Document begins
Stream 6 — Task 6.2: Operating Options Map
Internal working document. Not for public release. Stage 1: Gauging Interest. Prepared: May 2026. Requires steering committee review before being used in any financial model, community presentation, or external communication.
ALL revenue and cost figures in this document are ILLUSTRATIVE — labelled estimates based on regional comparable data and published industry benchmarks. They are NOT projections, NOT a business plan, and NOT a financial offer. Every figure must be replaced by a commissioned feasibility study before any decision is made.
Purpose
This document maps the operating options available for the Commercial Hotel building and site, with indicative revenue contribution ranges for each. It is a decision-support framework, not a plan. It feeds into the path-to-profitability model (task 6.6) and the go/no-go criteria (task 6.8), both of which depend on legal structure (Stream 2) and capital modelling (Stream 3) first.
The community meeting (17 May 2026) raised the breadth of options explicitly: a community member’s contribution — “use your imagination, there are many things it could do” — is the starting premise here. Imagination is mapped; viability is not yet assessed.
1. The Building’s Asset Envelope
Before mapping options, it is useful to understand the physical envelope. From the project’s existing materials and Lachlan’s verbal assessment at the community meeting:
- Heritage-listed 1884 building (Heritage Register Place ID 3472), two-storey
- Ground floor: bar, dining room, commercial kitchen (workable but not ideal — meeting-reported, not independently verified)
- Upper floor: rooms in poor condition, needing total renewal (meeting-reported)
- Outbuildings: degrading (meeting-reported)
- Site: ~0.5 ha including residential land component (title structure not yet confirmed — Stream 1 task)
- Veranda: significant heritage element, estimated $100K+ to restore (Lachlan, meeting-reported)
ASSUMPTION: The heritage constraints under the Historic Cultural Heritage Act 1995 (Tas) will limit the speed and cost profile of any use requiring significant internal alteration. Uses that work with the existing building fabric are lower-risk than those requiring structural change.
UNKNOWN: The current as-built configuration of upper-floor rooms — number, size, layout. The building condition report (task 4.6) is needed before any accommodation option can be scoped.
2. Options Map
Each option is assessed on five dimensions:
- Description — what it involves
- Enabling conditions — what has to be true for it to work
- Revenue type — how it generates income
- ILLUSTRATIVE annual revenue range — a rough order of magnitude based on comparable data, clearly labelled
- Risks and constraints
Option A: Core Pub (Bar + Food)
Description: Licensed bar trading, counter meals and/or full bistro dining. The primary use of the ground floor.
Enabling conditions: Liquor licence (natural person licensee, s.22 Liquor Licensing Act 1990 Tas); kitchen compliant with Food Act 2003 (Tas); Food Safety Supervisor; RSA-trained staff; Heritage Council approval for any kitchen fitout works affecting significant fabric.
Revenue type: Bar sales (product margin typically 65–75% on drinks), food sales (margin typically 65–70% on food cost; gross contribution depends on kitchen efficiency and waste).
ILLUSTRATIVE annual revenue range: $350,000–$700,000 bar and food combined at a regional venue trading 5–7 days.
- Low end: limited hours, food as a secondary offering, conservative cover counts
- High end: 7-day trading, strong kitchen program, local and visitor dining
ILLUSTRATIVE — subject to feasibility study. Figures based on regional pub industry benchmarks and Tourism Tasmania data; not derived from a commissioned study of this venue.
Risks and constraints:
- Award-compliant wage costs are material at these revenue levels — see staffing model (task 6.3)
- Competition with the Cygnet Hotel (Top Pub) on bar and counter meal offer — see market memo (task 6.1)
- Heritage kitchen fitout cost could be significant if major works required
- Liquor licence public objection risk from existing licensees
Option B: Accommodation (Hotel Rooms / B&B)
Description: Overnight accommodation using the upper-floor rooms, marketed as heritage B&B or pub-style hotel rooms. The existing Commercial Hotel operated in this mode prior to closure.
Enabling conditions: Upper-floor full renovation (meeting-reported as “total renewal needed”); compliance with Building Code of Australia Class 3 or 1b (short-stay); heritage approvals for room refurbishment works; fire safety and egress compliance.
Revenue type: Room tariff (nightly rate × occupancy rate × room count). Accommodation in the Huon–Far South region benchmarks at ADR approximately $154–$175 and RevPAR approximately $131–$175. (Source: Tourism Tasmania regional snapshots, cited in feasibility briefing. Figures are for the region, not this specific venue.)
ILLUSTRATIVE annual revenue range: $60,000–$150,000 depending on room count (estimated 6–10 rooms post-renovation), occupancy (40–65%), and tariff ($130–$180/night).
ILLUSTRATIVE — subject to feasibility study. Room count unconfirmed pending building condition report. RevPAR benchmarks are regional averages, not venue-specific.
Risks and constraints:
- Upper-floor renovation is the most capital-intensive element of any accommodation option
- Heritage approvals required for all works affecting significant fabric
- Competition from Cygnet Old Bank (boutique B&B, fully licensed café) and the Top Pub (heritage rooms) — see market memo
- Accommodation revenue is seasonal and weather/tourism-flow dependent in the Huon Valley
- Building and contents insurance premium loading for heritage-listed buildings (noted in feasibility briefing)
- This option is a “Next” priority — it depends on the capital works scope (Stream 4, task 4.7)
Option C: Function and Events Hire
Description: Hiring out the main bar, dining room, or outdoor spaces for private functions, community events, workshops, markets, music events. The Top Pub already has a function and conference centre; differentiation by event type and community character would be important.
Enabling conditions: Liquor licence (entertainment/extended trading licence may be needed for late events); public liability insurance; food handling compliance if catering is offered; Heritage Council approval for any acoustic treatment or AV fitout.
Revenue type: Hire fees, catering packages, bar tabs. Variable revenue — event-dependent.
ILLUSTRATIVE annual revenue range: $15,000–$60,000 depending on event frequency, hire rate, and whether catering is in-house or external.
ILLUSTRATIVE — subject to feasibility study. Range drawn from comparable small-venue event operations; not venue-specific.
Risks and constraints:
- Requires active event programming and marketing effort; this is not passive income
- Noise and late-trading requirements may require separate licence endorsement
- Heritage fabric constraints on permanent fitout for event use
- In the operating model source document, an Events Coordinator was modelled at $15,000/year casual/contract; that cost needs to be weighed against revenue contribution
Option D: Community Room / Multipurpose Space
Description: Dedicating part of the ground floor (or a separate outbuilding) as a community meeting room, accessible to local groups, committees, and organisations at low or no cost as a member benefit.
Enabling conditions: Adequate fit-out (not necessarily Heritage-constrained if not a significant space); operational policies on access, booking, and supervision.
Revenue type: Primarily non-commercial — this is a community benefit, not a revenue line. May attract grant funding if the space is part of the co-op’s community-benefit case.
ILLUSTRATIVE annual revenue range: $0–$10,000 (subsidised hire rates may recover some cost; grant contribution possible but not guaranteed).
ILLUSTRATIVE. The primary value of this option is community-mandate and grant eligibility, not commercial revenue.
Risks and constraints:
- Competes with bar-seat capacity during trading hours; needs careful scheduling
- Licence conditions may limit what can occur in a room within a licensed premises
- Does not contribute meaningfully to debt service or operational break-even; its case rests on community-benefit and membership value
Option E: Office and Co-working Tenancies
Description: Leasing part of the building — a spare room, a separate outbuilding, or part of the upper floor before accommodation renovation — to small businesses, community organisations, or remote workers as office or co-working space.
Reference: The Castlemaine Community Investment Co-operative owns The Hub in Castlemaine, Victoria — a mixed-use commercial building with 19 office tenancies plus meeting room, kitchen, cafe space and community garden, housing environmental and sustainability organisations and small businesses. (Source: castlemaine.coop, accessed May 2026.)
Archive correction: this paragraph originally described The Hub as “a former hotel building” and gave a sale year and a member-investor count. The project’s own verification work — case-study-cleaned-register.md C-V1 and assumptions register AR-12, both checked against ABN Lookup and the co-op’s disclosure statement — establishes that the asset is not a hotel or pub, and records “local hotel” as a mischaracterisation. The sale year and investor count were not among the verified figures and are not reinstated here.
Applicability note: The Castlemaine model is an office-building co-op, not a trading pub. The comparison is partial — the concept of using non-pub parts of the building for office/co-working tenancies is the transferable idea, not the full model. Cygnet is a smaller market than Castlemaine, and the Commercial Hotel’s primary community-mandate is as a pub. Do not present Castlemaine as a direct analogue.
ASSUMPTION: Cygnet has a small pool of potential office tenants — sole traders, remote workers, community organisations, small agricultural businesses. Huon Valley agriculture, tourism, and creative industries may generate some demand. Whether that demand is sufficient to fill co-working space at commercial rates is unknown.
Enabling conditions: Suitable rooms or outbuildings in condition to let; separate entrance or acoustic separation from bar operations; Heritage Council approval for any fitout; planning consent if change of use is required.
Revenue type: Rent (monthly desk licence or room lease). Lower-capital, more stable revenue than events.
ILLUSTRATIVE annual revenue range: $10,000–$40,000 depending on number of tenancies, rate, and occupancy.
ILLUSTRATIVE — subject to feasibility study and demand assessment. Cygnet office demand is not verified.
Risks and constraints:
- Office tenancies and a noisy pub bar in the same building require acoustic and access separation — a real fitout cost
- Heritage constraints may limit conversion works
- In a building already in poor condition, making spaces lettable as offices requires capital expenditure that competes with bar/accommodation priority works
- Best treated as a “later” or opportunistic option, not a core revenue plank
Option F: Garden and Outdoor Spaces
Description: Using the ~0.5 ha site (or the portion not required for the building and parking) for outdoor beer garden, community garden, market garden, or community-supported agriculture (CSA) plot.
Note on site: The ~0.5 ha figure includes a residential land component whose title structure is not confirmed (Stream 1, task 1.4). The operational footprint available for a garden is UNKNOWN until the title question is resolved.
Reference: The operating model source document (community proposal draft) references a CSA Garden circle with a Garden Coordinator and a greenhouse expansion example. That draft’s financial model is the pre-audit version and is NOT used as a verified source here.
Enabling conditions: Title clarity on the residential land; Huon Valley Council planning consent for change of use if residential land is used commercially; water access; modest horticultural capital.
Revenue type: Beer garden — bar revenue uplift in good weather (not a separate revenue line). Market/community garden — produce sales, CSA subscriptions (modest revenue). Community garden — primarily membership benefit and community-grant contribution.
ILLUSTRATIVE annual revenue range:
- Beer garden uplift: captured in bar revenue (Option A); not separately quantifiable without a trading model
- Market/CSA garden: $5,000–$20,000 (very small scale for regional community market; volunteer-labour intensive — note Fair Work constraint on volunteer substitution for commercial roles)
ILLUSTRATIVE. Outdoor hospitality revenue is highly weather and season dependent in the Huon Valley.
Risks and constraints:
- Beer garden requires extension of liquor licence (outdoor trading area)
- Any commercial horticultural use of the residential land requires planning consent and potentially changes the title/zoning picture
- Volunteer labour in a commercial garden raises Fair Work risk if the garden is part of a trading enterprise — this needs legal advice (Stream 2)
- Huon Valley is subject to fire risk; outdoor event spaces have seasonal constraints
Option G: Mixed Use (Staged Combination)
Description: Opening with core pub operations (Option A) in year one, adding accommodation (Option B) and events (Option C) as capital works are completed, and keeping community room and garden as non-commercial member-benefit layers.
This is the most likely practical model — not a choice but an inevitability, given the staged capital works programme (Stream 4). The question is sequencing.
Enabling conditions: All conditions for A, B, C, and D, in sequence.
ILLUSTRATIVE combined year 3 revenue range: $450,000–$950,000 across bar, food, accommodation, and events — with wide uncertainty depending on renovation scope, staffing model, and trading hours.
ILLUSTRATIVE — subject to feasibility study. This range spans a conservative to optimistic scenario for a regional venue of this type. It is not a forecast.
Risks and constraints:
- Managing multiple revenue streams in a volunteer-governed co-op with professional management requires clear operational boundaries (see operator model comparison, task 6.4)
- Staged opening means early years trade on bar and food alone, with the highest fixed costs (Award-compliant staff, insurance, licence fees, debt service) and the lowest revenue base
- This is the scenario where sensitivity analysis (feasibility briefing, section 4) is most important
3. Summary Matrix
| Option | Revenue type | ILLUSTRATIVE range (annual) | Capital intensity | Timing |
|---|---|---|---|---|
| A: Core pub (bar + food) | Bar margin, food margin | $350,000–$700,000 | Medium (kitchen fitout, bar refurb) | Year 1 |
| B: Accommodation | Room tariff × occupancy | $60,000–$150,000 | High (full upper-floor renovation) | Year 2–3 |
| C: Events / functions | Hire fees + bar tabs | $15,000–$60,000 | Low–medium (programming, minor fitout) | Year 1–2 |
| D: Community room | Near-zero / grant contribution | $0–$10,000 | Low | Year 1 |
| E: Office / co-working | Rent | $10,000–$40,000 | Medium (acoustic separation, fitout) | Year 2+ |
| F: Garden / outdoor | Bar uplift + produce | $5,000–$20,000 | Low–medium | Year 1–2 |
| G: Mixed use (staged) | All of above | $450,000–$950,000 (yr 3) | Cumulative high | Staged |
ALL figures ILLUSTRATIVE — subject to feasibility study.
4. What This Map Does Not Answer
- Whether these revenue lines are sufficient to cover Award-compliant wages, debt service, insurance, and compliance costs — that is the path-to-profitability model (task 6.6)
- Which options are compatible with the chosen legal structure (non-distributing vs distributing co-op) — Stream 2
- What capital is available to execute more than Option A in year one — Stream 3
- What the building can physically accommodate after minimum-viable works — Stream 4
Sources: Tourism Tasmania Huon–Far South regional snapshots (ADR and RevPAR figures), cited in project feasibility briefing; castlemaine.coop (Castlemaine model); project feasibility_and_costs_briefing.md; operating_model_source.txt (community proposal draft, pre-audit); workplans.md Stream 6 guidance.