Inside Track by Simon Chaplin
The pub sector has had to come to terms with a rapidly changing marketplace and consumer dynamic in recent times.
One only has to monitor the rate of pub closures to see how important it is for operators to stay ahead of the market and keep pace with a consumer taste that become both increasingly sophisticated and, at the same time, wary of the harsh economic times in which we live.
The provision of food has become almost de rigueur for the majority of pubs, and one continues to be astounded by the pace at which pubs have embraced the concept of providing good quality food at value-for-money prices. No longer is it the preserve of pubs with a pretension of ‘class’ — even what were once common-or-garden ‘boozers’, have understood the necessity and caught the bug.
Such is the generally excellent standard of pub food, and the sheer volume of pubs that provide it, that the provision of food, in itself, is no longer a major differentiator amongst operators.
The same cannot be said of pubs with accommodation, as the scramble to occupy this territory continues apace.
A number of operators — corporate, regional and independent alike — are looking to play catch up. But they are catching up in a sector which has grown out of all proportion over the last decade or so.
A return to days of yore?
Pubs with rooms are by no means a modern construct. We’re told of at least one inn which was full around December 4BC, of course. But the UK heyday of the inn, from the middle ages and beyond — where just about every hostelry provided accommodation for an increasingly travelled population — seemed to hit the buffers when the railways came to town!
In tandem with this, the hotel industry undertook a rise to prominence and, latterly, the so-called ‘budget’ hotel sector developed into its prime.
The budget hotel sector remains the industry’s fastest growing and most stable format (give or take the odd CVA!!!). Indeed, the UK’s three largest hotel companies — Whitbread (Premier Travel Inn), InterContinental (Express by Holiday Inn), and Travelodge — all operate within the budget market.
Today’s business and leisure travellers are keen to secure competitive room rates, but they also tend to reject ‘standard’ accommodation in favour of establishments that offer a bit of individuality. And this is where pubs can, and increasingly have learnt to, compete.
Many public houses can respond to travellers’ demands by offering affordable accommodation in letting rooms with a bit more character than the majority of budget hotels can offer.
Rooms fit for the 21st century
A number of pub companies have sensed the return to days of yore and recognised the potential of letting bedrooms — building portfolios of pubs offering accommodation, fit for the 21st century.
Eldridge Pope, for instance, which was taken private by Michael Cannon in 2004 and subsequently acquired by Marston’s, championed letting rooms and created a brand specifically for it. By 2005, the company had amassed some 500 letting bedrooms in an estate of 25 pubs and coaching inns across southern England. Eldridge Pope’s “Room at the Inn” accommodation brand was launched in the summer of that year, offering a central reservations number and online booking facility, that many have since sought to emulate.
Greene King and Brakspear were also ahead of the accommodation game. Greene King acquired Old English Inns in September 2001 and now operates more than 50 inns and hotels across the country. Brakspear has an estate of around 20 pubs offering “Room for a Night”, which are predominantly located in Berkshire, Buckinghamshire and Oxfordshire, in areas of high demand.
Other pub companies/breweries, such as Charles Wells, which sold off its hotel portfolio in the ‘90s, have chosen to re-enter the accommodation market. Charles Wells acquired a portfolio of ten freehold pubs from Traditional Freehouses, through Christie + Co in the mid-2000s. The fact that five of the pubs offered letting rooms was highlighted by Charles Wells as one of the prime motivators behind the acquisition, and the company today has an estate of 28 pubs with accommodation.
Letting accommodation is certainly a flavour of the month and even operators like Punch, Youngs, Fuller Smith & Wells and JD Wetherspoon have taken further, tentative, steps into an arena of which they know it is essential to be a part.
Accommodating market forces
There is a further factor driving this burgeoning marketplace — the economy.
Where once, couples and families would check in to a hotel for a weekend break, they are now finding just as good, if not better quality and value by staying at a pub with letting rooms.
Moreover, the rise to prominence of the ‘staycation’ has made holidaying in the UK a much more popular option, and pubs that provide accommodation are reaping the benefits. And there is a strong indication that they are also being boosted by an increase in corporate trade — particularly where the pub is also able to provide a function room or rooms.
So what does it take to deliver a quality accommodation offering in a pub environment? And how can operators ensure it is successful both in the short term and as an investment for when the time comes to sell on?
It may be a simple statement, but first and foremost, the key to a quality accommodation offering is the guarantee of a good and relaxing night’s sleep — so make the mattress comfortable! After all, the budget hoteliers have no other way to differentiate themselves from their competition other than the quality of rest they provide. Premier Inn is an operator that makes the most of this — much as one tries, the image of Lenny Henry flopping down on his hotel bed, and the terrible poetry, is not easy to erase!
With fewer rooms, it should not be beyond the wit of pubs to provide patrons with a comfortable bed for the night. Better still, ensure the rooms are en suite (another ‘must have’ for the modern customer). This is almost certainly what customers will remember most from their stay — so fail on this front and the customer is unlikely to return.
An all-round offering
The renaissance of the inn has also gone hand in hand with the improving quality of food provided. In this regard, pubs have a natural advantage over budget hotels. Get the food right and you don’t have to be beside the seaside or in a necessarily picturesque part of the country in order to become a destination inn or pub.
Wholesale improvements in the quality of pub food are having a positive impact on the desirability of letting rooms. Consequently, an increasing number of the top end gastro pubs are now providing overnight accommodation for the benefit of their diners.
Many diners now view good value overnight accommodation as an essential component of the pub dining experience (along with a fine selection of beverages, of course!). Where it’s not possible to develop letting bedrooms on the pub premises, a number of operators are purchasing neighbouring properties for conversion into guest accommodation.
For individual owner/operators, a small number of letting rooms can generate significant profit for limited outlay, which is also likely to be reflected in the sale price achieved when the property changes hands.
And when the time comes to move on, having a more rounded business with multiple income streams from drinks, food and accommodation will make a pub much more attractive to buyers and will enable vendors to command a higher asking price.
Much as almost every pub now has some form of food offering, with many able to deliver a restaurant experience, so too do many now have the rooms to make them true destinations.
The inconvenient truth
The dialogue, debate and concern over the future of the pub is reaching fever pitch. However, minimum pricing and the possibility of local councils safeguarding pubs by declaring them as ‘assets of community value’, are a mere diversion from the inconvenient truth that many pubs now have to face — the customer is all powerful and if they don’t get what they demand, they will go elsewhere.
Happily, the majority of pub operators are increasingly understanding that a diverse customer proposition, delivered excellently, is the way forward. And increasingly, letting rooms are part and parcel of the future shape of the pub.
