Investor snaps up motor lodge for $11.5m
It’s not all doom and gloom in the motel industry, finds Marta Steeman.
An Auckland motor lodge has been bought sight unseen for $11.5 million by an Asian investor, prompting motel brokers to comment it’s not all doom and gloom in the industry.
Negotiations for the threestorey, 32-unit Parklane Motor Inn in Takapuna started during the level 4 lockdown, so the investor could not travel to New Zealand. Representatives here carried out the due diligence for him, Bayleys Hotels, Tourism and Leisure national director Wayne Keene said.
The investor who bought the business and the property including the land of 3116 square metres wanted to remain confidential and also had assets in Asia, Australia and Europe.
The investor intended to spend a lot of money doing it up. It would remain a motor lodge but at a higher standard, Keene said.
There was a misconception that overseas investors owned a lot of accommodation here but the smallto medium-sized motels and hotels were largely owned by New Zealanders.
‘‘We haven’t seen fire sales so far,’’ Keene said. ‘‘Properties haven’t been sold at discount prices which is pretty cool.’’
Parklane was sold for a higher price than it sold for two years ago, he said.
Keene pointed to three other motel sales, in Taupo¯ , by Bayleys, since the resumption of domestic travel as evidence that there was long-term confidence in the sector.
The land and two-storey buildings housing the 24-unit Karaka Tree Motel in Taupo¯ sold for $2.8m. Lakefront upmarket motel The Cove’s accommodation business was on the market for $940,000 and sold for a confidential amount, and the 11-unit Executive Motel also sold for a confidential price.
Queenstown was very busy because of the school holidays and a good ski season ‘‘but once school holidays finish who knows what it’s going to be like’’, Keene said.
Taupo¯ was experiencing a boom, and it was ‘‘like Christmas’’ in the Bay of Islands.
‘‘A lot of Auckland people are only three hours away from a destination for a holiday. That’s why those areas are experiencing very good trade.’’
Rotorua’s fortunes were not as good, as there was a lot of accommodation there. He said moteliers in other centres would be struggling as well, citing Kaiko¯ura, which relied heavily on international tourists.
Moteliers lost six weeks of trade during lockdown so money being made now was just helping to recoup some of that, Keene said.
Keene and Gordon McGregor founded Resort Brokers in 2002, which was bought by Bayleys this year to lead a new tourism properties division, Bayleys Hotels, Tourism and Leisure.
Kelvyn Coffey of Coffeys Tourism Brokers said things were better than he expected them to be in terms of activity.
He was hearing that Taupo¯, Paihia and Kerikeri were busier
Kelvyn Coffey
Coffeys Tourism Brokers, left than last year, Twizel was ‘‘going well’’, and places like Palmerston North and Invercargill were trading ‘‘OK’’.
‘‘Places like Taupo¯ are ahead of last year so people have got confidence. So it’s certainly not doom and gloom. Obviously it’s the school holidays so what happens after that remains to be seen.’’
The company’s Queenstown rep said the resort town was busy but the service was not as good in some places because the businesses had laid off staff.
Coffey was seeing fewer listings than usual because people were probably thinking it was not a good time to sell.
He had seen no evidence of motels selling for discount prices. However, banks were more reluctant to lend on them.
Coffeys had four motel contracts, different types of deals including a couple end of leases in
Taupo¯,
Akaroa.
The large reduction in hotel room supply because a significant number were closed or taking isolation and quarantine guests was working in motels’ favour. Some motels were taking social housing tenants, which was reducing competition as well.
Coffey said in cases where leased motels were struggling and the operators wanted out, they
Feilding,
Kerikeri, and were bringing the landlord and leasee together to negotiate a termination deal so the landlord could offer the whole property – accommodation business and land and buildings – for sale.
That opened up more options for the property for any purchaser who could repurpose it for other uses. When that happened, it reduced supply and competition in the market for remaining operators. ‘‘We can’t say how successful that approach will be in the long run but it’s one way we are dealing with it.’’
‘‘Places like Taupo¯ are ahead of last year so people have got confidence. So it’s certainly not doom and gloom.’’