Pubs to change face of UK's hotels

Property agent Christie + Co has said that the pub sector is set to see an "influx" of guest accommodation as pubs look to diversify their offer in the wake of the economic downturn.

With a large percentage of the UK's pubs having large numbers of rooms above their trading space, it's an untapped source of revenue for many licensees, according to the agent.

James Shorthouse, head of valuations and special projects at Christie + Co says now is the perfect time for pubs to grow their accommodation market share and so offset predicted further falls in drinks sales, by developing their letting rooms.

The expected increase in domestic holidaymakers and the number of business travellers looking to cut costs is set to lead to increased demand for budget and premium budget accommodation, he said.

"There are opportunities for enhanced earnings both from direct accommodation revenue and from the additional food and beverage sales which will be generated from guests," says Shorthouse.

He added that a number of pub operators, regional brewers and other pub businesses had already made the move to invest heavily in accommodation (see box). But that the impact of the credit crunch may lead to some reigning in their plans.

Those who have already created or revamped their accommodation will be best placed to reap the rewards this summer. But, for those considering adding accommodation, there will still be financial rewards.

"The addition of letting rooms can also add extra depth to the business and generate significant profit for limited outlay," says Shorthouse. "This is also likely to be reflected in the sale price achieved when the property changes hands."