Luxury Escapes Buys Scoopon Travel & BonVoyage from Catch

The Lux Group, which owns online travel business Luxury Escapes, has bought Scoopon Travel and BonVoyage as part of a complicated, multi-faceted transaction with the Catch Group that will create a pure-play online travel business with $300m turnover and enormous buying power while clearing the way for further growth.

In what the companies are calling  Australia’s largest “home grown” e-commerce transaction, the deal sees the Lux Group essentially divest all its non-travel assets to Catch Group, while welcoming Catch Group founders, Gabby and Hezi Leibovich, on board as 20% shareholders.

For Catch Group, the reverse applies. The rationale is that the deal allows each company to play to their strengths. In a series of related transactions:

  • Catch Group is buying Brands Exclusive and Thehome.com.au from Lux Group.
  • Lux Group brands Cudo, Living Social and TreatMe (NZ) will merge with Catch Group deals business Scoopon. 
  •  Lux Group and Catch Group are forming a new 50/50 ‘Local Experience’ joint venture.

Lux Group Managing Director Adam Schwab said it was a transformative transaction for both parties.

“It was an obvious thing to do – we wanted to become a travel business and focus on our core strengths. This transformative transaction will allow Lux Group to establish a focussed and scaled Travel e-commerce business with over A$300m of pro forma turnover as we continue to deliver the world’s very best travel packages to consumers across Australia, New Zealand and South East Asia.”

He said while there’s a degree of cross-over with the two databases there is clear brand differentiation between Scoopon Travel (“four-star”) and Luxury Escapes (“five star”) in particular.

Mr Schwab confirmed that Scoopon and BonVoyage staff will soon move into Luxury Escape’s offices in Sydney and Melbourne but was unable to say if there would be redundancies. “This is all about trying to acquire revenue synergies,” he said.

Meanwhile, there has been speculation in the past that Lux Group was interested in a public listing but Mr Schwab said that’s not on the radar with investors happy with how the business is tracking.

“We are also excited to welcome Gabby and Hezi as new shareholders in Lux Group, and look forward to working productively together as we drive growth through our newly formed Local business which brings together iconic Australian ecommerce brands like Scoopon, Cudo and Living Social.”

Mr Schwab founded Lux Group with business partner Jeremy Same in 2010. He said more than 500,000 Australians will take a Luxury Escapes holiday this year. Catch Group co-founder Gabby Leibovich said the deal makes a lot of sense.

“Our strength is in sourcing products and we have mastered the logistics of ecommerce,” he said.

“With Catch Group’s travel brands on track to turn over more than $50 million this year, and product brands at Lux Group heading towards $60 million in turnover, we are very excited to partner with Lux and to be able to build on our respective strengths together to continue to grow and dominate Australia’s ecommerce landscape.”

The Catch Group is one of Australia’s largest diversified e-commerce groups comprising online stores Catch, GroceryRun, Mumgo, Pumpkin Patch and BonVoyage. Catch Group ships more than 10,000 orders per day.

Webjet proves everyone wrong: people will repeatedly pay more for airfares

The rapid evolution of Webjet over the past year has been something to behold: acquisitions, expansion, creation of new businesses, the profitable sale of Zuji, strong hotel B2B growth and more.

Webjet has won a lot of investor kudos for these moves, profit is growing a rapid clip, and a high share price is the reward.

The shift in strategy was timely – and had to come, although it took a long while. Until quite recently the company, founded in 1998, was essentially a one trick pony. An airline booking engine charging and reliant on industry-high booking fees of up to $54.90 on airfares.

Although customers kept paying the fees in increasing numbers, driving annual increases in total turnover value, many analysts and industry observers thought Webjet’s model unsustainable, a house of cards.

Their logic was impeccable – that Webjet customers would one day realise that they were paying too much for the airfares bought through the OTA. The same fares and cheaper were (and are) available fee-free direct through the airlines.

Every one except Webjet thought consumers would one day wake up, rise up and walk away. However that has never happened and it remains a mystery why when:

1. Low-cost carriers have won significant market share because they charge … lower airfares.

2. Australian consumers count their pennies – low-cost retailers are thriving, disrupting the more expensive incumbents. Think Aldi and the impact it’s had on supermarket retailing.

And yet Webjet is able to grow market share while charging market-high fees for every airfare it sells:

Domestic – $34.90  ($21.95 service fee, $12.95 price guarantee).

Trans-Tasman – $39.90 ($24.95 service fee, $14.95 price guarantee).

International – $54.90 ($32.95 service fee, $21.95 price guarantee).

These fees apply whether the airfare is $50, $500 or $5000.

In the most extreme example, a $50 one-way domestic airfare would incur a fee of $34.90, which brings the total cost of a $50 airfare to $84.90 – 69% more than a consumer would have paid on the airline’s website.

Would these people consistently shop at a supermarket where they pay 69% more for a product than they would in a rival outlet? No way.

So what’s going on? The most feasible explanation is that Webjet’s brand marketing is exceptionally effective.

It’s been running the same variations of its mainstream advertising – TV, billboards – for an awfully long time and, unlike others who come and go – is always there. And you suspect the mainstream is very much its market:

People who watch TV rather than YouTube and are older than the OTA average, customers that are intimidated by the web and like to deal with a familiar face.

Whatever the case, they are clearly loyal, and possibly a little ignorant of the alternate, cheaper options.

However, by transacting in increasing volume (Webjet says its B2C bookings are out-performing the market by “more than 4x”) they are proving the fee-driven business model is sustainable after all.

It’s especially relevant in the current travel environment, where airlines are cutting fares to record low levels.

This means rivals such as Flight Centre are selling more airfares but making less money because as prices come down, so do their commissions.

But because of its fee structure, if Webjet sells more, it makes more even if its commission on the sale are less. This is a massive win for Webjet and its bloody-mindedness.

Sure, high fees may one day start having an impact on its airfare sales volume, but there’s no sign of that happening yet and Webjet is now taking steps to diversify and spread the risk.

The counter-intuitive strategy has under-pinned the Webjet business over the past 18 years and is enabling the current expansion.

Therefore it’s time  to acknowledge the fee genius of Webjet, which has been able to convince people to pay more for a commodity that can be bought for less in so many other places.

No smoke, no mirrors, just dogged persistence and a triumph of marketing and consistency over common-sense.

Fee for all coming to an end with Airbnb’s host commission switch?

Pricing is set to get a shakeup in Australia’s short term rental (STR) industry from November 1 when Airbnb scraps guest service charges and moves to a 15 per cent host commission only model – up from 3 per cent – for its software-connected hosts and property managers.

It is a huge change for an industry where customer service fees can be 18 per cent of the room rate (plus cleaning) but is necessary says Airbnb, citing the need to simplify the guest booking process while bringing it into line with what consumers see on the major OTAs like Booking.com and Expedia.

Airbnb says testing shows that booking conversion rates improve by around 17 per cent when only the rate is shown.

Connecting is mandatory for software-connected clients, but will not apply to small property managers, meaning that the majority of listings on Airbnb (the minnows with 1-3 properties) will still display fees.

However, that may come at a cost. It seems likely based on available evidence that fee-bearing hosts will be penalised in the listings, ranking lower than competing fee-free properties.

Airbnb has already been offering better exposure for companies that connect early plus a lower commission rate.

Meanwhile, Stayz – part of the HomeAway group, is also taking steps in this direction – testing a 12% commission fee-free structure with a large group of property managers.

So far so good but it’s still early days and there’s no definitive data yet available, however after taking the first big step it’s highly unlikely Stayz will backtrack.

Property managers contacted for this story were ambivalent about the change, with most saying they would increase rates to cover the increased distribution cost.

There were a number of comments about the way in which Airbnb communicates major changes to hosts and property managers. One Gold Coast property manager says he hadn’t heard from Airbnb since April, when the company laid off 25% of its Australian workforce.

Meanwhile, while another operator from regional NSW commented that emails and phone calls often go unanswered.

However she has switched to commission-only and has no problem with it, covering the extra expense through increased room rates. “This is the least of my worries right now,” the property manager said.

These changes also apply to software connected property managers in New Zealand. 

Big moves in holiday park sector

The rapid consolidation of Australia’s tourism asset ownership has continued with news motoring organisation NRMA has bought Australian Tourist Park Management and control of its 27 properties while it’s been reported the sector’s largest ever single park sale has just closed.

The ATPM deal means the NRMA now owns and operates 34 caravan and holiday parks around Australia, adding to its existing  tourism asset portfolio which includes Travelodge Hotels, the Kurrajong Hotel in Canberra and Thrifty Car Rental.

“With the increasing corporatisation of the tourism sector, this transaction ensures that an important part of the holiday park industry remains in the hands of a membership-owned mutual,” said Glenn Sedgwick, Chairman of ATPM.

Meanwhile, The Australian reported this morning that Ingenia Communities Group has bought the Cairns Coconut Holiday Resort for $50m, the sector’s largest-ever transaction.

Ingenia chief executive Simon Owen said the ASX-listed company will not stop there.

“We do have a number of other opportunities in due diligence so we expect to make more acquisitions in the next few months,” he said.

NRMA is now Australia’s second-biggest holiday park owner/operator behind Discovery Holiday Parks, which has 54 properties, up from 32 three years ago.

Ingenia owns has 21 parks in NSW and Queensland, while Marketing group Big 4 Holiday Parks claims more than 180 members.

Agoda goes rogue on pricing

Agoda, the original Asian OTA, has gone rogue on pricing. Multiple hoteliers say Agoda regularly sells unauthorized static wholesale rates through the site, undercutting them on price without any regard for contracts.

Other times the feeling is Agoda takes a contracted rate and shaves its margin to push the price below competitor and hotel pricing.

Agoda’s contentious behaviour, which runs contrary to the two-way price parity contracts it signs with hotels, has led to it being cut off at times by several major hotel groups.

“It’s a matter of pushing back and closing them if needed,” said one. Another complained about the “constant battle” of ensuring that the ‘static’ rates it has negotiated with tech-backward wholesalers on allotment do not end up on Agoda. “The consumer still gets the bill from Agoda but we’ll hear from the wholesaler.”

Hoteliers say Agoda is taking multiple rate feeds and using the lowest one to ensure it always has the cheapest rate. One frustrated hotelier said it looks like Agoda is moving to kind of a meta-search hybrid.

In a statement, Agoda has confirmed for the first time it is pulling prices from multiple sources and also experimenting with how the results are displayed. Its justification is giving customers what they want.

“We aggregate a wide variety of supply from multiple sources and often experiment with different forms of display, including price comparison or meta display,” the company said.  

“Only by doing this can we guarantee our customers that we are offering them the best possible rates.”

Is this the leading edge of a broader trend that could spell the end of rate parity – hotels and retailers selling at the same price – which has already been ruled illegal in France and Germany? Quite possibly.

Central to this imbroglio is the inability of hoteliers to control  market rates for their properties. There is a solution of course – hoteliers could end the  grey market for room rates by dealing exclusively with wholesalers that can take a dynamic rate feed.

However, that is not practical in Asia and hoteliers say despite pressure, up to 15% of their business still comes via static rate agreements. All that aside, the question remains: Why would Agoda take this provocative approach after working hard to leave behind a patchy industry reputation accrued during the early 2000s?

There are two possible answers:

1) Agoda doesn’t care about its hotel relationships because it can always gets the cheapest rates it needs from the wholesale grey market;

2) Competitive pressure.

Or potentially a combination of those two factors. One popular theory is that Agoda is losing market share and is doing everything it can claw it back by always having the lowest possible rates. That was certainly the scuttlebutt at a recent Asian revenue managers conference, where several attendees commented that the brand is selling less of their product.

“In the past, it’s only been the smaller brand OTAs that have taken on the practice of selling wholesale rates but I guess they are just trying to compete with the their local OTAs,” said an attendee.

Meanwhile, Agoda is looking to take its brand global. Founder and CEO Rob Rosenstein is moving into the Chairman role and will hands the reins to John W. Brown, who has been Chief Operating Officer for several years.

“John has touched almost every facet of the Agoda business over the past eight years, actively contributing to the company’s strategy and expansion,” said Rosenstein. “Without question, John is the right choice to next lead the Agoda business, and I look forward to continuing to work alongside him as we look to develop our global strategy further.”

The changes are effective June 1, 2018.

Yury Shar, Director and Co-Founder, HotelsCombined

After immigrating to Australia from Russia at age 17, Yury developed a passion for computers and strategy games.

This passion drew him to the University of Technology Sydney, where he studied Computer Science and met fellow HotelsCombined co-founder, Brendon McQueen.

Before co-founding HotelsCombined in 2005, Yury spent five years working at HotelClub where he was primarily responsible for the company’s online marketing activity.

He was also involved in co-founding and investing in a number of other online businesses including ProductReview.com.au.

Yury is currently responsible for overseeing the strategic growth of HotelsCombined within key markets. Yury’s favourite hotel is Thailand’s Rasananda Resort Koh Phangan.

Wotif commissions to rise by 25% as Expedia rolls out new contract to hoteliers

Expedia is attempting to move all Wotif.com contracted properties onto a single company-wide contract and is raising site commission for larger producers from 12% to 15% – an increase of 25% – four months after buying the Australian OTA.

“We are in discussions with them at the moment and there are a number of matters that need resolution, both commercial and legal,” said one leading hotelier. He confirmed that Expedia is looking to charge hoteliers the same commission across all its sites.

Expedia has also told hoteliers that from March – date to be finalised – all Wotif.com bookings will be powered by the Expedia platform. It has requested the new contract be signed ahead of this transition but has not been clear in correspondence about what happens to properties that don’t.

The widely anticipated move was flagged by accommodation lobby groups in submissions to the Australian Competition and Consumer Commission, which subsequently approved the deal.

“The ACCC noted the concerns raised by market participants that Wotif represented an important source of bookings for some accommodation providers and that its removal from the Australian market may result in them paying higher commission rates to online travel agents (OTAs),” ACCC Chairman Rod Sims said.

“However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years. Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers,” Mr Sims said.

“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry. Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future.”

In summary, “the ACCC concluded that the proposed acquisition was not likely to result in a substantial lessening of competition.”

Expedia is telling hoteliers: “In an effort to streamline how we work together, we are offering a simple and attractive compensation structure and interface for each Expedia® Collect™ booking made on Expedia group websites, including Wotif.com.

What will change? You can look forward to having:

  • “A single level of compensation – same compensation for bookings made on all of Expedia group websites, including Wotif.com
  • “A contract covering bookings on all The Expedia group websites, that also adds bookings for Wotif.com
  • “One tool for all of your interactions with Expedia – in Expedia® PartnerCentral you can manage your rates and availability, content and accounting as well as access reports on your competitive performance
  • “One point of contact for all of the Expedia group brands, supported by our dedicated support teams”

There’s been a sense of inevitability in the way the Australian hotel industry has accepted the change. Some are even looking on the bright side. “At least it’s not 25% – there would have been a revolt,” said one.

An Expedia spokesperson said hoteliers have generally responded well to the change. “The feedback and support we’ve received from hotels, who acknowledge the benefits of a partnership with Expedia, has been very positive,” she said.

“We are introducing the Wotif Group supply partners to the power of Expedia’s global reach and customer base and we make significant investments in marketing and technology innovations, all of which drive increased customer demand for our hotel partners.”

Turu.com.au moves to booking engine and commissions

Holiday park site Turu.com.au has revamped its revenue model and will introduce a booking engine in the next few weeks, taking commission on each transaction.

The move to a booking engine has come earlier than anticipated in the brief history of the site, launched in late July. General Manager Robert Gallagher said the roll out has been fast-tracked due to some trepidation among park owners and managers  to Turu.com.au’s existing pay per lead system.

Mr Gallagher said Turu.com.au is attracting more 100,000 unique visitors each month with traffic steadily increasing. “We are on track with our forecasts,” he said, adding that the tipping point from a commercial perspective is roughly 220,000 unique visitors each month.

Meanwhile, visitor conversion rates – measured as a holiday park query – are now up to 11% from 3% when the site was first launched. “We are definitely generating some significant revenue for the parks. The next step is the booking engine, which is is being developed “by one of the leading industry players”.

He said Turu is creating a “channel management process” through which parks can automatically or manually update inventory. The aim is to have 50% of the 1840 parks now on Turu.com.au selling through the booking engine within the initial 12 months.

Turu.com.au, owned by media company ACP Magazines, is the first website to specifically target the holiday park sector.

Hotels driving many TripAdvisor reviews

TripAdvisor has started revealing the source of reviews for properties that use its guest followup tools – an initiative that reveals hotels can in many cases drive most of the comments. For example, a survey of the first 40 current reviews in several Sydney hotels show that most resulted from management pro-activity.

At 57 Hotel, 75% of reviews were collected ‘in partnership’ with the hotel while 25%  had been posted at the guest’s initiative.

A similar pattern emerged at Meriton Serviced Apartments Kent St where 72% of reviews used TripAdvisor tools. Pensione Hotel Sydney secured 55% of its TripAdvisor reviews.

Downtown at the Sofitel Wentworth (where recent reviews were generally poor) the split went the other way with 72% of posters doing so unprompted.

While this survey is anything but comprehensive it shows the role hotels are playing in generating reviews for their property. Reviews they generate are identified as ‘being collected in partnership with this hotel.

“This business uses tools provided by TripAdvisor or one of its official review partners to encourage reviews, including this one”.

The scheme appears to be voluntary.

New owner for The Ghan and Indian Pacific

Allegro Funds has bought Great Southern Rail, the loss-making owner and operator of  The Ghan, Indian Pacific and Overland trains and products, for just £2.5m from Serco, a troubled UK company selling non-core assets.

Allegro, an active investor that looks for turnaround opportunities, has said it will keep the present management team. Serco said it sold GSR because the business was historically unprofitable and not aligned with the rest of its transport portfolio.

“For the year to 31 December 2014, the financial result of the business was revenue of £58m and a pre-exceptional operating loss of £3m,” Serco said.

“Within the 2014 results there was an exceptional charge of £37m in relation to the business, consisting of a £23m non-cash impairment to reduce the carrying value of net assets to the estimated recoverable amount, and £14m in relation to the break costs of leases to be settled in cash by Serco in 2015.”

Lenoir takes the plunge, passes the CEO baton at Rezdy

Founder Simon Lenoir has made the big decision to step away from his day to day management responsibilities at Rezdy, handing the CEO reins to Chris Atkin, previously Chief Operating Officer.

Lenoir, originally a software developer who has been working massive hours since starting the business in 2011, says he first thought of stepping back around 18 months ago. “I went to the board and suggested they should be looking for a professional CEO – they were surprised but very supportive.”

Rezdy, a tours and activities booking platform for operators, now has more than 60 staff with good management in place across all key positions. It’s also in a strong financial position, raising a further $3 million a few weeks ago and Lenoir feels the company is more than ready for the next step.

“We have good money and a good team, so the time was right to go,” he says. “At the end of the day it’s about putting the company first.”

For Lenoir it means an opportunity enjoy being a father for the first time – his son was born eight weeks ago – also indulge in his passion for travel and scuba diving. “I’ll be able to spend more time with my young family and doing what I love the most – scuba diving. In fact, I’ve just booked my first cage dive with the great white sharks. It’s been on my bucket list for years and now, I finally have time to do it.”

Lenoir remains a significant shareholder and will stay involved with Rezdy in the as a board director. He has been working closely with Atkin, previously holding the dual roles of Chief Operating Officer and Chief Financial Officer, for the past year to ensure a smooth transition.

“I moved to Sydney and started Rezdy with Hugo Sterin in my living room, having previously run a dive centre in South East Asia,” Lenoir says. “The aim was to build a software that would enable tour and activity providers to live their dreams and save time to focus on what they love the most – whether it be scuba diving, skydiving, dog sledding, bird watching or running a lifestyle business whilst spending time with family. At that time, we had no idea what it would evolve into and we are tremendously proud about what Rezdy has achieved.”

“From the experience I had as a CEO, I learnt that it is a never-ending journey. It’s about being a chameleon, adapting into various roles in a well-timed manner. And so, the purpose of a leader is to find the right people, bring the best people forward who would be the right fit for the role and ultimately, to bring the best out of the company.”

Co-founder Hugo Sterin is staying on with Rezdy in his role as Chief Technology Officer.

Chinese company wins approval for Club Med purchase

French travel icon, Club Med, will be likely Chinese-owned by February 9 after regulators approved the takeover bid by Fosun International, which has offered €24.60 per share for the resort operator, valuing it at around €939 million. Fosun has been in a bidding war with Italian businessman Andrea Bonomi for Club Med since May, 2013, the longest takeover fight in the history of the Paris Bourse.

Welcome To Accor’s New Business Model

AccorHotels has announced it’s embarking on a new strategy that will see the global hotelier sell the rooms of independent hotels (for a commission of course) and also provide them with technology services, much like a modern Online Travel Agent.

The big difference of course is that Accor also owns or operates 3700 properties in more than 90 countries.

Sébastien Bazin, AccorHotels Chairman and CEO, wants to triple the number of hotels on AccorHotels.com to more than 10,000. He said the first non-affiliated properties would be live next month.

“Transforming our distribution platform into an open marketplace is a major initiative for the Group and the result of a new approach to our profession and business model,” he said. “We are becoming a trustworthy, selective and transparent third party and we are once again amplifying the in-depth transformation undertaken within the Group since 2013.

“These initiatives and the launch of the new AccorHotels application are designed to enrich the content of our digital ecosystem and reinforce our position as a hospitality industry pioneer and trailblazer.”

Accor was vague about the hotels it will sell, saying they will be selected ion the basis of unspecified criteria “with guest reviews taken into account. “This initiative will supplement the services developed by Fastbooking, a company taken over by the Group last April, within a new BtoB digital services activity,” the company added.

Former Rydges on Swanston to rebrand as Crowne Plaza

The former Rydges on Swanston, the incubator for 90% of Victoria’s deadly second COVID wave, will be refurbished and rebranded as Crowne Plaza Melbourne Carlton.

New owner Ross Pelligra bought the property for $35 million in September, and says: “We plan to lift the game and give this property a full refurb and a fresh start as Crowne Plaza Melbourne Carlton in early 2021.”

Pelligra has an established relationship with IHG, which operates the Crowne Plaza brand,  as the owner of  Holiday Inn Melbourne Airport, plus pipeline Holiday Inns at Werribee, southwest of Melbourne, and Richmond, near the city CBD.

A Victorian State Government inquiry was told more than 90 per cent of “second wave” cases could be traced back to a family which quarantined at Rydges on Swanston in May, now infamous for lax hygiene practices by security guards, which caused a renewed outbreak of the virus after it appeared to be under control. 

Australian short term rental booking growth leads the world

Leading short term property management platform Guesty reports that sector bookings in Australia grew faster than any other country during September.

“In September, we saw a 5% increase in reservation volume worldwide compared to August,” the company said. “Australia had the biggest increase in reservation volume worldwide – up 25% month on month.”

Guesty also revealed that nightly rates in Australia increased by 22% over the same period. However, while global short term reservations are now growing month on month, overall booking volumes are still down on last year.

“Reservation volume is decreasing across the board, though rates and lengths of stay are rising,” said Lauren Gumport from Guesty.

“Globally, Christmas reservation volume decreased by a whopping 40% compared to last year while the average nightly rate increased by 13%. Folks are also planning longer Christmas vacations – the length of stay increased by 17% compared to last year and now sits at 6 days on average per trip.”

It says last minute trips are still trending. “In September, 15% of reservations across all short-term rental channels were made the same day. More than 40% of reservations were made within 7 days of the reservation itself and an additional 30% within a 30 day window of the reservation.”

The Guesty platform is used in over 80 countries (including Australia, New Zealand and across APAC) and touches all seven continents. “We are seeing the most activity right now in Europe, North America and Australia.”

Veriu takes 16 years to become overnight success story

Opportunistic and casually ambitious – that’s one way to describe the team driving Veriu, a hotel brand that’s seemingly come from nowhere in the Australian marketplace, most recently winning the race to acquire the Punt Hill brand and leases on its 13 properties.

But Veriu is anything but an upstart with roots stretching back to 2002 when co-founders Alex Thorpe and Rhys Williams identified a niche in furnished accommodation leasing and started with two rooms in Bondi.

“No one was doing furnished accommodation at that time but there were a lot of people who wanted something they could move straight into,” says Thorpe.

Soon two rooms become four, four became eight, single apartments became whole buildings. Owners increasingly bought into the concept and now Furnished Property, the company they created, has 400 apartment keys and growing strongly. The creation and launch of Veriu in 2016, an inner-urban hotel concept, was a logical next step.

They still operate the same way – finding opportunities where they can add value for property owners, put the deal together and ensure Veriu wins has the management contract. The approach is working. Veriu now has five properties in the red-hot Sydney market – four branded and one unbranded – with several more on the way.

“More and more people are coming to us these days,” says Alex.

There’s no set funding model. In essence Thorpe says they source an opportunity and then put it out to their investor network.

“We deal with a lot of high net worth individuals,” he says. “Because we’ve been at this for more than 16 years we’ve built up a pretty good network of people. We self-fund where we can but there’s not a set way we do things.”

An example is the $44 million hotel fund Furnished Property has launched with the ASX listed property company Folkestone to develop a 144 room Veriu property at Green Square in Sydney.

He said the Punt Hill acquisition was a mix of internal and partner funding. The deal made a lot of sense but it’s one that nearly didn’t happen.

“We weren’t on the original tender list but someone we know suggested we should be there.” And the rest is history. “Our niche is in the 20 to 150 keys space where the big boys don’t play,” Thorpe says.

The actual building is less important to Veriu than location. “As long as location is attractive to guests and there’s good local F&B we are interested.

“Punt Hill is obviously a lot more corporate, our products really match well.” He says Punt Hill can feed corporate guests into Veriu properties while the reverse also applies. “We’d like to get Punt Hill more leisure focused.”

The move into hotels could not have been better timed. “Sydney is ridiculously strong at the moment (and) we’ve had a lot of success pushing rates and occupancy, especially at Camperdown.”

As for the future: “We don’t have big empire building ambitions, we don’t have any grand plans – we look at things on a deal by deal basis,” Thorpe says. “We take a really long-term view. We love the business, we love hospitality.”