Holiday Business Funding Update Jan 2021
Happy New Year and finally, some positive news for Holiday Complex owners!
For most of us, 2020 is a year we are all glad to see in the rear-view mirror. COVID-19, whilst largely under control in our country, unfortunately continues to have an impact on our lives, the lives of our families, friends, acquaintances and those within our industry and the wider community.
We have been fortunate to have worked with so many Management Rights owners and to have witnessed the level of care, integrity and resilience they have displayed towards their business, team, residents and customers – in good times and most especially in tough times.
Most adversely impacted have been our holiday complex owners, particularly during the most difficult months between March and June last year. With the QLD borders currently open and further easing of restrictions bringing back a greater sense of normality and stimulation of business activity (particularly in those businesses which rely heavily on tourism), together with promising reports about the roll-out of the vaccine, we are being reminded that this is not the time to become complacent.
The jury has been out on how to present figures for short term accommodation businesses since early last year when most were on-track for a record year following a bumper Xmas right up to the end of January 20, then along came CV-19 and rearranged the world. We have just received advice from a recognised industry valuer of a few holiday complexes successfully going under contract late last year, with finance approved for purchase. Preparation of net operating figures, for a year that included several months of altered trading conditions due to government imposed lock-downs, was presented as follows:
Gold Coast holiday complex which went under contract in Nov 20 included actual figures for 12 month period to 31 Oct 2020 excluding the months of March, April, May & June 2020 which were normalized out using the corresponding months from the previous year’s trading figures (i.e. Mar – Jun 19). We are advised that the bank approved finance on the basis of this methodology for presentation of its NOP figures, and that a multiplier of 5 was achieved against a net of circa $200K. Good news indeed for our short term accommodation owners!
Further positive news is anticipated when the banks sit for their review of the lending appetite for holiday complexes, following almost a year of “wait and see”/ sitting on their hands.
As a valued member of our database of customers – current, past and future, we like to keep you informed and up to date with important news, including any trends within the Management Rights industry, and this link will take you to all the informative blogs posted recently on our website. As always, we are very happy for you to forward our newsletter onto family, friends or colleagues! We look forward to moving onward and upward with you in 2021!
Your Management Rights Brokers Australia Team
