Scope for letting rooms at your pub?

MORE AND more pubs are rushing into opening or improving letting rooms - could it be an option for you?

Marston's Inns & Taverns announced recently that it is looking to capitalise on the popularity of its pubs with accommodation by building 12 new sites.

Young's, announcing financial results earlier this year, spoke of revenue per room rising 4.7 per cent last year, thanks to an investment project.

Now Fuller's has confirmed that development will start on the first of 30 sites identified for letting room development (see box). This decision was not made lightly. The London-based pubco stresses that a great deal of market research was required before leaping into such a project.

Fuller's operations director Jonathan Swaine says: "Ever since we bought Gale's [in 2005], which had 15 pubs with rooms, all of which needed investment, we decided to do something more with accommodation."

Fuller's sales manager for hotels and inns, Maggie Blandford, adds: "With an increasing number of customers looking for accommodation that isn't a soulless chain, pubs are looking at what they've got.

"I don't see why an individual licensee couldn't replicate the research Fuller's does."

Letting rooms can be a strong additional revenue stream, but any pub considering it should undertake a thorough market review first to establish viability. Here, with advice from Fuller's specialists, is how:

Weigh up the site's physical limitations​

Fuller's takes aerial photos. While it may not be within your means to hire a helicopter or crane to do this, a simple walk around the site can suffice. Take measurements.

Make a feasibility study​

A basic feasibility study will allow you to estimate the viability of a letting rooms business.

Is your pub close to a motorway or any public transport routes that bring a flow of people looking for a place to stay? Is the area currently lacking hotel rooms? Are there regeneration projects taking place that will bring in more potential punters?

For example, Blandford advises that "you can't fail in Greenwich ahead of the 2012 London Olympics, nor north of Heathrow as the airport expands".

Follow up with more in-depth research​

This will enable you to establish whether you're right in thinking the area has potential.

As Blandford says: "You may have intuition but you need to make a dispassionate decision."

Scour local papers to follow goings-on. Speak to local tourism bodies.

Research your prospective customers. Call local businesses and ask them if they would use new letting accommodation and how often they would use it? What rates do they pay for hotels they currently use?

Size up your competition. Check their rates, pose as customers and view their rooms and facilities.

Consider types of accommodation ​

Think about the type of accommodation that would be suitable. Are you going for three star-standard letting rooms or something more lavish? A modern new build or traditional?

"Always ask yourself 'what niche are we in?' in order to give yourself an identity or concept to market," says Blandford.

According to Fuller's, which is developing rooms on a pub-by-pub basis, there is no such thing as a bedroom template, although it believes pubs are generally suited to three-star quality and that en-suite bathrooms are now a necessity.

Do the maths ​

Work out what you can afford. "Make sure your plans are grounded in sensible cost projections," Blandford advises.

Plan early​

Get your planning applications in early. It is not uncommon for a council to take 18 months to reply.

Be thorough with your application and be prepared for troublesome questions.

Fuller's says it has experienced the bizarre request from councils to prove to them that they could not use another site for the development.

The pubco now employs planning consultants to come up with answers to such questions before the application is submitted.

Most councils have a document known as a 'Year Tourism Plan'. This sets out how receptive they are to accommodation developments in the area in the coming years, and the standards they will apply to prospective developers.

Blandford will also speak to the council in the early stages of market research to establish how receptive it will be.

Make absolutely sure there are no conditions over listed building status that will affect your pub. These are likely to see applications refused if you do not work around the parts of the building that are listed.

Case study: the Pilgrim's Inn, Hampshire

When Fuller's bought the Pilgrim's Inn in Marchwood, near Southampton, last year the company already knew there was potential to develop a bedroom offer. The previous owner had added around seven bedrooms, as well as a function suite and a separate kitchen, bar and cellar.

Operations director Jonathon Swaine is now looking to add to the bedroom stock by converting this function suite into more bedrooms. Following research into the local market, these should be ready for business within six months.

Swaine says: "We conducted a feasibility study considering a range of factors that would impact on the business. This included looking at the local operators, discussions with big hotel booking agents and the local cruise market, and looking at the transport links for the surrounding area."

Based on this research, Fuller's calculated the likely potential room rates at the hotel - and used this to check the project stacked up financially.

Swaine adds: "The room rate issue is also crucial. Adding rooms is not always the solution to growing a pub's profitability. You can't just decide you need rooms, do them up and then try to get whatever rate you can. It is important to work out the sustainable room rate - and then work backwards to make sure you can afford the investment and get a return on it."