Rooftop bars have rapidly become a sought-after feature in urban centres, offering a unique, sensory social experience with panoramic views, fresh air, and an atmosphere that is difficult to replicate elsewhere. Australia's city skylines are being redefined by these trendy, revenue-generating spaces. For investors and hoteliers, rooftop bars provide the opportunity to create an additional revenue stream while also serving as a marketing asset to attract new guests and enhance property value.

Rooftops are often underutilised prime real estate, and much like a penthouse, they offer a sense of exclusivity and elevation, both literal and figurative. However, the journey to setting up a rooftop bar is far more complex than establishing a ground-level venue. Investors must navigate a web of construction regulations, local council approvals, and the challenges posed by neighbours and guests. The key is finding a balance between enhancing the hotel’s appeal while ensuring that the rooftop bar operates as a supplementary income stream without compromising the core accommodation business.

The appeal of a rooftop bar lies in the blend of being exposed to the elements while still enjoying the luxury of the setting. Guests savour the summer breeze, feel the thrill of being in the open air, and relish the sense of escape from the bustling city below. For investors, this balance of risk and reward is enticing. In cities where space is at a premium, converting underused rooftops into vibrant, revenue-generating venues is a smart investment. Much like the trend in retail for experiential engagement, a rooftop bar can offer an elevated experience that enhances a hotel’s brand while driving profitability.

Each state in Australia may have its own set of rules, but federal disability regulations, state liquor licensing, and local zoning laws all play a role in shaping the prerequisites to opening a buzz-worthy rooftop venue.

Under the Building Code of Australia (BCA), new rooftop bars must meet modern safety and accessibility standards. Key requirements include:

• Appropriate flooring: Proper drainage systems must be in place to prevent standing water and reduce the risk of slips and falls, ensuring the safety of patrons and comfort of guests below.
• Handrails and balustrades: Rooftop spaces must have barriers that meet minimum height requirements, typically 1 meter or more, and often include protective glass panels to guard against wind and prevent objects from being thrown or dropped on passersby.
• Fire safety: Rooftop bars face stricter fire safety regulations, requiring multiple clearly marked, easily accessible points of egress in case of emergency. Sprinkler systems depend on the size of the venue. Additionally, construction materials and furnishings should comply with fire resistance standards. Complying with these standards can be especially challenging when working with older heritage buildings.
• Compliance with disability access regulations under the Disability Discrimination Act 1992 is non-negotiable. Rooftop areas must provide dignified wheelchair access, typically via dedicated elevators that meet mobility requirements.
• When adding a rooftop bar to a hotel, ensuring the comfort and safety of guests is paramount. Acoustic reports may be required to manage noise levels, while sound distribution planning helps minimise disturbances to in-house guests and neighbours.
• A separate access pathway for rooftop patrons, such as a dedicated elevator that bypasses guestroom floors, ensures privacy and security for hotel guests, while security cameras installed throughout the rooftop and entrance areas further enhance the safety of both patrons and guests.

These regulatory and planning prerequisites, while often cumbersome, ensure that rooftop bars meet high safety, accessibility, and comfort standards which are critical to turning underutilised space into a high-value asset for hoteliers and investors.

The tax benefits available through property depreciation further enhance the investment’s profitability of these venues. Depreciation allows investors to claim deductions related to the wear and tear of both the structural components of the rooftop bar, as well as the easily removable plant and equipment assets or assets that are mechanical in nature, reducing taxable income and improving cash flow.

To fully capitalise on the depreciation benefits of a new rooftop bar, investors should engage a property tax depreciation specialist before construction begins. This ensures that all depreciable assets are properly identified and documented from the outset. Once the rooftop bar is operational, a follow-up site inspection should be conducted to update the depreciation schedule.

By involving a depreciation specialist like BMT Tax Depreciation at both stages, investors can optimise their tax savings and ensure they don't miss any opportunities for maximising returns on their investment. For more information on the depreciation deductions available in the conversion of a dormant rooftop to an income generating rooftop bar, contact BMT Tax Depreciation on 1300 728 726 or request a quote.