Barnacles Backpackers

Backpackers and Hostels · For Sale
Asking Price $890,000

Listing Details

On offer for fire sale is two adjacent dwellings currently being used as an 86-bed backpacker hostel trading as Barnacles Backpackers.

The freehold and the going concern business are on offer on a walk-in walk-out basis with an optional onsite management contract or a ‘sell and leaseback arrangement’.

The business is for sale with its plant and equipment, furniture, fittings, and goodwill.

The property and the business have been valued at $1.310 m in September 2016 by Herron Todd White QLD but they are on offer for sale at a big discount to achieve a quick sale following a partnership breakdown.

The asking price of $890,000 is equivalent to the apportioned value of the freehold land and improvements. Vendors are not seeking any compensation for the business value, assessed at $420,000 in the valuation report.

The property is an aggregation of two adjoining allotments with a total area of approx. 4502 m2.

It is in a residential location within an easy walking distance of the town and shopping facilities.

Improvements erected on the land comprise two dwellings including one with a semi-detached section.

The first building (18 Gordon Street) comprises two levels. The ground level provides ten (10) accommodation rooms for forty-four (44) persons. The upper level of this building provides for the managers’ residence and reception area.

The second building (16 Gordon Street) is also over two levels. The upper level provides nine (9) accommodation rooms for thirty-eight (38) persons, while the lower level includes communal kitchen, laundry and living room. The semi-detached building has been refurbished and allows for four (4) beds and bathroom.

The owners have operated the business since 2004.

They derive their income primarily from short to long term accommodation. They also derive a minor additional income from washing machines and drink machines.

Most guests are young international itinerant backpackers in Australia on working holiday visas. They visit Bowen to predominantly work in the local horticultural industry and to enjoy The Whitsundays region, which offers palm fringed beaches, snorkeling and fishing.

In addition to providing accommodation, the owners arrange work for their guests at local farms and provide them transportation.

In recent years, the local horticultural industry has been affected by the weather. Hot and dry conditions significantly constrained planting and production which caused a reduction in labor demand. The decrease in available farm work has in turn affected occupancy at the hostel and reduced operating profit.

When the weather is not a disruptive force, occupancy is typically in the range of 45% to 50%. However, in the last two financial years, it was 41.4% and 36.6% respectively.

Turnover is typically in the range of $400k -$430k but has been at approx. $340k and $330k in the last two respective years. Thus, operating profit in 2015/2016 was at approx. $175k vs. previous levels of $200k to $250k (before owner’s salaries).

The coastal town of Bowen is situated adjacent to the Bruce Highway near the mouth of the Don River approx. 192 km north of Mackay and 203 km south of Townsville in the QLD dry tropics.

It is an old port town. It includes the main town area, its small ships harbor and outer lying residential areas of Queens Beach, Rose Bay, and Whitsunday Shores.

Major industries include irrigated horticulture, commercial fishing and beef cattle. Also, there is a major coal export operation from the Abbot Point Coal Terminal (30 km to the north).

At the 2011 census, the town had a population of 8604.

The top employment industry is the vegetable and fruit growing industry representing 8.6% of the workforce. In fact, the Bowen region is the second largest vegetable producer in Queensland.

This sale is a genuine fire sale opportunity and the vendor is strongly motivated to sell.

The business is crying out for a fresh, modern approach to its operation, branding and market positioning.

Barnacles would suit an investor looking for a high return or an experienced hostel operator with marketing flair and knowledge of current best practice.

One of the partners is keen to stay on either as an onsite manager on a combined fixed salary and small profit-share contract. Also, he is happy to stay on as a tenant with an above market rent on offer. Under both scenarios, the contemplated terms would be quite attractive to a prospective buyer.

Contact us for a detailed Information Memorandum or to arrange an inspection.

Additional details

N/A

Reticulated Water, Reticulated Sewerage, Garbage Collection Service, Recycling Service, Security System

Floor Plan

16 Gordon Street, Bowen

18 Gordon Street, Bowen

Location

16 Gordon Street, Bowen QLD

Attachments

Listing Agent

Alex Omran

Company Director, Accommodation Properties P/L

1800 198 858
0411122011

Alex Omran is a licenced Real Estate Agent and Business Broker with many years of commercial experience. After completing a Bachelor of Commerce and obtaining a Diploma in Company Directorship, Alex spent his early career in banking and finance with..

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