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Would you ever invest in a luxury hotel or resort?

By Greg Bell

Some very appealing real estate has hit the market in Queensland's Whitsundays: not one, but three luxury resorts on Lindeman Island. The island is scheduled for a $600 million redevelopment next year, which will include the creation of:

  • A six-star spa,
  • A five-star beach resort,
  • A five-star tourist villa centre. 

Project owner, White Horse Australia, is looking for the right group to operate the property when it's open for business in 2022. 

While this slice of heaven may be out of reach for most investors down on the Gold Coast, it could make you think about adding a hotel or resort to your own commercial real estate portfolio. Here's what you need to know. 

Up for sale: Lindeman Island

White Horse Australia has big things planned for Lindeman Island.

According to Karen Wales, one agent leading the search for an operator, "White Horse Australia is looking to create a truly spectacular world-class island resort, which celebrates its premier location within the Great Barrier Reef World Heritage area."

"The project will deliver 100 luxury villas and 136 guest suites, thereby allowing scale and efficiency across a range of room products and price points."

Lindeman Island will also become home to other new amenities, including: 

  • Restaurants, bars and cafes,
  • A conference centre,
  • An eco-tourism centre,
  • An airport. 

"When the resort is in full swing, it could maintain 300 ongoing operational jobs," State Development minister Anthony Lynham reported to the Brisbane Times. 

Investing in hotel properties on the Gold Coast

Meanwhile on the Gold Coast, the hotel industry is also taking off. 

With the Games earlier this year, Gold Coast hotel markets have enjoyed renewed international and domestic interest. This is expected to continue after the city's opportunity to showcase themselves to would-be visitors. In fact, Deloitte's national tourism outlook predicted that the Gold Coast (as well as Tropical North Queensland) would show the highest occupancy growth in leisure markets in 2018.

Due to the budding nature of the sector, many Gold Coast investors are considering hotel and resort properties for the first time. But is this the right move for you? Here are three things to consider about hotel property investment. 

1. Location is everything

In commercial real estate, location is always a factor. Shops and restaurants should be in busy areas, while warehouses and industrial spaces can be further out of the city. 

With hotels, the entire appeal hinges on the consumer wanting to visit a given place. Take Lindeman Island, for example. White Horse Australia can build the most amazing resort in the world, but it would still fail if no one wanted to go to the Whitsundays. 

Fortunately, the Gold Coast is a very tourist-friendly city, making it harder for investors to go wrong. It's important, however, to look even closer at location. It isn't enough to have 'good' location – you need great, situated with strong access to main attractions. 

2. You won't be the only stakeholder

When you buy a hotel or resort, you usually own the facilities, not the business. Of course, this is different if you bought a hotel with the intention of running it. 

Typically, another company will be in charge of operating the business, and that includes managing the property. As an investor, this is an important factor to consider. It's similar to buying a medical or aged care facility – you need to be willing to let someone else take the reins of your asset. 

3. High risk, high rewards

In 2017-18, Queensland saw international arrivals grow by 13 per cent, according to Deloitte. With new residents and tourists driving demand for hotels and resorts on the Gold Coast, you might think investing in the sector is a no-brainer.

That said, owning a hotel or resort is a high-risk, high-rewards game. If the property isn't able to make it as a hotel, what do you do with it? The space isn't easily converted for other uses. 

To learn about unique commercial investment opportunities on the Gold Coast, reach out to the team at Ray White Commercial Gold Coast today. We're here to answer any questions you might have about finding your next big opportunity. 

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