Hospitality investors may miss out on lucrative opportunities if they do not take into account fundamental changes to how we eat, drink, and spend leisure time.
Stephen Owens, managing director of pubs and restaurants, Christie & Co, said: “I’ve worked in this sector for 40 years and there has been more change in the last five years than the last 40.”
The British press constantly talks about pub closures, which can make for gloomy reading, said Owens, but there are more positive nuances behind the numbers.
True, the number of UK pubs has fallen from a peak of 75,000 in the early 1970s to around 45,000 today, but most of these closures have been wet-led tenanted establishments.
For most Brits under the age of 40, beer is no longer a part of daily life, so the need for a beer-and-pork-scratchings-only pub on every corner has diminished.
Positively, the number of freehouse pubs is increasing, noted Owens. These pubs give owners full freedom in selecting their suppliers and are generally driving innovation in how they meet consumer tastes.
Other changes include the decline of late-night clubs. “It’s almost a reset. I find it fascinating,” said Kevin Charity, founder & former CEO, Coaching Inn Group. “The late-night sector is just heading in one direction – disappearing. And we’ve seen this sudden surge in discos for the over 30s during the daytime. People want to enjoy themselves without late night risks and fears. Plus we’ve got this new generation coming through who just aren’t that interested in late nights and getting boozed up. It’s more about experiences during the daytime.”
Mahmut Aslan, area general manager, Criterion Hospitality, believed that the increase in remote working makes venues like pubs with rooms and those that offer all-round experiences a good investment, since they attract both corporate and leisure demand.
“People are looking for places to stay, dine, socialise, and at Criterion, we don't only offer meals and drink, we create special atmospheres, live music, weekend branches, stunning views of London. It's making it a destination, creating a whole atmosphere,” he said.
There are plenty of opportunities for new investors and operators to combine food, drink and accommodation well, agreed Charity. “I started a company called the Coaching Inn Group 20 years ago, where we specialised in picking up market town coaching inns, which are usually on the high street or the actual marketplace themselves, average around 30 bedrooms but lead on food and beverage. A lot of these sites were being left behind by bigger hotel groups who were looking for more bedroom stock.”
The combination of a pub or restaurant with bedrooms has made profitability stable, he said, and added: “There’s a massive load of hospitality property out there in a zombie state, in debt. The owner-operators tend to be tired and don’t quite know where to take things next. Often, they’ve lost the will. There are hundreds of these venues out there.”
Driving F&B revenue and dwell time
How can established hotel operators make the most of their F&B? Foxhills, a country club and resort in Surrey with seven F&B outlets, is partnering with Auden Hospitality to determine improvements that will result in its 600 members spending more time in the resort.
Tej Walia, managing director, Foxhills Collection, did not want a few Zoom calls with a consultant who would tell him what to do. Rather, he wanted a true partnership, which is what he is experiencing with Auden Hospitality.
The average Foxhill member visits the resort two or three times a week and stays two and a half hours on each visit. The goal of the partnership is to increase dwell time and spending.
Walia said that he wanted Auden Hospitality to make him feel uncomfortable about F&B at Foxhills and to encourage out-of-the-box thinking. New initiatives do not necessarily have to command large amounts of capex, he said. So far, they have included QR codes to order food and drink poolside, and a one-stop-shop resort app that will allow members to book the 270 weekly activities that take place at Foxhills.
There are hotel brands, like Hoxton and Firmdale, that make F&B central to their offering, but many do not, reckoned Charity.
“Hotels can fall into a mindset where the bedroom revenues are so simple, it's such a simple model, and the F&B is hard work and it’s almost seen as an add-on. That's the truth. And so there is a resistance to want to put some effort into F&B.”
“Some of the bigger branded hotels don't help themselves. You walk in and first thing you see is the biggest reception area or the biggest flower display. Well, why not actually put the F&B out in front so it’s the first thing you see. The hotels that get it right attract locals plus guests and improve the whole experience.”
Success comes down to three elements: service, atmosphere and quality of the food and drink, reckoned Charity, and personalised service will be the true differentiator in the current era of low staffing levels and automation.
He commented: “I visited a four-star branded hotel the other week and ordered the steak, and was told it comes medium. What they were saying is they are not willing to invest in the skill level to cook a steak to order. It came one way and one way only so you couldn't complain. There would be no reduction on the bill if it was wrong. Fair play to them. But it's not my style.”
All quotes taken from the panel sessions ‘Bars, Pubs & Restaurants: Tap into a Proven Market’ and ‘Focus on Hotel F&B: Overcoming Challenges to Thrive’ at the AHC 2024 in Manchester