Spirit sells single pub for £27m: Spirit has sold a freehold pub, The Black Lion, on Bayswater Road in central London, to 123 Bayswater Road Limited for a total cash consideration of £27m, which will be reinvested in the retained Spirit business. Spirit has also entered into an agreement with 123 Bayswater Road Limited to continue to run the pub for an agreed period. In the financial year ended 17 August 2013, The Black Lion generated Ebitda, before the allocation of central overheads, of £0.7m. As at 1 March 2014, the pub had a book value of £7.6m.
Jamie Rollo – hotel occupancy across the UK is hitting record levels: Morgan Stanley leisure analyst Jamie Rollo has reported that hotel occupancy is setting record highs in London and the UK regions. He said: ‘”UK RevPAR (revenue per available room) is 9% above prior peak, demand is still strong and operators upbeat. While supply growth and refurbishments are picking up, we are not seeing irrational exuberance yet. We nudge Whitbread EPS & PT higher post a strong Quarter One.”
He said the key trends are:
1. London RevPAR: London RevPAR has reached £115 on a trailing twelve-month basis, 15% above its July 2008 peak. TTM 83% occupancy is an all-time high, and occupancy continues to grow. Demand drivers remain intact, with inbound visitors +23% in Quarter One (despite GBP strength), and events have been strong.
2. Regional RevPAR: RevPAR of £49 is back to the 2008 peak, though lower in real terms. Occupancy is also hitting new highs, and is up 300bps YTD. Pricing power is strong, the Commonwealth Games and Farnborough will help, and the outlook is improving.
3. Expansion plans: All operators were upbeat about the potential to add new rooms, particularly in London, with high or rising occupancy the best indicator of need. Premier Inn was particularly bullish about the scope to expand and hit its 75,000 2018 room target, as it benefits from its strong balance sheet, strong PLC covenant, step up in extensions, and opportunities for “hub”.
4. OTAs: Online Travel Agencies (OTAs) are still growing in importance, but seen as partners rather than adversaries, and unbranded hotels pay more in OTA fees than a brand pays in franchise fees.
5. Amenity creep: Better beds, bigger TVs, free Wi-Fi, air-con and swanky lobbies are all signs that competition remains high and operators are focused on product differentiation. ROCE focus seems lower.
6. Operators are very different: Premier Inn is impressively consistent in product and growth rates. IHG expansion slower but a great asset light model. Accor is pressing ahead with its lease restructuring.
