Pubs must keep the momentum going

It's the time of year when the race to become the first retailer or advertiser to highlight the fact that Christmas is just around the corner goes into overdrive.

Forget that Halloween and Bonfire Night have still to take place, the competition for the festive pound can now start as early as September making the year feel even shorter.

Many in the pub industry would welcome a quicker end to a year that has again tested its sustainability to the full. Margins continue to come under pressure and examples of distressed businesses are still being brought to the market, with Merchant Inns just the latest. However, the flood of administrations and closures we saw just 12 months ago has subsided somewhat, with the summer months bringing a greater sense of optimism.

Trading updates have shown that those operators who quickly adapted to the changing environment are being rewarded with sustainable like-for-like sales, especially over the past few months. Consumers are still drinking and eating out, and the pub sector is still taking a healthy percentage of this trade.

From our own experience, interest in acquiring pubs has also steadily risen through the year, with a wide range of buyers now circling the market. Another silver lining continues to be the small but steady rise in house prices and confidence in the housing market (although this is due in large extent to under supply), which is helping to generate increased activity in the commercial property sector, with the alternative-use market also benefiting.

In the face of this, other sectors, noticeably hotels, currently seem to be at the place where the pub sector found itself 12 months ago, with many portfolios and single assets facing administration.

The final two months should not be wished away, but seen as a further chance to keep the momentum gained over the past few months going. The next few weeks should be the perfect opportunity to get ahead before further challenges arrive in 2010, including increases in VAT, alcohol duty and unemployment.

The first six months of next year will also be dominated by political posturing and uncertainty as we head into a general election. Set against this is a football World Cup, with favourable kick off times to help pubs take advantage of the upswing in trade.

The end of this year and the first six months of 2010 are still likely to be tough, however those with the momentum and a good offer behind them should still be in a good position to be part of the sector once the inevitable upturn begins.