By Ian Neubauer
The Australian pub sector is in good shape and reporting positive sales in gaming, liquor and food sales despite ongoing reports of receiverships, bankruptcies and lay-offs, according to industry experts.
Notices for forced sales have appeared regularly in the nation’s newspapers in recent months. Examples include the Lithgow Hotel in the Blue Mountains, which was passed in at auction in December but sold on offer and exchange; the Bredbo Inn in southern NSW, which was sold prior to auction; and the Royal Oak Hotel in Cessnock, which was passed in at auction but changed hands at its indicated value several days prior to the New Year.
Manenti Quinlan & Associates consultant, Adam Spencer-Carr, who brokered the sale of the Oak, said sales in the last quarter of 2008 were higher compared to the same period in 2007. But he discounted the argument that NSW’s pub sector was in dire straits as is happening in the UK.
“I think there is a fair but of hysteria and the newspapers are doing their bit to keep it going. We are not seeing a large volume of sales at the moment,” he said. “The reality of the situation is that we don’t know. Australia Day traditionally heralds the start of the first season of hotel sales for the year, so it’s too premature to call it now.”
Jones Lang LaSalle Hotels (JLL), which publishes regular investor surveys, admitted pub transactions have decreased across the board over the last 12 months. But it held that pubs are historically recession-proof and that a number of its clients, particularly in Queensland, were reporting increasing trade.
JLL senior manager, Mathew George, said while trading growth is expected to remain steady, lenders will remain cautious for the short to medium term.
“Our most recent Pub Investor Sentiment Survey showed that while investment activity has been impacted by the knock-on effect of the global financial crisis, pub investors remain relatively upbeat,” he said. “Banks are generally indicating that as long as they’re making their interest payments, they will stand by their clients.”
JLL senior vice-president, Wayne Bunz, added that the fall in disposable incomes has also impacted positively on food sales in pubs.
“With restaurants remaining a more expensive option relative to pubs, our pub clients are adjusting to the times and capitalising on these customers by supplying comparative offerings, value-add options such as entertainment and affordability for families,” he said.
AHA national affairs advisor, Hamish Arthur discounted the theory that the economic downturn was resulting in the cutting back of staff at venues, saying changes were the result of cyclical changes in consumer spending.
“We have no strong evidence of [massive layoffs]. There is a cyclical nature of employment in the year and January is naturally going to be a quieter month than December in the pub market,” he said. “You have to look at the figures year on year, not month by month.
“By and large the pub sector is quite steady, though we are still very much in recovery mode after the smoking ban. There are a lot of premises in rural areas that are still adjusting to what turned out to be a seismic shift in the way we do business,” he said.
“People are still going down to their local pubs and they factor in their spending for it each week. Our opinion is that there has been an effect but not a major one.”
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