Justin Hemmes' Merivale Group: Sydney is in danger of regulating itself 'into oblivion'

Merivale CEO Justin Hemmes. Photo: DL Photography.

One of Sydney’s most successful hotel businesses, the Merivale Group run by Justin Hemmes, has kept a low profile over the controversy surrounding the city’s lockout laws in the two years since they were introduced.

Until now.

The company, which employs nearly 3000 people across more than a dozen venues, put its views in a submission to the NSW government’s review of the 1.30am lockouts, 3am last drinks and 10pm takeaway liquor laws.

The review, led by former High Court judge Ian Callinan, has attracted hundreds of submissions before its April cut off date, with the Merivale Group warning that Sydney is potentially regulating itself “into oblivion”.

“There are disturbing signs that we have started down this path already in NSW with the closure of several landmark venues,” the Merivale submission says.

The company, whose venues include the Ivy, Establishment, CBD Hotel and Slip Inn in the CBD lock out zone, along with Ms G’s near Kings Cross, says it is a major contributor to the growth of the leisure sector and redefined hotel culture in NSW.

“Broadly speaking, we support common-sense measures to reduce alcohol-related violence and we don’t know any hospitality operator that doesn’t. However, we have serious concerns about some blanket measures implemented under the Act that target a handful but affect many through unintended economic and social impacts such as job losses and tourism and cultural impacts,” the company says.

“We fully support sensible measures to reduce alcohol related-violence, but we believe this can be achieved through alternative effective measures that don’t have such negative consequences for the hospitality industry and broader community.”

Merivale says it opposes the 1.30am lock out and 3am cessation laws, but supports the 10pm take-away liquor restriction, arguing that “pre-fuelling” – people who drink elsewhere before heading to licensed premises, continues to be a major issue.

But Merivale says that in 21 years as part of the city’s hotel industry, the lock out laws have “had a greater impact on the financial viability of hospitality venues in Sydney and the international perception of Sydney as a potential destination, than any others”.

Merivale argues the laws have caused widespread economic damage, not just to the hotel industry, but also to the surrounding businesses in the night time economy, leading to a loss of jobs. The company says the city’s reputation is also being damaged, especially when international visitors are confronted by the laws.

Here’s part of the Merivale submission:

It is entirely appropriate for preventative measures and strong penalties to be targeted at the handful of people who go out to a licensed venue with reckless intent and commit a criminal act. We fully support sensible and balanced measures to this effect. It is not appropriate or balanced for those measures to be so broadly applied that they threaten the viability of hundreds of businesses and have a negative impact on so many community members.

While some policymakers point to the above measures as having had a direct correlation with a reduction in alcohol related violence at times when venues are not operating, their devastating economic impacts outweigh the benefits and runs counter to one of the principal objects of the Liquor Act – “to contribute to the responsible development of related industries such as the live music, entertainment, tourism and hospitality industries”.

While some policymakers point to the above measures as having had a direct correlation with a reduction in alcohol related violence at times when venues are not operating, their devastating economic impacts outweigh the benefits and runs counter to one of the principal objects of the Liquor Act – “to contribute to the responsible development of related industries such as the live music, entertainment, tourism and hospitality industries”.

The closure of a string of small bars, hotels and restaurants in the lock-out zone is emblematic of the pain being experienced across the hospitality sector and more broadly.

Merivale argues that the current framework is a one-size-fits-all solution that hurts innocent businesses.

“Individual patrons and venues ought to be assessed on their behaviour and their record of compliance with balanced measures that address the core issue of violence reduction. The current measures not only adopt the opposite position of penalising all venues and patrons within a defined area, they make no provision for responsible people and well managed venues to seek exemption from their operation. This is a fundamental flaw that is affecting Sydney’s reputation as a hospitality and cultural destination,” the company’s submission says.

Turnover is down by an average of 30% for businesses in the lockout and cessation zones, with jobs being shed as a result, Merivale says. The live music industry is also suffering as a result.

And the world is noticing, they argue:

Sydney’s reputation as an international dining and hospitality destination is being impacted by reports from tourists and celebrities of our ‘nanny state’ laws.

For example, Merivale venues have had to refuse entry to Grammy Award-winning artists (Madonna, Prince, Drake, Marilyn Manson, Ed Sheeran and the Smashing Pumpkins) and sporting heroes (James Harden, playing members of the Arsenal and Chelsea Football Clubs and British Lions Rugby team), generating negative social media comments.

The company also takes the government to task over its blanket approach for licensing fees, which it says are “palpably unfair and lacking in logic”, saying the policy is like handing the same penalty to a driver 5km over the speed limit as one 50km over.

Here’s what the Merivale submission says:

While not opposed to a periodic liquor license fee scheme in principle, Merivale is opposed to the current format for this scheme in calculating compliance history risk loading because it fails to appropriately differentiate between small and large venues or the severity of an offence that triggers the scheme. The effect is to punish an otherwise well-operated and well-managed large venue for one incident, regardless of its type.

For example, if a large and popular venue that attracts 50,000 patrons a week has one minor assault committed in a year, it is treated the same as a small venue that attracts 500 patrons a week and has one grievous bodily harm incident recorded in a year in calculating the compliance history risk loading. This is akin to assessing a driver travelling 5km over the speed limit in the same risk category as another driver travelling 50km over the limit or recording a dangerously high blood alcohol level. The current scheme also fails to give appropriate weight to the overall management record of a venue.

Again, while the intent of the current scheme has merit, its operation is palpably unfair and lacking in logic.

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