North West hospitality can withstand onslaught of cost pressures

ryan lynn christie and coNORTH West hospitality businesses remain positive despite the onslaught of cost pressures that the pubs, restaurants and hotel sectors have been forced to take in recent months.

This was the message from a breakfast briefing event in Manchester hosted by specialist property adviser Christie & Co and international law firm Pinsent Masons.

On the panel were Jeremy Roberts, CEO of Living Ventures Group, Kieran Lawton, Investor Director, of Palatine Private Equity LLP and Peter de la Perrelle, Managing Director, of Tower Hotel Management.

Key topics discussed were the raft of new cost pressures introduced from April including the rise in the National Living Wage, business rates and pensions auto-enrolment as well as the effects of Brexit and technology.

While it is thought that 15% (700,000) of employees in the hospitality industry are foreign nationals, Peter de la Perrelle of Tower Hotel Management looked at staff nationalities from his eight hotels which mainly span the North West and found that the figure for his operation was in fact 50%.

He said that many EU nationals start in housekeeping positions to build their language skills before filtering into the wider economy which brings unlimited benefits, and that if this supply of workers dries up, the UK will have a big problem.

Technology will also play an increasing role in many hospitality businesses as they seek to cut costs in light of increasing outgoings. Jeremy Roberts said that the IT business has improved operations hugely and is becoming cheaper to buy into.

‘Sector as a whole is resilient’

There were more online reservation systems and smart paying tools which enhance accessibility and efficiency offsetting a small proportion of front line staffing costs, he said, but the industry is still far off being able to rationalise staffing significantly – particularly for back of house roles like housekeeping and food preparation.

Kieran Lawton said that in terms of acquisitions, if licensed businesses still demonstrate that they’re scaleable and cash generative then investor interest in these sites remains.

Consumer spending was continuing at a steady rate and eating and drinking out habits were unlikely to change so while there are sites, debt and exit options available, the market would continue to move despite Brexit and other external factors.

Ryan Lynn (pictured), Associate Director in Christie & Co’s Manchester office, said: “Despite the number of cost pressures, we are still seeing a very high demand for good quality hospitality businesses throughout the North West from UK based and foreign buyers.

“We predict that average prices will remain strong in 2017 and with hotel room supply increasing by 10% in Manchester and by 8% in Liverpool by 2019, it is clear that the licensed sector is continuing to grow at a steady rate.”

Amie Norris, Senior Associate at Pinsent Masons, added: “This isn’t the first time the hospitality sector has faced a challenging environment. What is clear is that the sector as a whole is resilient and adept at dealing with the challenges and changes it faces.

“Whilst there will no doubt be some operations that struggle to deal with the challenges of 2017 and beyond, there is also an opportunity for the stronger businesses to adapt and grow.”

 

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