Langton Capital – 2021-05-13 – Staff shortages, rents, staycations, bookings, On the Beach & other:
Staff shortages, rents, staycations, bookings, On the Beach & other:
A DAY IN THE LIFE:
So is the first sign of madness looking for hairs on the palm of you hand? Or, as Einstein suggested, is it doing the same thing multiple times and expecting a different outcome?
Or, as I prefer to believe, is it finding yourself apologising to your dog for walking through a door before he pushes past or for not being quick enough with his food of a morning?
Anyway, we’ll leave that one with you as we’re a tad pushed this morning. On to the news:
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THE ELEPHANTS IN THE ROOM:
What are the major issue facing the industry in a world where Covid, in the UK at least, may soon be in the rear-view mirror? See premium email.
PUBS & RESTAURANTS:
The outlook for rents:
• New Look sets precedent. We not that New Look has overcome (in the High Court) the objections of a number of landlords to its proposed CVA. City AM is not alone when it says this is a landmark case ‘that experts say will clear the way for other retailers to use Company Voluntary Arrangements to combat the impact of the pandemic.’ The tenants may be the winners and you don’t have to look too hard to find the losers. New Look had already secured creditor approval for its CVA but a number of its landlords had objected and had taken the ruling to court. They have now been told that they cannot oppose the deal.
• Langton comment: see premium email.
• Shifting demand for overseas holidays to the winter. This story impacts both Pubs & Restaurants (positively) and tour operators (less so). TUI, which yesterday reported H1 numbers (slack demand, big losses etc), has said that people are deferring their holidays to the winter season because of a lack of clarity regarding the summer. This should help bolster demand for UK pubs & restaurants (and domestic hoteliers) over the critical summer period. In what may be more a hope than a firm prediction, TUI says that customers remain keen to travel once Covid restrictions were fully lifted. Interestingly, TUI said that it had sold 2.8m summer holidays as at February this year – and that number has actually declined, to 2.6m, due to a lack of clarity and cancelations and re-bookings. Summer 2022 bookings look strong but, 15mths ahead of departure, these are relatively small
Company & other news:
• The Night Time Industries Association has warned MPs that the rent crisis facing the UK’s nightclubs could lead to multiple closures. It says late night operators could have run up as much as £2.5 billion in accrued rent. It says some 75 per cent of commercial tenants in the UK’s nightlife industry could be facing bankruptcy. It adds ‘large swathes of the nightlife sector have been closed since March 2020 with no meaningful opportunity to open and trade. As a result, businesses have been unable to pay rental arrears, through no fault of their own, and have accrued considerable debts. While the government put in place a moratorium on evictions in March 2020, this is due to expire on June 30, and the prospect of repaying these debts, for most in the sector, is largely unattainable.’
• The government is to drop its advice that people should work from home from 21 June. PM Boris Johnson says the “dynamism” of England’s cities may return “remarkably quickly” when workers return.
• SIBA has reported that the use of outdoor spaces at brewery taprooms across the UK, often referred to as ‘tap yards’, has mushroomed since 12 April. SIBA says on average brewery taprooms were around 73% busier over the last few weeks when compared to the same period in 2019. In Harrogate, North Yorkshire, SIBA’s Chairman Ian Fozard runs Rooster’s Brewery, which has seen a very busy few weeks at their large brewery taproom beer garden.
• UK Hospitality Scotland has commented on the confirmation of the next step to ease restrictions north of the border saying ‘today’s confirmation of the move to Level 2 for mainland Scotland, albeit with the likely exception of Moray, and the move to Level 1 for the country’s islands is extremely welcome.’ It adds ‘the easing of restrictions provides a much-needed psychological boost and promises some economic respite for businesses that have experienced fourteen months of severely disrupted trading.’ It concludes ‘even after all restrictions have been lifted, hospitality will still be in a very fragile state and continued Government support will be vital in ensuring the sector’s full recovery and in enabling businesses to play their full role in Scotland’s economic and social renewal.’
• Working from Home: The ICAEW says the move to hybrid working could be a dilemmas for employers. It says combatting worker loneliness is a challenge and says up to 50% of homeworkers feel ‘disconnected from their employer’. It says another danger is the emergence of an ‘out of sight, out of mind’ culture. This may even grow to become an ‘us and them’ feeling.
• DesignMyNight reports that one million online bookings for hospitality venues have been taken in seven days.
• US data. The latest Beverage Trak data from CGA concludes that the US on-trade has “roared back to life”, and is even seeing growth compared to the same period in 2019. CGA says ‘naturally, the market is in velocity growth versus the shutdown of 2020 but what perhaps is even more encouraging is that the w/c May 1 is up +4% vs the same time period in 2019.’
• The National Restaurant Association in the US reports that 10% of restaurateurs do not believe their staffing levels will come back up to ‘normal’. Most of the remainder expect normality to return by the autumn.
• Marston’s has reported that all of its pubs in England will open for indoor and outdoor service from 17 May. The company says ‘table service will take place, but guests will also have the option to order via Marston’s online ordering system called ‘Marston’s Tap’. The online platform is available across the majority of Marston’s pubs and a full rollout is underway following its success.’ CEO Ralph Findlay says ‘it’s fantastic that our pubs can reopen, inside and out. Over the past few weeks, we have seen people visit pub gardens, come rain or shine, for the pure enjoyment of socialising with friends and family.’
• US operator Denny’s has updated on Q1 trading saying that off-premise sales have continued at higher than normal levels post reopening. CEO John Miller says ‘we’ve been pleased with our ability to retain off-premise sales, which have been more than doubled since the start of the pandemic.’
HOTELS & LEISURE TRAVEL:
• Spain’s tourism minister, Maria Reyes Maroto, has confirmed Spain intends to reopen to British visitors from 20 May.
• Jet2.com and Jet2holidays have added flights and holidays to Portugal and TUI has confirmed that it will take UK customers on holiday to amber destinations. It will be up to the customers to quarantine on their return.
• Jet2.com’s CEO Steve Heapy has said the Home Office needs to sort out the UK border in airports to solve the “unacceptable” waits at immigration.
• Langton comment: see premium email.
• On the Beach Group says it will extend its pause on operations from 30 June to 31 August 2021 ‘following the announcement earlier this week on the traffic light system for leisure travel, where most destinations have been classified Amber.’ It says ‘the Board’s decision is based on consumer feedback from both research and search / sales data, showing a market wide lack of appetite for booking Amber destinations, as well as the likely loss of customer goodwill for holidays that might be booked only to be cancelled or re-arranged.’ It adds ‘this position will be reviewed following the Government’s update on travel and associated restrictions which is expected to be released at the end of May.’
• Langton comment: see premium email.
• STR updates on the London hotel market saying that occupancy is 28.6% with achieved average rates of £67.13 to give REVPAR of £19.23. It says ‘the absolute occupancy level was the highest for any month in London since October 2020, while the ADR and RevPAR levels were the highest since December 2020. Occupancy-on-the-books data for the market shows weekend peaks after May 17 — the day hotels can reopen.’
• Games producer Electronic Arts has announced full year numbers to end-March saying that ‘with tremendous engagement across our portfolio, we delivered a record year for Electronic Arts. We’re now accelerating in FY22, powered by expansion of our blockbuster franchises to more platforms and geographies, a deep pipeline of new content, and recent acquisitions that will be catalysts for further growth.’ Games have been a beneficiary of lockdown.
FINANCE & MARKETS:
• The ONS reports the UK economy only shrank by 1.5% in the first three months of 2021 after a strong performance in March. The economy is 8.7% smaller than it was before the pandemic. The NIESR says ‘we now forecast month-on-month growth of 2 per cent in April, and growth of 4.7 per cent in the second quarter compared with the previous quarter. This is likely to be driven by the retail and hospitality sectors, which we anticipate being re-opened in line with the government’s roadmap.’
• Exports to the EU rose in March. France is reported to be set to block a post-Brexit financial services deal in order to gain leverage over fishing. The City of London is reported to have lost £2.3 trillion in a single month in derivatives trading.
• US inflation ‘surged’ in April. Consumer prices are 4.2% higher than they were 12 months ago, up from 2.6% in March.
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 11 May 21 City Pub Group FY numbers
• 11 May 21 Morrison’s Q1
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 12 May 21 Coca Cola HBC Q1 update
• 12 May 21 Just Eat AGM
• 14 May 21 Tasty AGM
• 14 May 21 Gregg’s AGM (no update expected)
• 17 May 21 Hollywood Bowl H1 numbers
• 18 May 21 Britvic H1 numbers
• 18 May 21 DP Eurasia trading update
• 19 May 21 Marston’s H1 numbers
• 19 May 21 Premier Foods FY numbers
• Est 19 May 21 M&B H1 numbers
• 20 May 21 Young & Co FY numbers
• 20 May 21 Fevertree AGM
• 20 May 21 888 AGM
• 25 May 21 Restaurant Group AGM
• 25 May 21 Shaftesbury H1 numbers
• 26 May 21 C&C FY numbers
• 26 May 21 Playtech AGM
• 3 Jun 21 New River full year numbers
• 8 Jun 21 DP Eurasia AGM
• 15 Jun 21 Vianet full year numbers
• 24 Jun 21 Bank of England MPC meeting
• 23 Jul 21 Premier Foods Q1 update
• 27 Jul 21 Campari H1 numbers
• 3 Aug 21 Domino’s Pizza H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 19 Aug 21 Rank FY numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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