Profitable Quality Inn Napier business for sale

5:00 AM Wednesday March 16, 2016 Colin Taylor

The Quality Inn Napier is for sale at 311 Marine Parade, Napier.

The Quality Inn Napier, the only hotel business with a full restaurant and bar, swimming pool, gymnasium and fitness facilities, on Napier’s Marine Parade oceanfront, is for sale for an asking price of $1.2 million plus GST.  

The sale solely comprises the going concern hospitality business with the present owners retaining ownership of the land and buildings in a leasehold arrangement with the business purchaser.

“This is one of Napier’s best performing hotel businesses,” says Bill Brown of Bayleys Hawkes Bay who, with colleague Sam MacDonald, is marketing the 60-room hotel at 311 Marine Parade.

“The Quality Inn is one of Napier’s few commercial accommodation providers to straddle both the corporate and leisure customer sectors,” Brown says.

The hotel was built in the mid-1970s as the Napier Travel Inn and has undergone a number of refurbishments since then. The last was in 2013 which raised the property to a four-and-a-half star Qualmark rating.

MacDonald says the Quality Inn Napier operates under the Choice Hotels Australasia marketing umbrella and is the preferred accommodation provider in Napier for a number of Government departments like the Police, the Accident Compensation Corporation and the Department of Conservation. Among the hotel’s corporate clients are Air New Zealand, ANZ bank, DB Breweries, Domino’s Pizza and retailer Noel Leeming.

“Quality Inn Napier has also maintained its rates above average yields for the sector, again, justifying those rates through the quality of the premises and room interiors,” he says.

“The Quality Inn Napier’s revenues rose 8.6 per cent in the 2014/15 financial year compared to the previous 12 months. Similarly, the hotel’s net profit grew over the 2014/15 financial period – up a healthy 11.5 per cent on the previous 12 months thanks predominantly to increasing room yields.”

MacDonald says the building’s owners will grant a new lease of up to 30 years to the successful business buyer, charging annual rental of $440,000 to $460,000 depending on the gross revenue generated by the business’s accommodation activities.

“The property has strongly benefitted from its franchising agreement being part of the Quality brand. Within the franchise contract is a reservation system directly linked to the major travel agencies including House of Travel, Tandem Travel and Air New Zealand, as well as the online booking services such as Wotif, Expedia, Trivago, and booking.com.

“All of these systems are instantaneously updated using real-time room availability programmes to avoid over-selling of rooms and thereby maintaining yield management. The Choice and Quality Inn brand also delivers a substantial amount off corporate bookings – including group travel and conferences.”

A 56–seater restaurant and bar underneath some of the Quality Inn Napier’s waterfront-facing rooms is separately tenanted to a specialist food and beverage operator working in tandem with the rooms’ operator.

True Commercial - 311 Marine Pde%2c Napier - Quality Inn - aerial.jpg

An aerial view of the Quality Inn Napier in its setting.  

“The property’s rooms are configured from studio layouts through to two-bedroom executive apartments. Room rack rates begin at $155 per night,” says MacDonald.

“The hotel already has strong advance booking numbers right through until Christmas promising to deliver an instant cash-flow to a new ownership.”

MacDonald says a regular and comprehensive maintenance schedule has been the cornerstone of Quality Inn Napier’s annual operations calendar so all buildings, interiors, and furnishings are in above average condition.

The dual-storey business employs four full-time staff in receptionist and housekeeping roles, with six part-timers assisting with reception duties, housekeeping and laundry responsibilities.

“The Quality Inn Napier has benefitted from servicing both the corporate and leisure traveller markets – thereby smoothing out many of the peaks and troughs experienced by smaller stand-alone hotel and motel operations,” says MacDonald.

“A number of competing accommodation properties in Napier have chosen to take profits out of their businesses over the past decade in periods when times were good. In contrast, Quality Inn has re-invested a considerable portion of its profits back into its operations through maintenance and marketing.

“That strategy has paid off - with the property consistently recording above-average occupancy rates compared to several other hotels which have, in effect, become run-down and are now missing out on the corporate bookings that demand higher levels of accommodation.”

Brown says Hawke’s Bay’s in-bound tourism numbers are at an all-time peak with the latest data from Statistics New Zealand recording that international tourists are coming to Hawke’s Bay in record numbers – some 278,455 visitors for the 2015 calendar year, up 16.1 per cent on 2014. Domestic guest nights also simultaneously rose 4.6 per cent to 751,658 and the average length of stay for guests in Hawke’s Bay rose from 2.13 nights in 2014 to 2.21 nights in 2015.