UK Leisure Sector - Q2 2019

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Summary

A number of pub companies have reported an increase in like-for-like sales; Wadworth saw a managed like-for-like sales increase of 2.3%, exceeding the tenanted division for the first time. Thwaites like-for-like sales grew by 4%. Loungers, the operator of 148 restaurants and bars, reported a 6.9% like-for-like sales increase with total revenue of £150m, and finally Ei Group reported a tenanted like-for-like 1.9% increase in income.

Portfolio sales have both come to market and completed, including Aprirose's purchase of British Land's pub portfolio of 45 Spirit Pubs, Oakman's purchase of 7 freehold pubs from funds managed by Downing. Twenty-four tenanted Wadworth's sites are currently for sale as well as, most recently, Heineken's package of 150 pubs. All of these sites are spread across the UK with no geographical differentiator.

In the restaurant sector, Jamie Oliver's restaurant group was called into administration after two years of trading, including 23 Jamie's Italian units, Barbecoa and Fifteen London. Pret A Manger purchased rival brand EAT (75% of estate in London) with plans to convert some sites to Veggie Pret. There has also been some growth in turnover in the sector; noticeably The Ivy Collection up 124% with 14 openings and expectations to double turnover.

An increase in music tariffs by PPL, the music licencing company, has been announced. This relates to playing pre-recorded music in public from Monday 1st July 2019. The British Beer & Pub Association are taking PPL to the copyright tribunal for independent review, citing it as unjust.

The hotel sector has seen an increase in visitor numbers with double digit growth in Edinburgh (15%), Manchester, Glasgow, Leeds and Cardiff (all at 10%). This has continued throughout the first quarter of 2019 from the growth occurring in 2018. Conversely UK regional hotels, for the first time in seven years, have seen a Rev PAR decrease of 2.8%. But the overall market has been active with over £2bn of transactions.

In in the next quarter, the Prime Minster will have stepped down. Who will be standing in her place, and ultimately what effect will this and the potential agreed deal with the European Union have?

UK Leisure Sector Q2 2019 Highlights

April 2019 -

Pubs: Aprirose acquires 45 pubs within a portfolio of Spirit Pubs occupied by Greene King's Spirit Pub Company for £130m. The majority of pubs are located in the South East and North West of England.

Restaurants: An increase of 124% in turnover has been reported by The Ivy Collection for the year ending 29th July 2018. Turnover was £98.5m, which is forecast to double this year to £203m. The company has had 14 new openings and is aiming to open a further 3 restaurants by the end of this year, including Glasgow, Oxford and Cardiff.

May 2019 -

Hotels: The Hut Group has acquired Eclectic Hotel Group for a reported £50m (£714,000 per room). Eclectic Hotel Group comprised of two boutique hotels in Manchester; Kings Street Town House Hotel (40 rooms) and Great John Street Hotel (30 rooms).

Restaurants: Vinoteca, restaurant and wine bar, has reported an increase in sales for the year ending March 2019 to £7.57m, an increase of 5.8%. The brand operates five sites in London including Kings Cross and Cannon Street.

Restaurants: Administrators have been appointed to dispose of Jamie Oliver Restaurant Group units.

Restaurants: JAB Holdings-owned chain Pret A Manger is buying EAT (90 units).

Pubs: Wadworth is disposing of 24 tenanted sites, nine of which on an individual basis and a further 15 as part of a portfolio package. The pubs are located across the West and South of England.

June 2019 -

Restaurants: Flat Iron has reported an increase in turnover to £14,476,916 for the year ending 26th August 2018, a 23.6% increase when compared to 2017.

Pubs: Brewhouse & Kitchen has reported a sales growth of 21% to £14m. In late 2019 the first hotel, housed within one of their units, will open. An additional three hotels are planned in the coming year and half.

Pubs: A package of 150 pubs owned by Heineken UK has been put to the market as a single package. The pubs are located across England and Wales.

Hotels: McDonald Hotels & Resorts has sold a portfolio of 27 properties to an unnamed private equity investor, which is due to be complete by August. This transaction aims to eradicate McDonald Hotels' £190m debt.

Pubs: Four Peach Pub Company Limited freehold investments, subject to new 25 year index linked leases to Peach, have been released to the market for sale via Fleurets.