As featured in the August 2021 edition of the Queensland Hotels Association's QHA Review.
No doubt many of you will have seen the media's frequent coverage of the residential property market boom we are experiencing in Queensland (and particularly in Southeast Queensland). Whilst it may not be as heavily covered by the mainstream media, the pubs and hotels market is seeing a similar trend emerge. Residents of the southern states are taking notice of how Queensland has performed since the beginning of the COVID-19 pandemic and are looking to relocate and/or invest in the sunshine state. This is proving to be a significant driver for demand, creating conditions we haven't seen in the pubs and hotels market since before the Global Financial Crisis.
Major players in the pubs and hotels industry are making bold moves to expand their portfolios, through the targeted acquisition of multiple sites across Queensland, including smaller regional pub chains. Property trusts searching for freehold land with entrenched tenants should also be mentioned. Having monitored common financial performance metrics such as EBITDA (earnings before interest, taxes, depreciation, and amortisation) multiples and capitalisation rates, these property trusts are now identifying a number of sites as increasingly favourable investments.
These factors (among others) are contributing to a landscape where publicans and hoteliers are being approached off-market with lucrative offers to purchase.
As this competitive tension continues to fuel price growth, we've seen many longstanding hoteliers capitalise on the demand and sell their venues. Given this climate, I would recommend that those who are even remotely open to the possibility of selling should carry out all necessary checks to ensure a seamless transaction, should the right opportunity present itself. The excitement of receiving an enticing offer to purchase can quickly turn to frustration if the potential buyer either walks away from the deal or renegotiates a substantially lower price owing to poor results from their due diligence enquiries.
Some compliance considerations that may apply to your premises are as follows:
By ensuring you are up to date in relevant areas of compliance, you will be well positioned to capitalise on the increasing levels of demand we are expecting to see as we move towards the back end of the year. Should you have any queries about any compliance requirements, please contact me on 07 3224 0230.
Article written by Curt Schatz (Managing Partner) and James Browning (Associate).
"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."