Langton Capital – 2021-02-24 – Scottish reopening, work from home, vaccine passports, holidays, Intercon. Hotels etc.
Scottish reopening, work from home, vaccine passports, holidays, Intercon. Hotels etc.
A DAY IN THE LIFE:
Bit busy today but here’s an observation; the OJ Simpson trial reportedly added $200m to US GDP in the year that it took place.
And, just a guess, but it could be running up to 5x that now, what with the mini-series, the books, the endless journalism, the bumph re his later Las Vegas trial, the costs of his incarceration etc. etc. and that does suggest that you sometimes can’t be sure that what you measure as a ‘good thing’, like GDP growth is, in fact, a good thing.
Not really going anywhere with that so, without further ado, let’s move on to the news:
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PUBS & RESTAURANTS:
Scotland’s road out of lockdown:
• First minister Nicola Sturgeon has outlined the SNP’s plans for taking Scotland out of lockdown. There are fewer dates mentioned than was the case in England. The SNP says the reopening should commence in the last week of April but there will be a “progressive easing” of restrictions before then.
• It is hoped to lift the stay-at-home restriction in Scotland on 5 April. The ‘levels’ system will be retained north of the border. Ms Sturgeon says she expects to see a ‘phased but significant re-opening of the economy, including non essential retail, hospitality and services like gyms and hairdressers’ from the end of April. Scots Conservative leader Ruth Davidson said the statement “fell short of public expectations”.
• SIBA CEO James Calder comments ‘while it is welcome that pubs may be able to start to reopen in Scotland from the end of April, the tier system made it impossible for businesses to trade, with alcohol sales banned in level 3 and restrictions with a meal at level 2 along with curfews. Indicatively it looks like all of Scotland will move into level 3 from April 26th, making it impossible for any brewery to trade with pubs. If these restrictions remain as they are, then most pubs will have been unable to trade in Scotland for 8 months.’
• Mr Calder says ‘we need urgent clarity on what the content of the tiers are when we get more information in March. If no changes are apparent then Scottish brewers will need another round of the hugely beneficial Brewers Support Fund to get them through this crisis as the current funding can only help them through the next few weeks or so, with an average cash burn of £5,000 per month, per brewery.’
• The Scottish Beer & Pub Association comments that the announcement ‘raises more questions than it answers.’ It says ‘pub businesses across Scotland now have a lengthy and uncertain wait until mid March when details of the tier system will be announced. While we welcome the news that the government intends to provide additional support for business for four weeks after opening and a tapered support for businesses facing tiered restrictions, it is essential they strip out the complexity of the tiers introduced last year and make them easier to interpret and work with.’
• It says ‘for much of 2020 pubs in Scotland had to contend with onerous and unjustified restrictions which made it unviable to trade’ and says the Scottish government must ‘remove the arbitrary, and frankly, bizarre restrictions previously imposed such as curfew, no music and banning of the sale of alcohol. This is continued closure for pubs in all but name.’
More reaction to England’s unlocking plans:
• The Morning Advertiser quotes contacts as saying they are not ‘jumping for joy’ with some others saying the further delay represents a ‘huge blow’. Operators without outside space are particularly poorly placed. Vertically integrated brewers & pub operators (typically running pubs with beer gardens) are in a better position.
• Big Hospitality quotes sources as saying that hospitality businesses have said they are ‘paying the price for the Government’s mistakes.’
• Pressure is shifting from the PM to the Chancellor. Mr Sunak will present his first Budget (but by no means his first comment on Budget matters) on 3 March.
• The Daily Mail quotes Corbin & King co-founder Jeremy King as accusing the government of ‘gambling with the health of the hospitality sector’. He says ‘significant numbers of the businesses currently drawing down furlough money will never actually reopen because they are holed below the financial waterline.’
Other Covid-19 issues:
• PM Boris Johnson has said that city centres will ‘roar back into life’ when Covid is in retreat. He says there will not be a permanent abandonment of the office as face to face communication remains critical. The desire may be father to that thought.
• The PM says the home working revolution will not be permanent. He says ‘I don’t believe that this is going to mean a fundamental change to the way life in our big cities really works. The better remote communication gets, and the more people can see other talk on mobile devices, there’s a paradox – the more actually they want to see other face to face. I think London and our great cities will be full of the buzz and life and excitement again, provided people have confidence about coming back into those city centres.’
• Langton Comment. See premium email.
• The Night Time Industries Association is calling on interested parties to write to their MPs in support of late-night operators. As it stands, nightclubs should be allowed to reopen from 21 June after 15mths of closure. The NTIA would like to see more support offered in next week’s Budget.
• There is to be a review into whether customers should need to show a ‘vaccine passport’ before entering pubs, theatres, restaurants etc. This would add cost for the operators – but it would also raise the price of refusing vaccinations and, if moves like this and the possibility that employers may be able to enforce ‘no jab, no job’ rules, the take-up rate for vaccinations may rise.
• PM Boris Johnson points out that there are potential privacy and discriminations issues to be considered. He says ‘we haven’t had stuff like this before, we’ve never thought in terms of having something that you have to show to go to a pub or theatre. So there are deep and complex issues that we need to explore, ethical issues about what the role is for government in mandating people to have such a thing or, indeed, banning people from doing such a thing.’
• Michael Gove will report on the issue on 21 June. Mr Johnson says ‘I know the fervent libertarians will object but other people will think there is a case for it.’ Opposition is likely to come from the right wing of his own party.
• CAMRA is ‘urging Chancellor Rishi Sunak to provide vital ongoing financial support for pubs, social clubs and breweries to help them cope with months of restrictions announced in the roadmap for England this week.’
• CAMRA National Chairman Nik Antona says ‘whilst offering some light at the end of the tunnel, yesterday’s roadmap confirmed several more months of lockdown for pubs and the breweries that serve them. Many locals won’t be able to turn a profit with many not being viable to open at all whilst restrictions like outdoor-only space and the table service requirement are in place in the coming months.’
• The chairman says ‘that’s why CAMRA are urging the Chancellor to make sure next week’s Budget commits to long-term, dedicated financial support for pubs, clubs and their supply chains as long as they aren’t operating at full capacity. As well as extending furlough and business rates holidays, our locals desperately need VAT to be reduced for both food and alcoholic drinks, with a cut in duty for beer served on tap to help our pubs compete with supermarkets.’
Company & other news:
• Caffe Nero. Sources have assured Langton that ASDA owners, the Issa brothers, have not purchased any debt in coffee chain Caffe Nero. Despite weekend press comment, the sources go on to say that no discussions re a transfer of debt ownership have taken place.
• Campari maintains that the Covid-19 pandemic could create acquisition opportunities for the company. Campari tells Reuters ‘there are a whole series of companies and brands that are suffering from on-premise closures … You never know, they might be interested in considering alliances with a player like us to reduce the risk.’
• Unilever and Just East have established the Kebab Alliance – a trade body to represent the sector’s interests. Founder of the British Kebab Awards Ibrahim Dogus says ‘kebabs are the fourth most popular takeaway in Britain, but this major food sector has never before benefitted from a collective voice.’
• Indian food delivery start-up Zomato is reported to have raised a further $250m, two months after closing a $660m funding round. The new investment gives Zomato a post-money valuation of $5.4 billion, up from $3.9 billion in December.
• Airship and Toggle are offering free online training for hospitality staff. Furloughed workers could benefit. The webinars will take place every Thursday at 1pm. Dan Brookman, CEO at Airship and Toggle, said ‘we know that lots of hospitality staff have been on furlough for a long time now, and are keen to help engage and motivate them through opportunities for learning.’
HOTELS & LEISURE TRAVEL:
• Travel companies turned in a more mixed stock market performance yesterday after their big gains on Monday. Just before the close, On the Beach was up 11%, TUI gained 2% and Jet2 was marginally lower.
• Business Travel News has reported a mixed reaction to England’s proposed plans re exiting lockdown. The clarity has been welcomed but there have been calls for the creation of a global travel taskforce.
• CEO of Airlines UK Tim Alderslade says ‘we’re grateful to the Prime Minister and Department for Transport for providing the clarity the whole sector was looking for that international travel can reopen this summer’ and the Airport Operators’ Association says ‘the Prime Minister’s recognition of aviation’s important economic role, in particular for businesses that rely on access to international markets or visitors to the UK, was welcome.’
• An inconvenient truth. World Bank chief David Malpass has said that all countries must be vaccinated to end the Covid-19 pandemic.
• Langton Comment: See premium email.
• The UK government is to consider ‘Covid-status certification’ (vaccine passports) despite having ruled this out earlier in February. The government says ‘any such system will take time to implement. It will be heavily dependent on improved scientific understanding about the role vaccination plays in reducing transmission.’ That sounds like a kick into the long grass.
• Marriott International has announced that Anthony Capuano has been appointed Chief Executive Officer and has joined the company’s Board of Directors, effective immediately. He succeeds deceased CEO Arne Sorenson. Mr Capuano was previously Group President, Global Development, Design and Operations Services.
• This in yesterday’s Premium. Intercontinental Hotels yesterday reported Q4 & FY numbers to end-December saying that full year revenue fell by 48% to $2.4bn to give an operating loss of $153m versus an operating profit of $630m last year. Basic loss per share is 143c versus a profit of 210c last year. There is no dividend. Debt is down by 5% at $2.529bn.
• IHG CEO Keith Barr says ‘2020 was clearly the most challenging year in our history, with Covid-19 heavily impacting demand across our industry. 2021 has begun with many of these challenges still in place, with more meaningful progress towards recovery for the industry unlikely until later in the year and dependent on global vaccine rollouts, lifting of restrictions and an acceleration in economic activity.’
• He says ‘the shape of recovery remains varied globally, but we’ve continued to outperform the industry in key markets thanks to the strength of our teams, business model and segments in which we compete.’ Barr says ‘despite so many challenges in 2020, the long-term confidence we share with our owners was reflected by another 285 hotels opening during the year and an average of almost one new signing a day.’
• IHG concludes ‘having demonstrated resilience and outperformed in 2020, we continue to work closely with owners to capture demand, alongside investing to capitalise on our industry’s long-term growth prospects. Our preferred brands in attractive markets and segments, even stronger technology and loyalty platforms, and a substantial proportion of our pipeline being under construction, give us confidence in our ability to achieve industry-leading net rooms growth as the market recovers.’
• William Hill FY numbers. See premium email.
• Spotify has announced plans to roll out a new high-end subscription service, called Spotify HiFi.
FINANCE & MARKETS:
• The UK unemployment rate rose to its highest level in c5yrs at 5.1% in the three months to December.
• Average pay excluding bonuses was 4.1% higher in the period than it was a year earlier. Pay including bonuses was up 4.7%, the fastest rate of increase since 2008.
• The NIESR says there was a ‘sharp drop in the first half and a strong rebound in the second half.’ It says H2 was ‘partly driven by the compositional effect of a fall in the number and proportion of lower-paid jobs in the private sector.’
• The NIESR says 5-6m workers are currently furloughed. It comments ‘to reduce the long-term scarring effects of the pandemic on the labour market, it is crucial that the vaccination programme continues to be rolled out at pace and fiscal support measures are not prematurely withdrawn.’
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 22 Feb 21 Royal Caribbean Q4 & FY numbers
• 23 Feb 21 Intercontinental Hotels FY numbers
• 24 Feb 21 William Hill FY numbers
• 24 Feb 21 Accor FY numbers
• 25 Feb 21 Shake Shack Q4 & full year
• 25 Feb 21 Beyond Meat FY numbers
• 25 Feb 21 Airbnb FY numbers
• 25 Feb 21 AB InBev FY numbers
• 25 Feb 21 ABF full year update
• Est 28 Feb 21 – Various Eateries FY numbers
• 2 Mar 21 PPHE FY results
• 3 Mar 21 Nichols FY numbers
• 3 Mar 21 Government Budget Statement
• 11 Mar 21 Playtech FY numbers
• 15 Mar 21 Carlsberg AGM
• 16 Mar 21 Gregg’s FY numbers
• 17 Mar 21 Hostelworld H1 numbers
• 18 Mar 21 Fever Tree FY numbers
• 24 Mar 21 M&B AGM
• 25 Mar 21 Compass Group H1 update
• 30 Mar 21 AG Barr FY numbers
• 8 Apr 21 Sportech FY numbers
• 28 Apr 21 Carlsberg Q1 numbers
• 4 May 21 Campari Q1 numbers
• 7 May 21 Intercontinental Hotels Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 18 May 21 Britvic H1 numbers
• Est 19 May 21 Marston’s H1 numbers
• 27 Jul 21 Campari H1 numbers
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
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