Firebreaks, WFH, disposable income, UK hotels, 888 G4M etc.:

A DAY IN THE LIFE:

What a difference a day makes.

True with regard to many things. And certainly the weather because the contrast is pretty stark as today we’re going to get a taste of the autumn and, if we didn’t seize the opportunity to cut the grass yesterday, we may not get another chance for a while, possibly not before 2022.

Anyway, that’s a roundabout way of alluding to me being a bit behind with tasks due to spending a chunk of the day in the garden, Wednesday. On to the news:

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PUBS & RESTAURANTS:

An October firebreak:

• Talk thereof could be sending shivers through the hospitality industry but the Independent runs with its story, backed up by members of Sage, that the UK could be in for an ‘extended peak’ of infections as the schools return and the weather drives people indoors.

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Working from home:

• A number of observers have highlighted the ‘network effect’ (in reverse) which suggests that, as a communication network with only one telephone would be useless, the same applies to workers returning to the office if they subsequently spend all of their time on Zoom.

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• The ICAEW looks at remote working and quotes Global Integration as saying that ‘up to the pandemic, the big reason why companies didn’t embrace remote working was the management attitude to control.’ It says ‘a lot of managers didn’t trust people, fundamentally, to work remotely. That’s really been destroyed in the last year and a half. People have shown that generally they’re more productive and more engaged.’

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Demand – the ability to spend. The pound in your pocket:

• Zoopla has reported that rents outside London have increased by 5% in the last year, their fastest rate in more than a decade. NI payments are about to go up, utility bills are rising, food and fuel prices have gone up and rail fares will rise sharply as they have been linked to a particularly high RPI number.

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Labour & product shortages.

• The Morning Advertiser reports that Scottish bosses in pubs, hotels and restaurants north of the border believe a generation of ‘silver servers’ could help alleviate the current recruitment crisis in the industry. The Scottish Hospitality Group (SHG) is targeting anyone over 50, with or without experience, to join the trade.

• The BBC reports that the government is set to shorten HGV testing in order to help alleviate the shortage of drivers. It quotes an ‘industry source’ as saying ‘the government seem to finally understand the scale of the problem. For the first time they looked rattled.’ It is to be hoped that this does not impact road safety.

• Meanwhile, the MA reports that JD Wetherspoon is suffering from a shortage of bread, impacting 13 of its breakfast menu dishes. The food and drink industry is calling for a 12-month Covid-19 Recovery Visa to help alleviate the workforce shortages.

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• In the US, the National Restaurant Association says that, while restaurants added 1.3 million jobs during the first seven months of this year, the industry is still short of around 1 million workers. Numbers employed actually fell by around 40,000 roles in August. The NRA says 26% of restaurants are looking for cooks and 17% are in need of servers. The NRA says that many workers left the industry when they were initially laid off and that they seem to be reluctant to return.

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Company & other news:

• Airship Services has raised £500k from NPIF – Mercia Equity Finance to take advantage of increased demand following the re-opening of bars and restaurants. Airship’s software helps hospitality businesses to boost sales.

• Boxpark is reported set to accelerate its expansion after securing funding from private equity firm LDC. The company recently announced the launch of its new concept BoxHall which is set to open in Bristol next year.

• The proposed increases in NI contributions and dividend tax ‘will dampen the entrepreneurial spirit’ according to Suren Thiru, head of economics at the British Chambers of Commerce (BCC). The new health and social care levy will pay for reforms and the NHS in England.

• Star Pubs & Bars has said that its £38m investment into its estate will benefit 700 local pubs across England and Wales, creating an estimated 500 new jobs, according to the company. Almost  80 pubs will receive major makeovers, costing between £125,000 and £400,000 each.

• Amazon UK Services paid just £3.8m more corporation tax last year than in 2019, even as sales increased by £1.89bn, according to accounts filed at Companies House. The company’s corporation tax contribution was £18.3m in the year to December 2020 on reported profits of £128m. Sales increased by 64% to £4.85bn.  

• Drinks Business quotes a recent survey conducted by The Bordeaux Index as saying that lockdowns have boosted sales of fine wines.

HOTELS & LEISURE TRAVEL NEWS:

• RSM’s Hotel Tracker reports that UK hotel occupancy rates have climbed for the third consecutive month, with the average occupancy rate rising from 30% in April 2021 to 65% in July. The average room rate  was £89 in July, still behind the £110 average room rates in July 2019.

• Regent Seven Seas Cruises has resumed operations after an 18-month break, with the 750-passenger Seven Seas Splendor beginning a four-day relaunch on Tuesday.

• Cao Cao Mobility has raised $589m that will help the ride-hailing unit of Geely Automobile Holdings upgrade its technology and expand its fleet.  

• Travel Weekly reports that Shearings has doubled the capacity of its 2022 holidays featuring Warner Leisure Hotels, the specialist staycation accommodation provider that is owned by Bourne Leisure. Shearings features 13 adult-only Warner Leisure Hotels in its programme.

• The CEO of Travel Counsellors has said that momentum is building on sales. Steve Byrne told a Travel Weekly webcast that the homeworking group’s leisure sales are at 75-80% of pre-pandemic levels. Byrne adds ‘it’s a great time for customers to book, particularly short-haul. Flight prices are super-competitive and there is availability. Compared to where we were two or three months ago, and last year, you’re seeing really positive demand for Spain and other European hotspots.’ He says ‘people are booking now to go this month in October. Then you’re starting to see momentum build for winter and next year.’

• Carnival has updated plans for new sailings saying that it will have ships in its Holland America Line back in operation by before next summer.

OTHER LEISURE:

• Gear4music (Holdings) plc today updates on trading saying that UK revenue ‘returned to growth during July and August 2021’. It adds that it has seen ‘slower European revenue impacted by post-Brexit challenges’ and that, overall, ‘trading remains in-line with the Board’s expectation.’ The company has also announced an acquisition, saying that contracts have exchanged for the purchase of AV Distribution Ltd, to complete in Q3 FY22 for £9.2m, an EBIDTA multiple of 7.1x. CEO Andrew Wass says ‘as previously announced, trading during Q1 FY22 was stronger than the Board had expected although, as anticipated, behind the exceptional period of trading during FY21. UK sales have pleasingly returned to growth during July and August. European sales have remained behind last year, primarily as a result of post-Brexit cross border shipping challenges creating a less competitive delivery proposition
in some of our European markets.’

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• 888 Holdings has formally announced the acquisition of William Hill International. It says the deal will create a global leader. 888 is paying £2.2bn for the assets. It says ‘the Acquisition will create a global online betting and gaming leader by bringing together two highly complementary businesses and combining two of the industry’s leading brands.’ 888 adds ‘the Acquisition represents a transformational opportunity for 888 to significantly increase its scale, further diversify its product mix and accelerate the upward shift of its revenue growth profile. The combination of 888 and WHI is expected to deliver significant operating efficiencies, including pre-tax cost synergies of at least £100 million per year1, leading to improved profit margins. On a pro forma normalised basis the Enlarged Group’s annual revenue and adjusted EBITDA in 2020 would have been $2.5bn and $464m,
respectively.’

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• Sportech has reported H1 numbers to end-June saying that revenue rose by 70.3% to £13.4m vs last year with adjusted EBITDA up to £0.3m from a loss of £2.4m. The group is reporting an adjusted loss before tax of £0.7m against a loss of £4.3m in 2020. CEO Richard McGuire says ‘the first half of 2021 marked a notably successful period of restructuring as Sportech completed business disposals, secured the move to the AIM market and built further on the online revenue gains from 2020. In recent weeks we also secured shareholder support for a proposed capital reduction and a significant capital return to shareholders and were delighted to announce a 10-year business relationship with the Connecticut Lottery Corporation to support their sports betting initiative.’ Sportech says that ‘the business is in a strong position.’

FINANCE & MARKETS:

• Andrew Bailey, the governor of the Bank of England, has said that worker shortages could exacerbate what is already a levelling off in the UK’s economic recovery. The Bank is also forecasting that inflation will hit a 10yr high of 4% later this year.

• The Bank governor said that the MPC was split four to four on whether the UK had recovered enough to meet the minimum conditions necessary to start tightening policy.

• The British Chambers of Commerce has cautioned that the NIC hike could derail the UK’s economic recovery.

• Sterling mixed at $1.3757 and €1.1644. Oil higher at $72.73. UK 10yr gilt yield up 1bp at 0.75%. World markets down yesterday and London set to open down around 60pts as at 7am.

RETAIL WITH NICK BUBB:

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 1 Sept 21 PPHE H1 numbers

• 1 Sept 21 888 Holdings H1 numbers

• 2 Sept 21 Jet2 AGM

• 2 Sept 21 Gym Group H1 numbers

• 7 Sept 21 DP Eurasia H1 numbers

• 9 Sept 21 Gear4Music AGM

• 9 Sept 21 Morrison’s H1 numbers

• 9 Sept 21 Sportech H1 numbers

• 15 Sept 21 Restaurant Group H1 numbers

• 16 Sept 21 C&C H1 trading update

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 City Pub Group H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 25 Sept 21 (est) GfK UK Consumer Confidence numbers

• 29 Sept 21 Fulham Shore AGM

• 30 Sept 21 New River investor day

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 6 Oct 21 Constellation Brands Q2 numbers

• 8 Oct 21 Hollywood Bowl FY update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 25 Oct 21 DP Poland H1 numbers

• 27 Oct 21 Chancellor’s Autumn Budget

• 26 Oct 21 Campari Q3 numbers

• 28 Oct 21 YUM Brands Q3 numbers

• 18 Nov 21 Jet2 H1 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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