Hotels and Pubs
Investing in hotels and pubs can be an excellent way to diversify your commercial property portfolio. With the right property and strategy, these assets can generate consistent returns and capital growth. However, understanding the market, identifying the right opportunities and managing potential risks are crucial.
Hotels and pubs are hospitality-focused properties that cater to distinct markets. Hotels provide short-term accommodation, often for business travellers, tourists or event attendees. Examples range from boutique hotels in city centres to large resorts near coastal or regional attractions.
Pubs typically serve as social hubs, offering food, drinks and often entertainment. Some pubs also feature gaming machines, which can significantly enhance profitability.
- Hotels: Occupancy rates in Australian hotels have steadily increased as tourism recovers post-pandemic with an average occupancy rate for commercial accommodation of 70% in 2023, according to Tourism Research Australia. Business travel and tourism are driving demand, especially in capital cities and popular regional areas.
- Pubs: Pubs with a strong food and beverage focus have thrived as community gathering spots. Properties with gaming licences are especially attractive to investors, given their potential for higher returns.
Forecasting future potential for
hotel investments and pub investments
The future for hotels and pubs looks bright:
- Hotels: Continued international tourism growth, combined with Australia’s appeal as a business destination, should drive demand for well-located properties.
- Pubs: Suburban population growth and consistent gaming revenues make pubs resilient even during economic downturns.
Why buy
hotels and pubs?
Buying hotels and pubs as investments comes with several potential benefits. Their ability to generate multiple income streams is a major drawcard. Hotels can combine room bookings with event hosting and dining revenue, while pubs often supplement food and drink sales with gaming income. Additionally, hospitality properties tend to benefit from consistent demand, particularly in well-chosen locations.
However, they’re not without challenges. Hotels and pubs often require substantial upfront capital for renovations or upgrades. Assessing profitability is critical, as poor management or a dated offering can impact returns. Investors need to carefully evaluate a property’s historical performance, its reputation in the market and its future potential before committing.
To maximise your returns, it’s important to select properties in high-demand areas. A pub located in a vibrant suburban hub or a hotel near major attractions will generally see stronger occupancy and revenue. Furthermore, maintaining a focus on operational excellence – such as improving customer service, modernising facilities and offering live entertainment – can significantly enhance profitability.
Key considerations when
buying hotels and pubs
Location is one of the most critical factors in the success of a hotel or pub. A hotel’s proximity to business hubs, transport links and tourist attractions directly influences occupancy rates, while a pub’s performance will often depend on the demographics and preferences of the local community.
Equally important are the financial and regulatory aspects. Investors should conduct a thorough revenue and profitability assessment to understand how the property currently performs and what upgrades may be needed to improve results. Capital expenditure can be a significant outlay, particularly for older properties, so factoring in renovation costs is essential.
Regulatory requirements can also impact the investment process. Hotels and pubs must comply with zoning and land-use regulations, and obtaining the necessary licences and permits – such as liquor and gaming licences – requires due diligence. The reputation of the property is another consideration; a strong brand or positive customer reviews can provide a significant competitive edge.
Why buy with
Costi Cohen?
Buying a hotel or pub is not just about finding the right property; it’s also about navigating the complexities of the market, conducting thorough due diligence and negotiating the right deal. While some investors attempt to go it alone, this approach can lead to costly mistakes, such as overlooking zoning restrictions or overestimating revenue potential.
At Costi Cohen, we specialise in commercial property investments, including hotels and pubs. Our team has extensive experience in the hospitality sector, and we guide our clients through every step of the process. From identifying high-potential properties to negotiating favourable terms and assisting with compliance requirements, we help ensure that your investment journey is stress-free.
How to finance your
hotel or pub investment
One of the key challenges of investing in hotels and pubs is securing finance. Depending on the property’s features, such as whether it includes gaming facilities, lenders may offer loans covering up to 65% of the purchase price. Banks and financial institutions will also assess the property’s location, revenue potential and your financial position as part of their approval process.
At Costi Cohen, we work with a network of trusted financial professionals to help our clients secure competitive financing. Whether you’re a first-time investor or looking to expand your portfolio, we can connect you with the right solutions to fund your purchase.
Explore some of our
Hotel and Pub Purchases
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Whether you’re a seasoned investor or new to the market, our expertise will pave the way for your success in commercial real estate. We’ve looked after more than 250 commercial properties and are prepared to help you discover your next investment opportunity.
No matter your timeline, budget or preferred location, the expert team at Costi Cohen can help you find a commercial property that aligns with your needs. We invite you to get in touch with our team for a consultation today.
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