Property models explained
The accommodation and hospitality sector presents a range of property and business opportunities. Whether you are entering the industry for the first time, or are an existing owner planning to expand or upgrade, you need to consider the range of property types available, the various models of operation, and which best suits your business, lifestyle and investment goals.
While there are many types of tourism and hospitality properties i.e. motels, hotels, serviced apartments, caravan/tourist parks, backpacker hostels, B&Bs and so on - from an ownership and operational viewpoint, they fall into broadly two categories.
Freehold Going Concern: whereby both the freehold property and the business housed therein are wholly owned and operated
Freehold Investment: the freehold land and buildings are owned generally by a passive investor with a lease in place and:
Business: where a person operates a business from the land and buildings but does not own them. Mostly the chattels are owned by the business owner and there tenure is secured by a lease - normally 20-30 years in length with an annual rental payable to the "freehold investment" owner.
Management Rights: serviced apartments are operated under a different model i.e. Management Rights. In management rights buildings, ownership of the property is shared by individual strata title unit owners, while the business of operating the property is owned by the resident manager. Here we provide a concise explanation of these various industry models.
Managed Investments: The status of these investments vary from apartments that can be owner occupied on a permanent basis to limited or unlimited owners use. Click here for further details about this sale type.