Nick Varney to become chairman of the BHA: Nick Varney, chief executive of Merlin Entertainments, will take over the role of chairman of the British Hospitality Association (BHA) when incumbent Alan Parker CBE steps down on 1 January 2015. Varney’s immediate priority will be to make all political parties aware of the importance of the hospitality and tourism sector both in economic terms and as a key employer, particularly for 16-24 year olds, highlighting the key issues the industry is looking for any new administration to address. He said: “I am delighted to take up the role of the chair of the BHA at a time when it is so important that the industry voice is heard at a political level. The BHA is to be congratulated on the excellent work done to date to build relationships and raise the profile of the key issues which affect all our businesses; and I would like to take this opportunity to thank everyone, but particularly Alan and Ufi, for what has been achieved so far. Now with a General Election imminent we have a very short window of time to build on this, and to make sure that the economic and social importance of the hospitality and tourism sector is understood by all political parties; and that our issues are on their agenda for the future. I see the key challenges here as: price competitiveness: UK VAT at 20% means we are not operating on a level playing field with the rest of the world; emerging markets: The UK is failing to gain our fair share of business and visitors from new markets like China and Russia due to short sighted visa policies; the need for enlightened employment legislation that does not jeopardise industry growth/ jobs; the development of a robust skills agenda to ensure we are able to identify and recruit the right people to realise the sector growth potential; the need for a more efficient planning process, which encourages rather than restricts further development. All of which would result both in increased revenue for the Exchequer, and the creation of new jobs, particularly for young people, and one assumes therefore priorities for all parties, whatever their colour.” Alan Parker CBE, incumbent president and chairman of the British Hospitality Association, said: “During my time as chairman for the BHA we’ve worked tirelessly to raise the profile of hospitality and tourism to government, and we’re starting to see real recognition for this inspirational industry. Nick’s appointment as chairman will introduce a new dimension and direction to the BHA’s work and I wish him a very warm welcome to the role.” Ufi Ibrahim, chief executive of the BHA, said: “Alan Parker has been a true ambassador for the hospitality industry and on behalf of all the BHA members and partners I’d like to thank him for his tireless support and enthusiasm as well as welcoming Nick Varney as his successor. We are delighted to welcome Nick as the BHA’s new chairman. In the build up to the general election there’s a big task ahead of us to ensure that hospitality and tourism achieve high priority status on the government’s agenda. Nick’s reputation for results-driven success precedes him, and his experience and expertise will be invaluable to guide and shape our focus as we evolve.”

Douglas Jack – signs of stability at Enterprise Inns, regulatory outlook uncertain: Numis Securities leisure analyst Douglas Jack has argued there are signs of stability at Enterprise Inns although the regulatory outlook remains uncertain. He has a Target Price of 125p on the company’s shares. He said: “For the preliminary results, due on Tuesday 18 November, we forecast PBT to be flat, at £120.9m (consensus £119.8m). We estimate this result requires slight LFL net income growth in Q4. Encouragingly, the wet-led pub sector is showing signs of stability, but unfortunately the regulatory backdrop remains uncertain. LFL net income rose 1.3% in Q1-3, aided by: easy comps of -3.5%, the FIFA World Cup and favourable early summer weather. We forecast LFL net income being up 0.25% in Q4 (against tougher comps of 0.6%). Based on two-year LFL profits, our Q4 assumption may appear ambitious, but it is supported by an improving trend (LFL profits were +2.1% vs a -2.7% comp in Q3).Also, there are signs that the wet-led pub sector is stabilising. 58% of Enterprise’s estate is residential wet-led. On a calendar basis, MAT beer volumes in this market segment improved from -8.6% in 2013, to -7.7% in Q1 2014, to -5.9% in Q2 2014, to -3.8% in Q3 2014.We forecast a 4% reduction in net debt vs a 3% decline in Ebitda, enabling net debt/Ebitda to fall to 8.0x from 8.1x. We expect over 200 pubs to have been sold during the year, generating proceeds in excess of capex (forecast at £66m). Despite disposals, capex is unlikely to slow due to plans to increase the managed estate towards c.50 pubs from 14 pubs currently by November 2015.Three cross-party politicians have tabled a market rent only option for tied tenants into the Small Business, Enterprise and Employment Bill. This will be voted on 18-19 November, wary that it could lead to 4,600-6,400 pub closures and 23,000-31,600 job losses, according to the London Economics report. 48% of Enterprise’s profits relate to tied beer/cider sales (half due to incremental purchasing power). We expect to hold our forecasts, which anticipate minimal LFL net income growth in 2015E. If one were to invest in a tenanted/leased pub company, we would choose Punch Taverns over Enterprise Inns. Both companies are making operational progress, but Punch offers lower gearing (7.2x vs 7.7x net debt/Ebitda) and a lower valuation (8.9x vs 10.1x EV/Ebitda) for 2015E.”