How Should Port Macquarie Motel Sellers Explain Seasonal Revenue to Buyers?

A motel buyer usually wants to understand more than the total revenue shown for the previous financial year.

They want to know how that income was produced.

For a Port Macquarie motel seller, presenting monthly trading information can help explain the difference between recurring performance, stronger periods, quieter periods and unusual events.

Annual Revenue Can Hide Important Information

Two motels could theoretically produce the same annual accommodation revenue while trading very differently throughout the year.

One might operate relatively consistently.

Another might generate a greater proportion of income during particular holiday, event or travel periods.

That does not automatically make one business better than the other.

It means the purchaser needs enough information to understand the operating pattern.

Prepare Monthly Information

Where available, sellers can work with their accountant to organise historical information showing monthly room revenue and relevant operating expenses.

Other useful business records may help explain room nights sold, average room rates actually achieved, cancellations, direct bookings, online booking-platform activity and commissions.

The objective is not to overwhelm buyers with data.

It is to make the annual figures easier to verify.

Australian Government guidance says business buyers should independently investigate financial records and commonly review items such as tax returns, BAS, profit-and-loss records, cash-flow statements and sales records. business.gov.au

Explain Unusual Periods

If one year contained a significant interruption, major refurbishment, temporary closure or unusual one-off trading period, explain it.

Likewise, if a major expense occurred once rather than every year, have the accountant determine how it should properly be presented.

Do not simply remove costs or add hypothetical revenue to make the business look stronger.

The reasoning behind any adjustment should be capable of explanation.

Show Where Bookings Come From

The revenue story can also include the business's booking mix.

A prospective purchaser may want to understand the balance between direct bookings, online travel agents, corporate accounts, repeat customers and other booking sources.

Different channels can carry different acquisition costs and operational requirements.

Again, historical evidence is more useful than unsupported claims about future growth.

Separate Forward Bookings From Historical Trading

Bookings already on the system after the proposed settlement date may be commercially important, but they are not the same thing as completed historical revenue.

Keep the categories separate.

Historical trading explains what has happened.

Forward reservations form part of the handover discussion.

Future growth remains a possibility rather than a guaranteed result.

Make the Numbers Tell an Understandable Story

The strongest financial presentation is not necessarily the one with the largest headline number.

It is one where the buyer and their accountant can follow the information from trading records through to the financial statements and understand why the business performs as it does.

Frequently Asked Questions

Should a seller provide monthly motel revenue?
A buyer may request detailed financial information during due diligence. The seller's accountant should advise what records are appropriate and how they should be presented.

Can projected future revenue be included?
Forecasts can be considered, but they should be clearly distinguished from verified historical results and based on reasonable assumptions.

Selling a Motel in Port Macquarie?

Norton’s Resort Brokers can assist motel owners with preparing the commercial story, organising buyer information and taking the opportunity to relevant accommodation-business purchasers.

Steven Norton — 0488 496 277
Lawrence Norton — 0415 279 807
Nortons.re@gmail.com

Disclaimer: General information only. It is not accounting, valuation, taxation, financial or investment advice. Historical financial information and adjustments should be reviewed by appropriately qualified advisers.