By Marc Nicholas, Managing Director — GROUPN
When we wrote Pubs vs Clubs — a deliberately provocative article asking why pubs were streaking ahead of clubs in the NSW hospitality market — it landed like a stone in a pond. It was forwarded to boards, debated at management meetings and discussed at ClubsNSW regional gatherings. Some thought we were on the money. Some thought we were being unfair. A few were genuinely offended.
Round 2 gathered feedback from Club CEOs and Managers about what was holding them back. The themes were consistent: gaming stigma, the sign-in process as a barrier, boards making decisions based on member sentiment rather than commercial reality, and a food offering that wasn’t keeping pace with what pubs were doing.
It’s now 2026. So who’s winning Round 3?
The answer depends entirely on which part of the Club industry you’re looking at.
The scoreboard
Both sectors are growing. In Q2 2025 NSW clubs recorded approximately $2.71 billion in net gaming machine profit — up 8.9% on 2024. Hotels recorded approximately $2.19 billion, up 8.5%. The sky is not falling.
But look closer and the structural picture is more complicated. NSW Treasury forecasts hotel gaming growth at around 8% per annum through to 2027-28, compared to approximately 4% for clubs. Pubs are growing their gaming revenue at twice the rate of clubs, despite a legal maximum of 30 machines per venue.
The headline from Round 1 still stands — pubs are streaking ahead. But it needs significant qualification. Because the Club industry in 2026 is not one story. It is three.
Three clubs, three futures
The clubs that are thriving
The well-managed clubs in NSW are not losing. They are improving their gaming revenues despite significant political and ethical pressure on the industry. They are lifting their food quality — and even where the menu is straightforward pub-grub, they are executing it with a consistency and care that would have been uncommon a few years ago. They are attracting broader demographics and making genuinely commercial decisions.
These clubs have made the journey from value-driven to value-added. They have given their management teams the freedom to lead. The gap between these clubs and the pub industry’s best operators has narrowed considerably. Not closed — but narrowed. And the trajectory is right.
The clubs in the middle
The majority of NSW clubs sit in a more complicated position. They understand that change is necessary. Their management teams are having the right conversations and have made meaningful improvements — better food, a refreshed gaming environment, a growing awareness that cheap subsidised food and beverage is not a sustainable competitive position.
But they are caught between the commercial imperative to keep evolving and the governance reality of a board that moves slowly and a capital position that limits how quickly they can invest. They are progressing — but not as fast as the competitive landscape demands. These are the clubs with the most to gain from continued focus and investment. The thinking is right. The execution needs to keep pace.
The clubs that are falling behind
And then there are the clubs where the outsourced caterer is still in the kitchen, the board is still focused on preservation rather than progress, and the gaming room hasn’t seen meaningful investment in a decade. These clubs are not yet in crisis — but the trajectory is clear and the runway is getting shorter. The pace at which the gap between the top and the bottom of the Club industry is widening has accelerated, and the competitive environment is making the status quo an increasingly untenable position.
What’s changed since Round 2
The pub industry has become a formidable force
Large professionally managed pub groups now define the NSW pub landscape. Groups like Endeavour/ALH, Redcape, Iris Capital and Australian Venue Co dominate the market. Pub transactions in 2025 exceeded $2 billion nationally — up 40% on 2024. These groups have centralised management, dedicated gaming specialists, serious food and beverage expertise, and boards that make decisions based entirely on ROI. They move quickly, invest heavily and operate at a scale most individual clubs cannot match.
And they are thinking further ahead than most clubs dare to. Major pub groups are now pursuing residential development above their venues — seven-storey towers above western Sydney pubs, thirty-storey apartment and hotel towers above Brisbane heritage venues — capitalising on NSW housing reforms to unlock the land value sitting under their hospitality operations. This is not an industry playing defence.
Compare that ambition to a Club board debating whether to raise the price of a schooner by fifty cents.
The regulatory environment has shifted — and won’t stabilise
Cashless gaming trials, mandatory facial recognition under consultation, proposals to extend shutdown periods — the regulatory environment has changed significantly and shows no sign of settling. Clubs, which have historically used their community identity as political cover, are finding that cover less reliable than it used to be. Some pub operators are already diversifying away from gaming entirely. Clubs need to be investing gaming profits into the hospitality and lifestyle revenue streams that will sustain them if the regulatory tide continues to turn.
What the industry still needs to resolve
The sign-in process remains an unresolved barrier
Individual clubs cannot change this — it is legislated. But it remains a friction point that no other hospitality venue imposes, and it continues to work against the industry’s efforts to attract a broader demographic. ClubsNSW’s “Your Local Club” campaign is well-intentioned, but brand campaigns work harder when structural barriers are also being addressed. The case for modernising the sign-in requirement deserves to be made more loudly at an industry level. Individual clubs can support that push by making their voices heard through ClubsNSW.
Board governance — improving, but still a brake in too many clubs
This has genuinely improved. The clubs that are thriving are, almost without exception, management-driven organisations where the board governs rather than operates, and where commercial decisions are made on ROI rather than member preference. That shift is real and measurable.
But it hasn’t gone away entirely. There are still clubs where good management teams are constrained by governance structures that move too slowly for the pace of the market. The clubs managing this best have invested in board education, established clear delegations to management, and built a shared understanding of the difference between representing member interests today and protecting the venue’s ability to serve members for the next 20 years.
The verdict
Pubs continue to lead — particularly the large professionally managed groups whose scale and capital give them structural advantages most clubs cannot replicate. That is the reality of the NSW hospitality market and it is not going to change.
But the contest is more nuanced than when we first called it. The best clubs are not losing. They have caught up considerably — in their thinking, in their venues, in their food and in their overall offering. And they have something no pub group can manufacture: genuine community ownership and a member base that wants them to succeed.
The clubs talking to us — that have made the capital investment and commercial decisions to keep improving — are the ones closing the gap. Not by chasing pubs, but by becoming the best version of themselves. That is a more sustainable competitive position than trying to out-pub the pubs.
The question going into Round 4 is not whether the best clubs can compete. They can. The question is whether the broader Club industry can accelerate the pace of change fast enough to stay relevant in a market that is moving quickly and showing no sign of slowing down.
Working with GROUPN
GROUPN has been working with Clubs and Pubs across NSW for more than 30 years. If you’d like to talk through what the next chapter looks like for your venue, we’d welcome the conversation.
+61 2 9369 3546 / groupn.co
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