Hotel and Pub Market tightens but deals still being done.
Pubs and Hotels; update on the market in the South West
Looking at the Autumn market there has been a noticeable slowdown in new businesses coming to the open market, which followed a busy Summer of sale and letting completions on behalf of our client’s. Despite many reports of challenging trading conditions there is a determination in the leisure sector overall to trade out the tougher times and whilst profits to invest are under pressure, many will be doing what they can as they plan for 2024.
As a business we are seeing more of the long-term ownership sites planning to make a move and are working on a growing number of instructions that will launch in the New Year, for a pre Summer exit. These more established businesses will no doubt be popular as (by their very nature) are rarely available and with an established customer base they can offer good income opportunities and further growth under new ownership. Existing deals have become cyclical with a slight lull in Autumn, but we are on track to see a number of sites in the hotel and pub sector complete before the end of the calendar year. One recent transaction worthy of note is the free of tie lease assignment for The Chiverton Arms in Cornwall, which was available at an ingoing premium of £125,000 and completed this month – a strong price achieved, but underlines the interest in well invested free of tie leases with the deal completed within 4 months from original marketing. We have also seen multiple bids for sites where we have run timed marketing campaigns, very effective for the right assets.
Overall, whilst the sector is still under the cost pressures shared by both the operators and their customers, there is still activity and good pipeline of existing deals and new instruction for Winter. In terms of support there is a pressing need for a continuation of business rates support currently in place until March 2024 and expectation that this will be addressed in the chancellors Autumn statement – if Mr Hunt would only review the VAT position for the sector back to 5% and support an apprenticeship levy reform this would make a significant difference not only for the existing business owners, but also encourage more people into the trade – one which is still the third largest employer in the UK.
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