Corks are popping across the hospitality industry as owners of hotels, accommodation and pubs revel in one of the most active periods in years.
The sector was undoubtedly one of the most heavily impacted by the pandemic as lockdowns and social distancing turned pubs and hotels into shells of their former selves. But that has all changed with records toppling and almost $1 billion worth of watering holes forecast to change hands by June 30.
Buying Up Big
The record for an Australian pub sale was set in April this year when Nelson Meers, a former Lord Mayor of Sydney, paid $160 million for the Crossroads Hotel in the city’s western suburbs. The last time the hotel made headlines was when it became the site of one of the biggest outbreaks of covid-19 in Australia just before the introduction of lockdowns. Its sale pipped the previous highest by $56 million, a transaction that occurred in February 2020 when MA Financial bought Byron Bay’s renown Beach Hotel from John “Strop” Cornell for $104 million.
Meers AO also purchased the Belmore Hotel in Sydney’s Canterbury-Bankstown area in 2019 and, in 2017, the Hurstville Ritz Hotel for $45 million.
Victoria also recently saw its biggest pub deal to date when the WestWaters Hotel & Entertainment Complex sold for $85 million in mid-May. The hotel, located in the Caroline Springs’ retail complex in Melbourne’s outer-west, was the location of the Hawthorn Football Club’s lucrative poker machine operation which now belongs to new owner, NSW hospitality group Oscars Hotels. The state’s previous highest sale was the $54.5 million sale of Bendigo’s All Seasons Hotel to the Redcape Hotel Group in June last year. That transaction was brokered off-market by JLL Hotels & Hospitality vice president Will Connolly and managing director John Musca.
“Within the past six months alone we have witnessed over $180m of NSW-based capital investing in the Victorian industry across three of the most significant hotel transactions to ever occur in this state,” JLL vice president Will Connolly said.
Ray White Commercial director of research Vanessa Rader said demand to purchase hotels took a “strong positive turn in 2021” and the ongoing trend has not stopped. What’s more, last year’s $1.427 billion worth of pubs that changed hands represented a 144% hike on the 2020 result. NSW’s highest value transaction for 2021 was the October sale of the Vineyard Hotel in Windsor in Sydney’s north-western corridor. Covering a substantial 8-hectare footprint, the Vineyard was offloaded for $70 million by the Stanford family, a sale which just surpassed that of the family’s Carousel Inn in nearby Rooty Hill to Bruce Solomon’s Solotel hospitality operation for $68 million around the same time.
That price was matched a few weeks later by the sale of the Brunswick Hotel near Byron Bay, a transaction that “highlighted the appetite for quality offerings in premier locations and a growing price point” Ms Rader said.
Even Australia’s longest singularly held liquor licence traded recently, acquired when high-profile hotelier Fraser Short bought the Sir George Hotel in Jugiong for $14 million in November 2021. The 1845-built hotel is a popular stopover as it fronts the Hume Highway on the major route between Sydney and Melbourne. Prior to the sale it was revamped by its previous owners to offer country-style pub food as well as an artisan bakery, retail store and 10 elegant accommodation suites adapted from the property’s original stone stables.
In the last month alone, the broader hospitality market has seen a string of recent transactions including the sale of the Hook Island Lodge in the Whitsundays to Sydney hotelier Glenn Piper and the Alpine Inn in Khancoban in the NSW Snowy Mountains to a Sydney-based hospitality group. The Alpine Inn sale was the first time the venue had changed hands in 19 years. Both the pub and motel rooms will now undergo full renovation.
JLL Hotels executive Greg Jeloudev who presided over the sale said the property offered its new owner “sound investment fundamentals comprising a mix of gaming, accommodation and genuine operational upside” plus locational drivers of the Snowy Mountains Scheme and proximity to skifields.
The opening of the 5-star QT Newcastle next week, the first outside of a major metropolitan area for the group, signals the confidence in regional markets. The modern 104-room hotel has been shaped within the heritage building that once housed David Jones and is part of a $700 million investment into the city’s East End precinct by development group Iris Capital. It will offer the style of edgy décor for which the group is renown with no two rooms the same, each guest room and suite bearing an eclectic mix of heritage features including original beams and windows plus colourful designer furnishings complementing the sweeping coastal views. The QT group also has two more hotels in the pipeline, one in Adelaide and the other in Parramatta in Sydney’s west.