Published: 30 August 2006.

Tourism is Australia's great growth industry and management rights plays an enormous role in the development of tourism in Australia, particularly in Queensland where management rights began.

Historically, management rights has played an important role in tourism areas where holiday units are popular and where they predate hotels and motels.

On the Gold Coast, for example, the first international hotel was only built in 1984. It was The Ramada, and it was designed to be converted to apartments if the hotel didn't work.

Long before The Ramada there were many units built under the management rights system with domestic and international tourists serviced by management rights operators. The trend continues today.

If you buy a management rights business which is predominately holiday letting, then you are, in a sense, running a resort. You will need to market your building to attract holiday makers, usually for short stays (one weekend to a couple of weeks). You will be providing a higher level of service, but the returns should be greater.

In a holiday letting complex, most of the owners are likely to be investors, so they'll be looking for a good return from their units.

Advantages of holiday letting

• The return on investment is higher than other forms of management lights. Managers make money on rent collection but also on service charges like cleaning and linen hire. The greater the turnover the greater the income from these sources.
• The holiday letting business involves understanding how to market tourism properly. Some do this better than others.
• If you understand the secrets of successfully marketing your property, then you have an ideal opportunity to grow the capital value of your business.
• The location of your holiday letting business will probably be superb. Great for lifestyle. But remember good returns don't come from sitting around the pool.

Disadvantages of holiday letting

• To pain no gain. Holiday letting is hard work.
• You need good management skills so that you run the business rather than it running you.
• Holiday letting can be more complex than other types of management rights particularly in the area of marketing. You need good support services to learn this part of the business.
• You can be at the mercy of the tourism industry. A pilot strike/bad weather and general economic factors can affect your business.

"Holiday letting is the glamorous part of the management rights industry. Or is it? The rewards are great but the workload is heavy."