Significant opportunities are now available in regional Australia for experienced, resourceful accommodation operators willing to back their own judgment and ability.

Amid the fallout after the mining construction boom, fortune will indeed favour the bold. Many strong regional towns suffered a dramatic downturn when mining construction declined. Properties that had experienced outstanding trading during the resource-fuelled boom, found the remarkable high was followed by a demoralising low.

Some who reaped considerable benefits during the good times have, sadly, had their spirits knocked by the downturn. Understandably, some of those operators are now ready and eager to sell and move on.

So, as one door closes, another door opens. And on the threshold are canny, counter-cyclical investors with the wherewithal to step in and drive a turnaround. In many cases these are historically good motel and hotel towns, but they’re suffering a tough but temporary downturn. That’s where real opportunities often lie.

It’s not for everyone, however. You have to know what you’re doing.

If you do, you will recognise quality properties in fundamentally strong accommodation markets, where you can buy at a very attractive price, hold and, drive the business and, potentially achieve very strong returns down the track.

Of course I would caution buyers interested in under-performing regional motels and hotels to do their homework carefully to ensure they are pay a fair market price based on current conditions. Look at the most recent trading results and compare those to the corresponding period in previous years. If the recent figures are down significantly on corresponding previous periods, the purchse price needs to reflect the net profit of the most recent trading period. The gains possible when experienced operators take advantage of the cyclical nature of the accommodation property business are clearly demonstrated.

Five years ago, it was very difficult to sell management rights in the major coastal resort areas. But those who had the vision to buy in during the downturn are certainly reaping the rewards now that they’ve rebounded so strongly.

We should also mention, mining camps that operated beyond their intended or permitted scope had an impact on the mainstream accommodation industry in some areas. Some mining camps that were supposed to only operate during a project’s construction phase stayed open and offered short-term accommodation, in competition with motels. We’re pleased to see action is being taken to close these camps down, as it should be, and bring life back, not just to local motels, but to the towns in general. It will happen, and it is another factor to be considered by those who are in a position to grab the significant opportunities available now.

Advice from renowned counter-cyclical investor Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”