INNER SUBURBAN - BEER HOUSE
The beehouse is an inner suburban hotel usually located near the waterfront. lt commonly has the following features:
Early opening and closing times aiming to attract clientele who work shifts and early hours.
Most beer sold is draft beer through public bar
The bottle shop is of little importance in the total takings.
The beerhouse has the least management problems of any hotel as it does not spend a great deal on entertainment or advertising. It can be easily run by a small number of staff and is often the first hotel for publican investor. Because of the ease of management and lack of competition (no new hotels or clubs are likely to open in the immediate area) it is he safest hotel investment and therefore, has the lowest capitalization rate.
The main problems are:
A dwindling clientele as fewer workers work early hours in the inner city
High repair and maintenance as the hotels are usually very old. The valuer should check for any outstanding orders over the hotel.
May not be highest and best use.
A number of inner city hotels are renovated into boutique hotels or specialty hotels based on entertainment or a good restaurant. For example, in Balmain, Paddington and Glebe.
MIDDLE SUBURBAN HOTELS
Typical middle suburban hotels proliferated in the 1920s and 1930s and usually have an "art deco" style. Typical features include:
Located in established "strip" shopping centre
Saloon and beer garden bars are commonly, more important than the public bar
The bottle shop pays a more important role in the overall takings
Entertainment and it's associate management problems are a normat part of the hotel's activities.
Public carparking may be available at the rear of the premises. Often shared with the retail shops.
A good restaurant or at least a dining room.
Middle suburban hotels require a higher level of management expertise compared to beerhouses because of the problems associated with entertainment and the larger number of bars. They are riskier than the beerhouse but there is little chance of increased competition as they are usually sited in established suburbs. The valuer should check the land use for “highest and best use" as the land is often zoned commercial. Because of the higher risk to investment the capitalization rate is higher than that for a beerhouse.
OUTER SUBURBAN HOTEL
The outer suburban hotel is the largest and most modern of the hotel types and is characterised by:
A large number of bars.
A high dependence on entertainment. There may be more than one band playing at the same time.
Function rooms and restaurants play a more important role in the overall takings
Sited on a large site with its own larqe carparkinq area
A motel may be attached
Drive in bottleshop is most important.
An investment in an outer suburban hotel is hiqh risk investment because of:
high probability of increased competition from either newer hotels or clubs
Most difficult level of management expertise because of a large number of staff, bars and an emphasis on entertainment (crowd control).
Therefore, outer suburban hotels have the highest capitalization rate outside of boutique hotels.
The boutique hotel is largely a function of the “gentrification” of the inner suburbs of the large cities. It is typically an old hotel which have been modernised usually, to a very high standard and cost so that there is little resemblance to the old hotel. They are characterised by the following:
Restaurants and food facilities are of a very high standard
Lounge and beer garden bars account for a large part of the overall takings
Emphasis on a large range of beers nd wines. Some incorporate their own small brewery.
Very good examples are found Balmain and Paddington in Sydney. The risk is much hígher than for other hotels as the success or not depends largely on the fickle tastes of a particular professional class clientele. Their sustainability has not yet been proven.
A further problem is that since the quality of management required is high a large part of value well be personal goodwill. Therefore, the capitalization rate is the highest of the hotels.