The epic revival of daggy retro motels – and how to tap into the growing trend

Once synonymous with road trips and simple summers, motels are back in vogue among travellers – and savvy investors are capitalising, with a number of trendy revivals of once-daggy digs.

Perhaps the renewed popularity of motels is driven by their affordability and large rooms, Aussies’ focus on sustainable travel, or a comforting reminder of times gone by, when travel — and life — were a little simpler.

But the contemporary overhauls of these humble establishments are no longer so humble, with decades-old motor inns along the east coast undergoing chic makeovers.

Motel Molly’s suites are luxurious, trendy and very sought after. Picture: Elise Hassey

Several examples of epic transformations carefully preserve the retro motel charm but catapult the appeal even further.

Personal and playful

In April, Sydney-based Knox Developments spent about $5 million for the brown-brick 1980s-built Surfbeach Motel at Mollymook on the New South Wales South Coast.

The aim was to breathe new life into the property and create a “vibey” resort to lure a different demographic of tourist.

Motel Molly is a world away from its former self.

The transformation taps into a booming new demographic of domestic traveller. Picture: Elise Hassey

With architect Richards Stanisich, the developer fashioned Motel Molly, a high-end and playful offering with an endearing nod to the past through miniature Smeg bar fridges, stylish rattan furniture, colourful bath tiles, and bold bed linen.

“It’s different, it’s cool, it’s funky, it’s vibey – and that’s what people want these days,” Josh Crealy from Knox said.

Set to open on December 1, bookings are already high, Mr Crealy said.

The motel before its epic makeover.

Booking are flooding in a month before the property has even opened. Picture: Elise Hassey

He believes it’s the personal feel of motels that’s driving their popularity and a flurry of conversions.

“People want to go to those quieter surfside towns and enjoy a holiday. Motel conversions are boutique hotels that provide the same element of luxury, but they’re more relaxed.

“It’s completely different from staying at a 50- to 100-room hotel.”

Knox is already hunting for more motels, but Mr Crealy said a beachside location is crucial.

No more bland rooms and cereal boxes

About 50km down the road and on a far lower budget, Alex Moulis and four of his friends spent $2.75 million in 2021 on the daggy 1970s-built Abel Tasman Motel opposite the beach in Batehaven.

Alongside Those Architects, they sought to create “something special, nostalgic, premium but accessible for the modern traveller”.

The Isla has undergone an impressive Palm Springs-inspired overhaul. Picture: The Isla

The result is The Isla, a white-washed stunner complete with brown accents and jolly artwork indicative of the 70s, and a giant lollipop featuring the motel’s name out front.

“We wanted our interventions to be small but meaningful,” Mr Moulis said. “Recycling a building makes sense both financially and environmentally — and you can have fun with it too.”

The property’s chic design has been a hit with travellers. Picture: The Isla

Motels in 2022 are no longer transitory places for motorists to rest their heads on the cheap, but desirable destinations, he said.

“Gone are the days of a bland room with a tiny box of cereal for breakfast. Guests are looking for design-led stays that have character and offer an experience.

“The Isla is a nod to how we used to holiday and offers the sought-after nostalgia factor but with modern five-star features.”

The motel before its revival.

…and its spectacular refurbishment. Picture: The Isla

Open since April, The Isla already has a strong pipeline of bookings, he said.

Huge interest for listed motels

With more than 200 motels currently listed on realcommercial.com.au, most of them unrenovated, Australia’s coast may soon boast a few more vintage beauties.

Located on the beachfront at Urangan, 15km east of Hervey Bay in Queensland, the traditional Shelly Motel is now on the market.

It’s well presented and enjoys a loyal customer base, but agent Kim Carter at Carter Cooper Realty said it could benefit from an update and the addition of more units on its 1912sqm block.

The Shelly Beach Motel has generated strong interest. Picture: realcommercial.com.au

Ms Carter has been surprised by the strong level of interest in the property, with many looking to update and develop, from Melbourne families seeking a sea-change to silent investors who would appoint a manager.

She said the appeal of motels is clear.

“They have good old-fashioned service and a family feel. The bigger places get, the less of that feel they have.”

Down on Victoria’s Mornington Peninsula, the 1986-built Bayview Motel, located directly opposite the beach at Rosebud, has already received nearly 100 enquiries.

“These properties have been popular for a number of years and during Covid they became more popular,” agent Scott Carlow at CBRE said.

“We’ve seen a number of transactions up and down the east coast whereby very strong prices have been achieved for motel properties similar to this one.”

The Bayview is another motel offering lots of potential. Picture: realcommercial.com.au

Mr Carlow believes the value of these investments is in the upgrade.

“If you were able to do a smart renovation on this property, the appeal, the occupancy, and certainly your room rate will all grow.”

Motels in the old style are not being built any more, he said, which adds to their attraction.

“New accommodation developments tend to be either apartments or larger hotels. Motels tend to be on sites that haven’t been fully developed. So that’s where the opportunity lies.”

Renovation a delight for motel buyers

Traditionally, motels appeal to private and family investors, with corporate and offshore buyers hunting larger hotel brands.

But even then, they haven’t been seen as a huge investment opportunity given reasonably low regional occupancy levels.

A room at the Surfbeach, now Motel Molly, before the renovation.

Motel Molly is the latest in a string of epic revivals of daggy old motels. Picture: Elise Hassey

Growth in regional tourism has now upped occupancy rates and tariffs, but higher borrowing costs have dampened investment appeal, unless there is potential for development or renovation, experts say.

“Assets with development upside, not just renovation potential, will be attractive, particularly given these assets typically sit on large parcels of land,” Vanessa Rader at Ray White Commercial said.

“Similarly, those in good tourism nodes will perform better; your suburban metropolitan motel will not see the same attraction as one in a coastal region.”

Higher construction costs and yields in response to interest rate rises may put off some developers looking for upside before selling out, which could make a project more likely to appeal to owner-operators, Ms Rader added.

Karen Wales at Colliers said these factors also make renovating an old motel “more feasible than building a new hotel”.

“This offers a speed to market to capture a share of the current domestic tourism boom and is arguably less risky.”

The market for motels is currently strong, agents say. Picture: The Isla

But while domestic travel is enjoying a strong resurgence post-pandemic, a lack of certainty long-term may prevent a mass move by investors to this asset class, Ms Rader said.

“We need to consider – will this drive holiday market be one to stay or is it just a byproduct of Covid, which may subside over the coming years?”