This was originally published at cdrta.com.au by Kevin Carmody, Senior Consultant at C&D Restructure and Taxation Advisory.
In managing a site at the moment, I am observing constant change in the Australian accommodation industry and times are rapidly getting harder.
1. Reduction in Commercial Traveller Numbers
There is a distinct lack of traditional commercial travellers, sales reps and business travellers to regional areas. This continues to expansion of online options and cost reductions by wholesalers.
In contrast to this is the contract traveller; those in town for an extended period or where they have a short-term base, but are expecting more than a dodgy tv, a desk and a kettle.
2. Options are Increasing
I recently travelled to northern NSW for an event and a town with a population of 3,000 had over 50 accommodation options. Platforms like Airbnb and Stayz have opened up experiences and more opportunities for travellers looking for something more than just a room to rent.
It’s sad to say but the traditional options looked and felt tired, whereas the non-traditional gave a much better experience.
3. The Product is Changing
Spending a lot of the year in motels, I notice the little things, a packet of two biscuits, instant coffee and a few UHF milk containers no longer cut it. A small operator near Tamworth (with a population less than 500) was running at 90% and when observing the location I noticed reception with a coffee machine (and a manager who could make a great coffee), breakfast was not an individual packet of cornflakes and toast that could cut ice, but some home made muffins and baked goods; nothing significant, but a little more than expected. Overnight every car’s windows and front lights were washed, a little gesture but meant that people remembered the place and kept coming back.
4. Food Offerings Have Increased
The traditional motel kitchen has changed and is now competing with a lot more options. Even in large regional towns there are delivery options popping up everywhere. A short order menu and two tables of patrons is not really where the business should be heading. The best results I have seen are where the kitchen and the accommodation are split and potentially have two markets.
What Does it Mean?
Each location is different, and each offering needs to tailor its market. What has worked for the last thirty years is not going to make it as the market continues to develop and the options continue to increase.
Having run over 50 venues in my career I have seen all aspects from the opening of a Greenfields site to the implementation of crisis management when a tenant has walked from a property. Resilience and adaptability is vital in every industry, and a new set of eyes may be the help you need to stay one step ahead the market.