Hospitality businesses learning to operate in 'new normal' trading conditions

In a follow-up to its Business Outlook 2012 seminar​ earlier this year, the business advisor and property agent has published its first ever interim seasonal report on the markets it covers.

Despite the economic climate, the double-dip recession​, and a growing number of hospitality businesses facing insolvency​, the report indicates the restaurant, hotel and pub and bar sectors are managing to deal with the tricky conditions.

"One thing that is clear is that the market is still functioning as operators have learned to adapt to what is a ‘new normal’," Simon Hughes, managing director of Christie & Co, said.

Hughes admitted confidence remained low but said the company was optimistic there may soon be a return to increased lending for businesses that needed a boost.

Pub closures​

In the pub sector, Christie & Co said the first part of the year had been busy for both acquisitions and disposals led by some of the country’s biggest pub companies, such as Enterprise Inns, refreshing their estates.

"Encouragingly, the appetite for acquisition has kept pace with the rush of disposals," Neil Morgan, director and head of pubs at Christie & Co, said. "This has been especially evident in the regions where small regional pub companies are gaining pub assets and, in turn, local status."

Morgan echoed sentiment that increased lending was helping the sector but said further pub closures were projected and required. "We believe a further 2,500 pubs need to close before the sector becomes truly taut and competitive," he concluded.

Restaurant hope​

Simon Chaplin, director and head of restaurants at Christie & Co, said, although many operators in the restaurant sector had experienced a drop in sales in the first half of the year, there was good news outside London.

"The life in the sector was confirmed by a number of sales made by Christie & Co in the regions where, as forecast, independent operators are encouraged by the availability of some funding to enter the sector. Regional operators also looked to expand their empires." BigHospitality last week analysed five cities outside London experiencing hospitality booms - click here to read all five features​.

"While eating out remains something of a treat for UK consumers as the economic uncertainty continues, it is clear that it is one pleasure that consumers are loathe to give up altogether — which offers hope for the remainder of what is likely to be an eventful year," Chaplin concluded.

Von Essen​

Repeating a trend BigHospitality reported on in April​, Christie & Co said there had been a reasonably busy period of hotel transactions with a number of high-quality hotels sold, increasingly for cash.

Following the sale of the majority of the Von Essen portfolio​, the firm revealed the two remaining venues were expected to enter new ownership shortly.

"The continuing fragile economic environment has meant that trading has been as timid as many predicted but we would still expect this to pick up in the latter half of 2012," Jeremy Hill, director and head of hotels for Christie & Co, said.

Reputation risk​

In the report, which can be viewed in full on the Christie & Co website, Andreas Scriven, director and head of consultancy at the firm, said, in the first half of the year, there had been a clear division in performance between the best and worst-performing operations. Scriven also warned operators against cutting costs too far.

"Competent owners and operators will have driven significant cost out of their business, but now need to be careful to not compromise asset or service quality which can lead to significant reputational risk," she said.