UK Leisure Sector - Q3 2017

Click here to download the UK Leisure Sector - Q3 2017

Summary

Within the first six months of 2017 the hotel market has seen increased investment, reportedly totalling £2billion, with an anticipated year-end total of circa £5billion. This has been driven by overseas investors influenced by the beneficial exchange rates; this trend may however change if the recent uplift in sterling strength, from its nadir in August, continues.

In the late night market, Deltic Group reported a like-for-like sales increase in the current financial year of 3.85% and most notably a pre-booked sales increase of 47%. This highlights the continued shift of customer preference following the licensing change, away from nightclub style operations and towards late night bars. However, nightclubs are still considered a strong market with major operators still investing, including most recently, a £1million investment by Stonegate in their new superclub in Birmingham.

The food and drink market has seen a measured increase in like-for-like sales during August of 0.2% across managed public houses and restaurants. Recent reporting shows inflation increasing towards 3%; operators will therefore have to balance the need to pass on possible costs increases to the consumer, with a potential impact on total sales.

The market for 'competitive socialising' is increasing. Waterworld Leisure have acquired Adventure Island Mini-Golf for £20million and now plan a further significant expansion of 20 sites within 5 years, taking advantage of the growing popularity of this concept. Bounce, the ping pong themed venues (rebranding as Social Entertainment Ventures), plan to open 20 sites across America, the Middle East and China by 2020, again capitalising on this market growth. This company has Flight Club which is also expanding and All Star Lanes who have reported a 40% increase in EBITDA to the financial year ending 2016.

In a recent article published by Propel Info, a poll of 2,000 participants saw a quarter reveal they were at their happiest in the pub, showing continued consumer strength within the market.

UK Leisure Sector Q3 2017 Highlights

July 2017 -

Hotels: UK Market Hotel sector reported £2billion investment in first 6 months of 2017.

Hotels: Four Premier Inn hotels have been acquired from NFU Mutual by Knight Frank Investment Management for its Long Income Management Unit Trust for £37.95million, reflecting a NIY of 4.4%.

Restaurants: Handmade Burger Co falls into administration.

Pubs: Carlsberg Brewery acquires London Fields Brewery, located in Hackney in London, operating as a joint venture with Brooklyn Brewery.

Restaurants: Gourmet Burger Kitchen turnover increases to £77.9million this year, compared to £67.4million in 2016.

August 2017 -

Hotels: The Qhotels portfolio of 26 Hotels was acquired by Aprirose Investments from Bain Capital Credit and Canyon Capital for £520million (NIY of 5.5%) after being on the market in 2015 at £650million.

Hotels: Paramount Hotels go into administration handled by Duff and Phelps.

Pubs: Aprirose Investments exchanged on a portfolio of 73 units from Mitchells and Butlers.

Pubs: The Competition and Markets Authority approve the Patron Capital/ Heineken takeover of Punch.

September 2017 -

Hotels: Premier Inn in Camberley sold for £8.5million to AEW UK Real Estate Investment Trust (NIY of 5%).

Leisure: Gym Group acquired 18 units for £20.5million from Lifestyle Fitness.

Restaurants: Under new ownership Yo Sushi has seen an increase in like-for-like sales of 5.5%.

Pubs: Innis & Gunn craft brewers have accepted an investment of £15million for a 27.9% share, from the private equity firm L Catterson.

Pubs: Proprium with JV partner C&Co acquire Admiral Taverns' 850 public houses, from existing owner Cerberus, for a reported £220million.

Contact Details:

Elysia Wilson-Gunn
Senior Associate
T: 020 7280 4747
M: 07810 541 579
E: elysia.wilson-gunn@fleurets.com

Graeme Bunn
Managing Director
T: 020 7280 4740
M: 07776 208085
E: graeme.bunn@fleurets.com