The value equation: making pub assets work harder.

For generations, the Australian pub has been built around a fairly simple formula: a bar, a bistro, a beer garden, somewhere to watch the footy, and a bottle shop, TAB or gaming room. The focus was typically on generating revenue through food and beverage sales and gaming (depending, of course, on location). 

Today, the economics of the great Aussie pub are changing. Operators are looking more closely at the assets they already own and asking: how can we make every square metre count? 

For many established pubs, the opportunity isn’t necessarily another acquisition or a complete redevelopment. The answer is often sitting upstairs in accommodation that hasn’t been touched for decades, inside a bottle shop that no longer delivers the same return, or in other areas that generate little revenue. 

As customer behaviour changes and competition for discretionary spending increases, there is an opportunity to rethink how existing pub assets are used, finding new ways to increase visitation, dwell time and spend while unlocking greater value from the property itself. 

Creating reasons to stay 

Entertainment has always had a place in the local pub. What’s changing is the role it plays in attracting customers and keeping them there.  

Pubs aren’t just competing with the venue down the road. They’re competing with restaurants, entertainment precincts, dedicated activity venues and the convenience of staying home. Putting the game on a television in the corner is no longer necessarily enough to create a compelling reason to visit. 

That doesn’t mean every pub needs to become an entertainment venue. Smaller interventions such as electronic darts, shuffleboard or racing simulators can introduce another dimension to an existing venue without sacrificing its core identity. Rather than handing over an entire floorplate to entertainment, a handful of well-considered activities can give customers another reason to choose the venue, stay longer and spend more. 

The commercial opportunity doesn’t necessarily lie in charging customers for the activity itself. An electronic dart lane, for example, will encourage a higher food and beverage spend by encouraging patrons to linger. The same space is then working harder by generating multiple transactions over a longer visit. 

Sporting events present another opportunity. There is a significant difference between simply having a game playing on a screen, and creating an engaging game-day experience. Better screens, audio, digital integration and spaces configured around major events can turn sport from background entertainment into a genuine drawcard. 

The goal isn’t to fill pubs with gimmicks. It’s to understand what will give a particular customer another reason to visit, and what will allow existing floor space to generate a better return. 

Unlocking space upstairs 

For some pubs, one of the biggest opportunities isn’t in the bar or bistro at all, it’s hidden away upstairs. Many traditional pubs were built with accommodation above them, only for those rooms to become underutilised as the asset aged, or be converted into offices or meeting rooms. There is now a strong commercial case for looking at them again. 

Accommodation creates a new revenue stream without necessarily requiring operators to acquire more land or another venue. It can also capture more of a customer’s total spend. Someone who stays the night isn’t simply paying for a room; they are potentially eating dinner downstairs, buying drinks, participating in entertainment and returning for breakfast the next morning. 

Even a relatively small number of rooms can change the economics of an asset. Twelve rooms achieving an average of $150 per night, for example, could theoretically generate more than $550,000 in annual room revenue at strong occupancy. Beyond the operating income, incorporating accommodation can contribute to the value of the property. 

The opportunity isn’t about turning every pub into a hotel, nor does pub accommodation need to compete with a five-star offering. The starting point should be the customer. In some locations, the right product may simply be an affordable and functional place to spend the night after a nearby event. In others, there may be an opportunity to create something more distinctive. 

Importantly, that doesn’t mean stripping away what makes the building interesting. The character and history of an older pub can become part of the accommodation experience, supported by the practical comforts today’s guests expect. Making the asset work harder doesn’t always mean reinventing it. Sometimes it means finding a better use for something that was there all along. 

Testing ideas before building 

Identifying underutilised space is one thing. Establishing whether it can be profitably repurposed is another. Before committing to design and construction, operators need to understand what is actually possible within the existing asset. 

For accommodation in particular, that means looking early at planning and building requirements, fire separation, egress, structural constraints and the existing condition and classification of the building. An idea that appears relatively simple on a floor plan can become significantly more complicated once the requirements of accommodating sleeping guests above an operating pub are understood. 

The impact on the existing business matters too. If construction requires parts of a profitable venue to close for an extended period, that lost revenue needs to form part of the feasibility equation. This is why the process should begin with feasibility rather than design. 

An early approval pathway review, floor plan test fit and cost plan can establish what can physically and legally be achieved, what it is likely to cost and whether the commercial upside justifies the investment. Structural conditions, planning requirements, construction staging and disruption to trading can then be considered before significant money is committed. 

The same thinking applies beyond accommodation. Whether the opportunity is an entertainment area, a redundant bottle shop, or an unused upper floor, the question isn’t simply, “What could we put here?”. It is, “What use will make this part of the asset work hardest?” 

For pub operators with established sites, existing infrastructure and strong locations, there may be significant value hiding in plain sight. The opportunity is to understand where the asset is underperforming, what today’s customer actually wants, and where targeted investment can unlock a stronger commercial return. 

The next generation of the Australian pub may not be built on more space. It may simply be built on making better use of the space it already has. 

Unita’s Founder, Robert Rowe, spoke recently at the Hospitality Real Estate Summit about the future of pub venues in Australia. If you’d like to discuss your pub repositioning strategy, contact us here.