and genuine accommodation experiences. Traditional, heritage and authentic Australian pub accommodation (much with shared bathrooms) is enjoying a resurgence because it delivers character, the local stories and connection to a place that so many crave. If you have a sleeper with unlocked potential, now is the right time to explore your options and capacity to increase your market value, annual returns, cash-flow profit growth and food, beverage and gaming revenue.
Redeveloped pub rooms in good locations are delivering hundreds of thousands of dollars in annual operating profits and adding millions of dollars in capital value to Pubs. In one recent THSA project, a $300k investment in refurbishing and upgrading 18 unused, traditional hotel rooms and two bathrooms, is on track to deliver the Pub incremental gross operating profit of $330k per annum and has added $2.7m in value to the hotel.
Innovative thinking will create opportunities to harvest accommodation from your local market and deliver a successful, quality accommodation product that will attract new customers. With favourable domestic tourism and significant inbound tourism growth from North and South East Asia, now is the time to capitalise on untapped potential in your business and your hotel property.
Online nous can boost returns
Tuesday 17 November, 2014
With hotel returns at an all-time high and growing investor interest, especially from Asia, it is timely to ask if returns could be higher for property owners.
Has the market cycle merely delivered long overdue improvement, or have operators and asset managers contributed?
Apart from some consolidation, the current crop of management companies and asset managers has changed a little in a decade, so the question needs to be asked whether the hotel sector is driving its assets as hard as other sectors of the property market.
I think there is room to do better. having looked at what is happening in asset management in the US, Asia and Europe, I think in this cap rate environment, where $1 on the bottom line drives anywhere from $12 to $20 to the balance sheet, it is critical to look at more than just cost reductions to drive the P+L line. It is estimated that by adding $1 to the top line, more than 30¢ can be delivered to the bottom line, which means asset managers need to have a good understanding of the latest tools to drive revenue to the hotel property. It shouldn't simply be about cutting costs, but growing occupancy and average rate through online distribution, social media and reputation management.
Online travel agents (OTA's) have for many years driven a consumer focus on price competition and affected hotel returns and owners' values via high commissions and low net rates. But the strengthening of consumer rating sites such as TripAdvisor, which allow customers to buy based on reputation and quality, can provide tremendous opportunities for operators to drive the top line. One of the most significant KPI metrics for an operator should be online reputation. This drives the brand value and therefore the owners' capital return.
Manager and operators who are not in top of the trends online are leaving a lot on the table.
With cyclical cash flows making hotel returns less certain than the long-term lease income that other property classes can deliver, hotel asset managers have to drive the business very hard and move quickly to capitalise on rapidly changing technology-driven opportunities if they are to maximise the potential of the property.
Article published, Sydney Morning Herald, Commercial Real Estate, 15 November 2014
Article Published, Sydney Morning Herald, Business Day, 14 November 2014