The crisis-era punt that launched $100m Hurley Hotel Group pub empire
It was the recession-era gamble on a failing pub and a wild deal-making frenzy that launched pub king Peter Hurley’s empire and changed SA hotels forever. Now his next big flagship is coming.
In the early 1990s South Australia’s pubs and hotels industry was on its knees.
The State Bank collapse, a national recession and record high interest rates and unemployment were keeping customers away and forcing many hoteliers to close the doors.
But while many long-time publicans were battening down the hatches, an up and coming Peter Hurley would embark on the biggest financial gamble of his life.
The Arkaba Hotel had fallen into the hands of receivers who were looking for a buyer, and while money was tight, Hurley saw an opportunity to breathe new life into a tired landmark.
“Bill Spurr (tourism and hospitality pioneer), who became a best friend for many years until he passed away two or three years ago, said ‘I reckon you should have a look at the Arkaba – it will probably go for a fairly good price given the state of the industry’,” Hurley recalls.
“It wasn’t easy for us to borrow the money and the hotel industry wasn’t in good shape at that time – the economic conditions, unemployment, interest rates were high. But we just plugged away.
“And we’ve never looked back. It’s become our flagship and for me it’s my spiritual base.”
Hurley has since gone on to become one of the most influential pub operators in South Australia, heading up a family empire that now spans 10 venues in South Australia and NSW.
And soon his Hurley Hotel Group will unveil its biggest investment so far, when it opens the doors to the $60m Hotel Panorama currently under construction on Goodwood Rd.
It’s a far cry from Hurley’s first pub, the Wudinna Hotel on the Eyre Peninsula, which he acquired in 1975 after deciding to leave his job as a primary school teacher in Adelaide.
He’d previously moved to the city from the small Victorian town of Casterton to complete teacher’s college, but soon realised his passion lay elsewhere.
“During teacher’s college I worked in restaurants and pubs like the Feathers. I knew I had a sunset in teaching, it wasn’t going to be a long-term thing,” he says.
“I was 27 and I felt that I knew everything with the absolute advantage of not knowing what I didn’t know.
“Wudinna was the only good business that I could find and afford. It was 100 hours a week – the only way I knew was to work ridiculously long hours.”
The move paid dividends for Hurley, both professionally and romantically.
He met wife Jenny while at the Wudinna, and the couple soon moved to Whyalla where they acquired their second pub, the Spencer Hotel, from the Matthews family, another South Australian hospitality dynasty with roots in country pubs.
The Hotel Royal at Torrensville was soon added to the family’s growing pubs business, in a move that brought the Hurleys back to the city where they would expand their empire with a string of acquisitions.
But the real game-changer came in 1993 when Lion Nathan took over the South Australian Brewing Company, the state’s dominant landlord at the time with more than 100 pubs under its ownership.
Lion Nathan wanted to offload the properties, and Hurley seized on the opportunity, spearheading a deal that offered tenants the first option to acquire freehold ownership of their venues.
“That’s the most significant boost to what you might call our family balance sheet,” Hurley says.
“We put together a committee to make happen an idea that the late Ian McLachlan (former accountant and Port Adelaide director) and Martin Baily (bottle shop owner) had put together ... where every tenant gets the opportunity to buy the freehold of their premises.
“There was a valuation on the 106 hotels of $100m, and by that time the legislation approving the introduction of gaming had gone through parliament but it hadn’t happened. And it was as if the valuation ignored the fact that the legislation was there because the coins hadn’t started dropping into the drop box.
“We talked 89 tenants into participating, and then the 89 of us had to buy the remaining 16 or 17. We sold everything but the kids and the kitchen sink to do it, but there’s a lot of families within the hotel industry in South Australia whose balance sheets are a lot more robust because of that event.
“If you were a shareholder of Lion Nathan you would have been dirty on them doing the deal, particularly because they hadn’t factored in that gaming was coming in.”
The Hurleys took over freehold ownership of the Royal, Marion, Torrens Arms and Tonsley hotels as part of the landmark deal, which also marked the beginnings of the Fahey, Matthews, Francis and Brien family empires.
Together with the introduction of gaming machines just months later, the deal enabled hoteliers to invest in major pub upgrades throughout the 2000s, making South Australia a pioneer in the development of Australia’s modern pubs landscape.
“That was another game-changer for the industry,” Hurley says of the introduction of pokies.
“But one of the things that sometimes gets forgotten about the introduction of gaming is that after the state bank disaster there was a crisis cabinet meeting down south and they made a decision that they had no choice but to open the door to a gaming tax opportunity for a very sick state budget.
“It’s not too indulgent to say that, substantially, the pub and club industry got the opportunity to add gaming to its product offer as, more or less, a direct consequence of the state bank debacle.
“And if it hadn’t been for the introduction of gaming there’d be only half the number of hotels in the state.”
When it comes to the anti-gambling movement that emerged in the years after the arrival of pokies in South Australian venues, spearheaded by former ‘No Pokies’ politician Nick Xenophon, Hurley says that while he understands the arguments against gambling, “adults should be allowed to do what adults want to do”.
An ardent Adelaide Crows supporter and former board member, Hurley has partnered with former AFL stars on a string of acquisitions and developments over the years, including the Alma and Port Lincoln hotels, and more recently the acquisition of the Barker Hotel in Mount Barker with club great Mark Ricciuto.
Celebrating 50 years in business this year, and approaching his 78th birthday, Hurley says he has not plans to retire, but the business is in good hands once he does decide to step back. Daughters Samantha and Anna, and Samantha’s husband Scott, all work in the business, while son Nick specialises in consulting to the hospitality industry.
Hurley says annual revenue is “comfortably north of $100m”, attributing much of the company’s success to its ability to adapt to changing trends.
“People now drink a lot more at home and a lot less at pubs ... but people also eat on licensed premises a lot more and a lot less at home,” he says.
“Food is such an important part of our business now. It’s been a massive change but food’s hard work – it’s highly competitive. Our accommodation business has also grown massively, and that really underpins the money we’re investing at Panorama.”
The $60m Hotel Panorama is due to open before Easter, and will feature 77 rooms across three levels, a rooftop bar and function spaces. The ground floor will include a cafe, bar, restaurant, gaming room, sports bar and beer garden.
It is being built as a replacement to the Tonsley Hotel, which was compulsorily acquired by the state government to make way for the Torrens to Darlington road project.
Hurley says the project will build on his family’s 50-year legacy in the state’s hotel industry, a legacy “rooted in family and community”.
“We’re not just looking to the next chapter, we’re laying the foundation for the next 50 years and beyond.”
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Originally published as The crisis-era punt that launched $100m Hurley Hotel Group pub empire
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