Australian Hotelier February 2019 by The Intermedia Group

Hotelier AUSTRALIAN

AUSTRALIA’S NATIONAL HOTEL INDUSTRY MAGAZINE

VOL. 36 no. 1 – FEBRUARY 2019

THE 2019 ANNUAL INDUSTRY LEADERS FORUM

IN THIS ISSUE: MOST INFLUENTIAL | PREDICTIONS 2019 | INSIDERS’ INSIGHTS

35% less carbs than regular beer

READY TO ORDER 18 FEB 2019

THE NEXT GENERATION OF BEER WE’RE BREWING THINGS DIFFERENTLY We saw the chance to brew a great tasting, refreshing beer that is less heavy to appeal to men who are conscious of what they are drinking and how often. In our quest for the ultimate refreshment, we’ve created a revolutionary new brewing process. We used rice instead of wheat or barley for a cleaner, crisper tasting beer. It is lower carb, 99% sugar free, preservative free and gluten free.

WHY YOUR SHOPPERS WILL LOVE THIS We’re meeting the changing tastes and needs of Australians with a clean, crisp, great tasting beer that’s gluten free, lower carb, 99% sugar free, preservative free and totally sessionable.

MEDIA SUPPORT

MEDIA SPEND INCREASED BY FROM $ TO $

15.5M

11.5M

THE LAUNCH RANGE Modern, masculine, simple, bold and confident pack designs will help progress the contemporary category.

24 BOTTLE CARTON

6 PACK

330 ML BOTTLE

SUPPORTING HAHN ULTRA CRISP IN-STORE AVAILABLE POS: • • • • • • •

Bollard Cover Large Price Board A3 Poster Cool Room Decal Fridge Decal Wobbler A4 Counter Card

• • • • • •

Pallet Topper 2-way Display Unit Single Carton Display 6 Pack Display Stand 6 Pack 4-way Display Stand 6 Six Pack Counter Unit

*COLMAR BRUNTON QUANTITATIVE SENSORY RESEARCH - Project quest APR ’18 + AUG ‘18 - SAMPLE SIZE 138 + 110

OF BEER DRINKERS INTENDED TO PURCHASE HAHN ULTRA CRISP*

CONTENTS | ED’S NOTE

Editor’s Note

e’re back with a bang in 2019 after an exceptionally busy trading period for the industry. We hope you’ve had a profitable Summer and festive period to set you up for the months to come. With macro-economic data showing a slowdown in property transactions and the elections looming, the year ahead already feels like something of a rollercoaster. Which makes now the perfect time for our annual Pub Leaders Forum issue. It’s a chance for you to discover precisely what some key industry voices believe is likely to happen in 2019 (p30). In our brand new ‘Most Influential’ feature (p8), discover who is influencing the industry and how. In our exclusive interviews, told in their own words, lightly edited, Paul Kelly reveals why big is increasingly better (p16), Dan Brady explains how Redcape managed its ASX listing (p15), CBRE unveils its property forecast (p24) and the GTA (p21) guides us on gaming. But wait – there’s more. We have the state of play in ACT (The Duxton, p28), WA (Three Pound Group, p22) and VIC (Colonial Leisure Group, p12). From single operators to the groups, suppliers to operators, Australian Hotelier has you covered. Cheers,

Contents | February Special Features

Operators

6 News: The Most relevant stories affecting your business. ED’S 8 Most influential: Industry leaders PICK reveal who is influencing the industry, and how. 30 Predictions 2019: The key trends, brands and themes for the year ahead.

10 Red Rock Leisure 12 Colonial Leisure Group 15 Redcape 20 Beach House Hotel 22 Three Pound Group 28 The Duxton

NEXT MONTH Selling Sport • Gaming • Accommodation

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Suppliers 14 Hostplus 16 Paul Kelly Design 18 Intrust Super 21 Gaming Technologies Association 24 CBRE 26 Agnew Wines

Craig Hawtin-Butcher, Editor E: craig@intermedia.com.au

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Average Total Distribution: 5,497 AMAA/CAB Yearly Audit Period ending 31 March 2018.

NEWS

LION TO LAUNCH HAHN ULTRA CRISP BEER Lion has announced the launch of Hahn Ultra Crisp, a new beer targeting contemporary male drinkers. Not to be confused with an earlier Hahn beer called 'Ultra', the new iteration of Hahn Ultra Crisp will be preservative free, gluten free and 99% sugar free, along with 35% fewer carbs than comparable beers. Brewers have brewed the new incarnation using rice, rather than wheat or barley. A Lion spokesperson confirmed further details would be available shortly. Sign up to TheShout newsletter for the latest news affecting you and your business: www.theshout.com.au/subscribe-to-the-shout

Merivale’s venue Charlie Parker’s

ALLEGED MERIVALE UNDERPAYMENTS CRISIS SET TO DEEPEN Justin Hemmes’ Merivale group is just one of a number of hotel operators facing potential class actions, with up to 5,000 staff allegedly underpaid and unpaid at Merivale alone. Justin Hemmes’ under-fire Merivale group is facing a potential class action lawsuit as the fallout from staff collective agreements continues. Merivale has denied the class action claims. Lawyers currently representing at least 50 claimants have revealed their allegations against Merivale and are seeking redress of $15m-25m to recover underpayments, along with pecuniary damages claims for up to $728,000. Adero principal lawyer Rory Markham also confirmed to Australian Hotelier his firm are investigating a number of other pub operators across Australia, alleging similar practices. “Indeed we are,” said Markham. “There are a large number of operators that have similar practices to Merivale. We’ll be expecting announcements in the next three-months cycle of other operators.” Explaining the withheld announcements, Markham said: “We specialise in looking at industry-wide underpayments but we can’t name other entities until further due diligence is completed.” In relation to the Merivale claim, Markham added: “We’re also investigating underpayments in connection with salaries of chefs and so forth and we’re on notice of a large practice of forcing individuals to work hours but not to pay those hours.” Markham did not substantiate those allegations further. In detailing the claims against Merivale, Markham alleged:

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Merivale CEO Justin Hemmes

“We’re dealing with what they would call a zombie agreement. Our cause of action is really saying that when the IR system came into existence post-2009, there was an obligation to ensure people were paid minimum rates of pay and that Merivale has failed to keep those rates of pay up to minimum standards.” Responding to the threat of the class action, a Merivale spokersperson said: “Merivale is confident all staff have been paid in full and it has been compliant with all relevant legal standards and the applicable industrial instruments. “With regard to a potential class action, given the absence of any underpayment, the only winners out of any proposed class action, as always, will be lawyers and litigation funds.”

DARWIN PUB FACES RACISM ALLEGATIONS Darwin pub Rorke’s Beer Wine Food has been caught amid a swirl of racism and unpaid wages allegations. Pub owner Mitch McNamee has found himself at the centre of unsavoury allegations by former staff in a number of media outlets claiming some wages remain unpaid. Related allegations also claim that McNamee instructed staff to exclude indigenous customers from Rorke’s Beer Wine Food, to charge indigenous customers for water and a winning pokie player was refused their payout. McNamee has been approached for comment but remains unavailable. The Chief Executive Officer of Hospitality NT, the peak industry body in the Northern Territory for the hospitality industry, Des Crowe, told Australian Hotelier: “Hospitality NT is opposed to alleged discriminatory practices. “Recent allegations around discriminatory practices have been widely criticised by hospitality leaders and community leaders alike.”

NEWS

The online course was launched in London

FREE ONLINE WINE COURSES LAUNCH Pub staff and operators to benefit from new wine education program, Australian Wine Discovered. Wine Australia has launched a comprehensive new education program – Australian Wine Discovered – to provide free, online access to wine education tools for all. Pub staff and operators should benefit from this broad and deep access to wine knowledge across devices and platforms and at a time of their choosing. The program has a focus on Australian wine. The content-rich and globally-accessible program features 22 education modules, detailed information guides, videos, maps, tasting tools and more. Wine Australia Chief Executive Officer Andreas Clark said, “In the hospitality sense, this program aims to

raise awareness and advocacy of Australian wine among local trade, educators and consumers. It’s an opportunity for staff and operators to learn about our exciting wine scene, bring it to life in their business – and ultimately, encourage consumers to embrace our fine wines. “At the click of a button, we’re giving people open access to a modern education program.” The topics are suitable for beginner to advanced levels, offering an ‘Introduction to wine’ that covers the basics of how wine is made, how to taste wine and common questions such as how to identify wine faults, to more specific topics such as ‘Aged Australian wines’ and ‘Australia’s old vines’. The program harnesses visual storytelling, using illustrations, videos and imagery to break down

complex information into something staff can easily and quickly understand, which should aid customer service. All of the assets are flexible and editable with global access and unrestricted usage. Clark said: “This exciting new program is part of our bigger and bolder engagement with international markets, made possible by the Australian Government’s $50 million Export and Regional Wine Support Package. It’s about amplifying the Australian wine message and raising awareness of the people, the places and the grape varieties that make Australian wine unique and special. And best of all, it’s free!” The free education modules, tools and resources are available to all at www.australianwinediscovered.com.

AHA TO MEET CUB OVER EBAY DIRECT SALES The Australian Hotels Association (AHA) is set to hold discussions with Carlton & United Breweries (CUB) over its ongoing trial on eBay, after members raised concerns about the trial. Retailers have raised major concerns about CUB selling direct to consumers as part of a trial being conducted by ZX Ventures. ZX is the global growth and innovation division within the AB Inbev group, which owns CUB; ZX was also the company behind the purchase of online retailer BoozeBud last year. Scott Leach, National President of the AHA, told TheShout: “Hoteliers have expressed concerns over the market dynamics the CUB trial will create. “The AHA will be holding urgent discussions with CUB to express the sentiment of our members.” Last week, Lance Eerhard, ZX Ventures’ Head of eCommerce, Asia Pacific South, told TheShout: “ZX Ventures has been selling a limited range of CUB products on eBay since November last year. “This is a trial and ZX is continuing to assess the response from consumers. “Australian businesses are increasingly looking to sell their products through fast-growing digital retailers such as eBay. CUB produces some of Australia’s most popular beers so it makes sense to explore whether eBay is an effective way to get these products into the market.” TheShout reported that having looked through many of the products available via CUB’s eBay store Corona Extra, Carlton Draught and Victoria Bitter were listed for $56 per case, however with a 20 per cent discount promotion available these products can be bought for $44.80 with free delivery. Crown Lager costs $44 and Carlton Dry can be bought for $43.20. With the discounted prices available for the beer, several retailers questioned the reasons for the trial and how valid its results would be given the cheap prices involved. CUB declined to comment.

AUSTRALIAN HOTELIER FEBRUARY 2019 | 7

MOST INFLUENTIAL 2019

THE INDUSTRY’S MOST INFLUENTIAL OUR FEATURED LEADERS HIGHLIGHT INDIVIDUALS AND ORGANISATIONS HAVING THE BIGGEST IMPACT ON THE INDUSTRY – FROM REGULATORS TO CEOS, THESE ARE THE MOVERS AND SHAKERS SHAPING OUR WORLD.

From a national point of view, we believe the following groups on the eastern seaboard are the most influential due to their ability to redefine traditional hospitality offerings and create destination hot spots, transforming the overall experience of patrons. 1. Queensland – Comiskey Group (Sandstone Point and Eatons Hill) 2. New South Wales – Merivale and the Sydney Collective 3. Victoria – Sand Hill Road (Garden State and Espy)

Garden State Hotel, Melbourne

Paul Fraser and Ben McDonald of CBRE

1. The Merivale Group – Headed up by Justin Hemmes and his team. They are still definitely at the forefront of the industry and just nail every new project. 2. N eil Perry with his consistency of high level food offerings. 3. And of course the trio of Canberra locals Ant Arena, Lorenzo Focarile and Dean Brown who are the brains behind Mollys, Black Market, Highball Express, Bleachers and 88mph – these themed bars are some of the best in Australia hands down.

Merivale CEO Justin Hemmes

David Quinn of The Duxton

Our customers are the most influential people, but I assume that is not what you are asking... In terms of those working within our industry, I see: The respective heads of the regulator bodies in the jurisdictions we operate – Phillip Crawford in NSW and Mike Sarquis. Both have very clear ideas on how to work with industry but also satisfy the needs of people and communities to continually challenge better outcomes for stakeholders. AHA and NSW President Scott Leach. His leadership in ensuring NSW is a well organised body that represents its members well and works with all stakeholders for sensible reform and improvements that have allowed the industry to prosper whilst advancing social causes and harm minimisation. This has been achieved at a national level and the AHA as a body has fantastic connectivity to everyone from members, government, regulators, charity organisations, detractors to the industry, right through to the diverse customer base around the country. Trevor Crocker of Aristocrat Technology leads the way and although our regulators are becoming more agile in approving technology already developed by manufacturers, the opportunity to deliver more enhanced entertainment devices to our patrons is being well lead by Aristocrat and Trevor Crocker. Since taking the helm Trevor and the team at Aristocrat have continued to create products that our customers want and are entertained by.

Dan Brady of Redcape (pictured)

The pub game is so broad and diverse and there are many, many great people connected to this industry – to narrow it down to a few is impossible. There are several big name groups doing innovative and exciting things but equally you cannot discount the importance of the corner and country pubs. In my opinion, when they are thriving the whole industry is better off. Annette Verhoeff of Red Rock Leisure

1. Arj Rupesinghe, CEO of the Mantle Group, is a very hands-on leader. They’ve had great success in the Brisbane market and have just entered the Sydney market with The Squire’s Landing (pictured), arguably one of the best new pubs in Sydney. 2. Sam Angelico runs Food and Beverage for Accor Group Australia with 230 licensed venues and growing. They’re in a transformational phase updating many of their bars and offerings to attract more consumers. Their team are highly engaged and have focused on premium offerings. 3. A LH hotels are having some great success in some of their key venues by expanding their offering and taking some risks. They are a great group to work with, and even though they’re the largest pub group, the good venues and head office team including Andy Gupta are very thorough and have seen success in offering premium wines by the glass.

Rohan Beale of Agnew Wines

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Hotel Esplanade, St Kilda

MOST INFLUENTIAL 2019

To be honest, I think the three most influential people in the pub industry would be the Premiers of Queensland, New South Wales and Victoria. They all have the power to alter the pub industry across the eastern seaboard. We have seen the impact that changes such as the lock out laws have had on the industry and it is critical that the Government consults with major pub owners to ensure that changes aren’t closing establishments and cutting jobs in the process.

Sand Hill Road are doing some great stuff in Melbourne. They’re really creating a solid pub group, which we need. It’s important to have someone people look up to and are inspired by to do bigger, better, businesses. They’re quite an inspiration for a lot of young people. Alot of craft breweries are doing some interesting stuff. The Balter guys are doing really good stuff. They’ve shown a huge amount of growth, but they’re really hitting their stride now. Their beer branding is really well received. Lawrence Dowd of Colonial Leisure Group

Sand Hill Road's Andy Mullins

Brendan O’Farrell of Intrust Super National President of the AHA, Scott Leach

1. THE CUSTOMER. 2. OUR STAFF. 3. THE PERSON WHO SIGNS MY PAY CHEQUE. Paul Robins of Beach House Hotel Merivale's The Newport

The National President of Australian Hotels Association, Scott Leach, Merivale Chief Executive Officer, Justin Hemmes and ALH Group Chief Executive Officer, Bruce Mathieson Jnr are three impeccable leaders of their respective organisations. They have advanced and lead the way in the pub sector through innovation, passion and celebration of their people, brands and venues.

David Elia of Hostplus

Obviously Justin Hemmes has killed it year after year. He has an ability to attract a variety of markets aged 5 to 85. Every customer gets something out of a Merivale experience. That’s something a lot of people have found difficult to replicate, because of the complexity of it and the layers. Essentially to get an operator who can understand all of those different little 5%-ers, is very rare. The other person is Fraser Short of the Sydney Collective who can do it as well. He has the ability to look at things from a customer’s perspective, not just a business or operator’s perspective.

Paul Kelly of Paul Kelly Design

The ARK Group, which is the Kapinkoff family. They own a number of really good venues – Market Grounds, The Generous Squire. They’re well known in the industry, they’re a great family and run really good businesses. We catch up a lot to talk about how the Perth CBD is going. We have regular meetings where we have a beer and a chat. Andy Freeman from Sneakers and Jeans, who’s pretty well known in Perth. We’ve worked together a lot over the last 20 years. They have a similar outlook on pubs that I do, Andy is pretty innovative with his pubs, whisky bars and Japanese whisky pubs. He tends to concentrate on smaller venues with a niche offering. Tim McLernon of Three Pound Group

AUSTRALIAN HOTELIER FEBRUARY 2019 | 9

Temperance Hotel, South Yarra

RED ROCK LEISURE

OPERATOR

ALL HANDS ON DECK THE MELBOURNE-BASED GROUP WITH EXTENSIVE INTERESTS ACROSS BREWPUBS, BARS AND RESTAURANTS EXPLAINS HOW THE AUSTRALIAN PUB IS RADICALLY – AND RAPIDLY – CHANGING

ome of the highlights in 2019 include our Euro pub Hophaus winning the ‘Overall Pub of the Year’ at the recent AHA (VIC) Awards. We also welcomed four inspiring Melbourne venues and their dedicated team of people to Red Rock: Cookie, The Toff in Town, Boney Band Room and Magic Mountain. Our brewhouse in Sydney, All Hands Brewing House, in its first full year of operation, is going from strength to strength. We are really proud of how the venue has come up and very happy with the beers we are producing onsite there.

Annette Verhoeff Group Operations Manager Red Rock Leisure

All Hands Brewing House, Sydney

ALL CHANGE The nature of ‘the Australian pub’ is changing. There is more of a focus on food, however for us this has always been a key driver. There are fantastic opportunities, and a growing expectation from the public, to ‘premiumise’ and expand the offer, whether it’s through craft beer, whisky, gin, cocktails and great wine selections or even coffee and artisan non-alcoholic beverages. The product offering is important but ultimately a pub is, and I hope always will be, a place where people can connect with a community, friends, family and even strangers. Getting that right comes down to how good your staff are and how engaged they are in the customer experience. In 2019 our focus is on enhancing the customer experience through things like staff engagement and training, technology-enabled service innovation, in-venue activations and collaborations and continued investment in our digital and social platforms. Of course all of this needs to be underpinned by profitability. Driving costs down and improving margins are

10 | FEBRUARY 2019 AUSTRALIAN HOTELIER

“Three things have contributed to our success. People, culture and a long term vision” a continuous focus but finding the right balance so as not to impact on service or quality. Three things have contributed to our success. People, culture and a long term vision. Our first pub, P.J. O’Brien’s in Melbourne, turned 21 years old this year and is still enjoying growth. We have never wavered in our commitment to run it as an authentic Irish pub, we have supported live music there seven nights a week since its inception, our staff embody the essence of true Irish hospitality and the venue looks as good as the day it opened.

COMMUNITY MATTERS I think in this age of technology overload people are seeking out experiences that give them a sense of community and human interaction. The local pub has always been the next best thing

to home. The challenge is to understand what ‘community’ means to people now and how to engage with your patrons, both in venue and through the various digital platforms.

CHALLENGES It’s a highly competitive industry and the bar continues to be raised in all areas: venue design, food and beverage offering, entertainment and social media. It’s getting tougher to stand out from the crowd but I think the challenge is to maintain focus on what you do and do it well. Understand where you sit in the market, what your competitive advantage is and how you make that profitable. If you worry about other influences that are largely out of your control then you lose focus and the business suffers.

COLONIAL LEISURE GROUP

COLONIAL: BREWERS AND ENTERTAINERS LAWRENCE DOWD DETAILS THE SPEEDY RE-LAUNCH OF MORNINGTON PENINSULA’S PORTSEA HOTEL AND THE STELLAR GROWTH OF THEIR CRAFT BREWING OPERATIONS

OPERATOR Lawrence Dowd National General Manager Colonial Leisure Group

enovating the Portsea pub has been a big highlight for us. It’s been a very tight build programme, but what we’ve managed to achieve in that time has been quite incredible for us. Usually these projects take a few years to come to fruition but we’ve managed it in a 12-month period with a construction time of six months. To realise the full potential of a pub that’s a very famous brand but a pretty underwhelming experience. I think we’ve turned it around to create something that people are going to really enjoy down on the Mornington Peninsula.

CRAFTING BEAUTIFUL BEER Colonial Brewing has had a really amazing year. Both in the gross that we’ve achieved nationally and we’ve got our distribution right, put our head down to focus on what we’re doing, mostly, and not got too carried away by what the rest of the industry is doing, which is changing a lot. For us it’s been about creating the best beer that we can, making sure we’re competitive in our pricing and our brand positioning. It’s such a competitive space at the moment and a lot of breweries are trying to outdo each other with creative stuff, but at the core it has got to be tasty and competitively priced, that’s what we’ve focused on.

CHALLENGING YEAR Western Australia has been really tough for us. It’s still going through the pains and the lag that came from the financial crisis. Consumer habits have changed, they’re really considerate about the money they spend and where they spend it.

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Doubling capacity at the Port Melbourne brewery; (left-to-right) Lawrence Dowd – National General Manager, Nick Makowski – National Sales Manager, Ash Hazell – Head Brewer, Jarrod Stivala – National Brewery Operations Manager. For us, we’re always looking at opportunities and always looking to consolidate where we can. I think in some ways less is more. There are so many markets that have been relatively unpredictable of late. We’re taking it month by month at this stage.

“There are so many markets that have been relatively unpredictable of late. We’re taking it month by month at this stage”

ECONOMIC OUTLOOK The economy at large, a change in government giving uncertainty, living expenses are going a lot higher putting pressure on people’s spending habits. I like to think pubs do well in good and bad economies because it’s a small luxury but I’m finding it’s increasingly tougher. You have Uber Eats and a lot of reasons for people not to go out.

OUR FOCUS IN 2019 We’re going through a considerable upgrade to our brewery in Port Melbourne. We’ll be more than doubling our capacity in Port Melbourne and increasing the capacity in Margaret River.

We’ll be opening the Albert Park Hotel after a $8.5m renovation by September. We’re working on a luxury lodge in North Queensland, west of Cairns, called Mount Mulligan, and looking at another lodge next to Orpheus Island on Pelorus Island. There’s a couple of tourism assets we’re focusing on, a pub opening and the brewing side of things we’re increasing capacity. An investment in people and marketing will follow. We’re fairly diversified, we don’t have all our eggs in one basket. We’ve got some footprints in most major areas.

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

Hostplus and Balter Brewery

HOSTPLUS

SUPPLIER

A TOUGH YEAR FOR SUPER

David Elia CEO Hostplus

HOSTPLUS CEO DAVID ELIA TALKS ROYAL COMMISSION, AMASSING AWARDS AND THE VITAL IMPORTANCE OF THINKING – AND ACTING – LONG TERM

ontinuing to deliver industry-leading investment returns to our members has been a key highlight. We also celebrated our 30th birthday – a proud reminder of our industry fund heritage. On the flip side, the uncertainty surrounding the Financial Services Royal Commission was a challenge. However, it also presented our fund with an opportunity to reflect and refocus on how we serve our members. Coming out of 2018, it has been pleasing to see Australians voting with their feet and switching to industry super funds.

AWARDS AND ALARM BELLS We feel very humbled to have received many awards this year. These independently assessed awards were a positive affirmation of our unwavering focus on delivering the best possible value to our members. But from a macro perspective, the economic outlook is looking particularly uncertain for 2019 – especially relative to the last five years. We are building more defensive characteristics and additional flexibility into our investment portfolio. Hostplus has a long-term investment strategy with 10 and 20-year investment objectives, which we will continue to maintain in the face of this short-term volatility. As superannuation is a long-term investment, we believe the best returns are made over decades, not days or months.

KEY LESSONS FROM 2018 Unfortunately, the rules that govern markets and individual companies do not always prioritise the best interests of long-term investors. We face an ongoing battle to ensure

14 | FEBRUARY 2019 AUSTRALIAN HOTELIER

companies balance the needs of their customers and shareholders while remaining focused on the long-term. We will continue to be led by our profit-tomember philosophy. And, as an active investor and shareholder, we will encourage companies to regain the community’s trust and to reinstate themselves as responsible corporate citizens.

TWO BIG OPPORTUNITIES Since the Federal Election must be held before the end of this financial year, it is very likely that more public policy changes are on the horizon. Irrespective of the Federal Election outcome, we remain hopeful of getting the superannuation guarantee (SG) back on-track. Without growth in the SG, it’s likely that more people will have to stay at work longer to build up a nest egg they can then combine with the age pension for a comfortable retirement. We see a big opportunity to make the super system a lot simpler – particularly for our members who work in highly transient occupations and are likely to have several employers throughout their working life. Unfortunately, unintended multiple accounts remain a significant issue across the super sector. At Hostplus, we continue to take proactive steps to educate members about account consolidation, identify unintended multiple accounts and locate unclaimed or lost super. In 2019, we will also work closely with other industry super funds on a cross-fund account matching initiative.

TWO CLEAR CHALLENGES Unpaid super remains a significant challenge

“There is a sense in the community that some organisations have lost or damaged their social licence to operate by acting unlawfully or unethically” for the pub and broader hospitality industry. While we know around 95 per cent of employers do the right thing; we also know some hospitality workers aren’t receiving their legal entitlements. We will continue to ramp up our proactive engagement with employers and regular communication with members. We will also support industry advocacy to require employers to pay super in line with pay slips, and to implement better enforcement effort by the ATO. Secondly, women, along with low-income earners, make up over half of the national workforce and represent most of our membership. We believe they deserve better from the super system because they face entrenched disadvantages when trying to save for retirement. We will strongly support industry advocacy to add superannuation to the Federal Government’s paid parental leave scheme, to remove the monthly $450 income threshold for super eligibility, and to increase existing government contributions for low-income earners so that they keep up with rising income tax thresholds and the SG rate.

The Leumeah Hotel

REDCAPE CEO REVEALS ASX BACKGROUND

Dan Brady CEO Redcape

DAN BRADY CONFRONTS THE REALITIES OF 2018 AND HIGHLIGHTS MAJOR OPPORTUNITIES FOR THE SECTOR IN 2019

t’s been a big year for Redcape with our ASX listing – it was a big commitment. We have a strong management platform and a lot of support from the Moelis team, which resulted in the successful listing outcome. It did require careful planning and consideration to the application of resources across the organisation. We have highly trained and capable venue teams who have the autonomy and support they need to manage their venues. We were delighted to be able to structure the Employee Share Plan the way we did. Hotel ownership is difficult these days and being able to provide all Redcape staff with meaningful equity in the business was a great outcome in listing the business.

THREE THINGS WORKING REALLY WELL FOR US: 1. We have a strong portfolio of high quality assets, which provide diversity in their offerings to their individual local communities, a stable earnings base across the portfolio and the opportunity for hospitality professionals to gain deep industry experience across all revenue drivers. 2. These robust business fundamentals are enhanced by a strong management platform that has made a significant investment in systems, data, customer technologies and talent development over recent years. 3. T his investment in talent development is also proving rewarding. The development of our people and creating programs that enable young, driven, hospitality professionals to gain a depth of experience across a number of disciplines, as well as gain exposure to broader organisational projects, is something

that we believe will allow us to continue to attract high quality business leaders to both Redcape and the industry.

THREE CHALLENGES WE’RE TAKING ON 1. Taking the business into the listed environment and in doing so, providing people with an opportunity to invest in a sector that is otherwise, for the most part, tightly held. 2. Improved social outcomes for the local communities in which we operate through advances in harm minimisation and a greater investment in positive change for good programs like our Publinc Help and Publinc Communities programs. 3. Applying our data and technology development that we have invested in over many years to guide how we shape our facilities and customer experiences in our hotels.

DISCRETIONARY SPENDING IS A CHALLENGE FOR THE ENTIRE PUB INDUSTRY IN 2019 We operate in the entertainment and leisure space and therefore spending is discretionary in nature. The elections, tougher restrictions on private lending and general market sentiment may present some headwinds, although typically the portion of discretionary spend in our sector is small in comparison to other entertainment and leisure alternatives. The challenge for operators will be the speed at which they respond to changes in consumer behaviour as people become more selective about where and how they spend their entertainment dollar among the growing number of options.

“Hotel ownership is difficult these days and being able to provide all Redcape staff with meaningful equity in the business was a great outcome in listing the business” We have made a significant investment in data and technologies over recent years and will continue to do so into 2019. Applying this technology in 2019 will enhance the customer experience in our hotels and allow us to respond quickly to changes in customer behaviour and preferences.

AUSTRALIAN HOTELIER FEBRUARY 2019 | 15

OPERATOR

REDCAPE

Gweilo at The Evening Star Hotel, Surry Hills

PAUL KELLY DESIGN

SUPPLIER

GO BIG, GO BOLD, GO ALCOHOL-FREE?

Paul Kelly CEO Paul Kelly Design

LEADING DESIGNER TO THE PUB TRADE, PAUL KELLY EXPLAINS WHY LARGE-SCALE, MULTI-PURPOSE PUBS – WITH ALCOHOL-FREE AREAS – WILL BE THE WINNING VENUES IN 2019

his is our 21st year in business and it’s been a huge year of us planning systems and breaking new ground in a lot of the hotel markets, specifically with sports and a lot of food and beverage. One hotel is the Ambarvale Hotel in Campbelltown. We’ve just finished stage one – a massive gaming, entertainment and sports complex. Essentially we’ve developed the first sports theatrette concept specifically for non horse-racing events. It has its own bar, we’ve got a gaming room that’s spectacular, a huge big TAB complex adjacent, which has its own bar and balcony. It’s a very exciting large-scale format. Stage two opens in the first week of March, a 400-seat bistro/brewery concept with outdoor and kids areas.

VENUES GOING BIG All the projects we’re doing at the moment, they’re all massive, 2,000sqm formats. The industry has seen what’s happened at the Gregory Hills Hotel and the success of that, and thought they’d have a crack at it. The management structure of these types of venues has been standardised and simplified so it’s easier for people to understand how it could work. It’s accelerating in 2019. We’re doing a lot of master-planning for big sites, much of it up in Queensland. But the biggest venue is happening in Western Sydney. Brisbane is getting quite active and a lot of NSW publicans are buying up in Brisbane at a development called Laguna North Lakes and the Gold Coast, specifically the Mermaid Hotel.

BIG BUDGET RENOS 2019 is difficult to predict, however I’ve never seen more money being spent on hotels. The fitouts are becoming more and more elaborate,

16 | FEBRUARY 2019 AUSTRALIAN HOTELIER

it’s getting back to where it was prior to the GFC. The scale of venues is increasing, the turnover of venues is increasing and the general public perception of these venues has altered significantly. Essentially it comes down to one key point – Australians are eating out more than they ever have. The US economy – which we follow – has this year spent more eating out than at home, that’s the first time that’s ever happened. The result is there are more venues, people are drinking less, but they’re eating more and wanting to spend more time at these venues. The venues we’re doing are becoming incredibly intelligent. We’re diversifying the markets we’re trying to attract. Some venues – The Beverly Hills Hotel in Sydney we’re trying to develop next year – we’re targeting a latenight food market. Developing sporting markets and creating areas for non-alcohol consumption because of the benefits to other sectors of the business of people not drinking is significant. We’re really screwing into how these places operate, and it’s because they’re so big that we need to attract pretty much everyone.

2019 DESIGN TRENDS Something we’re doing a lot of at the moment is in-house smart brew systems, for example at the Ambarvale Hotel, and we have a brewery going into the Balmain Hotel. Big, large-format kitchens using open fire and charcoal are very current. But we run 20-30 projects at a time and no two projects look the same. But the cluttering of spaces and making them really ostentatious and eclectic is over. They’re becoming more ‘serious’ again. More streamlined and almost like mini casinos – they’re becoming a more serious offer now.

The Evening Star Hotel, Surry Hills

“I’ve never seen more money being spent on hotels” Layout planning-wise we’re really getting different sections of markets into venues, say for example family markets, markets that are into morning coffee, trying to make sure that if we can get certain periods covered – the 5:30pm to 7pm market, there’s a really good market there. So not just the layout but the product is attractive to those markets. A lot of gaming markets don’t drink, and those that do drink put off the ‘real’ punters, so we’re creating areas that pull people away from the traditional notion of a pub and more of an entertainment complex.

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INTRUST SUPER

SUPPLIER

PLAYING THE SUPERS LONG GAME THE INTRUST SUPER CEO EXPLAINS HOW PUB COMPETITION IS COMING FROM UNLIKELY DIRECTIONS, AND WHY A TIGHTENING ECONOMY STILL OFFERS OPPORTUNITIES

o say 2018 was an eventful year for the superannuation industry would be an understatement. There have been several Government and industry reviews, such as the Productivity Commission Review into the efficiency of the industry, the Insurance in Superannuation Working Group (ISWG) review of default insurance, and more recently, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry. Despite all these reviews, the superannuation system continued to deliver strong outcomes for members. Additionally, we were proud to be able to reduce insurance premiums for our members without any change to their current benefits. We also introduced several new services to improve the member experience, including our Intrust Super Rewards program. Very soon we will launch two new innovations. The first is Super Blueprint. This is an online financial advice tool that provides tailored advice much more efficiently than our current system. The second is SuperCents, our new app to help Australians grow their super without having to think about it.

TURBULENT TIMES We have seen a turn in the markets recently that have impacted super returns. It’s been quite a volatile market landscape the last few years. There is also some talk about the possibility of a domestic recession with the property market slowing down in New South Wales and Victoria. Super is a long-term investment and these developments do occur from time to time. The important thing is to diversify your investments and keep in mind, when prices are low, your contributions can go further!

18 | FEBRUARY 2019 AUSTRALIAN HOTELIER

It’s been a turbulent year for financial service providers who haven’t been completely transparent with their customers or members. The member is at the heart of everything we do. We value service and we value trust and integrity. When you’re doing the right thing by customers, for the right reasons, I do believe you avoid a lot of the pain that some providers have seen this year.

“The possible impacts [of a worsening economy] on business confidence and cutting back of staff are real” CONSUMER SPENDING MAY TIGHTEN There are many challenges facing the industry this year and beyond. NSW has a State election on the horizon and of course there’s the incoming Federal election as well. Regardless of who wins office, there could be changes to laws that directly impact both our industries. Already there’s a proposal in the works for part time and casual workers who work a regular shift to be automatically made full time after 12 months. Could we see a change to lockout laws? Will this change how a hotel does business? Will it create more costs? The slowing down of the housing market and the tightening of consumer spending could take a toll on the industry. Lower disposable income would typically mean fewer visits to the local hotel, fewer drinks and counter-meals purchased and falling poker machine takings. I suspect a lot of publicans are considering how they would overcome this challenge. The industry is also being challenged by a new wave of competition – and not just from

Brendan O’Farrell CEO Intrust Super

the obvious places. Niche or boutique bars, cafes and breweries seem to be popping up to exploit social trends and urban development. At the same time, the upsurge of technology is increasingly enabling Australians to stay at home and gamble, and order in any type of food and alcohol.

OPPORTUNITIES AHEAD New pubs are opening in this industry all the time, and I’ve no doubt that growth will continue throughout 2019. With new businesses comes more jobs, more employment – more staff that require assistance with wealth creation and protection. And that’s exactly where Intrust Super comes in. We will continue to provide the very best customer service experience to new and current business partners and their staff. Our service platforms provide members with faceto-face assistance or direct contact via phone or email. Our educational tools can help staff learn about super and improve their savings in their own time or in their workplace. Intrust Super can be there every step of the way with both new and long-term staff, ensuring better outcomes for everyone in a hospitality business. There are many hotels in the industry, particularly in New South Wales, which I believe could really benefit from what we’re offering. Especially when you combine our customer service with our overall package consistently strong returns, low industry fund admin fees and value-for-money insurance options. And with our new app, SuperCents, our member rewards program and our financial planning arm, you can see there’s a great opportunity for us to help many in the expanding hospitality industry reach their goals in 2019.

AGNEW WINES PTY. LTD.

BEACH HOUSE HOTEL

OPERATOR

INSIGHTS FROM AN AWARD-WINNING SINGLE SITE

QHA’S HOTEL OF THE YEAR THE BEACH HOUSE HOTEL SHINES A LIGHT ON THE IMPORTANCE RIGHT NOW OF DETERMINATION AND INNOVATION AT THE COAL FACE

he beginning of 2018 was tough, tourist numbers were down due to bad weather and local numbers were down due to a struggling local economy and increased competition in our area, Hervey Bay, QLD. We made several changes around the hotel to broaden our appeal and to attract different markets and demographics. The changes worked, we began to see new customers without affecting the ones we had and we are now busier than ever. So the challenge is also a highlight. It’s very satisfying when you meet a challenge and see your ideas working. Winning QHA’s hotel of the year was definitely a highlight for all of us. The owners, management and staff all appreciate the recognition for all the work that’s gone into building and then running the Beach House Hotel. We have seen a marked increase in patron numbers since the award, I think there were still quite a few people in our region who hadn’t been to the hotel yet and wanted to see what the fuss was about. There are no downsides to winning awards, apart from the hangover the next day. All in all it has been very positive with many of our suppliers and customers congratulating us on the achievement.

KEYS TO OUR SUCCESS Having a great venue, designed by KP architects and built by the late Warren Persal. We truly are very lucky to have a hotel built to a standard not a budget and with a beautiful outlook over the Hervey Bay waters to Fraser Island. People. Finding and developing a dedicated

20 | FEBRUARY 2019 AUSTRALIAN HOTELIER

Paul Robins General Manager Beach House Hotel

Whether it’s changes to the building, its décor, policies and procedures, menus or anything. Even the smallest of improvements are worthwhile, because over time they add up.

SPORTING TOURISM I can’t say what the opportunities are for the industry in general, but certainly some of the opportunities we are looking at is capitalising on the sporting tourism we get here in Hervey Bay. Working with the council and organisers to offer our services both here at the venue and off-site. Accommodation is another thing we are looking at. Although this won’t happen in 2019, I would like to have that ball rolling at least. We are also looking at equipment for large scale off-site catering and events.

FACING CHALLENGES

“We have seen a marked increase in patron numbers since the QHA award” team, who are passionate about providing a great customer experience in a positive work culture. I have a talented bunch of department managers, supervisors and staff. A lot of our success is due to their hard work. We are always looking for ways to improve.

The main challenge will be the ever increasing cost of doing business in a very competitive market. Many hotels need to absorb the increases to stay competitive. I think the only way around that is to carefully price products that we know our customers compare while making up margin on others. Australians are drinking less and thinking healthy so we need to adapt our offerings to suit. Finally, staffing. Filling front line positions is relatively easy, mostly our staff are at uni or it’s a second job, but finding staff that want a career in pubs to be your next manager is getting harder and harder. I am excited about the opportunities that are before us and the possibility of creating something even bigger and better.

SUPPLIER

GAMING TECHNOLOGIES ASSOCIATION

FRESH GTA CEO’S INNOVATION DRIVE CHRIS MUIR REVEALS THE INSATIABLE DESIRE FOR INNOVATIVE GAMING TECHONOLOGIES

018 was a big year for me personally, with the highlight being joining the Gaming Technologies Association (GTA) in June, and then moving into the role of CEO in September. Becoming CEO was also the biggest challenge. Ross Ferrar was a dedicated advocate for the association, its members and the industry, and those are big shoes to fill. My first Australasian Gaming Expo (AGE) in August 2018 was another highlight, seeing the broader industry come together in one event. And what an event it was, with last year’s AGE setting a new attendance record with 8,638 visits, including representatives from right across the hotel industry. This was a 7% increase over the previous year, which was already a record year, a record that we’re keen to replicate in 2019. Looking forward, I see opportunity. There will always be challenges with the gaming industry moving forward. Existing and emerging technologies, and the consumer demand for innovation, will help the industry evolve.

AGE DISCOVERY To get a great sense of what new products or approaches our members have in the pipeline, I would invite you all to attend the AGE in August to get a first-hand look at the new gaming products as they are launched. Like all industries, there is healthy competition among the gaming machine manufacturers and they like to keep their new products close to their chests, right up until the launch at AGE. I invite you to attend the AGE in August to get a first-hand look at the new gaming products as they are launched.

General areas of discussion with GTA members include the update to the Centralised Monitoring System (CMS) licence in NSW as well as basic technologies already accepted by the general community, which patrons will be demanding in products in years to come.

LOOKING FORWARD The biggest opportunities are through marketing and innovation. We’re always on the lookout for new suppliers, ideas and opportunities to showcase at the AGE. The 2018 Expo featured 237 exhibitors, covering a broad spectrum of hospitality suppliers including beverage, food, cash security, furniture, paging and communications, signage and displays, building services, AV, financial services and, of course, gaming. AGE 2019 will see more, from new gaming products to new technology in security and point of sale systems, uniforms and more, as we continue to source a broad range of

Chris Muir CEO Gaming Technologies Association

suppliers to provide visitors to the AGE with everything they need to run, fit-out, market and make improvements to their hospitality business. From a gaming perspective regulation will always be the biggest challenge. Technology is changing rapidly and consumers expect to see gaming innovation keeping up with this change, unaware of the challenges that regulation poses. A change to hardware or software, that in any other industry would be considered a ‘no brainer’, faces challenge. The GTA is working with industry stakeholders to represent them on these technical and regulatory challenges. In 2019 we will be repeating at AGE the three-day seminar program that covers a variety of topics that are relevant to hotels, with sessions dedicated to technical and regulatory challenges. This is in response to the demand we experienced in 2018 with several sessions being standing room only. Visitors can indicate their interest in attending seminars when registering for attendance at AGE 2019 at www.austgamingexpo.com In terms of what I’m most excited about looking forward, that would have to be the 30th anniversary of the Australasian Gaming Expo in August. It’s a testament to the people that make up the gaming and hospitality industry.

AGE KEY DETAILS 13-15 August 2019 ICC, Sydney, Darling Harbour, NSW austgamingexpo.com

AUSTRALIAN HOTELIER FEBRUARY 2019 | 21

The Stables Bar, Perth

THREE POUND GROUP

OPERATOR

LAUNCHING AUSTRALIA’S BIGGEST PUB

TIM MCLERNON LAUNCHED AUSTRALIA’S BIGGEST PUB, THE CAMFIELD, LAST YEAR. HERE HE REVEALS HOW HIS THREE POUND GROUP ACHIEVED IT AND WHY BIGGER VENUES ARE HERE TO STAY

rom a group point of view, which is The Stables, The Reveley at Elizabeth Quay, The Camfield and Kartel, a month-long pop-up bar, what’s gone well for us was opening The Camfield in February 2018, right next to the new Optus Stadium. That’s been a massive positive. Opening a new venue of that sort of size can be a real challenge, from a staffing point of view to just dealing with that amount of people.

HAND ON THE TILLER

THE CAMFIELD

THE STATE OF WA

Everything has gone pretty much how we thought it would. Obviously in the weeks building up to it you wonder ‘what the hell have I done here?’ but that’s been a massive positive. We’ve successfully opened a very large venue with a big capacity that has 45 days a year where we’re at capacity from 12pm to 12am. We’ve got everything right – the staffing levels and being able to deal with game days. Even our back of house, which is probably the most important part in these big venues, you’ve got to have the right capacity to hold the stock and have managers able to marshal the troops. The Camfield was a four-year project. We identified and trained up a number of individuals from our other venues we’d earmarked to come to The Camfield as managers or to replace managers leaving our other venues. We really needed to bring our A-team here. We had to draw all of our best guys who I know aren’t going to throw the towel in at 6pm on a Sunday when there are 3,000 people here ‘because it’s a bit too much’.

The market has been flat here for probably two or three years. Everyone knows WA has come off a big boom. In the CBD it feels like there’s still a 15-20% vacancy rate, so 10% fewer people in the CBD, with 20% less money to spend. Instead of there being 200 venues, there’s now 400, so the money just doesn’t go that far. One of the big challenges has been a proliferation of venues across Perth, because there’s certainly been an explosion. Yes the economy is still flat, most houses in Perth are worth less than they were five years ago and that’s one of the biggest issues. It’s a mental thing that means [customers] aren’t going to spend that money. Until house prices start moving here, people are keeping their money in their wallets.

22 | FEBRUARY 2019 AUSTRALIAN HOTELIER

I’ve always liked being in my venues and knowing everyone and everything that’s going on but once you get over three venues you’re just not able to do that as much. That’s why you need people you know and trust in those venues who’ve got your back. All of my managers have been with us for at least five years. You feel guilty that you’re not there as much as before, but it’s physically impossible.

COLOSSAL COMPETITION There’s been alot of discounting in the market, you see it with $3.50 pints, 2-for-1 meal offers and more happy hours. People are definitely competing for that dollar. We haven’t done too much of that because I think once you start doing 2-for-1 meal offers, it’s hard to come back from that. I don’t think the $3.50 ‘pint

Tim McLernon General Manager Three Pound Group

“Until house prices start moving here in Perth, people are keeping their money in their wallets” The Camfield, Perth

wars’ in the CBD have worked either, it’s not sustainable. What competition does is make you get your house in order, make sure you’re offering a great product, really good service and your venues are in top notch condition. Like anything, the market will turn eventually and better times will come. We’re not just sitting around waiting for it, we’re running events, degustation events, generating ideas to try to push that revenue back where we want it to be. It’s about being creative and coming up with your own activities that are of interest to people to get them in and keep the revenue up.

We focus on the small things To make the big things better. At PKD we believe every element of a project is crucial. This philosophy has seen us grow over 22 years into a company of 20, currently designing and delivering $60 million worth of projects.

Flying Fish at the Star

CBRE HOTELS

SUPPLIER

REAL ESTATE VERDICT FOR 2019 LEADING REALTORS HAND DOWN THEIR VERDICT FOR WHAT TO EXPECT FOR PROPERTY VALUES IN 2019 AND THE REGIONS LEADING THE CHARGE

he banking sector is under increased pressure through the royal commission. The knock on effect has been tightening on lending parameters, which has a direct effect on the market’s ability to easily source debt. The result of this in the market is that compared to 2016 and 2017 transactions can be more challenging for interested parties who do not have substantial balance sheets. We saw in 2016/17 lending was less complex than it is now.

THREE KEY TRENDS Transaction volumes have decreased from the peak of 2016/17. This is due to the overall timing, availability of stock and the stricter lending parameters set by lending institutions. There is a continued strong demand for pubs nationally, however the lack of available stock is limiting transactions. Market consolidated from major players including; Laundy Hotels, Merivale and Solotel have continued as bigger groups seek economies of scale and ‘bolt -on operations’.

Paul Fraser Directors CBRE

IN-DEMAND PROPERTIES We are still seeing top tier, A-grade performing gaming hotels as the most in demand property on the eastern seaboard. Solid performing hotels lying outside key metropolitan areas with sound fundamentals are also still attracting strong interest from discerning buyers priced out of economic centres such as Sydney, NSW. Coastal and key regional centres will continue to attract interest from hoteliers and commercial property investors in 2019. An additional example are those hotels located in Queensland specifically, we are still seeing the South-East QLD corridor as the most in demand sector.

STATE-BY-STATE NSW and VIC will continue to dominate transactional headlines in 2019 with the tightest yields nationally. QLD will remain a stable market with intrinsic value garnished from gaming authorities. In QLD we tend to see the hospitality sector mirror the residential housing market. There is a very little real movement in

“We are still seeing the South-East QLD corridor as the most in demand sector”

Limes Hotel Rooftop Bar, Fortitude Valley

24 | FEBRUARY 2019 AUSTRALIAN HOTELIER

Ben McDonald Directors CBRE

cap rates for freehold going concerns – we see capital values increase in line with EBITDA growth. Queensland does not generally see massive compression or expansions in yields like we see in markets such as NSW. Western Australia pub values have suffered over the last few years, which has been directly linked to the resource sector. With pubs unable to have gaming income, operators must rely on food and beverage to drive profit. As such (and linked with its relative isolation geographically) demand for these pubs from larger scale national operators continues to be subdued and demand is generally pushed through local operators already familiar with the hospitality landscape. We do however believe that WA is on the rise as the resource sector bounces back and we see this state as having some real value and a counter cyclical opportunity for astute buyers.

NOVEL DEAL STRUCTURES A number of purchasers are structuring acquisitions differently to traditional purchasing methods. With strains on the availability of capital, as a firm, CBRE has been at the forefront of structuring deals that entail a more structured approach over a period of time, so there are fewer equity requirements upfront. This is, for example, taking place in the form of a structured lease with a put and call on the freehold. This allows an operator to deploy capital to reposition the business, in turn driving up their equity position and their ability to leverage and activate the put and call option on the freehold within a predetermined time frame. Pending the Australian Venue Co and Coles joint venture currently sitting before OLGR, we may see this open the door to similar nontraditional transactions where joint ventures are created for mutual benefit of sitting partners.

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AGNEW WINES

SUPPLIER

GRAPE SUCCESS

FAMILY OWNED WINEMAKERS REVEAL THE STATE OF THE AUSTRALIAN WINE INDUSTRY AND HOW PUBLICANS CAN PROFIT

he wine industry is still very buoyant and is attracting new younger demographics who are willing to experiment far more than some of the more traditional established wine drinkers. Private label or buyers own brands has become an issue, particularly in retail – highlighting the importance of creating high-quality wine under strong consumer-focused brands. Some segments of the hotel industry are going through a wine transition. Consumers are generally drinking less but spending more, this has seen a decline in the traditional ‘house wine’ and an increase in wines ‘by the glass’ or ‘first pour’. We are also seeing a greater shift away from the established varieties in Sauvignon Blanc and Shiraz and a shift towards Prosecco, Rosé, premium Chardonnay, Pinot Gris/Grigio and Pinot Noir.

3. Wine on tap – it is not a new concept, and has always made sense from a qualitative, efficiency, environmental and cost basis, but there has always been consumer indifference to tap wine. This is now starting to change, and those venues embracing keg wines, but also using quality wine on tap from quality brands, have had significant success. Agnew Wines offers a small range of key wines on taps and will expand this range over the year to accommodate increased demand.

THREE OPPORTUNITIES

THE ROAD AHEAD

1. Consumer engagement through interesting and original events has always been a great way of attracting people but needs to continually evolve. We’ve had some great success with some of the ALH hotels with pop-up cellar doors, unique events including wine-tasting and speed-dating nights, plus also adapting the standard ‘Winemakers Dinner’ to a faster and more dynamic format. 2. Social media – almost every venue and brand has a social media presence, but many aren’t maximising it. By leveraging off events and using both supplier and venues’ lookalike audiences, brands and pubs can have direct and meaningful dialogue with a larger targeted demographic and actually see a real return on investment from the marketing expenditure.

Fundamentally we are now increasing our portfolio to give our customers a greater offering of boutique premium products, and while we are growing, our main goal is not to be the biggest, but ultimately the best at what we do across all levels of our business.

26 | FEBRUARY 2019 AUSTRALIAN HOTELIER

“The wine industry is still very buoyant and is attracting new younger demographics who are willing to experiment”

THREE CONCERNS Taxation is highly pertinent in the wine industry with the recent changes to the Wine Equalisation Tax (WET). In 2018 most wine businesses simply had to take $150k off their bottom line, which for many small to medium wine businesses would have been difficult. The prospect of a volumetric tax replacing WET seems likely in the long-term, but how this is executed can have significant implications

Rohan Beale Head of Sales and Marketing Agnew Wines

across all levels of the industry. You only have to look at the introduction of the Container Deposit Scheme (CDS) to see how impactful new initiatives can be across the sector. Regulation will always loom large in the alcohol industry, you only need to see the impacts of lockouts laws, off-premise closing times and the live music scene to see how much impact regulation can have both financially and socially. Having clear and meaningful dialogue representing all relevant stakeholders with the government has always been the best strategy, but also self-regulation can help prevent government intervention. The work of bodies such as The Night Time Industries Association (NTIA) and the AHA are crucial in helping shape and support the industry for a more positive future. We are living in a data age. There is a plethora of data being captured – whether through social media, or scan data predicting a consumer’s every move, yet on the whole we are lacking the skills to cut through and understand what consumers are really looking for – which I believe is a genuine connection with a brand or venue. A gap is emerging between what consumers are expecting, and businesses understanding using data alone. Consumers are becoming more fickle and businesses are struggling to keep up with them. There is a growing ‘foodie’ culture captivating Australians. These foodies are young, time-poor with a large disposable income to spend on dining out – they live and die by social media. If you aren’t embracing social media as a business, you’ll miss this large new segment.

CBRE HOTELS T H E O N LY T R U E N AT I O N A L P U B S T E A M WITH INCREASING CROSS BORDER TRANSACTIONS IN THE HOSPITALITY SPACE, YOU NEED A TRUE NATIONAL TEAM WITH YOU. FOR A CONFIDENTIAL DISCUSSION ABOUT YOUR ACQUISITION OR DIVESTMENT NEEDS, PLEASE FEEL FREE TO CONTACT ONE OF OUR TEAM MEMBERS TODAY.

QLD PAUL FRASER DIRECTOR M: +61 401 100 350 E: paul.fraser@cbrehotels.com SHANE MULLINS SENIOR MANAGER M: +61 447 185 001 E: shane.mullins@cbrehotels.com

NSW BEN MCDONALD DIRECTOR M: +61 414 182 848 E: ben.mcdonald@cbrehotels.com JAMES CARRICK SENIOR MANAGER M: +61 400 664 065 E: james.carrick@cbrehotels.com

VIC/SA/TAS

RYAN MCGINNITY DIRECTOR M: +61 417 719 712 E: ryan.mcginnity@cbrehotels.com

SCOTT CALLOW SENIOR DIRECTOR M: +61 418 153 606 E: scott.callow@cbrehotels.com

CHLOE MASON NEGOTIATOR M: +61 466 610 729 E: chloe.mason@cbrehotels.com

WILL CONNOLLY MANAGER M: +61 432 116 287 E: will.connolly@cbrehotels.com

THE DUXTON

OPERATOR

THE VIEW IN ACT

David Quinn General Manager The Duxton

WE GET THE INSIDE SCOOP ON THE STATE OF HOTELS IN THE ACT AND HOW TO PROFIT WITHOUT THE POKIES

018 was challenging full stop – staying on top of increasing costs across the board and the lack of careerfocused hospitality staff the key issues. Ongoing training of new staff to the level required, keeping them motivated and morale high in tough circumstances. Our highlights were definitely seeing the venues (The Duxton at O’Connor and The Brindabella at Holt) coming into their own identities and the businesses settle into a groove with happy customers and staff alike, which led to picking up a number of great AHA awards this year.

The Duxton

OUR POINTS OF DIFFERENCE: Location, the lack of traditional pubs in the ACT and the scale at which we currently run ours. Both venues are licensed for around 700–800 people, which opens the door to running multiple offerings out of each venue, which in turn creates a larger target market. Functions and events make up a huge part of our core business. To have the facilities to hold large scale events really makes a difference to the bottom line.

STATE OF ACT It’s really interesting at the moment with only a handful of traditional pubs in the nation’s capital but an oversupply of licensed venues. You only need to look over the border into Queanbeyan NSW to see how many pubs there are and how well they are trading. ACT pubs don’t have gaming machines, only the registered community clubs – this has seen the clubs really capitalise on the pub market with their food and beverage offerings being front and centre. It makes it hard for the small amount of pubs to really compete with that. With the huge amount of development going on in the ACT, along with the population growth, there are more and more opportunities for new smaller licensed venues – it will be interesting to see how we all trade over the coming years with no limit to licenses being handed out. My concerns are obviously the cost of energy, wages, food and alcohol are all on the increase. However, I believe if you have a great product, stay on top of your costs and have a fantastic staff there is no real reason to be concerned. It’s been like this for as long as I remember. We just need to keep evolving with the times and manage the businesses accordingly.

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“With the huge amount of development going on in the ACT, along with the population growth, there are more and more opportunities for new smaller licensed venues” ACT GETS SERIOUS In the ACT I think people are beginning to see the pub industry a lot more seriously than previously. This in turn means investors are more likely to invest in local areas, which opens up more employment for staff that want a career in hospitality. This is both good and bad as we all know great staff are hard to come by but, the more young kids who see it can be a very successful career to be in, the better for the operators at large. It’s all challenging and so different to how it used to be when I started in the industry 20 years ago. Thankfully we have such a great branch of the AHA here in Canberra that really takes time out to look after its members and help navigate through so many of the issues we face in hospitality these days from IR, liquor licensing and regulation to negotiating better energy deals through group buying options. I say this every year but I’m looking forward to getting on top of it all. But before I know it Melbourne Cup has come around and it’s the end of the year. It’s really the rush of the hospitality industry that excites me, striving for new venues or fine tuning the existing ones.

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PREDICTIONS

PUB LEADERS REVEAL THEIR 2019 PREDICTIONS FROM PUB PROPERTY TO THE STATE OF SUPER, OUR PUB LEADERS REVEAL THE INDUSTRY’S LIKELY DIRECTION OF TRAVEL THIS YEAR

PUB PROPERTY There will be continued interest in A-grade gaming hotels with considerable size and scale. Resource-centric areas are seeing a renewal and revitalisation as mining comes back on-line. These areas provide a softer yield, a better initial return and scope for strong bottom line improvement as the macro economy in these areas grows. Solid performing hotels lying outside key metropolitan areas with sound fundamentals will continue to attract strong interest from discerning buyers priced out of economic centres such as Sydney, NSW. Coastal and key regional centres will be in the spotlight in 2019. We will continue to see the banks’ lending parameters tighten and the cost of debt (outside of the Reserve Bank cash rate) increase – the knock-on effect will be groups seeking alternate funding options than the traditional four banks. Paul Fraser and Ben McDonald, Directors, CBRE

HOSPO SUPER As industry super’s total funds under management have eclipsed the retail sector’s, industry or not-for-profit super funds are increasingly taking a leadership position in the broader Australian economy. We believe the opportunity may finally be emerging to collaborate between the business community, the super sector, and both State and Federal Governments.

30 | FEBRUARY 2019 AUSTRALIAN HOTELIER

“There's a lot of heat on operators to work within the laws and it's very important right now to be on top of that” – Lawrence Dowd We remain hopeful of advancing the use of superannuation in nation-building infrastructure assets, by directly approaching government with innovative proposals to invest in both brown-field and green-field infrastructure assets. This includes a current proposal to the Victorian government to fund a $15 billion redevelopment of a rail line linking Melbourne’s Tullamarine airport and Southern Cross train station in the city. With the superannuation sector tipped to grow to three times the size of Australia’s GDP by 2030, we have huge opportunities to build this country, and we should be working together to do it. David Elia, CEO, Hostplus

FINANCIAL FOCUS 1. An abundant debt market with greater access to low cost, more flexible debt for business. 2. A stable and collaborative regulatory environment, which will see a commitment to improving social outcomes and advancing technologies that will enhance customer experiences.

3. The investment in suburban communities at all levels of industry and government – providing social hubs for the communities and solidifying hotels as the cornerstone of their local communities. We will take advantage of an abundant debt market and continue our prudent use of capital, taking a growth mindset to our portfolio management strategy through acquisition and divestment. We will also continue our focus on the application of growth capital through refurbishment to our local community hotels, providing greater facilities for our customers to enjoy for their social, entertainment and leisure needs. Dan Brady, CEO, Redcape

STELLAR STAFF Focusing on staff retention and development will be even more important, ensuring that we’re meeting that level of expectation with staff and also the consumer. The staff side of things is really important, there’s a lot of heat on operators to work within the laws and it’s very important right now to be on top of that. Ensuring that innovation is number one, equally you’re doing things that are leading not following. What was good last year is not necessarily adequate for next year. Lawrence Dowd, National General Manager, Colonial Leisure Group