An emotional Mark Lane purchased the freehold property and business on Thursday in front of a crowd of 40 people, many of them regular patrons of the hotel.

The Warrnambool local said he bought the hotel because it was a good investment and he was very happy with the purchase.

"I've drank here for 40 years, my family has pubs in Warrnambool on every second corner," Mr Lane said.

"It's a good real estate investment."

Mr Lane said he had known the former owner, publican Michael Foster, for about 20 years. "We're good friends," he said.

Mr Foster, who died suddenly in August last year, was known for his humour and generosity.

His family had pulled together since his death to keep the hotel operating before the business and freehold were put on the market in December.

His daughter Jessica Foster said the family took comfort in the fact the pub was now in the hands of one of their dad's mates.

"We really feel comforted by the fact that it is someone local and it's someone who knew dad," she said.

Ms Foster said the family felt like the hotel could potentially retain its current feel under the new ownership.

"I feel like these old places are quite special, and we didn't expect there was any way that could happen, that it could remain in the format it is," she said.

"If that happens then that's really special for us as a family."

The Victoria Hotel has been servicing the community for more than 115 years.

Before bidding got under way, CRE Brokers' Kevin Connolly described the hotel as a fantastic property in the heart of Warrnambool.

"I haven't seen such a good corner development opportunity for a long time," Mr Connolly said. "It's got everything."

The auction started on a vendor bid of $2.6 million and slowly rose in bids of $50,000 and $25,000 between two bidders to $2.925 million.

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