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Market Report May 2018

Since the announcement of the Gaming Machines Amendment Bill in March the hotel marketplace has been extremely busy.


Freehold hotels with 3, 6, 9 or 12 entitlements have been strong demand, with existing hoteliers taking advantage of the new banding (freeing up some areas that previously found it difficult to add GME's), the provision allowing the sale of 2 blocks of GME's to Metropolitan hotels per year and the ability for hotels to sell GME's without forfeiture.


For Hotels with multiples of 3 entitlements this resulted in a windfall gain of approx. $190,000 (3 GME's no forfeiture) or $380,000 (6 GME's no forfeiture).


In many cases the value of the entitlements now were greater than the business value.


A number of hoteliers have chosen to take this opportunity ….. I stress to these hoteliers, seek advice on the taxation implications from your accountant.


I foresee that come September this year up to 50 country hotels will close - following the sale of all their GME's.


At the end of the year another 50 will follow.


This will create an expanded marketplace for hotels with no entitlements, often with asset values far exceeding the sale price of these hotels.


For some; a new improved business with emphasis on food and accommodation above the standard country pub level - For others a hard slog trying to make the business profitable using the traditional hotel model; with no gaming.


There will certainly be some exciting initiatives and changes in the hoteling business to come.


The big end of the hotel market remains strong with strong demand for Regional Country hotels. Purchasers in the majority are hoteliers who now have multiple hotels and are looking to add to their holdings and enjoy economies of scale. 


Demand continues for hotels who have gaming …. Particulary for those that think that their gaming can be improved.


For country leasehold hotels, demand from new operators continues to be slow. We need to show that this is a great industry to be in and profits continue. This is an affordable entry level, to cut your teeth and move through the industry.


Interesting times follow.

Chris Tinning & Company
117 Byrnes Road
North Wagga NSW 2650
Ph: +61 (02) 69 710032
Fax: +61 (02) 69 710032