Hotels in country NSW are forming into a number of sub categories.
Action has been a plenty at the top end of the market. The four leaf
clover is a suburban hotel in a regional city, with the ability to add
further gaming. Strong competition from existing hotelier, many who now
own multiple country assets have seen this end of the market show record
prices and returns.
Premier hotels in regional cities where additional gaming is difficult
(if not impossible) are also in demand, however the market place is more
conservative when compared to those who can add gaming. Purchasers are
looking for the complete package, multiple income streams, quality
presentation and some potential to increase business.
For the leading hotels in country towns, with gaming; we are finding that
potential purchasers are often looking to minimise he goodwill portion of
the purchase and in some instances the asset value has a tendency to be
greater than the business value. These are the most unpredictable in
value. Each transaction needs to be assessed individually.
Hotels with no gaming machines are becoming more prevalent. This newer
market place relies on the business trading to ascertain the property
value. Well presented, up to date accountants figures are a must. Returns
remain at the traditional levels.
Leasehold hotels are also a product of the business value. Again well
presented and up to date accountants figures are a must. The smaller the
business the more difficult to find a potential purchaser. We are still
seeing a number of variations to the traditional leasing system and these
show anomalies in this marketplace.
Gaming machine entitlements went through an explosion in price with
announcement of the new Gaming Machine Act midway through the year. A
large number of GME's were sold during this time. Since August we have
seen the prices soften, with recent action below prices prior to the
introduction of the new Act.
GME leasing has been a slow start. The majority of transactions have
occurred within the same areas. Rentals appear to be settling at around
$20,000 pa + GST for the raw entitlement and some consideration given if
a modern machine is provided.
With the run into Christmas we believe the marketplace will continue to
be strong in activity, supply of hotels genuinely for sale is low.
Correctly pricing your property on the market remains critical. Potential
purchasers will not waste time or effort on properties that are pitched
above the market expectations.
If you would like to discuss the market further then please contact Nick