The appeal of regional hotel assets is growing in the Sunshine State, according to CBRE’s Queensland Hotel Market Outlook.

Paul Fraser, director of CBRE Hotels, suggested at the event that publicans were starting to look further afield in Queensland as Woolworths and Coles, through ALH Group and Spirit Hotels respectively, dominate the south-east Queensland market.

“Between them, Coles and Woolworths have a long-term hold over 200 Queensland venues – of which 154 are located in the south-east. This narrows the pool of available pubs even further in South East Queensland, resulting in publicans and investors chasing assets out of the market and prompting them to look further north to regional locations for opportunities.”

As has been the trend in New South Wales over the last 18 months, coastal areas – mainly tourism regions – are becoming the most sought after markets in Queensland for pub operators and investors. In the last two years, bigger groups like Pelathon and Redcape have been transacting assets in areas like Cairns and Mackay, but these regional areas are now becoming more attractive to single venue operators as well. These areas also provide gaming assets, in areas not dominated by ALH Group and Spirit Hotels.

“With only 11,523 gaming authorities in pubs located in South East Queensland – and the State Government not relinquishing any more – assets that offer existing authorities are extremely sought after by investors, achieving yields of between 10.5-11 per cent,” stated Fraser.

The hotels director also noted that publicans in Queensland are beginning to focus on diversifying their hotel offers in order to attract wider patronage.

“Owners are now putting a consumer lens over their asset – incorporating experience and lifestyle into their venues by activating spaces. Diversifying assets to appeal to a wider audience helps boost average spend and subsequent fiscal performance.”

Coles/KKR takeover rumours

In more projected movement for the Queensland pub market, Fairfax Media has been reporting over the last fortnight that global investment firm Kohlberg Kravis Roberts (KKR) has been in talks with Coles’ owners Wesfarmers to strike a joint venture over its pub business.

It is alleged that the two parties are in the final stages of negotiations for a partnership in which KKR – through its Australian Venue Company – will take over operations over the Spirit Hotels pub portfolio, while Coles will retain the operations of the attached bottle shops.  The Spirit Hotels portfolio consists of more than 80 hotels, predominately located in Queensland.

Coles has long been looking for a way to divest the pubs from its assets, so as to remove its association with gaming – without giving up its bottle shops – but has up until his point been unsuccessful, as Queensland legislation only allows the trading of bottle shops while attached to a hotel licence.

Neither KKR or Wesfarmers, or their associated businesses, have commented on the rumours of their possible joint venture.

Vanessa Cavasinni

Vanessa Cavasinni is the managing editor of Australian Hotelier and Club Management, trade publications for the pub and club sectors respectively. Vanessa has been at the helm of Australian Hotelier since...

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