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Motels and Management Rights have similar attributes in the accommodation industry, but also have their subtle differences.
Term | Motel leasehold | Management Rights |
Lending | Lending ratio is up to 55% for leasehold | Lending ratio is up to 70% |
Decision maker | Operator dealing with 1 owner (landlord) regarding decisions | Manager has to deal with numerous parties (owners) regarding decisions |
Trust Accounts | No trust account | Trust account required |
Licensing | No licence required | Restricted letting licence required |
Income | Your income can’t be affected by owners taking the units from the letting pool | Owners have the option of withdrawing units from the letting pool9 eg: if they sell to an owner) |
Owners | No owners live on site | Owners can live in their unit in the complex |
Approval | No consent from the body corporate. Approval from landlord | Require consent from the body corporate to transfer the ownership |
Return / Cash Flow | Higher return as you don’t outlay funds on separate real estate | Lower return as you normally have to purchase the managers unit that doesn’t produce any income |
Term | Up to 30 years on the lease | Up to 25 years on accommodation module and 10 years under the standard module for the term of the agreements |
Location | Location may not be as desirable as a management rights complex | Location can be right on the beach in major towns |
Hours | Hours can be longer in motels | Hours are designated by the agreements. |
Restaurant | Restaurants – operators might have to make breakfast. Have to have more staff | Very few complexes have a restaurant to worry about |
Legislation | Legislation is common law | The Management rights industry operates under the BCCCM Act giving greater protection to the operators |
Top ups | Lease extension – operator may have to pay the landlord to extend the lease | Body Corporate is not entitled to receive a financial benefit of extending the agreements |
Renovations | Renovations to the units are borne by the operator | Renovations to the units are borne by the owners |
Sales commissions | Can’t make additional income by selling units in the motel | Ability to make sales commission by selling units in the complex (with an appropriate licence) |
Rent | Payable to the landlord for exclusive occupancy of the motel | No rent payable to the body corporate |
Residency | Someone must reside onsite manage the business | Might or might not be required to live on site depending on agreements |
GST | GST on tariffs | Usually no GST on tariffs or rent |
Duties | Set out in the lease – motelier completes role as required | As detailed in caretaking agreements |