Don't bet it all on the house
Probably too many times to count. But it's a brave move, making the leap from customer to owner.
Nevertheless, in the past few years the lure has proved too much for some. But for the few who make a living owning a hotel or bar, the failures are three times as many.
If you read a newspaper during the past five years, it was very apparent who really made cash from pubs: receivers and managers.
Pulling a beer and having a clean, child-friendly beer garden, a well-priced steak-and-chips menu and some pokies were not going to save you, and in many cases didn't.
Despite the very fragmented industry, of the top 20 pubs across greater Sydney, most are held by families or long-term operators. These people live and breathe pubs. They know their clientele and realise there is more to making a venue a success than just pulling beers.
They offer a range of food, cater for kids and sports fans, and while gaming is not as important as in the past, they retain some machines.
Talk to a pub owner and you get the same answer: provide a safe, clean venue in a good location and don't overspend on the decor.
The most active pub families are the Laundys, the Shorts - of which Martin and sister Paris Ballantyne just relaunched the Royal at Leichhardt - the Bayfields, the Maloneys, the Savage Group and the McHugh, Green and Ryan families, among others. There are also the new corporate investors such as the Coles, Woolworths' Australian Leisure and Hospitality (ALH), as well as profitable listed landlord ALE Property Group.
Moving into the spotlight is the Riversdale duo of Paddy Coughlan and Rod "Ned" Kelly, who are working on a public float, Mark Carnegie's M.H. Carnegie & Co, John Singleton, former head of Qantas Geoff Dixon and Allan Johnston.
Having emerged from a number of years of being hit by high debts, receiverships and poor management, the next phase for investors is growth and stability.
In the end, borrowing too much at high interest rates to pay the high sale prices and then overspending on renovations, proved the undoing for the new entrants. Even those who headed to the sharemarket to raise money to buy pub portfolios were hit by the global financial crisis.
In June 2004, the first listed pub fund was the $70.5 million ING Real Estate Entertainment Fund. After a few tough years, the fund is now named the Lantern Hotel Group and is looking to expand.
Through Jones Lang LaSalle's Hotels & Hospitality Group, on behalf of Savage Hotel Management, Lantern has bought the Crown Hotel in Surry Hills. Sam Handy and John Musca of Jones Lang LaSalle negotiated the sale.
The hotel was sold discreetly off-market and was keenly contested, yielding six offers to purchase. No price was disclosed, but similar pubs have reached more than $16 million.
Russell Naylor, the executive director of Lantern Hotel Group, said he was excited by the opportunities the acquisition presented.
He said it was a strong fit with the existing portfolio of hotels and offered a variety of bar, dining and entertainment options while demonstrating upside and a strong underlying property value.
So next time you want to buy a pub, leave it to the professionals.
ccummins@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Buying a pub can be risky for everyday investors. The article notes many new entrants failed because they borrowed heavily, paid high prices and overspent on renovations – and for those trying to make a living from pubs the failures were reportedly three times as many as the successes. The piece suggests leaving ownership to experienced operators or investing via professional vehicles rather than jumping in as a novice owner.
The article highlights three common causes: borrowing too much at high interest rates to pay inflated sale prices, overspending on refurbishments, and being exposed to broader market shocks such as the global financial crisis. These factors led to heavy debts, receiverships and poor outcomes for many new pub owners.
Successful operators are often family or long‑term operators who know their clientele and focus on fundamentals: a safe, clean venue in a good location, sensible spending on decor, a solid food offering, and catering for kids and sports fans. While gaming is less central than in the past, many successful venues retain some machines and diversify bar, dining and entertainment options.
The article names several household and corporate players: supermarket groups such as Coles and Woolworths’ Australian Leisure and Hospitality (ALH), listed landlord ALE Property Group, and hotel funds like Lantern Hotel Group (the former ING Real Estate Entertainment Fund). Other industry figures mentioned include Savage Hotel Management, Jones Lang LaSalle, Riversdale’s Paddy Coughlan and Rod “Ned” Kelly, M.H. Carnegie & Co, John Singleton, Geoff Dixon and Allan Johnston.
Lantern Hotel Group began as the $70.5 million ING Real Estate Entertainment Fund (listed in June 2004) and has since repositioned and looks to expand. The article notes Lantern bought the Crown Hotel in Surry Hills through Jones Lang LaSalle on behalf of Savage Hotel Management, signaling active consolidation and potential upside in well‑managed pub portfolios.
According to the article, similar pub properties in Sydney have fetched more than $16 million. The Crown Hotel sale in Surry Hills was handled discreetly off‑market, attracted six offers and no public sale price was disclosed, underscoring competitive demand for high‑quality sites.
The article explains that investors who raised money on the sharemarket to buy pub portfolios or who carried high debt levels were hit hard by the global financial crisis. That period exposed overleveraged owners to receiverships and forced many to reassess strategy, leading the sector into a phase focused on growth and stability.
The article suggests everyday investors should prioritise stability over speculation: avoid over‑leveraging, look for funds or operators with proven experience and strong underlying property values, and assess location, management and portfolio fit. In short, consider professional vehicles or established operators rather than trying to flip a venue without hospitality expertise.
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