By Will Connolly, Vice President – Investment Sales, JLL Hotels & Hospitality
Across Australia over the past fortnight, we have witnessed the easing of restrictions for our industry with varying degrees of limitations, depending on which state you call ‘home’.
Whilst many of our nation’s publicans feared how they would survive the uncertainty surrounding the COVID-19 lockdown, we’re now faced with many in the industry deeming it ‘the great unknown’.
The general public certainly made no secret of their desire to be back to at the public bar, but will the coming weeks be viable for our industry as it works with limitations no one would have ever predicted?
This week, we spoke with three publicans who between them have decades of experience within pubs establishing and heading up brands such as Beer DeLuxe and Open Door Pub Co. Craig Shearer of Open Arms Hospitality currently operates The Terminus Hotel, North Fitzroy in Victoria; and two Queensland venues, the Plough Inn, South Brisbane and The Collective in Palm Beach. Global industry stalwart Michael Thiele re-entered the industry by purchasing Hardimans Hotel in Kensington, Victoria which he re-opened in 2018. And having owned and operated pubs throughout Perth, George Bagios’ most recent pub project has been the establishment of The Coppersmith in South Melbourne as a premier hospitality destination.
Our industry over its lifetime has faced numerous challenges. With the COVID-19 crisis being the worst, how quickly do you believe we, as an industry, can recover fully from it?
Thiele: There has never been anything like this current pandemic in my or anyone else’s experience or lifetime. However, this is the opportunity of a lifetime; the chance for the industry to RESET.
I believe that the industry has been living too long in a fool’s paradise in the form of an ever-expanding economic bubble, where costs have been increasing, there has been pressure on real margins through ever increasing competition, a lot of it through price driven sales strategies.
If our industry is to survive as we all know it, then all stakeholders, federal and state governments, landlords and operators need to come up with strategies and solutions for the biggest issues that face the industry.
- Simplify the Federal Hospitality Award and remove penalty rates
- Lower business tax
- Raise GST
- Abolish FBT
- Abolish payroll tax
- Abolish stamp duty
- Rents re-evaluated, at a more realistic level for pure hospitality businesses, unless landlords want to be looking at increases in vacancy rates
Unless the above can be resolved, I don’t believe things are going to get back to anything like “normal” for a significant period. Those with deep pockets will survive, but a lot will not.
Shearer: None of us have ever been through a situation like this, so not having the ability to crystal ball likely scenarios has meant we just have no idea what a recovery looks like, how long it may last, or if people will return to normal social and spending habits again. I don’t think there is a quick fix.
We are now seeing a few outbreaks occurring through Victoria that show just how quickly the virus can get going again, so I feel that without a vaccine in place, it will be very difficult to kick start our industry again. I am confident we will get there eventually, it may just take a little longer than we all hope.
Has this made you consider keeping some of the initiatives you’ve been forced to make implemented even after the lockdown?
Thiele: Labour is our largest single cost so initiatives we would consider keeping would be contactless ordering from an app, whilst also limiting the kitchen trading hours to more commercially viable times.
Some of the services we have suspended we would simply discontinue or perform ourselves. I think most businesses that do survive this will come out of this with a leaner business model.
Bagios: I certainly think the takeaway option will live on with us and most other venues. We’re located in a dense residential area of South Melbourne, so I believe it makes sense for us to continue on with delivery of boutique wine to some of our more ‘well-heeled’ neighbours and also continue to offer ready-made meals and even the pre-packaged ‘finish off at home’ dining experiences which has been an excellent initiative of our industry.
Do you think this could in fact be a positive long term for our industry given the public has potentially been given a reminder of what they ‘have lost’ during this time?
Thiele: The public is very aware of what they are missing out on, but will they be prepared to pay more for what is a very expensive service and product to provide under the current restricted trading conditions? We’ll have to wait and see. Unless there is significant change in regulation and our industry RESETS, the public is going to end up with less to choose from in terms of hospitality offerings when they go out.
Shearer: Quite possibly. It might be a very long time before we look back on this in time and say, “that helped my business/industry”, but I think eventually we might. I am pretty sure that with improved hygiene and cleaning processes, there will be a long-term behavioural change we see from our operators and yes, just maybe there may be a little more love for your local.
Bagios: I certainly think it could be a positive. A few days after the lockdown came in, we began to get our head around the fact that it was a chance for not only our venue to revisit some of our practices, but for all venues to look at how they can best position themselves going forward. We all certainly hope that we never experience anything like this again, but who knows? All venue operators will now be even stronger than before in their resolve, along with the greater public buoyed by their desire to support our pubs – that must be a positive.
On behalf of the JLL Hotels team, we stand in support of all publicans as they begin their journey across Australia’s easing of restrictions to in turn, build a stronger and even more resilient industry than before.