Hotel Steyne owner Sam Arnaout tells story of how he went from panel beater to pub tycoon

New owner of the Hotel Steyne Sarm Arnaout reveals his secret on how he went from panel beater to a pub and property tycoon. His company is worth $3 billion.

Sam Arnaout, new owner of Hotel Steyne. Picture: Adam Yip.

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The Hotel Steyne’s new owner came within a whisper of buying the iconic pub almost 10 years ago, it has been revealed.

Visiting his asset for the first time as the proud owner this week, businessman Sam Arnaout told the Manly Daily he was the underbidder in 2010, when the pub was sold to a high profile consortium comprising businessman John Singleton, hotelier Arthur Laundy and investors Robert Whyte and Mark Carnegie.

The Steyne Hotel at Manly. Picture: Troy Snook.

They paid about $30 million for the property in 2010, and have reportedly spent about $5 million on the hotel since then.

“I tried to buy it when they bought it but I was the underbidder and missed out,” he said.

This month he paid more than double that figure to take ownership of what he describes as the “jewel in the crown” of his burgeoning hotel portfolio.

He wouldn’t be drawn on exactly how much be paid, but industry sources have revealed the unconditional sale was somewhere between $60 million and $63 million.

“I probably paid more than I wanted to and they probably didn’t get as much as they wanted to, but in the end I am very happy with the result,” Mr Arnaout said.

“I missed out on this asset once before and it’s one of those inspirational assets you never really give up on. And for me, this is a long-term asset that is going to be in the stable long term.”

Sam Arnaout inside Hotel Steyne. Picture: Adam Yip.

The purchase had the blessing of one of Australia’s most enduring and successful publicans Arthur Laundy, who said he had spoken with Mr Arnaout following the sale and been impressed with his enthusiasm for the Hotel Steyne.

“He is a very switched on man, and he understands the importance of community,” he said. “I think he will do very well,” he told the Manly Daily the morning after the sale.

And it wasn’t an asset Mr Laundy let go lightly. He said he had sold more than 90 hotels in his almost 60 years as a publican, and the pub known affectionately as “The Drain” sits firmly in his top 10.

This isn’t the first time Mr Arnaout has done business with Mr Laundy.

In fact he sold the first pub he bought around 2000 — the Horse and Jockey Hotel in Homebush — to Laundy Hotels a few years later.

Hotel Steyne is an iconic pub.

“Buying that first pub was a massive leap of faith,” Mr Arnaout said. “There was a lot of anxiety — it was all our savings, we were mortgaged up to the eyeballs, and it was very stressful.”

Less than two decades on, it’s a much different story. His company Iris Capital, which has a hospitality arm and a property development arm, has become a quiet but formidable force in the Sydney, Newcastle and Hunter Region.

The company’s hospitality arm has a stable of about 20 pubs including the Hotel Steyne, the Grand Hotel, Bondi Junction, the Station House Hotel, Campsie, the Gaslight Inn, Darlinghurst and the Golden Tiger, Hurstville.

Sam Arnaout and his son Brad Arnaout posing for a photo outside Hotel Steyne. Picture: Adam Yip.

The company also owns the Dalwood Estate in the Hunter Valley, Hungerford Hill Winery, the Pedens Hotel, Cessnock, and the Sydney Junction Hotel in Newcastle.

Iris Capital is also involved in property investment and development, including Newcastle’s $700 million East End development.

Iris Capital is reportedly worth an estimated $3 billion — one third of that in the hospitality side of the business and the remainder in property development. The company employs an estimated 800 people.

It’s not a bad effort for a 43-year-old who started his career as a panel beater, one of five children living in a humble home in a blue-collar area of Strathfield.

He and wife Christie were teenage sweethearts and have two children Brad and Layla. They have been happily married for 25 years, and now live in the penthouse of the iconic building known as the Toaster on Sydney Harbour.

They paid $22 million for the whole floor apartment at Circular Quay in 2015. Mr Arnaout said he still looks out the window every day and appreciates the view.

He said he knew early on that panel beating was just a stepping stone, and no sooner had he finished his apprenticeship than he and his wife had taken their first steps on the property ladder — investing in two post offices in Lidcome and Redfern, and then in the Horse and Jockey Hotel.

The early years were a blur of long and hard hours working, he behind the bar and she in the post offices, but slowly they started to gather momentum, and when they sold the pub to Mr Laundy, they bought the Cabramatta Inn.

“The market started growing and we were in the right place to grow with it,” Mr Arnaout said.

Craig Laundy with his father Arthur Laundy at their pub, Marsden Brewhouse in Marsden Park today. Picture: Tim Hunter.

“There was a lot of hard work, a lot of sacrifices and good family support. And sure, there’s distractions and hurdles and obstacles along the way.

“It was a seven-day-a-week commitment, and it meant missing out on things, but we were working to get the foundations for our family’s future.”

Which is where the name of their company starts to make sense — Iris stands for independently rising in strength.

“It’s something we developed when we were still growing and it has turned out to be perfect,” Mr Arnaout said.

Around 2007 the company sold 13 pubs in one line, a move that was not only lucrative but well-timed given the fact the GFC was just around the corner.

“That’s where we got the capital to really build the company,” he said.

Sam Arnaout pours himself a beer at the Hotel Steyne. Picture: Adam Yip.

And the rest is history. Iris Capital is now counted in the top five heavyweights of the Sydney pub scene, keeping company with high-profile pub barons Justin Hemmes (Merivale), the Laundy family (Laundy Hotels), Bruce Solomon (Solotel), and brothers Patrick and John Ryan (The Ryan’s).

But the Arnaout family is happy living away from the spotlight.

“I deliberately stay under the radar,” he said.

“For us, this is doing what we love, and getting involved in the society stuff has never really appealed.”

Their children have also been encouraged to follow their dreams, inside or outside the family business. Son Brad has been rising through the ranks of the company, starting off as a cellarman and dishwasher, and now as a cadet in the property development arm of the business.

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Daughter Layla is pursuing a career in early childhood education.

“We didn’t build this business so our children would have to work in it, we have encouraged them to have a strong work ethic and follow their own dreams,” Mr Arnaout said.

Which leads to his dream come true — the Hotel Steyne. For him this is clearly not only a business decision but an emotional one as well. A long time coming, but a patience that paid off. And for now, he doesn’t plan to do anything radical. He has already proved his ability to wait.

He is keen to explore the potential that comes with the DA approval for additions and renovations to the pub’s hotel accommodation.

“What I really want to do is get to know the people, the people who work here and the people who come here,” he said.

“We need to get the foundations right, to understand what needs to be done. For example, we’re not looking to come in and do an upscale eastern suburbs-style renovation because that’s not what this place needs.

“This place is about the beach, local community and history. Take the Round Bar — for me that is nostalgia right there. And I respect that.”