NSW Night-Time Hospitality Struggles Despite Reforms

Another wave of NSW hospitality and dining reforms is being rolled out after 580 venues added outdoor dining under the new regulatory regime.

Permanent, additional operational floorspace on footpaths has been taken up by 380 venues since permitting and regulations were first relaxed in 2023, with another 200 temporary licenses offered for special events and activations.

The most recent tranche of “vibrancy” reforms was legislated in October 2025 and has been rolled out since January, with further changes due to take place throughout the year. 

Hospitality licensees that have been permitted to host outdoor dining can now re-apply, fee-free, for use of council-owned footpaths and public spaces, with an easier planning pathway.

Further incentives for live music performances have been introduced and rules prohibiting “vertical drinking” on footpaths—standing while consuming alcohol—have been scrapped.

Venues in Special Entertainment Precincts will be able to increase patron capacity without a development application and registered clubs will no longer need to enrol patrons with a home address within 5km as a member. Councils will now be able to approve temporary street closures for outdoor dining and performances.

▲ The reforms make it easier for venues to use council-owned footpaths and public space, including for the consumption of alcohol while standing.

However, the Independent Liquor & Gaming Authority has also been given expanded powers to revoke liquor licences for unsafe working environments and to enforce individual competency cards under the  “fit and proper” test.

Real estate transactions in the pub market were heated in the second half of 2025. The $64-million acquisition of Richard’s on the Park in Canley Vale in October, by John Lewis of Lewis Hotels, was the second-largest nationally after the $140-million deal for Byron Bay’s Beach Hotel.

NSW hospitality struggling after dark

The reforms come as the NSW hospitality sector remains tepid. The most recent Data After Dark report, compiled by the Office of the 24-Hour Commissioner, found that night-time spending of $4.35 billion in the December 2025 quarter was just 0.2 per cent higher compared to the year prior.

When adjusted for inflation, however, that represents a decline in night-time spending of 3.2 per cent in the holiday season. 

Public transport movements also declined by 3.8 per cent year-on-year to 38.2 million, and total people movements fell by 5.3 per cent to 334 million.

In his State of the Night 2025 report, released in February, 24-Hour Commissioner Michael Rodrigues said that “spend data alone does not paint an accurate picture of the vitality of the night-time economy.” 

▲ The night-time economy is struggling, despite “vibrancy” reforms and strong real estate fundamentals in the hotel sector.

“My interpretation of these data sets is that the appetite to leave the house at night-time is not weakening, and for now, cost of living is the handbrake (albeit slow releasing) when it comes to people spending once the sun goes down,” Rodrigues said.

“I expect we’ll see growth for in-person NTE spend over the next 12 months, aided by more people getting out and about, more often.”

Meanwhile, the number of GST-registered businesses in the food, drink and leisure sectors continues to diminish, with a 0.8 per cent decrease of 381 businesses in the quarter, according to the Office of the 24-Hour Commissioner.

During 2025, the sector experienced a net loss of 1039 businesses—2 per cent of the total.

The hotel market strengthened, however, with occupancy rates remaining above 70 per cent for most of the year, and reaching 80.2 per cent in the December quarter. Sector real estate specialists have told The Urban Developer that a lack of hotel room supply, and difficulty in developing new assets, should support room rates and occupancy in Sydney over coming years.