Queensland pub deals dry up as industry faces crisis of uncertainty amid COVID-19 shutdown

The enforced closure of the nation’s watering holes has left the $20 billion-plus pub and club industry reeling, with many publicans fearing they will eventually have no option but to call last drinks forever.

NOBODY knows when the beer taps and cash will start flowing again in Queensland’s pubs and with market activity drying up the fight is on to keep the glass half full.

The enforced closure of watering holes across the nation has left the $20 billion-plus pub and club industry reeling, taking a large amount of fizz out of the prized asset class.

According to CBRE Hotels Queensland director Paul Fraser, transactional activity has been reduced to a trickle of deals being finalised that were already underway before the coronavirus lockdown.

“That side of the market has almost completely died off,” he said. “People are not looking at pub assets at the moment because none of them have got current trading figures. It’s a wait-and-see scenario.

“However, there is always an element of buyers out there who will look at something like this as an opportunity to get into the market.”

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HTL Property director Glenn Price said an amalgam of long-term hoteliers, private pub groups, corporate groups and institutional investment arms also were in the wings waiting for generational pub opportunities if they become available.

“Hotels such as these, with strong property fundamentals and deep revenue histories, always exude a type of magnetism to astute investors irrespective of the market complexion,” he said.

From a publicans perspective, Jaz Mooney — the owner of two of Brisbane’s oldest pubs, the Normanby Hotel at Red Hill and Grand Central Hotel in the Brisbane CBD — said the hotel sector was “in serious trouble”.

Publican Jaz Mooney and CBRE’s Paul Fraser inside the closed Grand Central Hotel in Brisbane.

“There’s no sugar coating anything, this is a big disaster for all hoteliers,” he said.

“But you have to put this in perspective, this is a health crisis — a pandemic — and that has to take precedence over anything that we’re feeling or experiencing.

“So we do what the government tells us and we do what’s right.”

However, Mr Fraser said with no cash flow the challenge facing the pub sector was unprecedented — not even during the world wars or Depression were hotels forced to shutdown.

He described recent government relief measures, in particular the deferral on gaming tax, as just “a stay of execution” and many publicans still feared they eventually would have no option but to call last drinks forever.

“Unless there is some kind of tax amnesty and not just deferrals that kick the can down the alleyway a bit longer, once the pubs are up and operational they’ll be paying those taxes again and it will cripple them — their profits will be less, their valuations will be less, and the banks are being very co-operative at the moment but they are not charities.

“We have an industry in complete crisis and it will need governments collectively looking at how to support it to get it back on its feet.”

The closed Grand Central Hotel in Brisbane.

Mr Mooney said beyond the federal government’s JobKeeper wage subsidies that would enable stood down staff to be retained, there was no certainty ahead for the pub sector, which has always been a nimble and robust asset class.

“We have got no idea when we are going to be allowed to reopen,” he said. “We have got no idea what it is going to look like out the other side.

“The world in terms of hotels, pubs and most likely gaming has changed forever.

“Obviously, we will have to change our model and what that will look like nobody really knows yet.

“But I do know this much, it’s going to take time to recover,” he said. “And we’re all going to need a beer when it’s over.”