As featured in the August 2021 edition of the Queensland Hotels Association’s QHA Review.
No doubt many of you will have seen the media’s frequent coverage of the residential property market boom we are experiencing in Queensland (and particularly in Southeast Queensland). Whilst it may not be as heavily covered by the mainstream media, the pubs and hotels market is seeing a similar trend emerge. Residents of the southern states are taking notice of how Queensland has performed since the beginning of the COVID-19 pandemic and are looking to relocate and/or invest in the sunshine state. This is proving to be a significant driver for demand, creating conditions we haven’t seen in the pubs and hotels market since before the Global Financial Crisis.
Increasing Demand for Acquisitions
Major players in the pubs and hotels industry are making bold moves to expand their portfolios, through the targeted acquisition of multiple sites across Queensland, including smaller regional pub chains. Property trusts searching for freehold land with entrenched tenants should also be mentioned. Having monitored common financial performance metrics such as EBITDA (earnings before interest, taxes, depreciation, and amortisation) multiples and capitalisation rates, these property trusts are now identifying a number of sites as increasingly favourable investments.
These factors (among others) are contributing to a landscape where publicans and hoteliers are being approached off-market with lucrative offers to purchase.
How to Make the Most of the Increasing Demand
As this competitive tension continues to fuel price growth, we’ve seen many longstanding hoteliers capitalise on the demand and sell their venues. Given this climate, I would recommend that those who are even remotely open to the possibility of selling should carry out all necessary checks to ensure a seamless transaction, should the right opportunity present itself. The excitement of receiving an enticing offer to purchase can quickly turn to frustration if the potential buyer either walks away from the deal or renegotiates a substantially lower price owing to poor results from their due diligence enquiries.
Some compliance considerations that may apply to your premises are as follows:
- Whether you are required to submit compliance reports pursuant to the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF). A venue that houses 16 or more Electronic Gaming Machines are considered reporting entities and must submit a compliance report every year between 1 January and 31 March;
- Whether your Designated Outdoor Smoking Area (DOSA) is compliant and you have an up to date Smoking Management Plan;
- Whether the Risk-Assessed Management Plan (RAMP) for your liquor licence is approved and up to date;
- If you hold a liquor licence and you trade prior to 10.00am and/or after midnight, whether you have been approved to do so;
- Whether an asbestos register has been maintained and kept up to date. An asbestos register is required unless the building was constructed after 31 December 1989 and no asbestos has been identified or likely to be present at the premises;
- Whether all employees are being managed in accordance with the appropriate award and National Employment Standards; and
- Whether any building works are compliant with town planning requirements and a final certificate of occupancy has been obtained.
By ensuring you are up to date in relevant areas of compliance, you will be well positioned to capitalise on the increasing levels of demand we are expecting to see as we move towards the back end of the year. Should you have any queries about any compliance requirements, please contact me on (07) 3224 0230.