24 May 2013
Words Tim Admin

When the smoke clears

Operators of licensed premises in Victoria and New South Wales are concerned about the likely downturn in trade expected due to the introduction, from July 2007, of new regulations requiring smoking be permitted exclusively in designated outdoor areas.These designated smoking areas must be either unroofed or have at least 25 per cent of the wall area open.Similar regulations will be introduced in South Australia, the Northern Territory and ACT later this year and operators on those jurisdictions will no doubt be closely monitoring the situation in Victoria and New South Wales.Industry sources believe initial revenue losses of up to 10 per cent will occur, with greater losses being experienced by operators who are unable to offer an outdoor solution or who have not installed a designated area in accordance with the regulations. Cost to comply In Victoria, from June 2006 to April 2007, 242 permits have been issued for renovations to licensed premises. The permits, totalling $38 million, would predominantly have been for the provision of “smoking” solutions.In New South Wales, it is believed the pub and licensed club industry has invested more than $80 million to prepare for the introduction of smoking restrictions.Many licensees have prepared for the regulatory changes, however, many have not and may suffer additional loss of on-premise trade. This could have a detrimental effect on Freehold and Leasehold values for city and rural properties.Additionally, prospective purchasers may discount hotels that have not complied with the regulations. Operators who do not comply face penalties if prosecuted for allowing smoking inside their hotel.