Opulen Consulting's principal has worked for a number of banks and property related businesses in Australia and New Zealand.
Our experience encompasses hospitality assets including hotels and restaurants as well as residential, commercial and retail property development.
The freehold going concern hotel market remains segment specific. Generally, yields and transaction volumes can be categorised by geographic location (Metropolitan/Country) and by dollar value.
Pub values are currently being affected by:
- A concentration in hotel ownership among heavily geared groups and perception by smaller groups/family operators that a wholesale disposal of assets at heavily discounted prices may occur.
- The anticipation of further falls in value has weakened demand from traditional hoteliers and vendors have been reluctant to meet purchasers' expectations.
- Adjustment of Loan to Value Ratios (LVRs) by lending institutions for the asset class have placed principal reductions on hoteliers and reduced capital available for group expansion/acquisitions
- Financial instability and growing concerns over levels of sovereign debt (nationally & internationally)
- Significant share market volatility and falls in personal wealth for private and institutional hotel owners
- Large institutional buyers seeking reduced exposure to this asset class
- Rising interest rate environment and the increasing cost of borrowings
- Transaction levels dominated by receiverships where despite a marketing campaign being carried out, purchasers are aware of the vendors weakened bargaining position
- A softening appetite for risk among investors for hotels with limited trading figures and/or limited potential to improve trade
- Industry risk profile has increased with legislation reviews, the Productivity Commission's report into gambling and the constant threat of addressing both problem gambling/alcohol abuse
- We expect the market to continue to be dominated by sales in the $2M-$5M segment
- Transactions of hotels in the $5M-$10m and $10M+ segments are expected to remain
scarce but will pick up in 2011
- Yields are expected to flatten in all segments with a softening bias, however, competition from buyers will prevent significant rises in yields
The Australian and New Zealand retail markets face a number of challenges such as stagnant consumer spending, changes in consumer behaviour and preferences, new competitors in the market, strong suppliers and complex sourcing from abroad.
Over the next few years, leaders of retail companies will have to answer a number of key questions:
- How can we improve the value we bring to our customers?
- How can we remain cost competitive?
- How can we become more efficient?
- What is the right portfolio of products, services, formats and locations for future growth?
Our Retail Experience
Opulen Consulting Consulting has completed a number of retail engagements including due diligences, customer surveys, market strategy reviews, portfolio reviews, store network planning and cost cutting engagements.