John Blacklow, REIT Business Broker of the year, suggests placing a moratorium on new liquor licences in an already over-serviced industry.
John Blacklow, Hotel, Motel and Business Consultant for Knight Frank Tasmania, is the 2017 REIT Awards Tasmanian Business Broker of the Year.
John has over 30 years experience as a specialist hotel/motel broker. With demand in the accommodation sector high, SCHWARTZWILLIAMS spoke to John about the outlook for the Tasmanian industry.
How did you get into the hotel/motel sector?
I commenced in 1983 as a specialist hotel/motel broker after previously having a banking background. I liked to go to pubs so thought it would be a good idea to sell them! I ran my own Company, Realty House, for 10 years then joined Knight Frank.
What are some of your career highlights from your time in the industry?
In September 2007 I set the record for the highest “pub” sale in Tasmania, being $14m for the Granada Tavern, near Hobart (opposite MONA). In 2013, I was engaged to sell the Federal Group’s key assets at Cradle Mountain, Strahan and Freycinet which I sold to RACT in one line.
What are the biggest issues currently facing your market?
The accommodation market is very buoyant due to Tasmania’s booming tourist industry. However, hotel sales are very stagnant. Of the top 40 gaming hotels in the State there are 33 that are owned by the big groups such as ALH, Federal, Dixon Brothers, Kalis Group and Goodstone Group. Consequently, they are not for sale and the larger ones in private hands are also not for sale. The Federal Group’s monopoly on gaming machines expires in 2023 so there will be substantial change in the industry after that date. We feel that the hoteliers will be advantages by proposed changes to the legislation
How has the industry changed in the time you have been involved with it?
Pubs are more difficult to sell and in the last 30 years they have evolved into different business models so that they can compete. There are far too many liquor licences, creating competition so the hotelier needs to be smarter and have a well-diversified trade mix.
What changes would you like to see over the next two to five years in the industry?
I would like to see the gaming hotels have the opportunity to buy their own machines which appears to be the preferred option. It all depends which political party is in power when new legislation is due to be enacted. There should be a moratorium on new liquor licences as our industry is already over serviced. Realistically, penalty hours should be abolished as this industry is 7 days a week. The hotelier should be free to contract their employees on mutually acceptable conditions without being disadvantaged as to which particular days they work in a given week.
What advice do you have for people who are just starting out in this sector?
The business of being a hotel/motel broker is very rewarding and challenging. There is travel involved and you meet all sorts of characters. It is important to be able to fully analyse a hotel’s business performance so that a range of buying factors can be considered.
What do you believe is a unique factor of doing business in the hotel/motel sector?
As compared to the residential market, buying and selling hotels is not normally based on emotion so it is much easier to deal with people. A lot of time is spent with preparing documentation to sell a hotel or tourism property. It has to be accurate, thorough and all of the due diligence information made available. So the hard work is really in getting the property to the market whereas with residential sales this is much easier and the hard part is actually trying to find a buyer.
What’s your outlook for your sectors for the next year?
The accommodation sector will continue to bubble along as demand is high. Conversely, hotel demand is low but there are 3 or 4 good buys out there, particularly for groups that may not already be in Tasmania.