Regional pubs enjoy trade spike during COVID

A nationwide snapshot of the market, by real estate group CBRE, found pubs in regional Australia had reported a spike in trade in the months after lockdowns eased.

“In Western Australia regional pubs are seeing an increase of trade of about 30% versus last year. This trend is also similar in regional pubs in NSW and Queensland where we’re seeing better turnover,” report co-author and CBRE Hotels Director Paul Fraser said.

“It’s all about the psyche. People have been isolated for a long period of time and had some disposable income through government stimulus and they now view going to the pub as a reward. It’s created a bottleneck mentality.”

Fraser said pubs based in CBD areas were most impacted by reduced levels of foot traffic.

“Office blocks are still running at 40-50% occupancy which is having a direct affect on the hospitality industry,” he said.

“Trading is still down in CBD areas and I don’t believe that will change until at least early next year …. So publicans are struggling if they’ve just got assets in the CBD.”

He said despite regional pubs reporting a spike post COVID-19 lockdowns, business turnover was still down for 2020 compared to previous years.

“An increase in turnover for a few months has still not got them back the loss revenue they had before. Like for like, year on year, they will still not have had the same turnover compared to 2019 by a long shot,” he said.

With Victoria’s state of emergency extended last weekend, Mr Fraser said the uncertainty of the holiday season was worrying for publicans in Melbourne.

“Pubs generally in November and December do 35% of their turnover of the year and it would be more in net profit, about 40%. If in Melbourne these pubs are forced to stay shut, they’ll be in a lot of distress and hurt in 2021 and 2022.

He predicted the industry would face a key litmus test over the next 12 month, with loan relief from banks expiring and JobKeeper due to end in March.

“You’ve got rent that has been subsidised. The rubber will hit the road in January and it will be a double whammy. A lot of these pubs will be up for full rent plus the rent they have had subsidised.”

He said pubs would take solace in the government’s asset write offs, outlined in the budget. But he warned that pubs would still face financial pressure in 2021.

“A lot of these pubs are already not getting JobKeeper because of their performance. I think from January onwards it will be very tough for pubs and more initiatives need to come out from the government to sustain them.”

This article originally appeared on www.theaustralian.com.au/property.