The hotel was twice subject to a 72-hour closure order by the Office of Liquor, Gaming and Racing - once in June and once in July, on both occasions due to alleged drug-related activity.

Former owner Shadd Danesi kept the pub closed while he negotiated its future with authorities, but ultimately sold it to publicans Scott Leach and Fraser Short. Mr Leach is also president of the NSW branch of the Australian Hotels Association and runs the nearby Rose of Erskineville hotel.

Sam Handy of commercial property realtor JLL confirmed the sale price was approximately $6.5 million.

For the past 13 years, Mr Danesi ran the Imperial as an LGBTI (lesbian, gay, bisexual, transgender and intersex) venue and said he hoped the new owners would continue that tradition.

Mr Short said the Imperial's history as an LGBTI nightspot was "immovable" and it would remain a "landmark venue" for the gay and lesbian community. But he also indicated he would take the pub in a new direction, including high-end dining.

"The place doesn't have a kitchen," Mr Short told Fairfax Media. "I don't think gentrification has to be moving away from the old. Gentrification can be embracing the old and encouraging a demographic to enjoy it in a different sort of ambience."

He also confirmed there would be no nightclub in the venue's underground space once it reopens, which he expects to be in a few months.

The Imperial ran into trouble after Mr Danesi leased the venue to Spice International earlier this year. Lessee Murat Kilic turned the basement level into a nightclub called Spice Cellar ERSKNVL, having previously run the Spice Cellar as an after-hours club in Martin Place.

Police raided the premises in June and alleged that staff members were using illicit drugs, prompting the first 72-hour closure order. In July, the hotel was closed again after inspectors observed several breaches of the Liquor Act, including a male patron seen licking spilt alcohol off the floor, and a woman appearing to buy drugs.

Mr Danesi and Spice International parted ways following the second closure. But he argued landlords should not be "punished" for the actions of their tenants, calling the legislation "disgraceful".

" Punish the offenders by all means," he told Fairfax Media. "Don't punish innocent people. I personally will never invest in another hotel in NSW as a landlord while this legislation is in place."

Mr Danesi also runs the LGBTI nightclub ARQ at Taylor Square and owns the Sly Fox at Enmore, which is leased to a tenant. Mr Short also operates The Morrison in the Sydney CBD, the Watsons Bay Hotel and the Balcony Bar & Restaurant in Byron Bay.

Mr Short confirmed that a reopened Imperial would adhere to a new voluntary 3am lockout agreed by the local Newtown liquor accord, due to start in September.