Tourism roundup shows caravan parks and pubs are in hot demand

After some challenging years spanning the Covid pandemic, the tourism sector continues to bounce back as caravan parks and pubs emerge as high-quality assets for investors.

In 2024, sales of mixed use holiday parks offering both cabins and caravan sites have already exceeded $100 million (compared to $114.06 million for the entirety of 2023), with private investors, family offices and operator/occupiers the most active buyer groups.

Ray White Commercial head of research Vanessa Rader said the attraction of caravan parks as an asset class is understandable, given the low start-up and maintenance costs involved.

“They can operate on limited resources while offering high returns,” Ms Rader said. “Post-pandemic we continue to see strong occupancy levels, with their flexibility and relatively low cost attractive to many travellers.”

Sales of mixed use holiday parks have already exceeded $100 million in the first half of 2024, close to the entirety of 2023. Picture: realcommercial.com.au

Together with remote workers, a growing ‘grey nomad’ sector has seen many retirees increase visitor nights at caravan parks, Ms Rader added, however couples and families still remain the largest occupier group.

A continued uptick in caravan registrations is also supporting occupancy growth.

In 2023, 765,150 caravans were registered in Australia which grew by 5.3% in the last year, while campervan registrations also grew by 4.9%.

A beachfront paradise

Northern NSW is a key location of interest for holiday facilities, though smaller offerings in the regional markets of Western Australian and Queensland are also proving popular.

In the Queensland city of Mackay, the Bucasia Beach Caravan Park is currently on offer for $3.45 million.

The 1.01 hectare beachfront parcel adjoins the Bucasia Boat Ramp. Picture: realcommercial.com.au

The 1.01-hectare beachfront lot features 47 powered sites, a one-bedroom beachfront villa, a two-bedroom residence, BBQ area, pool and communal amenities.

Robert Dunne of Savills Brisbane said the diverse opportunity would suit an owner-operator seeking a lifestyle change, an investor aiming to diversify their portfolio, or a developer envisioning a dream project.

It has a strong holding income of $365,000 (projected and adjusted FY24 net profit) and has been previously DA-approved for 37 beachfront townhouses.

Pubs prove a good bet

With the national pub market experiencing a year of moderating transaction activity in 2023 and following record transaction volumes in 2022 of around $2 billion, HTL Property agents said pubs were now bouncing back.

Pubs that utilise their square meterage more aggressively with multiple revenue streams are in high demand, according to HTL Property. Picture: realcommercial.com.au

HTL Property national director for investment management, James Smithers, said pubs hold strong potential to provide a lot of value for investors.

“Pubs have been an asset class people have misunderstood, but you have five potential income streams across food, beverage, gaming, retail, and accommodation,” Mr Smithers explained.

“There’s a lot of conversation about discretionary spending, but people are still going out, but they’re choosing venues with stronger offerings. So those venues with all five revenue streams are seeing increased footfall.”

Offering multiple revenue streams, investors are betting on pubs. Picture: realcommercial.com.au

HTL Property managing director Andrew Jolliffe said yields had moved along with interest rates, but pubs were still a “good bet”.

“They’re a good bet for a bank as they have prosperous cash flows, and you can influence revenue and profitability in a pub which makes them an attractive asset class for lenders,” he said.

“Generational families or experienced private groups are still the majority of who are buying hotels. However, some domestic and offshore funds have also taken an interest, with some high-level, sophisticated, transactions going on.”

Mr Jolliffe added that while regional and coastal activity is still a feature, there has been a greater proportion of metro assets sold in 2024 compared to previous years.

One in the country, one in the city

In the rural NSW village of Rappville, the 113-year-old Commercial Hotel has hit the market with an asking price of $990,000 – $1.1 million.

Under the current ownership, the pub has been renovated and had an extensive commercial kitchen installed, servicing both a dining room and expansive 70-seat restaurant.

The century-old federation style hotel sits in the quiet rural village of Rappville. Picture: realcommercial.com.au

There are six rooms on the upper floor currently being renovated, offering prospective owners to opportunity include accommodation in the next package.

The hotel is offered as a walk-in walk-out sale with furnishings and stock at valuation.

In the inner-city Sydney suburb of Paddington, the iconic Captain Cook Hotel is also up for grabs via expressions of interest.

Ideally positioned within stone’s throw of the SCG and Allianz Stadium, the pub is a popular pre-game watering hole. Picture: realcommercial.com.au

Operating within a c1914 Federation building, it offers 22 large accommodation rooms and is licensed for 96 beds.

Its walking distance to Allianz Stadium and Sydney Cricket Ground also positions the hotel as a sought-after pre-event venue for sporting fixtures.

Luxury and boutique hotels

According to Ibis World’s March 2024 tourism report, pent-up demand for travel in the wake of Covid has led many tourists to accept higher prices for hotel accommodation, putting the luxury hotel market in good stead.

James Smithers said that while market conditions in the sector remain tight, with limited transactions across the last quarter, revenue remains resilient across NSW.

“Boutique and luxury assets are drawing increased footfall through pivoting operations towards elevated food and beverage offerings,” he explained.

Australia’s first 25hours hotel brand by Accor is set to open in December. Picture: realcommercial.com.au

These include luxury hotel developments such as the forthcoming 25hours Hotel located at the intersection of Oxford and South Dowling Streets in Sydney.

Set to open in December, the hotel is being offered for sale via an international EOH campaign.

The 105-room luxury hotel will have a rooftop bar overlooking Oxford Street and Sydney Harbour. Picture: realcommercial.com.au

The 105-room luxury hotel will have a rooftop bar overlooking Oxford Street and Sydney Harbour, plus a restaurant, cafe, fitness centre and central courtyard used to host live events.

There are currently 15 25hours hotels across twelve cities spread throughout the world, with plans for a Melbourne hotel currently in the works.

In regional NSW, The Byng Street Boutique Hotel is also up for sale.

Located in the heart of Orange CBD, it offers 22 luxury suites within a heritage homestead plus a modern extension.

The luxe freehold hotel in Orange is being offered as a blank canvas business opportunity with vacant possession. Picture: realcommercial.com.au

It also comes with a freestanding three-bedroom, two-bathroom manager’s residence and is within a stroll of gourmet restaurants, boutique retailers and local cultural attractions.

Expressions of interest close on Thursday 27 June.