JW Lees has had a strong festive trading season as it focuses on increasing investment into and growing its accommodation business, managing director William Lees-Jones tells MCA.
The Manchester-based brewer and pub operator, which will be 200 years old in 2028, said all three parts of the business – beer, pubs, and hotels – are in growth.
Last month, JW Lees reported record turnover for the year to 31 March 2023, with company revenues at £88m (+£13m / +16%), although profits were down by 56% to £3.5m due to cost pressures.
“We’re adding rooms to existing hotels to get that scale within the business,” Lees-Jones says. “We’ve had an aggressive disposal programme over the last 20 years, so the tail of the estate is almost nonexistent.”
Accommodation is currently about 20% of the managed business, but adds to the F&B take of the site, with JW Lees looking to add scalability in this area.
“It’s hard to do rooms with all the associated costs when there are less than 20 on a site,” Lees-Jones adds. “In my mind it’s something that’s scalable. Third party travel agents have given us a route to a market which, 20 years ago, was the domain of Premier Inn and Travelodge.
“The lack of business travels means people are independently making decisions about where to stay, and they like to stay in a pub.
“The big thing in the last 10 years has been understanding how that market [for rooms] works. Last year we were at 83% occupancy, but once you’ve got scale, it’s easier to fill those rooms.”
JW Lees has also been carrying out a refurbishment programme that leaves it well placed to benefit from premiumisation trends as customers look for better quality rooms, wines, and cocktails, according to him.
“People are aspirational by nature…we see they don’t just want to have a pint and play darts.”
While refurbishing existing venues, the company is also looking to acquire sites it can “bolt on” to its estate in the Northwest and Wales, as well as sites it can “add value to.”
From a managed pubs perspective, the priority is to keep evolving the offering so that it stays relevant.
The company is seeing growth in its own beer brands – particularly in the stout and lager categories – and plans to continue investing in its brewing business.
“When I look at our peer group, there used to be more players in the regional brewery sector,” Lees-Jones says. “Both Fuller’s and Young’s have come out of brewing, but from our perspective, brewing is very much the heart of the business.”
The company is seeing like-for-like growth – with less uncertainty around cost pressures going into 2024 – but continues to see prices or supply uncertainty with materials like malted barley and CO2.
Trading was positive over both the summer and the festive season in 2023, despite some slowdown in the October and November months in between.
“Some prices are coming down but there’s still a reasonable amount of jeopardy…inflation is up double digits in terms of wages, food, and energy, so if like-for-likes aren’t in double digits, the business is probably in decline.”
