JD Wetherspoon’s decision to look more closely at the hotel industry and see what it might be able to enjoy there with limited risk and maximum gain makes absolute sense to those of us who make money putting a roof over others’ heads. The pub group has identified a gap where there is often a gap to be found: in food and beverage. Hotels are famously awful at bars and restaurants, preferring to focus on the needs of the sleeping guest instead. This is not universally true; at the high end, Nobu is shocking everyone in the sector by doing beds and tables well, and not just because Robert de Niro is handy with a steak knife.

But travel down the chain scale, and the most you can hope for is a decent burger van in the car park or an imaginatively stocked vending machine. It’s too easy for hotels to do it badly and too hard to get right. Whitbread, which has a decent idea of which spoon to put where on the table, recently took the decision to focus on Premier Inn over food because it’s just easier and more profitable. And, given the trade war at the time of writing, any offering where coffee might be served is one to sidestep. 

So, you can see how Wetherspoon looked at all those empty spots where an imaginative general manager might stick a temporary art gallery and see a chance to franchise. Franchising, as the hotel sector has been well aware since Holiday Inn, is a great way to expand without having to get caught up in the hell of operations. The branded hotel sector is very much rushing towards franchising, in part because the markets get all freaked out when trying to value operational real estate with brands, and in part because it’s much more fun counting fees than trying to find someone to work the night shift/clean rooms that might be concealing corpses/any other of the 200 truly awful jobs one can pick in hotels. All you need is a neon sign, a brand book and an interest in popping in unannounced with a white glove to run over dirty surfaces. 

So, it’s easy to see why Wetherspoon would fancy some of that action, particularly because it’s looking to make the leap from 800 pubs to more than 1,000 – and that is some slow, grinding, expensive work when done the traditional way. But having seen Wetherspoon’s point of view, is having a Spoons in your hotel desirable? The group was happy to talk about the franchise success it had enjoyed at Haven’s Primrose Valley holiday park in Filey, North Yorkshire, and at two universities. 

Hotels are no strangers to conversions. There are now any number of brands who are offering the opportunity to convert your failing office into a (usually) budget hotel, and at the top end, you can have your hotel converted into a luxury service apartment. It’s a very flexible sector. 

There is also plenty of hunger for effective food and beverage. It is every hotel guests’ dream to eat a tasty meal and then crawl into the lift and into bed without having to suffer the impact of going outside. Wetherspoon has a prominent brand. It’s so well known that Welsh rappers Goldie Lookin’ Chain wrote a song called “Is It Wetherspoons”, which featured the lyrics: “In every major city, in every major town – if you can’t find a Wetherspoons, you’re a clown.” Part chorus, part estate agent’s pitch. 

Wetherspoon is unlikely to find much demand from a Hilton or a Marriott. Hotels are well aware of the need to create atmosphere, but there’s atmosphere, and then there’s the kind of late-night storm some city centre Spoons have been accused of attracting. The good news for Wetherspoon is that no-one really knows how many hotels are out there, but what we do know is that, rather like the Predator, they show themselves when they are injured and, between the cost of doing business and the cost-of-living crisis, distress is very much a theme at the moment. There are potentially hundreds of hotels out there looking at a disused ballroom and wondering if they could bring in another revenue line. 

There has been less from Wetherspoon about its own hotel business, which, at more than 50 strong, is surely ripe for franchise itself. Last year saw the group pull back from using the online travel agencies to fill beds, relying, like Premier Inn, on the pull of its brand. Of course, in Wetherspoon’s case, the chairman and founder, Sir Tim Martin, has done some of the work by encouraging staycations through his political activities. But hoteliers are always drawn to the idea of cheap distribution, particularly with a budget brand.

Pub hotel offerings such as Wetherspoon and Fuller’s are the counter to competitors such as Airbnb, as planning departments are starting to realise. They offer experiences guests are rabid for, and operations are often shared with the pub below, making them more competitive. If Wetherspoon is thinking franchise, maybe it should start thinking beds. 

A few weeks ago, I visited the Prince Regent in Marylebone, and the experience sparked a fresh focus on kitchen efficiency. I began chatting to the manager, who was perfectly suited to the pub, being a superbly energetic character who invigorated the place while managing the troops and the crowd.

She really was impressive. But the kitchen, well, that was a different story. It wasn’t her territory, and she felt as though she was stepping into someone else’s place when she walked in. She didn’t feel the same sense of command as she did on the other side of the doors. 

So, my colleagues and I began to educate her on the running of the kitchen – the ebbs and flows of the team, the layout, the process and the movement of equipment and food in and out. She was, in fact, our trial house for kitchen efficiency, so we spent a long time learning what we needed to do in order to facilitate her drive to run a highly effective kitchen.

We taught her about the six-foot rule, stepping off the line and all the other key kitchen habits. In time, she became more comfortable with the running of the kitchen – moving from judging the kitchen entirely on the gross profit, the quality of the food and speed, to having a proper understanding of how the kitchen worked. Prior to this, if the food was slow, she let the kitchen have more labour, which, of course, led to the team asking for more than they needed as the hours would suit their needs and not the needs of the business. 

The moment the penny dropped for her, she uttered: “This is just the same as the bar but with food.” Good enough for me. She was now in command of the kitchen. This was the first great step in our kitchen efficiency consultancy, which we considered when laying out how we could roll this out into more than 1,000 pubs with varying levels of food, kitchens and skills. 

How many of our front-of-house management team feels comfortable in the kitchen? How many know the processes and can spot when things are going wrong? How many work there on occasion and can step in when we are short? Whoever can and does all of these things has the attributes of a multiskilled manager.

My recommendation, of course, it that every member of the management team should be able to do all of the above in a normal site, except if the food skill required is extremely high. In much larger sites, this might be different, but the smaller you are, the more important it is that your team are multiskilled.

Kitchen efficiency is still, for many, the great untapped opportunity in our industry. One of the more obvious benefits here is ensuring that your team always has something to do. No more standing at pot wash with their phone, going out for another cigarette break or over-prepping.

There are less obvious signs of an inefficient kitchen too; a badly laid out kitchen, a kitchen that is not ready for service, a kitchen where the head chef either does all of the work or none of it. Poorly laid out line fridges and storage are signs too. And, if you can’t spot them, you are at a big disadvantage.

Like the manager at the Prince Regent, you may be reliant on outputs, not inputs. In the end, front of house may suffer, which is the last thing we will want this year, as we are going to have to compete even harder for value. We all need the energy, passion and organisation skills of the manager at the Prince Regent!

Settling into the bar of the Royal Forest pub on the edge of Epping Forest on a gloriously sunny Friday evening ahead of a meal in its restaurant would have been a real treat in itself for my family, but we also had the added enjoyment of being only feet away from our comfortable rooms for the night.

Herein lies the beauty of pubs with rooms to the customer, and I’m grateful that we are seeing a lot more such places opening, with boutique-style accommodation to match their top-notch food and drink offers. Pubs adding rooms is hardly a new phenomenon, but there is currently an explosion in the number of such properties as the model is proving to be a big winner for pub companies. Significant investment is flowing into the category. 

At the Royal Forest, we were guests of parent company Heartwood Collection, which comprises a growing number of pubs, including five with rooms, as well as the Brasserie Blanc restaurants. As labour costs increase, the company is finding adding rooms into the mix is helping stabilise the model, according to chief executive Richard Ferrier, who calculates accommodation as three to four times more profitable than pubs and restaurants. 

Although the rooms might represent only 25% of the revenue at Heartwood, they are crucially powerful drivers of food and beverage. The company’s five pubs with rooms are its highest grossing properties for food and beverage across the whole estate. “Rooms give us more dining occasions,” he says. “Monday to Wednesday nights can be as busy at weekends, with the early part of the week the corporate stays.”

This is very much the experience at other pub companies, including Butcombe Group, which operates 130 pubs across the UK and Jersey. For every one or two-night stay, the expectation is that 80% of staying guests will eat and drink on the premises. There was a realisation that the rooms were proving to be such a positive footfall-driving aspect that the company decided to make it a key pillar of its strategy. 

Pub companies are effectively plundering a part of the market where hotels have failed badly. Incredibly, half of hotel guests order in or dine out when staying in a hotel rather than eating in a hotel restaurant or getting room service, according to research from CGA by NIQ. An admittance of this abject failure to offer an attractive combination of rooms and food and beverage was the decision by Whitbread (with Premier Inn) to exit 126 of its lower-returning branded restaurants and convert 112 restaurants into 3,500 rooms. 

Is it any wonder that JD Wetherspoon has just announced its appetite for taking on space in hotels to run its successful pub format on a franchised basis? This comes on the back of early success with the model at the Haven site at Primrose Valley in Yorkshire, which is leading to a roll-out of the joint-venture arrangement.

This ability to successfully combine food and beverage with accommodation is proving revolutionary for those pub companies with the capital to invest in their estates – through either acquiring pubs with rooms that are ripe for an overhaul or building rooms on to their existing properties. The sweet spot is very much in the ten to 30-room size, and a price point in the £100-£200 bracket. This gives sufficient scale without moving into fully blown hotel territory and sits at a price-point competing head-on with the budget and small boutique hotels with limited facilities.

Needless to say, this major opportunity in the hospitality sector has been identified by a growing number of operators. Heartwood currently has 200 rooms across five sites, and the plan is to hit 500 in the next couple of years, while Butcombe is also expanding. JW Lees has just reopened the doors to Craigside Manor in Llandudno, while Arkell’s has added the Old Stocks Inn at Stow-on-the-Wold to its portfolio. Brakspear-owned Honeycomb Houses pubs has just acquired its 11th and 12th sites in the Cotswolds, and Stay Original Co is enjoying record trading at its six pubs-with-rooms sites in the south west of England. Also boosting their room counts are Fuller’s, Shepherd Neame, Young’s and Hall & Woodhouse.

 

Isn’t the space getting a little crowded? Not a bit of it, says Ferrier, who reckons corporate hotels versus the homeliness of a pub with quality rooms and food and beverage is a no-brainer for customers, and there is lots more growth to go for. “We want more of it,” he says. “The sector wants more of it. There are not enough bedrooms really, particularly at the high-quality pubs-with-rooms end. There are huge amounts of white space to go for.”

As my family enjoyed breakfast in the comfortable dining room of the Royal Forest after an early morning stroll across the lower edge of Epping Forest, we certainly dropped into the camp of wanting more of it.

Insurance is based upon risk and so, with Grand National just behind us, I read with interest the latest news from the Pubs Code adjudicator (PCA) and Regulation 46 with a view to where I would place my money if I were a betting man. Under Regulation 46 of the Pubs Code, pub companies must give tenants the full information about the premises insurance arrangements. This includes the premium, any commission to the pub company, the cover, sums insured, policy limits and excesses.

 

In my experience, tenants will almost always say they can obtain a more competitive premium and it is a frustration that brokers and insurers are familiar with. The building is the landlord’s asset, and it would make commercial sense that they insure that asset as opposed to letting thousands of tenants make their own insurance arrangements.

 

Aside from the sheer volume of compliance and administration, such an arrangement would incur the important fact is that of suitability of cover. It is no good to the pub company finding out that terrorism, subsidence or another peril have been missed after the claim is submitted; or the tenants forgot to pay the premium – effectively “all bets are off”!

 

So, we have a situation where the tenants want the most competitive premium and the pub company wishes to protect their asset with the most comprehensive cover. Let’s get rid of notion that all tenants want cheap policies regardless of cover and pub companies aren’t interested in competitive premiums because they aren’t paying them – the tenant is. Tenants need the buildings to be covered and losses to be dealt with or they have no premises in which to operate, and pub companies need successful tenants and the rent and trade they produce.

 

This is where the Regulation 46 of the Pubs Code comes in and while the concept is good, the practical application has some challenges. The code states that if alternative insurance quotes are obtained by the tenant and they are “suitable and comparable” the tenant will not have to pay the difference in premium, usually the insurer of the pub company will reduce to match the quote provided.

 

The policies provided by the pub companies will offer lots of additional cover such as “capital additions at £5m, public liability £20m, fire extinguisher expenses £250,000, the list goes on” – it looks fantastic! The tenant seeks an alternative insurance quote, either online or via a broker, often obtaining a specialist “pub package” policy. Invariably the tenants will not know about all the “extra” covers and so presents their alternative more competitive quote to their pub company to be met with the response that their alternative quote is unfortunately a non-runner (ie not suitable). Fallen at the first is the best way I can describe it although it could be argued it was never going to make the race.

 

It is at this point that the tenant either gives up or runs out of time. Let’s assume there are some who are not to be deterred and like a punter chasing his losses at the course, the tenant goes back to where they obtained their quote and explains that the cover needs to be improved. The PCA has reminded pub companies that alternative quotes need not be equivalent but nothing more than that in terms of guidance so the blinkers remain on. (Don’t worry, the horse race references don’t last furlong).

 

The broker can indeed source the extra cover required and is prepared to put the work and effort in with the insurers with a view to welcoming on board on a new publican customer. However, this won’t happen because at best, their quote is sent to the pub company whose insurer will reduce their premium to match. Why would a broker and insurer put any effort and time into quoting for a client when there is a guarantee that they will not get the business? Try asking for a tradesman to come out and quote on a job after telling them they will never get the work!

 

So, while the theory is good, in practice how many tenants are going to be able to source alternate quotes that are “suitable and comparable” from insurers who are never going to be successful in obtaining the business, plus with “suitable and comparable” being open to interpretation.

 

This piece certainly isn’t a criticism of the pub companies, insurers or the PCA – in fact their attempt at solving the landlord verses tenant issue is to be admired and the issue is not limited to the pub sector. However, I suspect the actual outcomes fall short of what the PCA would like.

 

The PCA’s 2024 annual tied tenant survey showed that only 56% of tenants were aware of their right to price match the amount they pay their pub company for premises insurance on the open market. I don’t think this is the real issue, until there can be some agreement between the pub companies and the PCA on what constitutes a minimum criteria for “suitable and comparable”, I’ll keep my money in my pocket.