Brisbane-based Blue Sky joins Adelaide pub operator Greg Maitland to buy 10 hotels from Independent Pub Group

TOWNHOUSES, shops and motel accommodation are likely to spring up around suburban Adelaide hotels following a corporate takeover on a scale rarely seen in the state’s hospitality industry.

Brisbane-based investment firm Blue Sky, which manages $1.35 billion of assets, this month teamed with Adelaide pub operator Greg Maitland to buy 10 hotels from the Independent Pub Group.

The pubs, rebranded GM Hotels in the $67 million deal, are the Tower Hotel, Valley Inn, The Brahma, Paradise Hotel and Bolivar’s Whitehorse Inn, as well as the Christies Beach Hotel, Emu Hotel, Beach Hotel, Crown Inn and St Francis Winery in the south.

There are 11 bottle shops in the deal, nine being drive-throughs attached to the hotels.

The deal has raised the question of whether the Adelaide hotel market — still dominated by family businesses and sole operators despite supermarket giant Woolworths being the biggest player — will become more corporatised like the eastern states.

Mr Maitland, who was also a partner with the pair of private equity firms that previously owned the pubs, said some would be refurbished while others had “excess land” that would be developed for residential, retail and accommodation purposes.

He would not be drawn on which hotels but yesterday said development applications were being lodged with councils.

Mr Maitland said investment firms would take an “opportunistic” approach to the SA market and others had shown interest in the IPG assets.

He did not believe big corporate players posed much threat to independent pub owners, except when it came to bulk purchasing power for bottle shops.

“I don’t think it’s a particular issue for them as far as competing. They generally have a much more hands-on approach which puts them in a good position.”

But Tony Franzon, co-owner of the Franzon family’s group of hotels, feared there would be a “continual decline” of family-run pubs.

“There is no doubt everyone in SA would prefer SA-run, family owned business get looked after than these big shareholder driven companies interstate or overseas,” he said.

“Off-premise (in hotel bottle shops), how do we compete with a national brand like Dan Murphy’s or BWS? It’s impossible.”

However, Mr Franzon was “a bit perplexed’ at the timing of Blue Sky’s investment in SA given the state of the economy and competition from small bars, dwindling gaming revenue, rising wages and utilities costs and the Emergency Services Levy.

“I’m surprised because it’s really tough. I’ve been in the game 30 years and it’s never been harder since Paul Keating was in (power) and interest rates were 17 per cent,” he said.

Australian Hotels Association state general manager Ian Horne said major corporate investment in pubs was “very, very unusual” in SA but “increasingly the norm” in the eastern capitals, where strong population growth compensated for national declines in per capita alcohol consumption and the trend towards drinking at home instead of in pubs and clubs.

While the Blue Sky deal was “a vote of confidence in certain hotels in certain parts of Adelaide”, further corporate investment here was unlikely without an economic revival, he said.

Mr Horne agreed the big advantage of corporate players like Woolworths was “aggressive pricing” in bottle shops connected to pubs.

WHO’S BEHIND THE BAR

ALH (Woolworths) — 31 venues including Royal Oak, Norwood, Belgian Beer Cafe, Ramsgate, Findon, Slug and Lettuce, Seacliff Beach, Village, Eureka Tavern

GM Hotels — 10 venues: Whitehorse, Emu, Crown, Paradise, Brahma, St Francis Winery, Beach, Tower, Christies Beach, Valley Inn

Hurley Group — 10 venues: Arkaba, Alma, Hackney, Kensington, Marion, Port Lincoln, Royal, Tonsley, Torrens Arms, Pretoria (Mannum)

Saturno Group — 8 venues: West End, Banque, Unley, Mile End, Duck Inn, Colonist, Avenues, Mick O’Shea’s

Spirit Group (Coles) — 7 venues: Brighton Metro, Grand Junction, Hope Inn, Payneham, Hampstead, Waterloo Station, Western (Mt Gambier)

Franzon Family — 5 venues: Bath, Grange, Queen’s Head, Cremorne, plus Hyde Park Tavern with Matthew Primus and Warren Tredrea.

Source: The Daily Telegraph, Tim Williams, 26^th September 2015
Originally published as: Brisbane-based Blue Sky joins Adelaide pub operator Greg Maitland to buy 10 hotels from Independent Pub Group