Mon, 22 Oct 2018, Catie Langdon
Motels are the backbone of our accommodation sector, trendsetters of a modern generation of lodgings. The motel has evolved since its 1950s incarnation, and endured. Now, the roadside romance is celebrated and nostalgia for those simple pleasures is fuelling a highway heritage revival.
As it does for so many things, Australia’s motel heritage owes its origins to the USA. There, in the early 20th century, the rise of the automobile saw Americans take to the road. No longer confined to the railway, tourists could choose their own routes, destinations and timetables.
Accommodation choices, usually hotels beside railway tracks, didn’t suit the new mobile population. Convenient and functional lodgings for motorists for needed. What evolved – tourist cabins, ‘motor courts’ and eventually motels – became part of popular culture.
One book that traces this evolution, John Margolies’ Home Away from Home, notes a 1940 article in America’s Business Week that reported: “Actually, the auto court represents more than a different mode of accommodation. It stands for a new way of life in tourism – a way that combines convenience, inexpensiveness and informality in a formula that is definitely clicking.”
That was still long before the advent of the motel in Australia. But, with similarly vast distances to travel and motorcars increasingly available to the general populace, the stage was set. All it took was one entrepreneurial Australian, while visiting relatives in the US, to have his first ‘motel experience’.
Father of the industry
Some years ago, I had the privilege of spending a day with the late Hugh McCarron, widely known as the ‘Father of the Australian Motel’. McCarron told the story of visiting his cousin in the scorching desert of Death Valley, outside LA, in 1952.
Because the family didn’t have enough room to put him up, he was told he’d been booked into a ‘motel’. “What’s that?” he asks his cousin. “You mean hotel.” “No goddamit,” his cousin retorts. “I mean MOTEL. Don’t you have motels in Australia?”
What McCarron found was a row of 10 rooms, built of exposed desert rocks inside and out, with a concrete floor, corner wash basin, electric jug, box air-conditioner on the wall, and a toilet and shower behind a tiny cupboard-like door.
It wasn’t much, but it got him thinking. Having travelled extensively throughout NSW selling insurance, he’d stayed in enough hotels by the railway tracks, with the wooden toilet down the back, to see the potential for motels in Australia.
Others, however, took a bit longer to convince. McCarron spent three years putting together plans and gaining financial backing and, in 1955, he opened Australia’s first motel – the Bellair Drive-in Motel in Orange. (Yes, others also claim this title.)
With 26 rooms and a revolutionary floor heating system, it was a roaring success from day one – and it’s still there today, as the Mid City Motor Lodge. Soon after, McCarron opened Australia’s first air-conditioned motel in Parkes, and the industry has never looked back.
He remained a doyen of the industry, building a chain of dozens of properties, heading the Caravilla chain and overseeing a merger that led to the establishment of Travelodge. From 1962, he operated the Koala chain and, in the 70s, took a half share in Trans World Inns, then owner of the Ramada chain.
Growth and competition
Probably the greatest growth period for the motel industry in Australia was from 1975 to 1985. Competition drove owners to offer an ever-increasing array of amenities.
In the beginning, a private bathroom and onsite parking were ‘the bee’s knees’. By the 1960s, highway hoardings boasted the latest mod cons, colour TVs and swimming pools.
Resort Brokers founding director Ian Crooks, a motelier in New Zealand before moving to Australia in the 1980s, well remembers the must-haves as the decades rolled by. Spa baths in the seventies, waterbeds in the eighties.
“When Bankcard arrived in 1978, there was huge resistance. Everyone always paid cash. I’ll never forget, when we had our motel on Lake Taupo, a guy from the US stayed with us for a while.
“I asked him if he’d heard of this Bankcard thing. He flipped open his wallet to show me probably 20 cards. ‘Nobody in the States pays cash these days’, he says.”
Crooks himself pioneered the next big change in Australia’s motel industry – this time not to what greeted guests, but to how motels were actually owned and operated.
Motel leases were commonplace in his native New Zealand but, when he moved to Australia in 1985 to establish Resort Brokers, there was none. The traditional model of owner-operation ruled the market.
Historically, freehold land and buildings were seen by moteliers as the key assets – real estate that, independent of the business, would continue to rise in value. But Crooks knew the potential to also create a valuable business component.
He established and sold Australia’s first motel lease, and set the scene for motels to be sold in one of three ways – as a freehold going concern to an owner-operator, on a leasehold basis to a business operator, and as a freehold property to a passive investor.
“It really opened the market up, enabling ambitious younger operators to buy motel leasehold businesses for less than the cost of freehold,” Crooks says. The concept has certainly stood the test of time.
Memories flooded back, as we took our nostalgic road trip through Australia’s motel history. I recalled a childhood holiday staying every night in a ‘Golden Chain’ motel. We filled a book with stamps or stickers, and our tenth night was free.
Flag Inns (a forerunner of Choice Hotels), Crooks says, were considered the cream of the crop. Readers of a certain vintage might remember Flag Inns’ advertising heroine ‘Super Sally’, whose super power was take your booking and get you the best rate.
Referral chains published national accommodation directories, which became travellers’ bibles. Though not entirely, these have now largely disappeared, displaced by the Internet and Online Travel Agencies (OTAs).
Other former motel industry staples have fallen by the wayside due to new technology and lifestyle preferences. Star ratings, once the benchmark by which you judged properties, have been usurped by online guest reviews.
As early as the 1990s, motel advertising signs started disappearing from roadsides. It coincided with the advent of mobile phones, and has accelerated with the proliferation of smart devices and OTAs.
Once ubiquitous motel features have disappeared too. Remember the breakfast hatch, through which your host would push a cooked breakfast at your requested hour? Now, with a café on every corner, most people opt to eat out.
“Breakfasts were such a profitable thing for motel operators – probably 70 per cent profit,” Crooks laments. “But now the cooked motel breakfast is pretty much a thing of the past.”
Fundamentals the same
The evolution continues. But the concept endures. Comfort, convenience and value – these are the fundamentals of the motel industry. And, more than 60 years on from the opening of our first motel, they’re every bit as important to travellers and the wider tourism industry.
Crooks says the slowdown in development of new motels coincided with the advent of cut-price airline travel. It was suddenly cheaper to fly than drive between cities.
“I remember occupancy rates along the Newell and New England highways used to be in the mid to high seventies, yet the national average was more like 58.5 per cent,” he says.
“Now, with the growth of other types of accommodation and groups like Quest, Mantra, Accor’s Sebel brand, Ibis, Oaks, etcetera, there is so much more competition.
“Having said that, our national occupancy rate is sitting around 60 per cent. So, even though there are so many more rooms, there are a lot more people travelling.”
There will always be a place for the traditional motel, he insists. “New motels built in the right place always do extremely well.”
And the buyer profile for motels hasn’t changed – hard-working people from all walks of life who want to own their own business.
Demand for motels remains high, because they continue to offer fantastic returns. And, in today’s low interest rate environment, yields have tightened.
“Freeholds are scarce as hens’ teeth,” Crooks says. “Where they used sell on a 12 per cent yield, now it’s more like eight per cent. Leases used to sell on 35 to 40 per cent yield, but now it’s 25 to 30 percent.”
Fundamentally, the key to success is service. Good service is rewarded with good returns.
There are imperatives though, in an ever-changing accommodation landscape where OTAs dominate and competition is coming from other operational models including hotels and serviced apartments. Refresh. Differentiate. Innovate.
“You definitely need to keep evolving, to create a point of difference for your property, and always to reinvest in your property, to refresh and reinvigorate.”
Finally, it’s perhaps reassuring for the industry that there’s truth in the saying ‘everything old is new again’.
Nostalgia for the motel heyday is bringing guests flocking back to retro reincarnations like La Costa Motel on the Gold Coast, Halcyon House at Cabarita Beach and Byron Bay’s Hibiscus Motel.
Clearly, it’s a formula with a future.