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A positive outlook for management rightsAn article by Peter Child of Bankwest
Another year is well under away and to this point, there are a significant numbers of positives. Despite the magnitude of rain in early February, the school holiday period was dominated by blue skies – a far reach from that of two years ago when tourists were checking out early due to frustration associated with the inclement weather. The Aussie dollar has climbed onto the greasy pole in 2010. A continuing downturn in this regard will hopefully minimise the 20% of Australian residents who elected to holiday overseas in 2009. Governments are starting to plough some serious coin into the Australian tourism market which we all hope will generate a greater inflow of international tourists. And most agents are reporting strong enquiry, some even acclaiming the start of 2010 to be the busiest ever. What is refreshing is many of the potential buyers are making their debut in the management rights industry, an element which has been missing in recent years. Those four ‘external’ points alone are strong positives for 2010 and should delight those who have invested into the accommodation sector. Internally, it remains imperative that resident managers maintain vigilance over their trading performances and use the historical information of years gone by to make accurate assessments on where the business is heading. While the majority of time is spent ‘working in the business’, managers must dedicate time to ‘working on the business’. If the task of reviewing and understanding financial information is either a burden or proving too complex, please, I encourage you to seek the support of a trusted industry advisor – generally your accountant. Those astute professionals will quickly and accurately advise profit margins on core income streams like cleaning, internet services, pay television etc. Maybe your cost to unit owners in this regard is below average, or maybe you are paying too much for these services. A tweak on either of those factors can have a dramatic impact on your profitability. Multiply that out by a ‘benchmark’ five times and I hope you are seeing the beneficial flow-on effect. Similarly with your management and letting agreements, far too many try and play the ‘bush lawyer’ and dedicate too much energy to dealing with the Body Corporate battlefield. Quick escalation of your issues to a recognised industry lawyer will save pain and heartache, and permit better utilisation of your time in managing your complex. There are an enormous number of stories circulating around the management rights industry about resident managers clashing with Body Corporates. I question how many of those disputes are a result of managers playing the ‘bush lawyer’ in a bid to save costs. Personally, I believe your personal brand is worth protecting and early advice on clauses contained in your agreements will go a long way to protecting your personal brand and not allow relationships to go past the point of no return. Same song, different verse in regards to financiers. All I will say in that regard is that the good times attract fair weather sailors – those who enter the market in the glory times. When the weather turns nasty, inexperience becomes evident and at a time when a borrower can least expect it. Your lawyer, accountant and agent will be the best people to discuss and recommend industry proficient bankers. Best wishes for a healthy and successful 2010. Peter Child To speak to one of our dedicated Management Rights Specialists please contact:
bankwest.com.au
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