Motels Surge as Hidden Gems for Investors

Motels are becoming an increasingly attractive asset class for both institutional and small investors due to a rise in domestic travel. This trend is part of Australia’s $3.9 billion hospitality rebound, though it may challenge the traditional owner-operator model.

Once viewed as budget roadside stops, motels are gaining popularity again. The pandemic shifted travel habits and renewed interest in local escapes and nostalgia-driven getaways. That change, combined with social media’s embrace of retro design and the rise of “bleisure” (business and leisure) trips, has sparked investment in city-fringe and regional motels. Since 2020, the sector has grown by an average of 6.9% annually and attracted a wide mix of entrepreneurial investors.

These new investors are reimagining older motels through renovations that add charm and boost returns. Properties are often acquired below the cost of building new ones and typically need only modest upgrades. Some groups focus on preserving vintage architecture while updating amenities to include solar panels and water-saving systems. Others prefer to avoid coastal tourist zones, which can experience seasonal drops in occupancy, and instead focus on steadier demand from workers, business travelers and public-sector contractors.

Institutional interest is rising fast. Major investment firms are pouring money into this space, as seen in rising transaction levels. One agency reported a 60% increase in motel sales compared to before the pandemic and listing inquiries have jumped nearly 130%. New ventures, including a $500 million fund from a commercial property group, plan to acquire at least 50 regional motel sites with the intent to build the largest branded and professionally operated motel chain in the country. The goal is to deliver reliable returns in regional markets that often lack large accommodation providers.

What makes motels especially appealing is their latent value. With little new construction underway and strong loyalty from return customers, motels remain a vital part of regional travel. Properties located near major infrastructure projects, military operations or transport corridors tend to perform best. Despite needing modest capital up front, these assets can perform well. A recent $7.5 million purchase in Victoria, for example, generated $1.2 million in revenue last year and achieved a 10.4% yield.

The vintage charm of a 1960s-style poolside setting now resonates more than ever, especially with younger guests seeking visual storytelling and alternative travel experiences. This combination of profitability, local appeal and authenticity is reshaping the landscape of regional accommodation investment in Australia.

Source: Australian Financial Review, DesignStreet, The Hotel Conversation

Doga Sydney - Corporate Cuddles & Puppy Yoga

Take what you’re doing offline and circle back on team wellness because real team bonding happens with puppies, not PowerPoint. Give your team an event they’ll actually look forward to with Puppy Yoga!

We’ve got you covered with Corporate Cuddles and Puppy Yoga 🐶