Pub operators less confident about accommodation growth

That’s according to a survey of operators and consumers from online site opening database RPBi Openings, whose 2019 research found that operators feel less upbeat than in 2016.

When licensees were asked how they expected their accommodation revenues to be in the next 12 months, more operators expected a decline.

Some 6% said they expected to see a drop in profits in the next year, compared to no pubs expecting this when asked to make a forecast for 2017. 

However, more operators said they expected revenues would stay the same in 2020 (41%) compared to their predictions for 2017 (32%). 

Fewer operators believed their revenues would grow in 2020 (53%) than they did when looking to 2017 (68%).

Factors worrying operators include the lure of cheaper food businesses and the cost pressures of taxes and rates.

Challenging summer

James Sullivan-Tailyour, who operates the Swan in Bradford-on-Avon, Wiltshire, told The Morning Advertiser ​he had had to reduce rates substantially to achieve a reasonable occupancy in recent months.

He said: “We have certainly found that this summer has been more of a challenge.”

Occupancy was down by more than 10% on a typical summer, with average room rates down by more than 35%.

Sullivan-Tailyour added: “This has a knock-on effect on our restaurant trade as guests were also looking for cheaper dining options, such as visiting the local takeaway.”

Operators also reported in the survey they were more concerned about the consequences of Brexit on their business compared to three years ago, with 36% saying they believed it would have a negative impact versus just 13% previously.

However, Sean Donkin, managing director of The Inn Collection Group, said the past year had seen overnight stays increase across its estate, with sales increasing up to 28% in some sites.

He explained: “The uncertainty around Brexit has seen more people opting for ‘staycation’ breaks.

“This, combined with the weak pound, slumping consumer confidence in overseas travel following the collapse of Thomas Cook, and even more people wanting to holiday with their dogs have been factors towards a strong year of growth across the accommodation arm of the business.”

Love for the pub

Despite operators’ confidence being down, most consumers would prefer to stay in a pub (53%) as opposed to paying the same for a hotel (23%).

Sullivan-Tailyour said business travellers opted for pubs over hotels because of their relaxed, friendly atmosphere, while leisure travellers were keen to meet locals at the bar and enjoy a “traditional English experience”.

Newly appointed BII chief operating officer Steven Alton said he believed a lot of pubs could improve their profits by letting rooms.

He said: “Pubs are such dynamic spaces, serving many different customer types and providing that much needed ‘third space’ where people can relax. 

“We believe that licensees can provide all of the same functionality of a hotel, with a warm and welcoming atmosphere unique to pubs.”

Policy change

In response to the question: ‘What would most help your pub to grow its accommodation trade?’, 90% of operators told RPBi that it would be a cut in VAT – an increase of 30 percentage points from the 2016 answer.

Sullivan-Tailyour said he would agree with this: “I don't believe it is all about price but more about the ‘guest experience’, which is created through the standards of facilities and services that we offer as a pub.

“A cut in the VAT would give us the opportunity to improve these areas and provide a better experience for our guests and potential guests.”