Think management rights is beyond your financial reach? A syndicate may be your ticket in.
Management rights newcomers Craig and Danielle Dunne used a syndicate to enter the industry to operate three of Yeppoon’s best properties. Here’s how they did it.
Growing up on a cattle property west of Yeppoon, the idea of operating a management rights business was not on Craig Dunne’s horizon. The 35-year-old became a sparky straight out of school and fell into work as a fly-in-fly-out electrician at mining sites in Queensland. The prospect of running a hotel just wasn’t in his frame.
“I had a good trade background but was more of a people person than your average tradie. I knew there was probably something else out there for me where I could use my trade but also my communication skills,” says Craig.
“I remember my parents talking about management rights for years, but when you don’t know about something, you don’t even know where to begin, so we never took any steps towards it. But it was always something at the back of our minds,” he says.
All that changed in 2017 when Craig’s father got wind of a management rights opportunity in Yeppoon. Being from central Queensland the family knew Yeppoon well. Craig himself had spent part of his childhood in Yeppoon as well as in nearby Rockhampton. Craig’s father called the vendor and was surprised to learn he was selling three management rights businesses not one: Salt, Echelon and Beaches on Lammermoor.
Salt and Echelon were arguably the top two beach properties in Yeppoon. Built in 2015 and 2009 respectively, these premium 40-key resorts were located 50 metres apart on Anzac Parade, Yeppoon’s main street. Beaches on Lammermoor was a short drive away, also on the coast.
“When the vendor mentioned three buildings, we immediately assumed it was no longer an option. Three buildings is elite level. Plus, that’s a lot of money that we couldn’t afford, so we sort of walked away,” says Craig.
Enter ResortBrokers. Founder Ian Crooks made the connection with the Dunne family and assured them that, with a little input from investors, who were former management rights operators themselves, they could afford the trio of management rights on offer in Yeppoon.
Says Craig, “It wasn’t until we met the investors that my wife, Danielle, and my parents put our heads together and thought, ‘This is actually possible now, should we have a crack?’”
Their plan was to operate the Yeppoon properties as family-run businesses. Craig’s parents would move from the country to Yeppoon, and help Craig and Danielle run the three properties. The investors would take a passive role and not be involved in day-to-day operations.
“Things really kicked off when the investors came on board,” says Craig. “They had an incredible wealth of knowledge. They weren’t just people who had a little bit of spare cash, their experience helped us enormously when the deal was coming together. They knew industry experts in every field we needed. They gave us an amazing hand during the start-up process.
“When things got up and running, they were never more than a phone call away. As soon as I called and asked, ‘What shall I do about this body corporate issue or this accounting issue,’ they were ready with really great advice. Bear in mind, we were all incredibly new to this, so it was good to be guided by former management rights operators.”
The Dunnes started operating the three Yeppoon properties at the beginning of 2018 and found it a steep learning curve.
“It was a very tough first year to get on top of everything,” says Craig. “With holiday short-term letting it’s a hectic, seven days a week concern, especially running three properties. But you either do it or you don’t. The sheer volume of work across three locations was a really big challenge. Something goes wrong in one building, then something goes wrong in another, then a computer doesn’t work here and then there’s no hot water there. There was a lot of running around between the three buildings. We inherited under 10 staff from the previous owners, and by the end we had 30.”
The couple were helped by excellent relationships with their bodies corporate from the get-go.
“It helped that we were originally from the area,” said Craig. “West of Rockhampton there’s many country people who have our last name. People liked that. It wasn’t like some big foreign investment company coming in, it was locals moving back.”
The couple had an excellent run of trade in the first two years of operation throughout 2018 and 2019. Then Covid hit in early 2020.
“Everything went completely dead for three months. The only people we could take in was essential travel. We didn’t know what to expect but we just hung in there. Then I remember as clear as day when the Queensland premier announced in June 2020 that Queenslanders could travel anywhere they wanted to within the state.
“The phone went ballistic. Yeppoon is very locally based for travel. We don’t get a lot of interstate or international tourists. The main people who come to Yeppoon are from those country and mining towns within a 300-km radius. People from Blackwater and Emerald, for instance, they love coming to Yeppoon as much as they can. After months of being stuck in a country town, the volume of phone calls we got was incredible. People just could not wait to get out.
“After June 2020 it didn’t stop, we had to get a lot more staff as it got super busy. It was a lot of hard work. Our occupancy rates never went backwards. We were operating at 80 to 90 per cent occupancy, which was incredible.”
“Danielle was most of the brains of the operation,” Craig admits. “She was the glue that held everything together. With a toddler at home, we certainly questioned whether we could maintain running a management rights business of three busy holiday properties. When an opportunity was presented by ResortBrokers to sell out in 2021, we decided to take the chance.
“We had a six-to-seven-year plan. Four years was probably a bit short for us. We’d kept in touch with ResortBrokers who told us there were buyers in Southeast Queensland looking to get out of the boom and bust in that market and spread their wings up the Queensland coast. Because of the success we’d made of the place they told us they could get us a much higher net profit than what we paid. It was an offer we couldn’t refuse. Working seven days a week without a real break can really get to you.”
The Dunnes have since relocated to Brisbane where they now manage another management rights business. The couple are enjoying the change of pace of operating a permanent management rights business compared to the faster pace of a holiday letting business. Craig says that’s one of the main attractions of the management rights business — you can fit it in with whatever stage of life you’re at.
“Our goal with this one is to think more long term,” he says. “We’re going for longevity this time around, something we can hang onto for a long time with a manageable workload. This one is very much Monday to Friday, certainly not as fast paced as what we had in Yeppoon.”
The now-experienced management rights operator has some advice to anyone looking to break into the industry.
“One of the best attributes you can have is being a people person. We were so fortunate to be introduced to experienced investors, but it certainly helped having the right people around you. Above all, you’ve got to be prepared to work hard. We really did put in big hours, especially in that first year.”
This article was contributed by Resort Brokers.
You can find more information at: https://www.resortbrokers.com.au/