Reopenings, Redcat, Pret, CCH, Inn Collection, TUYI, ROO & other.:

A DAY IN THE LIFE:

Plenty to talk about over the coming days regarding hospitality’s near term opportunities and challenges.

Staycationing in North Yorks and the Peak District provided illustrations of both but, just for the moment, we find ourselves a bit pushed for time after scrolling through newsfeeds, emails and the like to blow off the dust.

Hence, stopping only to mention that the Mighty Hull City’s brief sojourn at the top of the Championship is over for the moment and, if we pick up red cards and ship goals at the wrong end of the pitch like we did on Saturday, we won’t be challenging for promotion any time soon, we’ll move on to the news:

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PUBS & RESTAURANTS:

Trading:

• The latest Market Recovery Monitor from CGA and AlixPartners has reported that ‘more than 7,000 licensed premises have not yet returned after last month’s ‘freedom day’. The Monitor says ‘while it is expected that some are still planning their restart or are waiting for trading conditions to improve—especially in Scotland and Wales, where restrictions were lifted later than in England—others are unlikely to open again.’ More than nine units in every ten that existed pre-Covid are now open. The Monitor says ‘the wave of re-openings was partly triggered by ‘freedom day’ in England on 19 July, which allowed many venues, especially nightclubs and late-night bars, to trade for the first time since March 2020. Across Britain, 98,790 licensed premises were open by the end of July—93.0% of the total known sites.’

• A little flavour. The Monitor says that 98.1% of food-led licensed premises were reopened by the end of July, compared to 91.4% of drink-led sites. It says that chains have reopened more units than independent operators. The former have 98.7% of their units open and only 89.9% of single-site traders are open.

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• UK Hospitality last week highlighted the contribution made by the reopened hospitality sector to Q2 GDP numbers. UKH says ‘these figures not only show the importance of the hospitality sector to the UK economy, even in the severely restricted and beleaguered state it was in during the second quarter of this year, but also demonstrate its real potential to power a wider economic recovery now trading restrictions have finally been eased after almost 18 months.’ GDP was up by 4.8% between Q1 and Q2. Kate Nicholls continues ‘this was not a period characterised by booming sales and plain sailing for the sector, but many weeks where businesses were still operating under strict restrictions and experienced a multitude of challenges brought about by the pandemic.’

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• CGA reported last week that ‘sales in the contract catering sector grew by more than two thirds in the second quarter of 2021 as the sector continues its recovery from COVID-19 lockdowns.’ It says ‘sales from April to June 2021 were up by 69% on the same three months in 2020, when the UK moved into a full national lockdown. Year-on-year sales growth grew at a higher pace from April into May and June — months in 2020 when the majority of venues served by contract caterers, like schools, universities, offices and sporting venues, were closed.’ However, on a rolling 12-month basis, ‘sales in the year to end-June were 38% below the previous 12 months.’ CGA says ‘this demonstrates the huge impact of on-off closures of private and public sector spaces on the contract catering sector over 2020 and 2021.’

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• The MA quotes the latest data from Centre for Cities’ High Streets Recovery Tracker as saying that Freedom Day has provided a much-needed boost to the pubs, restaurants and nightclubs in many cities. It says night-time footfall in the centres of the UK’s 63 largest cities and towns rose by 16 percentage points.

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R rate and infections:

• The NIESR has commented on rising infections saying that it is ‘likely that some of the increased infection transmission resulting from step-4 reopening are becoming evident only now in the data, following the incubation period of the virus which ranges from 2 to 14 days.’ Covid vaccines ‘are highly effective at averting severe illness and death’ meaning that mortality numbers are lower than would have been the case with similar levels of infections a few months ago.

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Industry trends & other news:

• Lumina Intelligence reports that pubs accounted for 15% of total eating out occasions in the four weeks to 11 July 2021. Some 50% of the population are eating out. It says average spend is up 2.6%.

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• Beer deliveries could be under threat due to strike action by delivery drivers. Union Unite has said there will be two 24-hour strikes on Tuesday 24 August and Thursday 2 September. There will also be an overtime ban and a work to rule.

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• Working from Home. The BBC reports that Google may cut the wages in the US of employees who opt to work from home permanently.

• Delivery issues. KFC has warned that supply chain issues are disrupting deliveries of both food and packaging materials.

• Sport in pubs. CGA reports that 30% of consumers watched sport in pubs in the first ten days’ trading after Freedom Day.

• Spring frosts in France alongside heavy summer rains mean that this year’s grape harvest will be ‘historically low’.

Company news:

• RedCat Pub Company is reported set to acquire The Coaching Inn Group. The MA says this is ‘for a rumoured £50m’. Quite whether this is EV or equity value or post-new money isn’t clear. Coaching Inn Group operates 18 coaching inns across the UK, largely in historic market towns. The group was founded by Kevin Charity in 1996 and secured investment from BGF in 2015. The purchase sees RedCat, former Greene King CEO Rooney Anand’s vehicle backed by Oaktree Capital Management, move to 60 sites. Mr Anand says ‘I’m delighted that The Coaching Inn Group is becoming part of RedCat.’ He adds ‘I look forward to building our pub hotels business and building our business together.’

• Pret a Manger is in the news for a number of reasons. It has said it will open 100 new shops nationwide with franchisees. It has also said it will make permanent what had been an effective pay cut by not paying workers during their breaks. However, it has said that a ‘good service bonus’, which was based on mystery shopper reviews and which was paused last year, will be reinstated. It had first done this at half the rate of previous years – but has now made this whole.

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• Wendy’s in the US is to grow its partnership with Reef Technology and aims to open 700 delivery kitchens over the next five years. Most will be in the US with some in Canada and the UK.

• Amazon is reported set to launch its own-brand food lines for sale.

• Moody’s has reported that Coca-Cola HBC AG’s agreement to acquire approximately 94.7% of Coca-Cola Bottling Company of Egypt, which should close in the fourth quarter of 2021, is credit positive ‘because it will increase CCH’s geographic diversification and expand its operations to Egypt, a country with high growth potential. It will also reduce the group’s leverage, because the transaction will be mostly funded with existing cash while adding EBITDA of about €50 million-€60 million from the acquired assets, by our estimates.’

• McDonald’s is to oblige its office workers get vaccinated against COVID-19. This will delay the return to the office from Sept. 7 to Oct. 11.

• The Inn Collection is to convert the landmark Dean Court Hotel near York Minster. The acquisition will take the estate to 25 units. Inn Collection Group MD Sean Donkin says ‘the Dean Court Hotel is an extraordinary site. We are absolutely delighted to be adding this spectacular venue and its team into our collection. It matches our pubs with rooms blueprint in every way, offering our expanding customer base an unrivalled location with a phenomenal USP in its proximity to York Minster. We have had York in our sights for a considerable time and are looking forward to operating here and welcoming the Dean Court staff team and customers into The Inn Collection Group family.’

• Gordon Ramsay is to open his first Bread Street Café in Ealing Broadway on 23 August reports The Caterer.

Lateral thinking:

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HOTELS & LEISURE TRAVEL NEWS:

Leisure travel:

• An ABTA poll suggests that around a third of holidaymakers have booked an overseas holiday this summer with 41% doing so at some point in the next 12 months. However, 26% of people believe that foreign travel should still be banned. ABTA says ‘as an industry, we know that the demand to travel abroad is there – and has been for quite some time.’ It adds ‘this is certainly reflected in the fact that a third of people had a foreign holiday booked for this summer and more plan to head off overseas in the next 12 months.’

• The cost of NHS coronavirus tests for international arrivals in the UK has been reduced from £88 to £68 for people arriving from green-listed countries.

• TUI has reported an “enormous rebound” in working capital as a result of holiday bookings and says that it is “no longer burning cash.” See comment on H1 numbers under recap below.

Hotels:

• Indeed Flex reports that demand for hotel staff rose by 21% in just one week following the easing of some travel restrictions.

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• Sykes Holiday Cottages has acquired a Gwynedd-headquartered competitor, Abersoch Quality Homes.

Cruise industry:

• Onboard spend. This has risen sharply, says Norwegian Cruise Lines. Perhaps passengers are less keen to go ashore?

Airlines & airports:

• IATA reports that the global airline industry lost $126bn last year with revenues falling by around $421bn.

• The CAA forecasts a “further recovery” in passenger numbers as restrictions are eased. It says 6.3m passengers flew in and out of Britain during the quarter compared with 3.4 million during January to March.

• However, Gatwick Airport is reported to be in talks with its bank lenders to avoid defaults as major losses continue. It says the government should simplify its rules and adds ‘the UK is in danger of continuing to lag behind Europe and the US whose much simpler travel rules are enabling passengers to travel more freely and enjoy much needed breaks and reunions with family and friends.’

• Heathrow says July passenger numbers were up 74% on the same month last year. It says, however, that ‘the cost of testing in the UK remains prohibitive for many, as industry calls for VAT to be scrapped, alongside the use of cheaper lateral flow for low-risk destinations. This will keep people safe and will avoid travel becoming the preserve for the wealthy.’

Company news:

• Airbnb has reported Q2 numbers saying that it now has a record number of listings with over four million hosts. The company says ‘the way that people travel and live continues to change. We believe that many of the new booking trends that emerged over the past year are here to stay.’ The company reduced its net loss for the quarter to $68 million, an improvement of $507 million compared to the second quarter of 2020 and an improvement of $229 million compared to the second quarter of 2019.

OTHER LEISURE:

• Cineworld is reportedly considering a US listing for its shares. See catchup below for the group’s H1 numbers.

FINANCE & MARKETS:

• The UK economy grew by 4.8% in Q2 compared with Q1 per the ONS. The NIESR says ‘June’s month-on-month growth of 1 per cent in GDP was mainly driven by the effects of reopening which led to a 1.5 per cent growth in services sector in June 2021. Return to some normality in health activities and increased demand for indoor dining were the main contributors to rapid growth in services output. Meanwhile, production output contracted by 0.7 per cent in the same period.’

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• The RAC says petrol prices are now at an 8yr high.

• US job vacancies reportedly hit a new record high in June of 10.1 million positions.

• The rate of inflation in the US was 5.4% in the year to July.

• The ICAEW reports that the UK Treasury will take 20yrs or more to recover from Covid.

• Sterling around level since our last email at $1.3851 and €1.1744. Oil down at $69.77 and the UK’s 10yr gilt yield broadly unchanged at 0.58%. World markets better but London set to open down by around 55pts as at 7.10am.

• Rightmove reports that the average price of a house in the UK fell last month for the first time this year. Prices were down 0.3% with the price of larger homes falling by 0.8%.

CATCH-UP – RESULTS ETC (for the dates on which these numbers were reported, see Forthcoming Figures schedule).

• See premium email for brief comments on Deliveroo, Coca Cola HBC, Gregg’s, Stock Spirits, Domino’s Pizza, Diageo, TUI, Intercontinental Hotels, Hostelworld, Cineworld and Escape Hunt.

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 30 Jul 21 Safestay FY numbers

• 2 Aug 21 Escape Hunt trading update

• 3 Aug 21 Domino’s Pizza H1 numbers

• 3 Aug 21 AG Barr H1 trading update

• 3 Aug 21 Gregg’s H1 numbers

• 3 Aug 21 Marriott Q2 numbers

• 4 Aug 21 Royal Caribbean Q2 numbers

• 5 Aug 21 Bank of England MPC meeting

• 5 Aug 21 Shake Shack Q2 numbers

• 9 Aug 21 Nightcap trading update

• 10 Aug 21 Intercontinental Hotels H1 numbers

• 10 Aug 21 Flutter H1 numbers

• 11 Aug 21 Deliveroo H1 numbers

• 11 Aug 21 Hostelworld H1 numbers

• 12 Aug 21 TUI Q3 numbers

• 12 Aug 21 Cineworld H1 numbers

• 12 Aug 21 Entain H1 numbers

• 12 Aug 21 Coca Cola HBC trading update

• 17 Aug 21 Fulham Shore FY results

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 1 Sept 21 PPHE H1 numbers

• 2 Sept 21 Jet2 AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY numbers

• 8 Dec 21 TUI FY numbers

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