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20 March 2018
| Category - Advisory

Investment company poised to take advantage of demand for 21st century accommodation

Investment opportunities for new hotel developments in suburban and regional areas is set to increase with hotel operators on the move in southern states and the Queensland tourism market recording a bumper year.

Stronghold Investments is ready to capitalise on the market shift, having already acquired one hotel for its investors and entered into an agreement to purchase a second investment opportunity in Bundaberg.

Steve de Nys said things were looking up for the suburban and regional hotel markets, with new stock replacing the obsolete motel model which dominated the suburban landscape for the past 50 years.

He said a recent media report*, highlighting four new hotel developments underway in the suburbs of Melbourne and the performance of hotels in areas like Parramatta, Westmead and the Olympic Park precinct in outer Sydney, was a sign of things to come for a maturing Queensland market.

In Queensland, Stronghold Investments recently completed the purchase of on a brand new Quest operated 90 key hotel development at Eight Mile Plains and couldn’t be happier with the results.

Steve de Nys said:

“Our experience in working with Quest at Eight Mile Plains has given us an insight into the generational/transitional change that is occurring in the hospitality sector.

“It’s largely driven by the approaching obsolescence of the traditional motel sector.

“A lot of the motels that we grew up with the breakfast chute and dining room out the front are getting to the end of their economic life.

“Consumers, particularly business travellers who often need accommodation in suburban areas, are looking for quality, amenity and technology, and these old accommodation types no longer offering what modern travellers demand.”

Mr de Nys said this was apparent in the Bundaberg market, where the company was currently working on a development proposal for hotel accommodation next to the Brothers Sports Club Bundaberg.

The 2017 Bundaberg Short-Stay Accommodation Market Update* prepared by Lucid Economics showed a divergence in the room occupancy rate and the average daily rate with the former staying stagnant while room rates increased. The report attributed the divergence to an increase in newer and larger accommodation properties in Bargara which were attracting visitors away from the older, smaller motel properties.

Mr de Nys said Bundaberg was a key destination for the travelling business person and they generally wanted “clean and comfortable accommodation with a bite to eat and a couple of beers close by” but the older accommodation in the region didn’t provide the convenience or standard of accommodation today’s travellers were looking for.

Stronghold have entered into a contract to buy the Brothers Sports Club Bundaberg and associated land holdings and have secured an Agreement for Lease (AFL) with a hotel operator to build and operate a 120 key hotel adjacent to the club. The AFL is subject to Development Approval by the Bundaberg Regional Council.

The site is in a prime high exposure gateway position on the main road into Bundaberg from Brisbane, directly opposite Harvey Norman, adjacent to a brand new $30m Coles anchored retail centre and in close proximity to the Bundaberg airport.

“The benefit of this site is that the hotel will support the Club and the Club will support the hotel.

‘The concept of developing accommodation adjacent to an entertainment and shopping precinct is nothing new and has been very successful for the likes of Penrith Panthers and Rooty Hill RSL in Sydney.” On the Gold Coast, Mantra is about to open a 120 key hotel next door to the Southport Sharks dining and entertainment precinct.

The proposed hotel development also looks to fill a gap in the market, with the Bundaberg Short-Stay Accommodation Market Update* predicting the region will experience a room shortage by 2020 if no new accommodation is built.

Queensland Tourism market report for 2017 also backs up the Stronghold case for new accommodation in suburban and regional areas for business travellers, reporting business travel to Queensland had experienced record growth this year, increasing 16.7 per cent to 4.8 million visitors.

The latest Tourism Research Australia data to the year ending June 2017 showed domestic overnight visitor expenditure in Queensland increased 5.5 per cent to $15.4 billion, while domestic visitor numbers grew 6.2 per cent to a record high of 21.5 million.

The Stronghold Hospitality Trust No.14 opened for applications on the 7th March 2018 and closes on the 29th March.   The offer is available to Wholesale Investors only. For more information and updates about the progress of this investment opportunity, please register your interest by subscribing to our newsletter.

“This advice is general advice, not personal advice so you can’t assume it will be suitable for you. It does not take into account your objectives, financial situation or needs so you will need to consider if the advice is appropriate for you.”

More information on our current opportunities

Stronghold Hospitality Property Trust No 14- Open for investment

For a copy of the STRONGHOLD HOSPITALITY PROPERTY TRUST NO. 14
INFORMATION MEMORANDUM or INVESTMENT SUMMARY please contact Steve de Nys on 0413 515 808 or email sdenys@strongholdinvest.com.au

 

REFERENCES

 

*Bundaberg Short-Stay Accommodation Market Update

Prepared for  Bundaberg Regional Council by Lucid Economics

April 2017

*http://www.theherald.com.au/story/4987410/hotels-find-new-frontier-in-the-suburbs/?cs=9

http://statements.qld.gov.au/Statement/2017/9/20/business-travel-leads-record-year-for-queensland-tourism

http://www.theaustralian.com.au/life/seven-hotel-trends-the-inn-thing/news-story/75d14d4e97b2b793d1be7bf6eba0e30e

https://southportsharks.com.au/hotel/about-mantra-at-sharks/

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