Motels in Austalia

History of Motels in Australia

Motels first appeared in Australia in the early 1950s, following their popularity in the United States. They were marketed as a modern and convenient alternative to traditional hotels, offering private rooms with attached bathrooms, off-street parking, and often other amenities such as swimming pools and restaurants.

The first motels in Australia were typically located on major highways, making them a popular choice for travellers who were passing through. Motels soon began to spring up in regional areas as well, catering to tourists and business travellers alike.

In the 1960s and 1970s, the motel industry in Australia experienced a period of rapid growth. This was due to several factors, including the increasing popularity of road travel, the growing affluence of Australians, and the development of new highways and tourist destinations.

During this period, many motels were built in a distinctive mid-century modern style. These motels were characterized by their bold colours, geometric shapes, and use of glass and steel. Many of these motels are still standing today.

The motel industry in Australia peaked in the 1980s and began to decline in the 1990s. This was due to several factors, including the rise of budget hotel chains and the decline of domestic road travel.

However, in recent years, the motel industry in Australia has experienced a revival. This is due to several factors, including population growth without a commensurate increase in motel supply, the increasing popularity of regional travel, the growth of online booking platforms, and the affordability of motels relative to alternative accommodation options.

Today, motels offer a diverse range of accommodation options, from budget-friendly rooms to more upmarket suites. Many motels also have on-site facilities such as swimming pools, restaurants, and bars.

Market Size and Structure

According to IbisWorld, there are approximately 2,100 motels in Australia, with the majority of these being located in the Eastern States of Australia. Further, it is estimated that only about 15% of motels are in large metropolitan cities, with the majority being in regional towns and localities.

The industry is highly fragmented. The top six operators represent 34% of the sector with the remainder accounted for by small private businesses which are mostly husband and wife run operations.

In many cases these private operators have bought a motel business as a lifestyle decision without prior experience in hotel or motel operation. Typically, they live on-site in a manager’s apartment and pay themselves a modest wage for managing the business.

Roughly half the motels in Australia operate as a freehold going concern with the remainder split into separate leasehold and freehold businesses. This separation is reflective of some businesses which have sought to stay invested in the sector via a freehold exposure after transitioning into retirement. This has been matched by a notable rise in demand for freehold motel assets as investors, more broadly, take an interest in alternative property sectors.