Australian Hotelier August 2019 by The Intermedia Group

Hotelier AUSTRALIAN

AUSTRALIAâ&#x20AC;&#x2122;S NATIONAL HOTEL INDUSTRY MAGAZINE

VOL. 36 no. 7 - AUGUST 2019

L E A D I N G PAG I N G A N D C O M M U N I C AT I O N MANUFACTURER / SUPPLIER

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IN THIS ISSUE: PROPERTY SPECIAL | AGE REVIEW | VENUE SECURITY

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CONTENTS | ED’S NOTE

Editor’s Note

t’s fair to say there’s been a dizzying number of property sales in recent weeks – large venues, large prices and big names have typically all been involved. That’s why our property special this month is so important – starting on page 20, we get the inside scoop from a number of key realtors to understand what’s happened, what’s happening and, crucially, get to the crux of where it might all be going in the next six months. Ahead of Australasia’s biggest gaming expo, the AGE at Sydney’s ICC, we have our annual preview feature highlighting the biggest news likely to emanate from the event, starting on page 12. With the statewide rollout of the Digital Drivers Licence in NSW taking place in August, we look at other advances impacting venue security for pubs, on page 18. Continuing our new series, Tales From The Top, the Night Time Industries Association’s chair Mike Rodrigues helps us make sense of what the lockout law review could mean for you, on page 30. As always, we have all the news you need from page six and August’s sporting highlights on page 28. Our regular interiors feature Design and Build has made way this month for our expanded property feature, but will return again in September’s issue. Cheers, Craig Hawtin-Butcher, Editor E: craig@intermedia.com.au

NEXT MONTH Super | AGE Review | Foodservice

20 12

Contents | August Special Features

Regulars

12 AGE Preview: Key gaming news ahead of Australasia’s biggest gaming expo. 18 Venue Security: Latest advances, including the Digital Drivers Licence for NSW. 20 Property Special: Our insiders’ ED’S PICK guide to the current market and where it’s heading.

6 News: The most relevant stories affecting your business. 28 Sports Calendar: August’s US LIVE! Open tennis, Bledisloe Cup and more. 30 Tales From The Top: Night Time Industries association Mike Rodrigues.

PUBLISHER: Paul Wootton EDITOR: Craig Hawtin-Butcher PUBLISHED BY:

Food and Beverage Media Pty Ltd 41 Bridge Road GLEBE NSW Australia 2037 Tel: 02 9660 2113 Fax: 02 9660 4419

30 6

craig@intermedia.com.au

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Jason Wild Tel: 02 8586 6213 • jwild@intermedia.com.au

GENERAL MANAGER SALES – LIQUOR & HOSPITALITY GROUP: Shane T. Williams

GROUP ART DIRECTOR – LIQUOR AND HOSPITALITY:

Kea Thorburn kthorburn@intermedia.com.au

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Chris Blacklock cblacklock@intermedia.com.au

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Jacqui Cooper jacqui@intermedia.com.au

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NEWS

BILL YOUNG RETRIEVES FRIEND IN HAND HOTEL Hotelier and former Wallaby front rower Bill Young has purchased Glebe’s Friend in Hand Hotel in an off-market freehold sale for around $10m. The sale – handled by HTL Property’s Dan Dragicevich, Sam Handy and Andrew Jolliffe – marks a return of the hotel to the Young family after 36 years of ownership by the Byrne family, who originally bought the hotel from the Young family. “We are very proud of the Byrne family’s nearly four decades of ownership,” says vendor and Friend in Hand licensee Michael Byrne, “and are delighted that our family legacy is in appropriate hands, with

the fact that Bill Young has purchased the hotel given his family’s history of owning the property before our family did.” The Friend in Hand occupies a corner site on Cowper Street in Sydney, attracting clientele from Glebe and Pyrmont since its inception as a hotel in 1858. Young’s last purchase, also through HTL Property agents, was the $28.5m acquisition of the former listed company Lantern Group’s Five Dock Hotel. Recent research by HTL Property suggests the NSW pub market has seen double digit volume growth and close to $900m in sales during the past financial year, including the record hotel sale of Manly’s Hotel Steyne.

TODDLER GAMING MACHINE USE LANDS CLUB CONVICTION Mount Pritchard & District Community Club (Mounties) has been convicted and ordered to pay almost $6,000 in fines and costs after a case relating to a toddler’s use of a gaming machine. In Downing Centre Local Court on 1 July, Magistrate Sharon Freund found the club guilty of breaching NSW laws that ban minors from remaining in gaming areas at licensed premises. This was after a defended hearing on 4 June where the club pleaded not guilty to the offence. Liquor & Gaming NSW revealed to Australian Hotelier their investigation, which included seizing CCTV footage, found the total time the toddler was in the gaming room was one minute and 48 seconds. The footage showed a young boy who appeared to be aged under five sitting on a stool in front of a gaming machine with a man standing behind him. The child was pressing buttons on the machine without money inserted. When two club staff entered the room, the man lifted the boy down from the stool. The staff were only alerted to the boy’s presence when he ran past them. The man and the boy then left the club. Liquor & Gaming NSW director of compliance operations Sean Goodchild said the offence was a serious breach of NSW gaming laws. “These laws are in place to protect minors from exposure to gaming machines which have the potential to cause significant harm,” Mr Goodchild said. “All venues with gaming machines have a clear responsibility to supervise and monitor gaming machine areas to ensure minors do not enter and remain in gaming machine areas at any time.”

FOR MORE INDUSTRY NEWS FOLLOW US ON 8 | AUGUST 2019 AUSTRALIAN HOTELIER

CCTV still of the toddler gaming machine incident

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NEWS

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The Oxford Hotel, Drummoyne

SYDNEY’S OXFORD HOTEL SELLS FOR BIG PRICE Sydney’s Oxford Hotel in Drummoyne has sold just two weeks after hitting the market. Arthur Laundy paid $42m for the inner west hotel property, hot on the heels of selling his interest in the Hotel Steyne, Manly. In November 2015, Iris Capital sold the Oxford Hotel to private buyers Michael Wiggins and Joanne Cassar for $34 million. “When we engaged HTL Property to market the asset we couldn’t have envisaged such a great outcome in such a short period of time,” says Oxford Hotel vendor Michael Wiggins. “I have a very high opinion of Arthur and his family, and congratulate them on purchasing what will continue to be an exceptional asset for years to come.” The Oxford Hotel – a key gaming pub – occupies a significant 974sqm corner site land parcel with three street frontages, the largest of which fronts the arterial Victoria Road, and which sees traffic volumes of some 60,000 vehicles per day. Included in the sale was an adjoining retail building. New owner of the Oxford Hotel, Arthur Laundy says, “We are thrilled to be taking the keys to the Oxford. My son Craig was the local member when he was in parliament and our family have a long affiliation with the area.” “In the post State and Federal election environment,” says HTL Property Managing Director Andrew Jolliffe, “and following the Reserve Bank’s cash rate repositioning to historically low levels, we are now seeing as active a transaction landscape as ever seen for quality hotel operations indexed to best in class gaming performance.”

The licensee of Bathurst’s Elephant & Castle Hotel has lost an appeal against a conviction for offences including letting two women get highly intoxicated at a “Ladies take over” event featuring topless male waiters. In the NSW District Court on 12 July, Judge Helen Syme dismissed Campbell Gibson’s appeal against his conviction and $2,500 fine handed down in Bathurst Local Court in February. In late 2017, Liquor & Gaming NSW inspectors found two highly intoxicated women at a ‘Ladies take over’ charity function with topless male waiters. One woman was unable to hold her head up while seated, while the other repeatedly fell over. A third woman was riding on the back of a topless male waiter serving drinks at the function. When questioned, one of the waiters did not have a valid Responsible Service of Alcohol competency card. In February, Mr Gibson was fined $2,500 for permitting intoxication and given a 12-month conditional release order for allowing a staff member to serve alcohol without a RSA card. In dismissing the appeal, Judge Syme said the sight of a woman jumping on the back of a topless male waiter “served as background evidence of the lack of diligence by bar staff and that patrons were becoming unruly.” She said many of the ‘mitigating factors’ listed in Mr Gibson’s written submissions were irrelevant. She only accepted he was of good character and that he had taken steps to prevent future offences. Judge Syme said the situation was not assisted by Mr Gibson remaining upstairs throughout the entire incident. Liquor & Gaming NSW Director of Compliance Operations, Sean Goodchild, said the case highlights the risks of allowing high-level intoxication to happen on premises. “Licensees who allow intoxication put patrons and others at risk,” says Goodchild. “Hotels have a responsibility to serve alcohol responsibly and to manage staff to ensure the responsible service of alcohol is practised.” The Elephant and Castle Hotel was listed for sale by HTL Property in December 2018.

IRIS CAPITAL CONTINUES SPENDING SPREE WITH $56M PURCHASE Iris Capital have splurged a whopping $56m on prominent gaming venue the Cambridge Tavern in Fairfield. The off-market sale follows hot on the heels of Iris’ well-publicised record-beating purchase of the Hotel Steyne in Sydney’s Manly from a smorgasbord of prominent investors including John Singleton and Arthur Laundy. The Hotel Steyne sale at $62.5m earlier this year represents what is believed to be a record price for an Australian hotel. The Cambridge Tavern sale isn’t far behind at $56m. “We’re delighted with the asset,” says Iris Capital CEO Sam Arnaout, “it’s a testimony to the expertise of JLL Hotels Director John Musca to have somehow brought this transaction together between the three parties and made the acquisition of this exceptional property possible.” The confirmed sale by JLL Hotels & Hospitality Group was managed by their National Director John Musca. Musca negotiated with incumbent tenants the ALH group to sell their long-term leasehold

10 | AUGUST 2019 AUSTRALIAN HOTELIER

The Cambridge Tavern, Fairfield

interest while working simultaneously with Joe Ganim Jnr and Tony Bargwanna of Savills Brisbane to secure the privately held freehold interest. “Analysis of the Top 100 gaming venues in NSW demonstrates the rapid consolidation of the asset class,” says Musca, “interestingly driven by experienced, private hoteliers with strong balance sheets, and leaving little scope for short-term aggregators, we’re almost at a zero supply position.”

Iris Capital acquired the Cambridge Tavern, which occupies a 5,847m2 site opposite Fairfield train station and includes large public and TAB bars, bottle shop, restaurant and 30 gaming machines. The property has been identified as one of only 13 priority future Fairfield CBD development sites with an FSR of 3.5 to 1 and a 39m proposed height limit presenting a large-scale, mixed-use development opportunity of over 23,000m2 GFA potentially.

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AGE PREVIEW

AGE floor, 2018 event

SHOWTIME IN SYDNEY WITH GAMING’S BIGGEST EVENT TAKING PLACE IMMINENTLY, CRAIG HAWTIN-BUTCHER REVEALS SOME OF THE KEY GAMING NEWS STORIES SET TO BE UNVEILED AT THE AUSTRALASIAN GAMING EXPO 2019.

30TH AGE IMMINENT The 30th Australasian Gaming Expo (AGE) is set to take place at Sydney’s ICC space in Darling Harbour across three days in August. The free-to-attend 13–15 August trade event is Australia’s biggest hospitality and gaming event. The event organisers are promising the presence of many of your favourite suppliers and access to new and innovative industry providers. They’re offering hands-on experience with the latest in gaming design from a number of gaming machine makers. This year’s iteration includes new names on the show floor including Cellarmasters, RTC Foods, MJ Playgrounds, HOLOGATE, and Power Knot. There’s also a daily prize up for grabs of a trip for two to G2E in Las Vegas. For more details visit austgamingexpo.com.

View the full AGE seminar program at bit.ly/AH-seminars

Seminar event at previous AGE 2018

AGE SEMINARS This year’s AGE continues the associated seminars program and includes sessions on ‘Hyper Distraction’, ‘Customer Experience’ and ‘Sacred Cows’, among others. A spokesperson for the AGE said: “Hear how you can do business bigger, better, smarter and look ahead. While the 2019 Australasian Gaming Expo showcases the latest technologies, the educational seminars provide insights to help hotels and clubs do business better.” 24 speakers are scheduled to be involved across 17 sessions. Names from within the hospitality industry will discuss a range of topics relating to all levels of the sector to generate conversation on the impact of new technologies, gaming, regulation, customer service, food, and beverage. “On the back of strong seminar and educational sessions in 2018, this year will see further emphasis on education and professional development,” said an AGE spokesperson. “The program will host representatives

12 | AUGUST 2019 AUSTRALIAN HOTELIER

from government, regulation, technology, gaming, communications, research and more, to offer an informative and holistic view of the industry.” Some of the subjects revealed include: • How the culture of your organisation and employee incentives can be appropriately leveraged to provide an engaging and highly satisfying customer experience for valued customers. • A seminar that reviews the effectiveness of hospitality marketing “sacred cows”, including badge draws and cheap schooners. • How the growth of the $1.7 trillion illegal black market betting industry impacts hospitality operations. AGE organisers have confirmed the seminar program takes place alongside the expo itself and seminars are complimentary for those attending the Australasian Gaming Expo. The seminar program is sponsored by the Gaming Technologies Association (GTA) and Asia Gaming Brief (AGB).

Committed to better.

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SG Gaming is proud to have been an exhibitor at the Australasian Gaming Expo for the past 30 years. Every year we have strived to put our best products on display and create the best experiences for our customers. From our Vidco heritage to our current day SG Gaming, one thing remains the same, our commitment to being better. We look forward to seeing you at this yearâ&#x20AC;&#x2122;s event at Stand 190.

SG Gaming Committed to better.

AGE PREVIEW

ARISTOCRAT CONFIRMS AGE THEME: ‘IT’S ALL ABOUT WHAT’S INSIDE’

Scientific Games stand at AGE 2018

TWO NEW GAME FAMILIES FROM SCIENTIFIC GAMES Scientific Games confirmed plans to present its key digital gaming and sports products alongside “revolutionary” gaming and lottery products at the upcoming 2019 AGE. A Scientific Games spokesperson says: “This lineup is the most comprehensive product offering available from a gaming supplier and combines a range of category-leading brands with a reinvigorated games library for the DualosX cabinet. “Focusing on providing products that will help grow, develop and improve the gaming businesses of its customers makes Scientific Games a must see at AGE.” Having launched the DualosX cabinet earlier this year, which featured large high-definition screens, an LCD iDeck that combines dynamic fullcolour display with mechanical play buttons and a faster processor for enhanced gameplay, the first two titles Monopoly Hotel Tycoon and King of Babylon introduced players to the new product features with familiar games styles. Scientific Games’ Senior Vice President Adrian Halpenny said, “We are committed to bringing innovative and exciting games to players that make use of the big screens and create a superior entertainment experience. Along with Monopoly Hotel Tycoon and King of Babylon Action Spins, Rising Riches games have been recently approved and they are all part of our strategy [to] introduce several new game series that offer greater diversity to hotel players.” Visitors will get a chance to see two new game series from Scientific Games that are bolstering the early releases. The Quick 6 family are fastpaced games with one title Good Catch approved now and ready to make a splash in venues. New concept Hot Hot Jackpots is being launched with two game titles Golden India City and Silver Stallion ready to stake their claim in hotels this year. “With this year marking the 30th anniversary for AGE, Scientific Games has been there since the show’s inception albeit under different company names over the years,” says Sandra Renwick, Marketing Manager with Scientific Games. “One thing [that] hasn’t changed is the company’s passion to deliver customers the best gaming products,” says Renwick. “There will be some incredible new products unveiled this year so make sure you see what is on offer at Scientific Games Stand 190.”

14 | AUGUST 2019 AUSTRALIAN HOTELIER

Aristocrat have confirmed they are looking to reinforce their theme that “It’s All About What’s Inside” on their AGE stand. “We’re showcasing that through collective brilliance, our teams strive to deliver the very best game content, hardware, service and venue management solutions,” says an Aristocrat spokesperson. Their content strategy focuses on providing a range of different game play experiences grouped into Brands, On-Trend, Innovation and Next Gen. “Our goal is to give you more of what works for you and your customers through the development of proven performing content as well as forward thinking concepts,” says a spokesperson for Aristocrat. Aristocrat revealed they are looking to evolve their recognised brands, with new instalments of their well-known brands. “With a passionate and loyal fan base, our brands have become global sensations and have stood the test of time,” says an Aristocrat spokesperson, confirming they continue to evolve titles including Lightning Link and Player’s Choice. Aristocrat confirmed new iterations of Lightning Link are coming to the AGE, with brand new titles: Mine Mine Mine, Fire Idol, Dragon Riches and Raging Bull to be available with higher denominations. The brand claims improved player experience with the new Helix X cabinet, which features “an all-new virtual button deck with a physical bash button, upgraded bolster and a sleek matte black exterior,” the company says. Aristocrat also confirmed they will have a number of new innovations launching at the AGE expo, while their Welcome to Fantastic Jackpots “incorporates the latest trends in the market”. There will be on-stand demonstrations of the latest titles being unveiled at the show – Fantastic Riches and Fantastic Stakes. Aristocrat will be at AGE stand 100.

“WITH A PASSIONATE AND LOYAL FAN BASE, OUR BRANDS HAVE BECOME GLOBAL SENSATIONS AND HAVE STOOD THE TEST OF TIME” – ARISTOCRAT SPOKESPERSON

Visitors should expect plenty of networking opportunities

AGE PREVIEW

LRS TO SHOWCASE SUITE OF SOLUTIONS FOR PUBS While the AGE celebrates its 30th anniversary this year, LRS has been exhibiting at the event every year for the last 10 years, offering a range of products that simplify the guest experience, enhance productivity and improve communications within hospitality businesses. This year, on stand 479, the company will showcase all its products, including its Guest and Staff Paging systems, its Push for Service technology and its Gaming Paging Systems such as Orbit, a loyalty poker machine paging system that provides venues with statistics and reporting. New products in LRS’s range include an on-screen call system and a ‘Text4Service’ system. The team at LRS will be on hand throughout the expo to demonstrate how their technology can help your hotel business.

Also Available on

VISIT KONAMI STAND 390 AT AGE 2019

Konami Australia Pty Ltd. 28 Lord Street Botany NSW Tel: 02 9666 3111 Email: davidson0204@konamigaming.com@konami.com.au www.konamigaming.com

AGE PREVIEW

MAX HOSTING BIG PICTURE BREAKFAST EVENT Konami stand at AGE 2018

KONAMI REVEALS MONEY TRAILS PERFORMANCE AND HIGHLIGHTS 4K TECH A Konami representative has claimed “great feedback” for All Aboard amid strong performance for the title during the last 12 months. The brand also confirmed it will be exhibiting a range of new game series as well as extending All Aboard and All Aboard The Lucky Link with new titles. An important highlight for the brand at the AGE this year will be the amount of games available on both the Concerto and Concerto Stack cabinet, for example Prize Drop, but also the games developed specifically for the Concerto Stack cabinet such as Money Trails and Lian Lian Fa. Money Trails has also landed in the market and the brand revealed “it has consistently performed twice the floor average since initial launch, emphasising the current marketing trend towards Asian theme games and the flexibility for players to select their preferred denomination with high Bonus Prizes.” Konami have also pointed to another key trend in the market towards tall and high resolution cabinets and games. Players will be able to experience this with the latest series Lian Lian Fa, Konami’s first 4K games on the Concerto Stack cabinet, which has been optimised to create an enjoyable experience for the players. “This year we will showcase a range of new innovative products based on market demands to entertain your players and provide opportunities for gaming floors,” says a Konami spokesperson. Konami National Sales Manager David Punter says: “Prize Drop is one of these that allows players to collect bonuses and free games in a very simple way when in the features. Based off the success of All Aboard we will showcase Lian Lian Fa – 4 x 5 Reel version featuring a similar repeat win feature as All Aboard allowing players to experience greater numbers of the repeating feature.”

16 | AUGUST 2019 AUSTRALIAN HOTELIER

Max will be hosting a complimentary breakfast event on the first morning of the AGE on 13 August. Max is the result of the coming together of a number of Australian gaming services providers. A Max spokesperson said: “Our aim is to provide the most comprehensive suite of end-to-end products and solutions that enable our customers to operate and achieve success effectively, efficiently and sustainably.” “This is the perfect opportunity to hear directly from our senior leaders,” said the Max spokesperson, “and be entertained by keynote speaker Todd Sampson, breakout star of the hit ABC show Gruen Planet and co-host of the Channel 10 news program, The Project.” The event promises to explain more about the company's range of products and services and will complete by 9:30am, allowing attendees to rejoin the tradeshow floor for day one.

Max stand at a previous event

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AUSTRALIA’S NATIONAL HOTEL INDUSTRY MAGAZINE

VOL. 36 no. 5 – JUNE 2019

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SECURITY

TECHNOLOGY AIDING SECURITY

FROM THE NEW DIGITAL DRIVER LICENCE TO A NEW SECURITY SEAL, CRAIG HAWTIN-BUTCHER REVEALS THE LATEST TECH ADVANCES FOR VENUE SECURITY.

SW is rolling out a ‘digital driver licence’ (DDL) service statewide in August after successful local trials in Sydney, Dubbo and elsewhere. “The rollout of the NSW digital driver licence is a significant step forward,” AHA NSW CEO John Whelan said. “This new technology, an initiative of Customer Service Minister Victor Dominello, will provide a quick, fraud-resistant method for hotel staff to confirm a person’s identity. The DDL is an electronic version of the NSW Driver Licence, carried on a patron’s smartphone or tablet using the Service NSW App. It’s a free, opt-in service and there are no plans to phase out the physical cards. In addition to the details held on a physical card, the DDL shows live details including licence validity and also flags under-18 holders. “Currently fake or borrowed IDs used by minors attempting to enter a venue present a real challenge for hoteliers,” says AHA NSW’s Whelan. “The new digital drivers licence with its live time stamp and movable hologram will make ID checking much easier and more accurate – something the minors will quickly realise.” For more details about the DDL and how to check it, visit: bit.ly/AH-DDL.

VENUE SECURITY ON THE UP While the new DDL is being welcomed as another tool for publicans, AHA NSW Director of Liquor and Policing John Green believes the whole range of technology solutions are benefitting the hotel sector. “There is no doubt modern technology has had a significant impact upon the business operations of many licensed premises,” says Green. “These systems cover a range of areas, including cash handling, CCTV, digital reporting and record keeping, and staff management systems. “AHA NSW sees the use of technology in improving venues’ security as a vital component of an overall package – from quality CCTV using digital recording owners/licensees can access on their smartphones to the latest in drop or time delay safes reducing the risk of, or loss from, armed robberies. “CCTV systems continue to improve in terms of quality and storage capacity. At this present time, 10-12 frames per second appears to be a general standard, which allows for good quality stills and movement at virtually the rate the eye can see. “Digital Incident Registers have been useful in providing systems which share and workflow both liquor and security activities, reducing duplication whilst ensuring compliance with both the Liquor and Security Industry Acts.”

NEW CASH BAG SEAL A new cash bag security seal has hit the market from Australian business Harcor. The ‘Themis’ seal is protected by a 20-year patent term and features ‘fracture safe’ breakout points. This means evidence will show if an attempt is made to remove the chamber from a bag. The seals also feature barcodes for improved connectivity with smartphones and are oversized for ease of reading. Security sealed cash bags offer an improved degree of security vs standard locks, which can be opened and resealed more surreptitiously.

18 | AUGUST 2019 AUSTRALIAN HOTELIER

NSW is rolling out the ‘digital driving licence’ after successful local trials

SECURITY FOR MOVEMENT AND STORAGE OF CASH OR GUEST VALUABLES

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www.theshout.com.au/ australian-hotelier • PUB SALES • F&B • REVAMPS • APPOINTMENTS • LEGISLATION

Hotel Steyne in Sydney’s Manly, NSW set a record sale price at over $60m

PROPERTY SPECIAL

EVERYTHING YOU NEED TO KNOW ABOUT PUB PROPERTY RIGHT NOW FROM THE BIGGEST BUYERS TO THE MOST PROMINENT SELLERS, WE REVIEW WHAT IT ALL MEANS FOR YOU, WITH THE HELP OF EXPERT CONSULTANTS AND REALTORS.

“W

e have witnessed an extraordinary period of transactional activity in 2019 to date,” says JLL’s National Director John Musca. “With sales volumes exceeding $300 million and yield compression mirroring that of 2005/6, interestingly, in a far more conducive interest rate environment.” The upshot has been a surge in pub sales activity, though with volumes and pricing variable between states. Musca also points to a sales conversion rate of 90% for all appointments in 2019 to date at his firm as a sign of the liveliness of the property market right now. Additionally, the off-market sale of the Royal Exchange Hotel in Sydney’s Marrickville for a not-insignificant $34million, described by Musca as a “discreet” sales process, was also flagged as a key sale for his JLL team. Meanwhile in Melbourne, Savills’ Associate Director in Valuation & Advisory Damian Clark says it’s a different story. “We have seen extremely limited pub sales over the past 12 months,” says Clark. “However, this is due to the limited stock that has been offered to the market rather than a reflection of demand, noting both local and interstate hoteliers, private investors and syndicates all remain attracted to Melbourne’s pub sector.” “We have seen some great sales and exciting acquisitions for many of our clients this year,” says PKF Partner and Director Anthony Sullivan. “Each one [of] them has been important to each client for varying reasons depending on their strategy adopted. Market opportunities have allowed the astute operator to derive value in a number of different ways. “Typically an operator will start with a particular operational strength and then look to diversify revenues and risk through acquisition and/or renovation of venues, or through activating greenfield sites. “It takes different skill sets to optimise all aspects of the evolving hospitality offer, when diversification happens, teams grow and we see the implementation of some great innovative ideas. The relatively liquid market has been great for the industry as a whole.”

20 | AUGUST 2019 AUSTRALIAN HOTELIER

STATE-BY-STATE BREAKDOWN

CBRE SHARE THEIR POINT OF VIEW ON EACH STATE

NSW

The Edgeworth Tavern in Lake Macquarie, NSW

KEY SALE 2019 has seen a continuation of buoyant market conditions and transaction activity in the NSW pub market. One of the key deals for the NSW pubs team was the sale of the Edgeworth Tavern in Lake Macquarie to Sam Arnaout’s highly acquisitive Iris Capital. This purchase continues Mr Arnaout’s impressive run of recent acquisitions including the Hotel Steyne in Manly and the Cambridge Tavern in Fairfield.

TRENDS 1. We are seeing hoteliers continue to chase yield in a contracting yield environment driven primarily by the weight of money in the market, strong trading conditions and record low interest rate environment. 2. Significant capital recycling through refurbishment initiatives and value-add style development activities – driven by the low cost of capital. 3. The transfer of hotel ownership by long-term owners to a new breed of modern-day operators who in many cases are repositioning existing businesses and maximising the development upside presented to them.

FORECAST We see the market continue to hunt assets that present strong underlying fundamentals from both a business and property perspective. Large format regional hotel opportunities will also feature prominently as large hotel groups and traditional metropolitan operators look to expand their geographical footprint and bolt on acquisitions to existing portfolios. The diminishing availability of A-Grade assets will spur heightened competition for acquisitions as further consolidation occurs in the market occurs. CBRE Hotels director Ben McDonald says “Further rate cuts in the short to medium term will fuel investment activity in the sector as hoteliers continue to see year-on-year improvement in general CBRE’s Ben McDonald trading conditions.”

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PROPERTY SPECIAL RECORD SALES HTL Property’s Andrew Jolliffe points to the firm’s key sale of the Hotel Steyne in Manly, which set what is believed to be a new sales record. John Singleton and business partners sold Manly’s Hotel Steyne to Iris Capital for $60m-plus back in May, via HTL. “Apart from being a national record-setting sale,” says Jolliffe, “the high profile nature of the campaign and doyen-like status the hotel enjoys in Australia’s pub culture, meant it was very important for it to be a successful transaction on a range of levels.” JLL’s Musca highlights some of the larger transactions concluded in the first six months of the year, including the Cambridge Tavern in Fairfield. A prominent gaming hotel, it sold for a substantial $56m in a deal Musca describes as “complex” given it involved the combination of freehold and leasehold interests. “This represents the largest gaming-centric hotel asset sale of 2019 and reflects the quality of the asset, its substantial future development potential and heritage as a top 10 gaming asset in New South Wales,” says Musca. Commenting on the rapid two-week sale of the Oxford Hotel in Drummoyne, HTL’s Dan Dragicevich says: “This deal was somewhat complex as it involved not only the acquisition of the hotel but also the two adjoining commercial properties. This essentially required careful management of two separate sale processes.”

CURRENT TRENDS JLL’s John Musca highlights the rapid consolidation of the industry nationally as a prominent current trend. “The big get bigger,” says Musca, “and the quality assets are falling into both public and private ownership vehicles that may see them housed for an extended period without transaction.” Meanwhile Musca also points to the move to cross-border acquisition as previously localised hoteliers increasingly consider interstate opportunities to expand their portfolios and leverage their operating models. “We have seen a significant increase in cross-border liaison and transaction activities between our offices as national clients seek to get ahead of the queue for any opportunities that arise, predominantly in the national capitals,” says Musca. Musca also believes there is a major “re-valuation and reactivation of the leasehold hotel interest where the spread between the cost of debt, now more readily available for experienced operators, and the cash on cash returns that leases deliver, has seen a resurgence of interest by savvy hoteliers identifying and securing business interests without the underlying capital commitment to property.” The Cambridge Tavern in Fairfield sold for $56m

The Harold Park Hotel in Sydney’s Glebe

MAJOR RECENT SALES The pub property market has been particularly buoyant in recent weeks, witnessing: 1.

B ill Young bought the Friend In Hand, Glebe from the Byrne family for a rumoured $10.25m

T he Harold Park Hotel, also in Glebe, sold for around $6m after just five days marketing

3. A rthur Laundy paid $42m for The Oxford Hotel in Drummoyne just two weeks after hitting the market 4.

Sydney’s Criterion Hotel 20-year lease sold for over $15m

5. W oolworths plans to combine and then demerge Endeavour Drinks Group and ALH Group.

“WE HAVE SEEN EXTREMELY LIMITED PUB SALES OVER THE PAST 12 MONTHS [IN MELBOURNE]” – SAVILLS’ DAMIAN CLARK

TAS

“Changes to gaming regulations proposed by the current Tasmania Government could have a significant impact on the pub market within the state over the next few years,” says Savills’ Associate Director in Valuation & Savills’ Damian Clark Advisory, Damian Clark. “The proposals will likely return a greater percentage of gaming revenue to the venues in which they operate and see the introduction of 20-year licences for hotels to operate their own gaming machines. If implemented the returns generated from gaming venues will likely increase and the long-term licences will provide investors with a higher level of confidence, so overall this should lead to increases in investment. However, I caution that to date the proposals have not been approved and they will not come into effect until 1 July 2023 at the earliest.”

22 | AUGUST 2019 AUSTRALIAN HOTELIER

31 hotel specialists across Australia

Over $118 million transactions in H1 2019

$56 million Largest gaming hotel sale nationally

85% clearance rate H1 2019, more than double all competitors*

over$1.7 billion No 1 hotel brokerage NSW with more transactions in H1 2019 than any other agency

$15m+ Largest hotel lease sale nationally

transactions in H1 2019

Featured Transaction Harbour View Hotel

Sold at asking price in 5 days

As market leaders, more hotels are sold in Australia with the help of JLL. It's no wonder when we have Asia Pacific's largest truly dedicated pub, hotels and hospitality team with 31 specialists across Australia alone.

Meet the team John Musca National Director New South Wales M: +61 424 257 004

Nick Butler New South Wales M: +61 458 672 643

Will Connolly Victoria & South Australia 0432 116 287

Sean Flynn Western Australia M: +61 412 779 987

Tom Gleeson Queensland M: +61 449 289 845

jll.com.au Real Estate Services

PROPERTY SPECIAL

DIVERSIFICATION THE PRIMARY TREND “The primary trend is diversification,” says Anthony Sullivan, Partner and Director of PKF, an accountancy and business advice firm. Sullivan highlights diversification through: 1. Gaming – remains a strong revenue stream with great innovation coming from suppliers; 2. Food & Beverage – now a very important component of most hotel offerings. The competition is fierce and the innovation around F&B service and product has grown exponentially. Operationally venues have had to evolve to support the F&B offer. Technology is now widely adopted to engage with customers and make the delivery of F&B service efficient; and 3. Accommodation – lack of supply in key areas and often inherently good locations, have seen operators focus more on accommodation offerings. The commercial considerations for publicans are often different to those considered by straight accommodation hotel operators. The result has been more choice for the consumer.

Research from HTL Property suggests there is a clear transactional trend in NSW being the sales growth and average sales price of North Coast and Northern NSW assets; which are up 63% YoY in terms of combined sales value. HTL’s Andrew Joliffe says: “We see this being as the direct result of heavily contracting metropolitan yields, as well as the population and infrastructure growth taking place in these regions. It provides investor confidence and underwrites future revenue attraction.” HTL’s Dan Dragicevich draws attention to the sale of seven TOP 200 gaming hotel sales over the last 12 months and anticipates that these will continue to transact at sharp yields over the next 6–12 months. “Most of the statess gaming pubs are in the hands of large corporates, institutions and portfolio publicans,” says Dragicevich. “All of whom... have seemingly longterm gaming market share aggregation strategies. The demand is definitely still there but there is a diminishing supply of pubs on [the TOP 200] list that are under private single ownership and potentially available for acquisition in the short to medium term.”

WHERE WILL THE MARKET BE IN SIX MONTHS’ TIME? “We see interest rates as the most influential factor driving valuations. Continued downward pressure on interest rates coupled with more stable and robust revenue streams lead us to believe strong valuations will prevail in the short term.” Anthony Sullivan, PKF “Having recently been through the confidence-stymying federal and NSW State elections, compounded by the Banking Royal Commission, there is now an air of clarity moving forward, meaning the transactional market can operate and function with improved certainty and confidence.” Andrew Jolliffe, HTL Property

24 | AUGUST 2019 AUSTRALIAN HOTELIER

Improved gaming space at The Ambarvale Hotel, NSW

VIC TRENDS 1 . L ack of gaming stock – gaming venues extremely tightly held as highly profitable right now and some traditional gaming hoteliers venturing into accommodation as another revenue source. 2. Big pub renovations – venues being re-birthed are CBRE’s Mathew George generating massive revenues during their honeymoon periods and beyond. 3. Continual evolution of pub fare – demand for craft beer and fancy food continues to attract the crowd.

FORECAST In six months’ time we may see a slight correction, typically in food and beverage pubs. As we have seen unprecedented growth in real estate values over the last 10 years, the humble pub is learning how to grapple with ever-increasing rental levels. Coupled with the enormous growth witnessed in the licensed café scene over the same period of time, the pub on the corner or down the road is starting to show slight signs of strain. As under-performing and lacklustre venues become irrelevant with the craft beer and fancy food crowd continuing to dictate what is served to them, more and more opportunities in desperate need of a makeover (mostly leasehold) may start hitting the market, which in turn will create opportunities for progressive and forward-thinking operators. CBRE Hotels’ Director Mathew George says: “Interest rates are at all-time lows and with banks proposing to ease up on lending requirements we are sure to see continued growth in patronage numbers along with continued investment and development in the sector.” “The pub sector is proving it can keep up with, and in a lot of examples overtake the so called edgy and more sophisticated restaurant/café sector. Pubs are creating incredible food and fare among theatre and atmosphere with their daring menus and brilliant renovations, and it’s the continued efforts of the industry stakeholders that keep raising the bar to exciting new heights.”

Freehold of One of Brisbane’s Iconic Hotels The Victory Hotel

For Sale 127 Edward Street, Brisbane City QLD Prominent 924sq m (approx.) corner block site Single tenant lease with 3.5% annual fixed increases Facilities include: a beer garden, Level 1 nightclub, Hornblowers Bar, Nelson’s Sports Bar, Sailor Jerry Room, gaming (30 EGM’s), TAB and Keno, restaurant and function facilities Development opportunities with Principal City Centre Zoning (subject to approvals) Gaming entitlements valued at over $3.3m Expressions of Interest closing 11 September 2019 Tony Bargwanna 0411 544 451 tbargwanna@savills.com.au

07 3221 8355 savills.com.au

PROPERTY SPECIAL

“SHEER WEIGHT OF CAPITAL INTO THE EASTERN SEABOARD CONTINUES TO SEE MOST TRANSACTIONS KEENLY CONTESTED” – JOHN MUSCA, JLL “In the more transactional eastern capitals we will continue to see a high level of transactions increasing in an off-market format with buyers trying to generate a competitive advantage outside of market forces, an uplift in opportunism into the regional areas where economic and infrastructure activity is improving and buying levels are still attractive.” John Musca, JLL “Pub freehold owners with ownership of pubs which are securely leased to third party operators have shown a preference for asset retention rather than divestment due [to] the limited investments opportunities currently available which would provide returns which exceed those currently generated from their pub. With key indictors signifying the low interest rate environment is going to continue for an extended period, I anticipate this trend will likely continue and any sales which do occur will likely reflect relatively sharp yields.” Damian Clark, Savills “The national market remains relatively polarised whereby economic and operating challenges on the West Coast continue to provide cash flow challenges at the tap face, subdued growth in the southern states is bolstered by the limited asset availability and the sheer weight of capital into the eastern seaboard continues to see most transactions keenly contested.” John Musca, JLL “We’re buoyant about the future market, its reliability and health; as well as its continued broad attraction as a preferred investment class, especially when considering the prosperous future outlook of the local economy.” Dan Dragicevich, HTL Property The Oxford Hotel in Sydney’s Drummoyne, NSW

The Normanby Hotel in Brisbane’s CBD sold to Pelathon Management Group

QLD KEY SALE The sale of the Normanby Hotel to Pelathon Management Group, who have entered a two-year lease over the property with the option to CBRE’s Paul Fraser buy the freehold, represents strong underlying value and the opportunity to reposition the pub. The Normanby Hotel is a high profile, heritage listed venue on an acre of land 1km out of the Brisbane CBD.

TRENDS 1. Adani green light – With the Carmichael coal mine getting the go ahead from the Queensland Government, we are seeing publicans putting their attention back on resource-centric areas as a real opportunity to get into a depressed market with a low entry point and potential macroeconomic upside. 2. AVC and Coles merger – consolidation of assets continues in SEQ and wider Queensland. Flow of capital north from NSW still evident as larger groups chase EBITDA and softer yields than their Sydney comparison pubs. 3. P ublicans looking at pubs not performing and looking to reposition in the market. Established pubs are notoriously tightly held in SEQ, we are seeing publicans are now looking at opportunities to acquire deemed underperforming assets in this region with a view to spending considerable CAPEX to reposition the assets and drive capital gain. Examples of these include Normanby Hotel, Samford Hotel, Boundary Hotel and Woodford Hotel.

FORECAST Queensland doesn’t generally have peaks and troughs in this asset class compared to states such as NSW, so we expect the market to stay very stable over the next six months. Stable government at both federal and state level has also installed confidence in this market as legislative stability has continued. CBRE Hotels Director Paul Fraser says: “With two interest cut rates this year already and another one touted before the end of the year, confidence in the market is still robust and appetite is still strong for assets in SEQ.”

26 | AUGUST 2019 AUSTRALIAN HOTELIER

PROPERTY SPECIAL

FORECAST

Holey Moley golf club in Northbridge, WA

KEY SALES CBRE’s Ryan McGinnity highlights the purchase of the freehold interest of the Holey Moley golf club in Northbridge. Venues that offer something other than the norm are doing well in Perth and this sale highlights just that. Holey Moley’s mini golf and the Lookout Bar and Bowling in Scarborough are two venues … appearing to be trading well [and] offering a social outing outside of F&B.

TRENDS 1. Local area / suburban focus – traditional hospitality areas such as Subiaco and Mt Lawley are currently going through tougher times; however, there are signs that those operators who have repositioned venues to meet local demand are doing well. Suburban venues dealing with lower on average F&B spend are appealing to residents and drawing good patronage. 2. Diversifying income by offering alternatives

other than F&B – Amplifier has added bowling lanes, The Palace Arcade with its arcade games and the Court Hotel with its drag shows, quiz night and karaoke events all command strong patronage. 3. Reliance on food – aside from alternatives to F&B, most Perth pubs are still driven by F&B. Quality food is therefore a must and supported by well-priced drinks. Social media ultimately gives immediate feedback, every pub meal leaving the kitchen needs to be restaurant quality being perfectly cooked and presented. Value for money is at the forefront of patrons’ minds so food, while needing to be perfect, needs to be affordable.

CBRE HOTELS THE ONLY TRULY NATIONAL PUBS TEAM

We expect the Perth pub market to improve over the next 6–12 months on the back of the housing market. Perth house prices are still falling, patrons, even with job security, are reluctant to spend on F&B with the psychology of their home price reducing month on month. We expect to see pub revenues increase as confidence comes back in the housing market. CBRE Hotels’ director Ryan McGinnity says: “In the short to medium term we expect the local economy including the hospitality sector to strengthen on the back of higher commodity prices and the Government’s focus on drawcard events. The likes of Manchester United, The State of Origin and the Bledisloe Cup all coming to Perth in mid-2019 will create a substantial increase in inbound tourists, most CBRE’s will certainly visit a pub Ryan McGinnity or restaurant.”

RECRUITING THE RIGHT PEOPLE NATIONALLY We welcome two accomplished brokers to our national team with over 40+ years of experience VIC

MATHEW GEORGE Director, CBRE Hotels mathew.george@cbrehotels.com +61 400 663 840

NSW

SPEAK TO ONE OF OUR TEAM MEMBERS TODAY 02 9333 3333 SYDNEY | MELBOURNE | BRISBANE | PERTH

KATE MACDONALD Associate Director, CBRE Hotels kate.macdonald@cbrehotels.com +61 412 726 676

CALENDAR

SPORTS FIXTURES PACK IN THE PATRONS WITH THE SPORT ON LIVE AND LOUD. HERE ARE YOUR AUGUST HIGHLIGHTS FOR THE MONTH AHEAD, INCLUDING THE US OPEN AND THE ROAD TO THE AFL AND NRL FINALS.

TENNIS

BASKETBALL

Aussie Ash Barty will hunt down more Flushing Meadows success this month as ESPN serves up live daily coverage of the 2019 US Open tennis from New York. When: Tues 27 Aug to 8 Sept, 2am to 2pm Channel: ESPN

The Boomers will be a top seed as the 2019 FIBA Basketball World Cup tips off in China at the end of the month. The team features eight current NBA players. When: Australia v Canada, Sun 1 Sep, 5:30pm. Australia v Senegal, Tue 3 Sep, 5:30pm; Australia v Lithuania, Thu 5 Sep, 9:30pm Channel: Fox Sports

UNION

UFC

The Qantas Wallabies and All Blacks face off in the Bledisloe Cup on back-to-back Saturday nights, with the other two southern hemisphere giants going head-to-head. When: Australia v All Blacks, Sat 10 Aug, 8pm and Sat 17 Aug, 5:35pm. Springboks v Pumas Sun 18 Aug, 1:05am Channel: Fox Sports

Aussie boxers Tim Tszyu and Jeff Horn headline separate PPV events. Tszyu faces Dwight Ritchie with the WBO Global and IBF Pan Pacific super welterweight belts up for grabs. Former welterweight world champion Jeff Horn faces fellow Aussie Michael Zerafa. When: Tszyu v Ritchie Wed 14 Aug. Horn v Zerafa Sat 31 Aug, both 7pm Channel: Main Event

NEXT MONTH

Itâ&#x20AC;&#x2122;s finals time in September as the AFL and NRL reach their climactic conclusions, at the MCG and ANZ Stadium respectively. When: Qualifying final and elimination finals throughout the month. AFL Grand Final Sat 28 Sept, 2:30pm, NRL Grand Final Sun 6 Oct, 7:30pm Channels: AFL Grand Final on Channel 7, NRL Grand Final on Channel 9 *All times are AEST

28 | AUGUST 2019 AUSTRALIAN HOTELIER

SUPERRATINGS PLATINUM 2019 MYCHOICE SUPER

SUPERRATINGS PLATINUM 2019 PENSION

10 YR PLATINUM PERFORMANCE 2009â&#x20AC;&#x201C;2019

MYSUPER OF THE YEAR FINALIST 2019

CAREER FUND OF THE YEAR FINALIST 2019

TALES FROM THE TOP

WHY WE’RE MISSING $16BN IN LOST REVENUE CHAIR OF THE NIGHT TIME INDUSTRIES ASSOCIATION, MIKE RODRIGUES TELLS CRAIG HAWTIN-BUTCHER HOW PUBS CAN RECOUP OUR LOST BILLIONS.

hile we think the lockout review is likely to result in some change, the question is: How deep will this change go? It’s review of lockout. And it’s also a discussion around Sydney’s night time economy. That’s new language for the state of New South Wales. Clearly the industry will be seeking full blown repeal of lockout. And the discussion really has been: if lockout goes, what if anything is put in its place? Bearing in mind that the political reality is that the police and health professionals on the other side of this debate are going to be arguing to keep it or even deepen it. And guess what. The concept is good operator, bad operator. Good operators being incentivised, bad operators being punished. There’s a school of thought that says the punishment mechanism is well and truly in place. Things like three strikes policies, plans of management, violent venues list in particular, exists. If lockout was introduced as a temporary measure to fix something, why don’t we go to what we had before as a starting point, for what might sit in its place? I think how effectively industry argue that would be a function of what overall plan industry can deliver to the government for a workable solution around not having the problems that the lockout were created to solve, reappear. It’s things like venue concentration combined with a lack of public transport. That was what afflicted [Kings] Cross. So if you look at what’s the situation now, well, there aren’t many venues. And then secondly, Uber has been a pretty important addition to the night time economy because it gets people to where they’re going and without taxi queues. What we’re trying to do through the Night Time Industries Association is actually triumph the other areas of the night time economy and paint hospitality as very much the backdrop. It’s a facilitation of your night out as opposed to the be all and end all of your night out. It’s a narrative that

government can buy. Also it ties into why we’re missing $16bn worth of income a year in the Sydney area. That’s in lost income as a result of an underperforming night time economy. Years and years of awareness campaigns and also the rise of wellness and mindfulness and so forth has better calibrated society’s understanding of the health consequences from alcohol. You know the stats on the decline in alcohol consumption per capita, decline in mainstream beer consumption, the increase in non-alcoholic product category. What you have here is a good number of venues that aren’t necessarily traditional pubs and play in that space. Pubs are great pieces of infrastructure with the capability to offer multiple things in comparison to a restaurant licence or a bar licence. And so I think that there’s a degree of oversupply – I’m talking about Sydney specifically - but then you add in things like home entertainment, Ubers Eats and Jimmy Brings-style, that’s a lot of capacity in the economy. By necessity then pubs are having to think about what they’re offering. My advice is to think about what the pub was there for, which is ultimately to serve the community as a public house. How does that look in terms of can we take daycare classes in the morning, things like playgroups? That happens in the UK – daytime elements. Pubs have spaces. There’s a history of Sydney over a long period of time it’s a pendulum shift from one extreme to the other. We go from prohibition to decadence. 1999 we liberate the bar scene for the Olympics coming up and in 2014 we kill it. This is the kind of pendulum swing I don’t think is wise from a civic perspective. It stands to reason then that you would have interventions on an occasional basis around things like licensing to rebalance. Diversity at its heart is where the solution lies with this. We have diverse audiences, we should have a diverse night time entertainment landscape.

30 | AUGUST 2019 AUSTRALIAN HOTELIER

Mike Rodrigues, Managing Director Time Out Australia and Chair of the Night Time Industries Association

“We have diverse audiences, we should have a diverse night time entertainment landscape.”