Arthur Laundy expects pub prices to level off as interest rates, beer costs rise

Hotel sale prices will ease thanks to the central bank lifting interest rates and the price of beer going up but Arthur Laundy is still on the lookout for acquisitions.

Arthur and Craig Laundy at their pub, Marsden Brewhouse, in Marsden Park, NSW. Picture: Tim Hunter.

Interest rate rises could soon start biting into the high prices being paid for pubs across the market, according to veteran hotel magnate Arthur Laundy, but that’s not stopping him from ­continuing to look “all over” for more pubs.

Fresh from his $45m purchase of the Tacking Point Tavern in Port Macquarie on the NSW Mid North Coast, Laundy – who has a portfolio of about 80 pubs – says it’s early days yet. But the five successive interest rate rises could start to bite into consumer spending patterns.

“It’s early days … interest rate rises have not sunk in yet; for a lot of people who have bought homes it has not sunk in yet. (But) I believe the hotel market can’t sustain the interest rate rises,” he says.

“Prices for hotels have to drop. I think interest rates will cause (prices) to come back.”

For Laundy Hotels and other publicans, the worry is also pending wage rises, as well as beer prices.

Arthur Laundy with sons Stuart and Craig. Picture: Richard Dobson

“We will have two increases in beer prices – they are subject to CPI twice a year. If people are struggling with house prices they will not be able to drink. Things will toughen up in my industry,” Laundy says.

“I am all right. But the people in my industry who have borrowed too much could have a worry.”

Laundy Hotels has just spent $14m renovating its Woolloomooloo Bay Hotel in inner Sydney and recently opened the Plough & Ale Inn in the new suburb of Calderwood near Albion Park, south of Sydney.

But Laundy says he won’t look at buying The Oaks Hotel in Sydney’s Neutral Bay, which has a $175m price tag, believing a prospective buyer could be the owners of the Big Bear Shopping Centre nearby.

Aside from The Oaks, Laundy says he is interested in everything else.

“I will look everywhere. I will look in regional areas,” he says.

“I might look at the Kingscliff Beach Hotel.”

Located between the Gold Coast and Byron Bay on the NSW North Coast, the Kingscliff Beach Hotel is being offered to the market by HTL via an expression of interest campaign closing September 28. The vendor is the Sydney-based Taphouse Group.

About $100m is expected for the hotel, which sports multiple bars and gaming facilities, all developed across a 3824sq m site on a beachside street.

Closer to Sydney, Laundy Hotels expects to open another of its newly built hotels in Jordan Springs, one hour west of Sydney, by November.