Major Quest franchisee ceases trading

George Sell George Sell Uploaded 15 October 2020


Australia: CEM Group of Companies, one of the largest franchises of Quest Apartment Hotels properties has ceased trading, resulting in the closure of at least three properties.

CEM, which is jointly owned by Quest co-founders Paul Constantinou and Rohan Davis, told landlords of the Quest on Chapel Street in South Yarra that the pandemic and its effects have had a "catastrophic impact on the business", which had suffered losses of $370,000 since March.

CEM Group said it had elected to cease trading on Thursday, October 15 having been unable to make progress on a rent determination process. It asked landlords of the property's 48 apartments – most of them with leases in place until 2025 – to surrender their leases. CEM Group's website is no longer functioning.

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 chief operations officer David Mansfield said two other Quest hotels operated by CEM Group will close and cease trading this week. They are on Melbourne's Bourke Street and in Gladstone.

Mansfield said: “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. Landlords will have their assets returned to operate as they choose."

A letter sent to the landlords of Quest on Chapel on October 9 confirming the de-branding of the property said Quest Serviced Apartments Pty Ltd, as franchisor, "will not be seeking to rely on any of its discretionary rights, which otherwise may have been pursuant to the lease, including assuming any of the lease obligations of the tenant".



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