The hotel's licensee, Anthony Hird, has lodged a development application to extend the venue's trading hours from midnight until 2am on Thursday, Friday and Saturday nights.

The application, before Newcastle Council, pointed to the pub’s relatively unblemished record and argued it was seeing a costly exodus of patrons to venues in the CBD that trade beyond midnight. 

The proposal has encountered staunch opposition from some members of the Cooks Hill Community Group, who argued noisy punters would spill onto the surrounding streets at close. 

Work is also underway to remove a barricade to Council Street and make it one-way, meaning traffic leaving the hotel would be diverted through residential areas. 

Residents stressed they were happy living alongside pubs in Cooks Hill, but wanted to keep the status quo. 

"If people do want to kick on, they can head down towards Finnegans, and then you've got them in a non-residential area," resident Michele Knight said. "The other worry is we've got the Cricketers Arms and Oriental only a few blocks away and this could really set a precedent." 

Mr Hird declined to comment until submissions on the proposal had closed. 

Most nightspots within the Darby Street precinct - including Soho, Five Sawyers and the Hop Factory - shut by 12.30am. An exception is Finnegans Hotel, at the northern end, which closes by 2.30am on Fridays and Saturdays. 

Australian Hotels Association Hunter president Rolly de With argued applications should be judged on their merits, rather than a "blanket no to every application". He raised the suggestion of a trial period. 

"If an operator doesn't operate their business in accordance with their license conditions, or is unduly affecting the quiet and good order of their neighborhood, they will be closed down or have their hours wound back," he said. 

Mr de With argued the attitude towards alcohol in Newcastle had changed dramatically in the last decade. 

"We want Newcastle to continually evolve,” he said. 

But the proposal has inflamed old tensions with alcohol-related violence campaigners, who fear it could undermine progress achieved by lockout laws. 

"We've got nothing against the hotel per se, it may be well run ... but once you start relaxing one part of the package of conditions, the whole lot can come unstuck," activist Tony Brown said. 

He pointed to research by University of Newcastle professor Kypros Kypri, a senior fellow at the National Health and Medical Research Council, which indicated alcohol-related violence was likely climb if the application was approved. 

"Professor Kypros estimated for every one hour increase in trading, there is a 20 per cent increase in violence and other alcohol-related crimes,” he said. 

The development application acknowledged that rates of alcohol-related crime in Cooks Hill were above the statewide average, but argued that was reasonable given the suburb’s proximity to the CBD. 

It said the hotel employed five security guards and an RSA officer on a Friday night, and seven security guards and an RSA officer on a Saturday night. 

“Those numbers are in excess of the numbers regarded as constituting best practice at entertainment venues, such as hotels,” it said. 

Phil McKnight, who lives on Council Street, said he was reasonably happy with the way the Delany conducted its business. 

However Mr McKnight was apprehensive about the proposed changes, given crowds leaving the venue were already “rowdy”. 

He claimed he had been threatened when he told someone to stop urinating on a fig tree near his home, and there was already vandalism happening in the area. 

“They don’t have an understanding that this is a residential area and it’s very difficult to advise inebriated people that,” he said. “The 2am trading will exacerbate the situation.” 

However another resident, Geoff Nattrass, backed the proposal, which he believes would create jobs. 

“I don’t think it will create the mayhem that people think it will create,” he said.