Firstly, a big thanks to all the posters, you each assisted in our decision to purchase a leasehold motel. This has been a journey of over 2 years in research and endless enquiries and to?fro with accountants with figures.
We have our eyes locked on a motel where our offer ends in a 37% roi ($367,000 net after rent) after an offer below what the seller was after, but business is business!!
The couple have separated and were after a quick sale, so we as a couple can automatically reduce costs by ending the relief managers salary which is $97,145pa increasing the net ROI substantially. 1 hr from coast, busy tourist and business area. Average of 70% occupancy reflected in ABS stats.
The motel does not have a restaurant, however does have a brand new commercial kitchen that was never used by the previous owners of the lease. I'm a qualified chef so will be looking at getting that going. They currently just have a commission agreement with the local RSL for meals.
This is a big jump for us, as we are leaving well paid secure positions, however feel that it will provide a lifestyle balance and offers increased opportunity.
Interested to hear any comments of success or problems faced or anything really from people who have made the big decision to move from a secure yet drone life to something such as this!!
ThanksBennyModerator@bennyJoin Date: 2002Post Count: 1,376
Hi Paul and Marn,
Congratulations – I don't know much about leasehold (is it in Canberra?) but the other numbers all look pretty good to me. Bonus that your skills as a chef can add even more value.
A bold move, for sure – but then, "people businesses" can do very well if the owners like meeting people. The attitude shows, and the goodwill follows.
Oh, and congratulations on your first post too (but it seems you have been reading on here before eh? Anyway, we hope you stick around, tell us how it goes, and share your "wins" and your trials – we can all do with learning from others who do different things. Good luck with the big shift – I'm sure you will do well….
Thanks Benny, and will do. Motel in QLD. Yes, have been reading on here for some time getting some good info that assisted in our venture.
Congrats on finding one you like. Chef skills will make a big difference, especially with breakfasts, not to mention dinners.
Few B & B motels apply chef level skills to breakfast so you can become a legend in that area.
I often cook the breakfasts at our motel in Wagga, they turn out ok but they never look like a chef's effort.
Hope the extra investment in time and $ of opening the dinner options can pay off.
You'd probably be taking some market share from other motels by opening dinners, that's how it goes..
Where are you up to with the purchase and can u tell us a bit more about it yet ?
Hope it's a great success for you.
Post any problems here or PM me, happy to help.
thecrestJeff123Participant@jeff123Join Date: 2012Post Count: 31
I'm with thecrest, we need an update paulnmarn! Let us know how you're going.
Hi All, apologies for taking some time to get back to you! Well, what a time we have had. The purchase period was extremely drawn out, from the acceptance, to the due diligence, to the fine tuning of the legals before exchange of contracts, to the handover period, and finally a period of time where we have been doing it on our own!!
Well, where to start. Once we arrived we were met with vendors keen to move on, and us obviously keen to learn. Our keenness didn't seem to matter in the least to the vendor, they had seemingly moved on some period of time close to when the contract became unconditional. Anyway, we pressed on, we took an approach of walking before we run. We did skype interviews with employees the vendors had and made a decision to keep the longer serving ones rather than the most recent additions. This meant that we were granted a 70% "credit" from the vendors for any long service/rec leave entitlements at date of handover. We have already improved on the bottom line by doing the room stripping ourselves as opposed to leaving this to the staff. Of the 8 staff that were on, we kept 4, and to be honest, we really haven't done a great deal of labour ourselves so shows that the vendor was a little slack at staff management.
I could type and type, but would probably bore the hell out of you, happy to answer any specific questions anyone may have. Happy to recommend any of the accountants/solicitors/insurer/bank etc that we used who were all great.
Suffice to say, that despite the expected hiccups, we have been traveling pretty well with all things considered. We are making a great living, seeing more of the kids, seeing more of each other, have reduced stress levels, and would NEVER consider our move to have been a poor one.Tamaika WillyParticipant@tamaikawillyJoin Date: 2014Post Count: 2
Hi Paulmarn. Congratulations again on your purchase and on taking the journey. Glad you’re reducing wages, that’ll pay off especially over times like Easter and definitely every weekend. It sure builds an in-depth knowledge of your room product and the linen quality. Commercial laundries’ products can become overaged quickly and affect your offering. Can u identify the motel or town for us ? Sounds like the relief mgrs were overpaid considering no restaurant. Hope it continues to flourish. You’re so fortunate to have chef skills, great food is such a plus, especially breakfasts, coz the quality of motel breakfasts varies so much. Are you packaging accomm with meals (dinner , bed n breakfast) to keep that expenditure in-house ? Very excited for you. Looking forward to more info about your motel.
thecrestCorey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010
It’s nice to see an update from a purchaser of these specialised commercial properties, a rare situation indeed. Even nicer to see that it’s been working out well for you all. :)
How have you found the occupancy rate since taking it over?
Hi Corey, been a while since I have logged on!
We have found occupancy rates have improved since we took over. Historically, the months of June through to the end of August had seen the motel occupancy rates drop to around the 53% mark. We had occupancy over 80% average for June and July has good forward bookings. We are fortunate in that our location is a halfway point, so we get a lot of walk-in bookings. We’ve also been using the features provided through trip advisor to generate more bookings. Moving toward mobile apps and getting them on board has assisted greatly. We have switched to a new reservation system too that integrates our channel manager directly with our reservation system so I don’t need to log into my channel manager to update availability and rates, it gets pulled live off my system. It also has an inbuilt revenue maximiser that we can use. Essentially it will increase your online rates when occupancy is over a certain percentage and can decrease them when you are looking for more bookings. We haven’t used this yet as we haven’t had any need, and quite honestly have enjoyed the 1 or 2 days that we have had where there have only been a few bookings!!
The biggest thing that we had to get worked out was who was going to do what role. I’ve taken the front office and cooking, my wife has charge of all of the cleaning staff, entering the figures into xero, and delivering the breakfasts.
It certainly is rewarding when you see the bank account, but we are certainly seeing the fact that you don’t get a lot of downtime. We generally follow this routine : 6am up and shower, 6:30am breakfast start to fire, 9am the cleaners arrive, check-outs happening during breakfast preps. Cleaning usually compete by 12pm. Rooms checked and ticked for approval for new guests. Guests start checking in from 1pm. Guests still checking in up to 8pm….Office locked up
8:30pm print transaction report from eftpos machine, do checks and balances against roll over report. Enter in breakfasts onto system, prepare breakfast trays, get breakfast order ready. Around 10pm, sit down for a bit of telly. We usually throw a meal down sometime between 6pm and 8pm! The days just disappear on you! On the upside, I spend the day around my kids on the weekends with them hindering our duties while trying to be of assistance :)
We have got a couple who have motel minded here with the previous owners for some years, they will be coming in next week so we can go for a short break with the kids. I’m going to make a point of ordering any obscure item on the breakfast menu and watch as the owners madly dash out to get the stuff as nobody has ordered it for some time so they haven’t got the stock :) It happened to us when we first took over until I had the time to do up a more friendly breakfast menu :)
Our planned renovations have had to go on hold – we had the work planned for the anticipated quiet months of June & July but the tourist trade has dictated that the quiet time was not to be.
We found that we picked up more corporate trade simply by purchasing a fresh coffee machine and getting in the travel cups. The reps love that they can drive out of here and not have to stop soon after to get a fresh coffee to have in the car while they drive to their next stop. We also offer the reps a packed lunch to go which they have taken to with gusto. Also the new reservation system can e-mail accounts so they no longer have to come into the office to settle the bill, we do the transaction as card not present and e-mail the receipt through. Word has spread on this and we have picked up some great new corporate trade.
We are certainly earning more than we had anticipated, more than we would ever have expected to earn in our previous lives as permanent employees. But you get what you put into it and it certainly is not a case of sitting back and letting the money role in, it is long days indeed!
Best of luck all!
Thanks for the awesome details of what your day is like, sounds like ours. Where’s the motel ?
What’s the resv system ?
At the moment we’re the relief managers at our own place, giving our managers some time off.
It’s quiet in Wagga this time of year, and so cold. Thrilled for your success, well done.
We are in Eden, Twofold Bay. We class ourselves as being an hour from the coast as in the larger coastal city. We are actually on the South Coast ourselves, with ocean views from every room. We have found from talking to our customers that they prefer here to where they originally intended to travel to which is great for us! We have even had people check out from here in the morning only to ring in the early afternoon saying they are coming back as they don’t like the place they have travelled to. Let us know anytime you are looking at coming through.
paulnmarnvagirl2012Participant@vagirl2012Join Date: 2012Post Count: 47
Sounds like you’re living the dream guys! Good work!leonParticipant@leonjcJoin Date: 2015Post Count: 2
G’day there we own a leasehold motel in central Qld and it has been going great. Little bit of a downturn this year but still has gone great. Situation sounds similar to yours paulnmarn, increase the systems and provide better service and the trade will come. Our hardest thing is we have an 8 month old daughter and want more kids. Finding it harder to manage and thinking about full time management. Is that what you have thecrest? And I see do you also relieve your managers. That’s what we are thinking of doing. How has it worked for you the crest. And also are you a broker. That’s the line I’m looking for as well. Love to chat more if you don’t mind. Feel free to email me [email protected]
Good luck paulnmarn it is rewarding but hard work. Love it though.
I’m a broker and a motelier, trying to sell my motel and free my time for broking.
Management has provided mixed results. It’s very hard to find the right people who will work hard to maintain and grow the business, and really engage with the guests and provide friendly service all the time without grouching at guests or staff, or closing early. To keep mgrs sharp you must spell them yourself every month for about 4 days which provides you with direct contact and feedback from guests and staff.
Chat is ok.