AVLP poll outlines biggest pub property challenges in 2018
The UK's leading body for specialist property advice on hotels, restaurants, pubs, bars, clubs or other leisure premises represents licensed property valuers on a nationwide basis and contains more than 100 members from companies including Fleurets, Christie & Co and Savills.
While highlighting the industry’s concerns over Brexit, the poll also revealed that the market-rent-only (MRO) option was not among the biggest challenges facing the sector over the coming 12 months – a finding that came as a surprise to Dan Mackernan, honorary secretary of the AVLP and director at Savills Licensed Leisure.
Mackernan said: "I'm amazed that MRO is right down the list – hardly gets a mention at all really.
“It's all about the operating costs and Brexit. It makes the MRO look a bit of a damp squib."
"Maybe MRO isn't really a challenge, but you'd think that to get free of tie is actually a bit of a challenge because it's not as easy as everyone thought it would be.”
In your opinion, what is the biggest challenge facing the licensed leisure industry in the coming 12 months?
11 - General operating costs
11 - Brexit/economy/staffing
5 - Oversupply/competition/supermarkets/Deliveroo
5 - Not making a profit or staying in business
3 - Pub companies not offering worthwhile long leases
3 - Funding issues
2 - MRO
2 - Rent and RPI increases
2 - Attracting new operators/quality of applicants
1 - Lack of support
1 - Reduced alcohol sales
The poll also found that fewer people were looking to buy freeholds, and that, in the opinion of the country’s licensed property valuers, more people were looking to purchase leaseholds.
Discussing the broader findings, Mackernan explained: "You'd have thought more people would be wanting to buy freeholds, but maybe they actually can't afford to buy them – they can't get on that ladder.
“And with the tenanted market coming under pressure and operators whinging more about the issues of a tied lease you would think that trying to get your freehold would be a good opportunity, but they can't get their hands on them.
"Interestingly, only a minor change, but I'm amazed that more people want to buy leaseholds. That's just odd. Maybe that's because they're potentially looking at more free-of-tie opportunities.”
Parallels between pubs and dining
The poll also found that licensees’ relationships with their landlords have stayed more or less the same since the association’s last poll was conducted in August 2017.
"I'm surprised there's no real change in response to 'are licensees happy with their landlords?' You'd have thought with MRO they would have been a bit happier because they're getting better deals and they can negotiate better deals for their business but that obviously doesn't translate to say 'I'm happy with my landlords'.”
Mackernan also drew parallels between the pub and casual-dining sectors when commenting on the biggest challenges facing pubs in 2018, stating that the top four responses, yet expressed surprise at the apparent lack of concern over the length of leases.
"I'm quite surprised there's only three mentions of pubcos not offering worthwhile long leases. Twenty years ago it was all short leases, then it became long leases and now it's going back to short leases again, but you can't really sell a short lease, there's no value."
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