Quest Franchisee Shuts Doors

Landlords will not receive any further rent payments, including deferred rent that Quest first stopped paying at the start of the pandemic.


Key points:

  • Two hotels operated by CEM Group would cease trading

  • CEM is jointly owned by Quest co-founders Paul Constantinou and Rohan Davis

  • Landlords will not receive any further rent payments, including deferred rent


COVID-19 has forced Quest, one of the Australia's largest franchisees, to shut down hotels in Melbourne and Queensland as well as break long-term lease agreements with landlords.


CEM Group of Companies told landlords of the Quest on Chapel Street in South Yarra that they suffered losses of $370,000 since March due to the pandemic and Melbourne's restrictions. CEM is jointly owned by Quest co-founders Paul Constantinou and Rohan Davis.


CEM Group said it would cease trading on 15 October and asked landlords of the 48 apartments to surrender their leases. They have been unable to make progress on a rent determination process on the leases, of which some extend to 2025.


CEM Group managing director Damian Gallace said, "Unfortunately, given the predicament the business finds itself in, we do not have the funds available to make further payments to landlords".


Quest COO, David Mansfield confirmed two hotels operated by CEM Group would cease trading - the Quest on Melbourne's Bourke Street and the Quest in Gladstone.


“Quest has been working tirelessly with franchisees and endeavoured to keep all businesses open, but there comes a time when businesses that are no longer financially viable, as a last resort, are forced to shut," he said. "Landlords will have their assets returned to operate as they choose," said Mr Mansfield.


It was reported that landlords will not receive any further rent payments, including deferred rent that Quest first stopped paying at the start of the pandemic.


A number of landlords have indicated they will take legal action, with one saying "I will certainly take this matter all the way to tribunal for an outcome" and another indicating "I'll take them to court and I will win".


Quest continues to market and launch new projects offering long leases and is due to open a hotel in Wangaratta in November.


80% of Quest is owned by Singaporean accommodation giant Ascott Limited, which bought their share in 2017.

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