One area of investment that is still growing are hotel business sales across Australia. The potential in coming months to see further hotels become available for sale might see continued increases in price.

1. Keep Calm and Buy a Pub

Stock market volatility on the back of global uncertainty won’t quench investor thirst for the pub market in 2020.

CBRE Hotels national director Paul Fraser said the turnaround in market sentiment that ignited increased transactional activity late in 2019 is set in to continue, with 2020 expected to deliver solid investor interest in the pub sector.

“Well located commercial properties, including pubs, are viewed as ‘safe haven’ investments and we are seeing established and larger-scale venue operators expanding their portfolios with bolt-on acquisitions,” Fraser said.

Australia’s eastern seaboard continues to be a hot spot for investors, with New South Wales recording the heaviest transactional rate ahead of Victoria, and south-east Queensland witnessing strong growth, according to the report.

Following on from the record-breaking 2019 sale of Byron Bay’s famed Beach Hotel—the first pub deal in Australia to surpass $100 million—transactions following the trend this year include HTL Property’s sale of freehold interests Sydney’s Gregory Hills Hotel, along with the listing of Sydney’s historic Fitzroy Hotel and the Anglers Rest Hotel on the banks of the Hawkesbury River.

In the Sunshine State, following strong 2019 sales including the $22 million Airlie Beach Hotel and the $34.1 million sale of the Red Earth Hotel and Mount Isa Hotels, transactions in recent months also support the data, with the Acacia Ridge, Elephant & Wheelbarrow and Shearer’s Arms hotels all selling to primarily interstate interests.

And in Victoria, where notable transactions last year included the sale of the Summerhill Hotel in Reservoir ($20.5 million); Bendigo’s Shamrock Hotel ($7 million) and The Lord of the Isles in Geelong ($10 million), hotel operators are set to benefit from long-term certainty offered by gaming legislation secured through to 2042.

In Western Australia, where notable transactions last year included the sale of the Subiaco Hotel ($10 million) and Karratha’s Tambrey Tavern ($6.9 million), going concern assets were expected to remain in high demand, with growth of the FIFO workforce as a result of improved confidence in the resource sector expected as new mining projects are approved.

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2. QLD Outback pubs get new life with new owners, despite drought and rising insurance costs

Iconic pubs scattered across outback Queensland are seeing a new generation of owners come through, despite years of drought and flood.

Seven hotels have sold in western Queensland within six months, with more on the market. But regional pubs have a troubled past, with the Insurance Council of Australia saying they are becoming a growing problem to insure.

Pubs have sold in Quilpie (Toompine Pub), Muttaburra (exchange Hotel), Birdsville (Birdsville Hotel), Cloncurry (Post Office Hotel), Julia Creek (Top Pub), Blackall (Union Hotel) and Wyandra (Wyandra Pub) — in some of these towns, the pub is the only licensed venue, restaurant and bottle shop for hundreds of kilometres.

Pubs and businesses in western Queensland experienced their worst year for sales and tourism in 2019, following years of drought and the widespread floods in February 2019.

When it comes to Cloncurry’s Post Office Hotel, its sale was an unexpected change for locals.

Previous owners Ian and Nancy Dodd had managed and lived in the hotel for more than three decades.

However, publican life was all too familiar for new owner Trevor Jones, after leaving Boulia’s Australian Hotel five years ago to travel.

“I got a call saying the Post Office was for sale on Wednesday, made an offer Friday, flew to Cloncurry on the Saturday — done and dusted,” Mr Jones said.

Risks and insurance costs add pressure
Fire hazards have become a problem for old and abandoned pubs, with recent fires at the Lyceum Hotel in Longreach and the Muckadilla Hotel west of Roma.

The Insurance Council said one pub per fortnight across Australia experienced a fire and the price to insure pubs and clubs had increased as a result in the past five years.

Head of risk Karl Sullivan said regional pubs were usually harder to insure than those in metro areas, as age, climate and disaster-prone locations escalated prices.

Outback pubs not dead yet
Despite the added pressures to outback pubs and regional business, the Australian Hotels Association believes the sales have given the rural tourism industry a bright future.

The association’s chief executive, Bernie Hogan, said outback pubs were still a viable business, especially for buyers wanting to enter the industry.

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