Secret war to transform Sydney’s favourite pubs

Sydney’s pub barons have gone on a buying spree.

A secret war has been brewing in Sydney’s pub industry, pitting a handful of powerful families against each other in a high stakes race to snap up all the city’s best watering holes.

The buying spree has seen billions of dollars worth of bars and pubs change hands in recent years, with hundreds of millions more in the projected pipeline this year.

Individual price tags for some pubs have hit as high as $160m.

High profile families with a wealth of pub experience and deep pockets are the driving force behind the great hotel exchange.

And the trend is driving out many of the mum and dad operators, with experts warning small, independent inner city pubs are getting fewer.

MORE: Aussie suburbs where home prices are set to crash

The Ryan family bought Tea Gardens Hotel in Bondi Junction.

MORE: New $1b precinct to transform popular city region

Setting a 2024 pub price record in August, the Tea Gardens Hotel in Bondi Junction was offloaded by the Purkis family who’d paid $36m for it in 2014.

The buyers, publicans John and Sally Ryan, added it to their high profile portfolio including Ryan’s Bar, the Paragon Hotel, the Ship Inn and the Orient Hotel.

This year, long-term hoteliers the Laundys added two more addresses to their 90-strong venue list.

The billionaire pub barons snapped up the Light Brigade in Woollahra for $20m, and acquired Sydney’s oldest pub the Lord Nelson at The Rocks, also for $20m.

The Lord Nelson Brewery Hotel sold for $20m.

The Light Brigade Hotel sold for $20m.

The Shakespeare in Surry Hills changed hands just this month for the first time in almost half a century, selling for a rumoured $10m to Laurence Collins and his family, while the Captain Cook in Botany was bought by Kent Walker for about $35m.

Casula is home to the biggest pub price tag after the Crossroads Hotel – at the centre of a major Covid outbreak in 2020 – was purchased off-market in 2022 by Sonnel Hospitality for a reported $160m.

These transactions followed Merivale pub baron Justin Hemmes’ pandemic pub buying spree in 2021, when he snapped up Norton’s Irish Pub in Leichhardt, the Duke of Gloucester Hotel in Randwick and many others.

The Crossroads Hotel in Casula sold for $160m. Picture: Richard Dobson

Robert Martin, buyer’s agent and director of MCommercial said hotels weren’t for the faint-hearted.

“I wouldn’t see too many mum and dad investors. It’s more those families already entrenched in hotels who are buying more and more. They’ve got a very good recipe and it’s easy for them to roll that out across multiple venues,” he said.

“Just getting a liquor or gaming license is extremely difficult, as it should be, but that also makes it more difficult for newcomers who have that dream of buying a pub.”

Andrew Jolliffe, managing director of HTL Property and broker behind the sales of the Captain Cook, Light Brigade and Tea Gardens hotels this year, said vendors usually have good reason to sell up.

Captain Cook Hotel, Paddington sold for $35m.

The Shakespeare Hotel, picture in 2000, sold for the first time in more than 50 years. Picture: City of Sydney Archives

“One is to realise the uplift in value they’ve experienced after owning for a while. Secondly, some people are trading out of hotels for generational reasons or succession planning … Or, they just get an offer that’s too good to refuse,” Mr Joliffe said.

Mr Jolliffe added opening a pub had become harder for newcomers.

“Over time, the regulators have made the barriers to entry for competitors so high. You can’t just decide, we don’t like the local pub so we’re going to open our own up the road a bit.

“Pubs are such an interesting asset because we all seem to have a connection to them. We’ve all got an opinion, everyone’s got a story and in some cases you know the owners,” he said.

“Even if you don’t know them personally, they have a face. You don’t know the owner of your local Maccas. They support the local sports teams, they’re part of the social fabric of Australia.”

Owner of refurbished pub “The Mona” Ben Hanson and his uncle, Laundy Hotels group head Arthur Laundy.

Ray White Commercial head of research Vanessa Rader said the post-pandemic landscape for pubs was booming.

“If you look at NSW alone, 2022 was our absolute peak year with more than $2 billion worth of pub transactions. That’s when financing was cheap, there was a very low yield and sellers were getting top dollar,” she said.

“Last year was slightly less, but this year is on track to hit that peak level again. More people are seeing just how lucrative pubs are as an investment type,” she said, adding that approximately $500m in pub sales have exchanged this year so far.

Justin Hemmes, pictured with Madeline Holtznagel, went on a pandemic pub buying spree. Picture: Thomas Lisson

“Gaming is obviously a really big part of pubs which adds value, but there’s also food and beverage, plus some have accommodation and often a retail component like a bottle shop. The cash flow is great for operators, but they need to know what they’re doing.”