Purchasing a motel involves a lifestyle change. What are some of the things you should consider if you are thinking of buying a motel?
One of the first obvious decisions to be made when
venturing into this vibrant industry islocation. How far away from you
current residence do you want to move? Whilst many larger motels can be
run under management, most small to medium size businesses involve hands-on
running of the motel. It helps that most motels include a residence; this also adds to the all up profitability of the venture.
The next consideration isleasehold or freehold? Most motel sales are
on a leasehold basis. New motel leases are normally for a longer term
than most other business types and range from 20 years to 30 year terms.
The amount of rent is governed by turnover, location and quality of the
Another decision to be made is,do I want a motel that includes a
restaurant? In some cases a restaurant is an imperative part of the
business and without one, the business would not sustain its turnover and,
subsequently, its profitability. The operation of a restaurant greatly
increases the workload by extending the working day. In many cases, the
operating restaurant is not overly profitable and unless you are experienced or
keen to run your own restaurant business within a business I would suggest a
motel without a restaurant is a better option. That been said, most
larger motel purchases will include a restaurant.
A motel purchase involves a lifestyle and location change; however, by
living on the premises the cost savings are substantial making a motel purchase
both a rewarding and profitable experience.
David has been a Business Broker for over 18 years specialising in supermarkets, and the motel and caravan park industry. Previously David was involved in the finance sector for over 20 years both in South Australia and the Northern Territory holding the position of Senior Territory Manager for a major finance company. David won the Real Estate Institute of South Australia’s Business Broker of the Year 2010 and considers customer service one of his highest priorities.