These are the findings of Christie & Co’s 2012 Business Outlook, which studies price information from across the hospitality industry. According to the Outlook, average price movements saw a 5.1 per cent decline in the hotel sector, 4.1 per cent in restaurants and 1.1 per cent in pubs.
Chris Day, managing director of Christie & Co, was quick to put the year in perspective. Speaking at the Business Outlook seminar yesterday, Day said: “We unsurprisingly saw an increasing distress across the sectors as many businesses struggled to cope with the on-going economic challenges.”
Restaurants
Day’s view:
“The real winners last year were the consumers, who witnessed an increase in the number of value options. The transaction market proved tough as most business owners and operators hoped for an improvement in business prices.
Christie & Co’s predictions for 2012:
- London will continue to benefit from international investment
- London will continue to out-perform the regions though performance will level out after the Queen’s Diamond Jubilee celebrations and the London 2012 Olympics
- There will be further distress and administrations
- Opportunities created by business disposals will see more independent operators emerge, particularly in the regions
- New entrants will exploit simpler entry levels and a stronger bargaining position on rent to deliver affordable dining to local communities
- Pub operators will continue the migration towards majority food-led operations
Hotels
Day’s view:
“There were disparities in the hotel sector. In London, prices held up very well, but in the provinces there were some significantly greater falls in value. There was also a great deal of uncertainty, caution and distress – particularly in the final quarter of 2011.
“But there were plenty of international bidders in the market over the past year, and we can expect to see more oversees investment in the hotel market in 2012.”
Christie & Co’s predictions for 2012:
- Cash buyers will hold the upper hand
- Investment will come from diverse and new markets including China, India and Russia but will be London-centric
- Banks may seek to rationalise their investments and we may see some consilodartion in the market
- The transactional market is likely to remain cautious; prices will be driven by those able to buy now and fund later
- Regions will see continued variable trading performance, but may be boosted by Olympic ‘stay-aways’
- Mid-market and budget hotels will continue to up-scale their customer bases
- Capex timebomb will hit owners and force down prices on tired assets
Pubs
Day’s view:
“Appetite for pub properties is still strong and there are plenty of reasons for optimism in 2012. We expect the private free house market to continue growing as pubcos dispose of their freehold assets.”
Christie & Co’s predictions for 2012:
- Banks will release further assets to the market
- Over 2,000 pubs will be sold by the pub companies
- Managed public house stock will continue to be in high demand
- The late night sector will remain extremely challenging
- The free house sector will grow by at least 1,000
- There will be continued private equity interest in the managed house sector and emerging interest in the tenanted sector
For more information on Christie & Co, visit www.christie.com .
