Regional historic hotel comes with wealth of potential

The 1870s Royal Hotel in St Arnaud, 240km north-west of Melbourne, has been beautifully renovated over eight years. Picture:
The 1870s Royal Hotel in St Arnaud, 240km north-west of Melbourne, has been beautifully renovated over eight years. Picture:

The renovated Royal Hotel at St Arnaud, 240km north-west of Melbourne, has plenty to offer owner-occupiers looking to move to a regional area.

Built in 1873, the freehold pub is on the market with a price tag of $750,00 at a time when regional pubs are in high demand with investors.

Nutrien Harcourts St Arnaud sales agent Sharlene Bertalli said the property has been exte4nsively renovated since she sold it to current mother-and-son owners for $165,000 in 2014.

“The owners have been renovating it pretty much since they first bought it, with Mum first starting the renovations before her son joined her later to help open the hotel side of it.”

Now selling the property again, with colleague Damian Drum, Ms Bertalli knows the 391sqm corner block property well.

The historic property has come a long way in eight years and along with 19 rooms upstairs also features a lounge room and renovated bathroom, with another yet-to-be-updated bathroom also on this level.

A fireplace can be seen to the side of the main bar at the Royal Hotel in St Arnaud

The hotel features a combined bar and dining area with a fireplace, beer garden and a pool room, commercial kitchen, cool room, cellar and storerooms. Picture:

Downstairs, there’s a combined bar and dining area, separate formal dining room, a beer garden, and a pool room, along with a commercial kitchen, cool room, cellar, and storerooms. 

Throughout both levels are open fireplaces, high ornate ceilings, stained glass windows,3 and exposed brick feature walls.

Royal Hotel is one of several historic buildings in the former gold mining town, including Victoria’s oldest fire station, built in 1883, which is now a fire brigade museum.

Buyers looking for a treechange

The Royal Hotel would appeal to post-COVID buyers looking to escape to a regional area, as it us just two hours from Melbourne and set on the Sunraysia Highway – a major thoroughfare between Ballarat and Mildura.

A PropTrack report released last November revealed Melbourne experienced its largest net migration loss on record in 2020, as 32,166 residents fled COVID metropolitan restrictions in favour of rural areas.

At the same time, many “city skippers” still sought regions on the outskirts of metropolitan areas.

Exposed brick and bath with feet in one of the bathrooms at the Royal Hotel in St Arnaud

The bathroom has been transformed into a beautifully renovated area. Picture:

Regional pubs are popular with investors, according to recent data from Real Capital Analytics.

In 2021, demand for Australia’s regional pubs rose above the 2017 to 2019 average of $226 million, and investor acquisitions reached just under $1.2 billion – an astonishing figure when compared to the record full-year sales of $1.16 billion in both 2017 and 2019. data also recorded that regional pub sales accounted for 35% of the national pub transaction volume in 2021, which is a sharp contrast to the sector’s 20% accounting in 2017 to 2019.

Ms Bertalli said potential buyers have definitely liked the Royal Hotel’s $750,00 price guide, which is based on similar hotel sales in the town.

This includes the 1870s La Cochon Rose Motel, which sold for $750,000 in November last year to a Melbourne woman.

Driscoll Douglas East Rural Real Estate co-director Brett Douglas said the market in St Arnaud has been hot but remains buoyant.

Buyers are also attracted to the agricultural-based town given it’s not too far from Melbourne.

“That has been a real draw card for a lot of people wanting to get out of the city with all its COVID experiences,” he said.

“We’re a bit of a go-to place like most rural areas and a lot of good quality people have come to the town as a result, which is great.”

Excellent future financial potential

Royal Hotel’s owners aren’t immune to Melbourne’s easy access, with the hotel sale due to one of the owners wanting to move permanently back to the city with his fiancée, although his mother will remain in St Arnaud.

Ms Bertalli explained that although the co-owner worked from the hotel during COVID, he mainly lives in the city, visiting St Arnaud on weekends, with his fiancée managing the pub.

When they’re there, all of them live in the hotel’s upstairs rooms, which Ms Bertalli said were not utilised as a commercial accommodation, but for the owners and visiting friends and family.

However, this detail, and others, could be changed by a new owner, she said, with the property not being heritage listed.

This would further add to the hotel’s financial potential, particularly as there was very little accommodation in St Arnaud, she explained.

Oil paintings, heritage-style furniture and antiques on display at the Royal Hotel St Arnaud

A separate formal dining room comes with an exposed brick feature wall and chandelier. Picture:

The staff are willing to stay on with the new owners. The property’s annual commercial income remains undisclosed. 

But buyers looking at the property are mostly from Melbourne and were so far generally entirely new to the hospitality and accommodation business, Ms Bertalli said.

“I think people new to hospitality could take up this property though – you’d just need some idea of managing a business, including staff and bookings,” she said.

“This person or a staff manager would also have to be prepared to step up to the bar, just to keep it on track.”