Signs of recovery: Hospo business sales prices bounce back 40%

by | Aug 2, 2022 | News

The average sales price for Hospitality businesses is up a massive 40% compared to the same time last year, report industry brokers 

The price of hospitality businesses for sale has increased by 40 percent, according to the latest quarterly report, This is the key finding* from the latest Market Intelligence Quarterly Report by ABC Business Sales.

These figures are in stark contrast to the overall average price for SME businesses (excluding Hospitality) that has increased by just 8% for the 12 months to June 2022.

Chris Small ABC Business Sales Managing Director, says the increase in sales prices is not being driven by demand activity from ‘vulture buyers’ looking for businesses on their knees and making lowball offers, but rather it represents a genuine bounce back in confidence for hospitality businesses.

“The main drivers of demand for hospo businesses include strong return on investment – often more than 50% – as well as positive cashflows from day one ie cash coming in prior to paying any bills”, says Small.

“With the renewed confidence of our borders now being open to all international visitors, the ‘certainty’ of no more lockdowns and potential buyers hearing about many hospo operators experiencing extensive waiting lists and not being able to keep up with demand, the appeal of these businesses is well and truly back on the rise”.

Small says: “The significant percentage size of the average sales price increase is also a result of hospitality prices coming off a very low base in 2021 caused by the initial Covid period. But we are confident these current average prices – in the high $200,000 range – are more reflective of a normal market and will be sustained going forward.”

*Key findings:

  • The average sales price for hospitality business at the end of Q2 June 2022 is $284,050.
  • (The average sales price for hospitality business at the end of Q2 June 2021 was $202,774.)
  • The overall average sales price for SME businesses (excluding Hospitality) at the end of Q2 June 2022 is $794,130

ABC Business Sales

 

Photo by Anthony Persegol on Unsplash

 

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