Published: 21 December 2008.

Contributed by Ian Brooks of Platinum Resort Brokerage

We are all familiar with the analogy – Is the glass half full - or is the glass half empty? Anyone who hasn’t spent the last 12 months in outer space, or living with a lost tribe deep in the Amazonian jungle would be aware that we are experiencing an unprecedented economic meltdown. Pick up any newspaper; turn on the television or surf the internet and you will be hard pressed to find a “glass half full” piece of journalism. In fact, most of what has been written and reported reflects a glass that is not only totally empty, but has a flashing reserve warning light attached to it.

So are things really that bad? Well for many people the answer is probably yes. If you are unfortunate enough to have been involved in any of the industries that have been caught up in the aftermath of the sub prime mess, or currently involved in the automotive industry, then you can be excused from being a member of the “glass half full brigade”. Now for those of us that are in Management Rights and tourism related industries, I can find some positives that may just help to convince ourselves that our glass is in fact slowly starting to fill again.

Several months ago, I wrote an article for Resort News about market multipliers. While this topic itself is open for hot debate, the underlying point in the story was the negative effect that high interest rates have on Management Rights. Since my comments were published, interest rates have fallen by approximately two percent with a high likelihood that by the middle of next year we may well see a further two percent cut. This means that within the space of year, borrowing rates could have fallen from ten percent down to around six percent, or in dollar terms for every million dollars borrowed an extra forty grand stays in your pocket - not the banks! Consequently, some listings that we have on our books that are currently difficult to sell due to loan cash flow service ability will be suddenly more viable and ultimately more saleable.

Another ‘bad news’ headline is, in fact, potentially good news for Management Rights. Some pundits are predicting unemployment could rise towards or even above ten percent.  Some readers will have been around long enough to remember back to the last time unemployment rose significantly. Many businesses were scaling down their workforce and redundancy packages were being offered to a large number of workers in Telstra, NAB and Qantas to name a few. Many of these workers were too young to retire and too old to get a job in other industries.  Workers who were used to getting a regular pay cheque needed a new challenge and direction. Management Rights offered a perfect opportunity for some. After all, where else could you buy a business with some guaranteed income, no bad debts, no stock, no landlord and live and work from home.

It was recently quoted in the press that tens of thousands of jobs could be lost in Australia just from banking mergers alone. I can see the potential for history to repeat itself with an influx of new cashed up buyers ready to take the plunge into what  historically has been considered an ideal  first time business venture.

As I have outlined above, the planets are now coming into to line for an improvement in our market place as far as buying and selling is concerned. Presently, it’s a buyers market for everything - property, cars, boats, holidays and Management Rights! We should expect that to change towards the middle of next year and greatly improve by the end of 2009. It’s of no small coincidence that similar predictions and time frames are in place for the real estate and stock markets. One thing is certain; nothing will get the ball rolling faster than an improvement in general economic sentiment. Those of you, who know me well, will be aware that I am an avid stock market watcher. I am of the opinion that once a clear bottom has been established in the market, we will start to see a shift from a negative spin to a more positive spin from our journalists and media outlets.

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