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UK Leisure Sector - Q3 2019

09 October 2019Quarterly Updates Topics: Hotels & Guest Houses, Leisure & Nightclubs, Pubs & Bars, Restaurants
UK Leisure Sector - Q3 2019

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Summary

The leisure market has been active in the last quarter highlighting a trend of investment in resorts. Park Holiday UK has cited that their turnover increased to approximately £150m, following an investment of over £5m on entertainment complexes and additional investment in children's activities, swimming pools and clubs. Bourne Leisure also referenced a spend of £150.9m, which included investment in entertainment complexes, caravan parks, swimming pools, overall guest experience and the accommodation in their Butlin's and Warner Leisure Hotels. However, there was also movement within the transactional market as Brightwater Lakes in Wales (comprising of 100 caravan homes, 153 plots and 53 chalets) was acquired by Thornley Leisure. Thornley Leisure have stated they will carry out investment in the site. There is a trend of holiday park groups citing an increase in turnover following improved repeat bookings, increased capital investment in the quality of the holiday lets and the ongoing uncertainty surrounding exiting the EU.

Within the restaurant sector, expansion plans outside of London are delivering on targeted growth, after reporting large increases in sales notably from Franco Manca and Five Guys JV; Franco Manca have opened in Birmingham, Exeter, Leeds and Edinburgh following a sales growth of 17% in the year ending 31st March 2019. However, the latest insight from GGA and AlexPartners' Market Growth Monitor states that UK-wide restaurant numbers have decreased over the last 18 months, with many closures coming from independent operators.
There remains a strong transactional market in the public house sector. Greene King's shareholders are reviewing a cash purchase by CK Asset Holdings (the Hong Kong-based property developer), likely driven by weak Sterling and Li Kasheng's Hutchison Group seeking to further diversify out of Hong Kong. Stonegate Pub Company's potential acquisition of Ei Group for £3bn is currently approved by Ei Group's shareholders. Red Oak Taverns
acquired a portfolio of 18 pubs from Wadworth bringing the total to 179 pubs. Admiral Taverns reached an agreement to acquire a portfolio of 150 pubs of Star Pubs & Bars.

The market remains resilient with a number of notable large transactions and a significant overseas investment by CK Asset Holdings into the UK leisure market.

 

UK Leisure Sector Q3 2019 Highlights

July 2019

Restaurants: The UK joint venture of Five Guys JV has opened 10 stores over the year, now totalling 88, with an increased turnover to £149.6m (up 23%).

Restaurants: Franco Manca saw sales rise to £64m (up 17%) in year ending 31st March 2019. During the year, four new sites opened and one closed. Expansion continues in and out of London, with three further sites due to open in this financial year; Exeter, Greenwich, Birmingham, Leeds & Edinburgh.

Pubs: Hop Stuff Brewery has been purchased by Molson Coors in a pre-pack administration deal.

Pubs: Trust Inns, a north west-based pub company owning 350 pubs, has cited a reduction in finance cost for the increase in pre-tax profit for the year ending 31st March 2019 at £7.3m from last year's £1.7m.

August 2019

Restaurants: The Alchemist reported turnover of £41,031,836, which is an increase of 19% on last year (YE 31st March 2019).

Restaurants: The 90 year old Harry Ramsden estate was acquired by Deep Blue Restaurants from Boparan Restaurants Group. This included 34 sites in the United Kingdom, Ireland and Malaysia.

Restaurants: Loungers reported sales of £153m (up 26.4%) with adjusted EBITDA at £20.6m (up 23.7%). The brand has a total of 146 sites and opened 25 new sites in the year ending 31st April 2019.

Pubs: CBRE Gi completed a sale and leaseback of Upham Pub Company's 14 pubs totalling 151 bedrooms. The freehold of The Swan, Chiddingfold is excluded and has been retained by the South of England-based pub company. The funds have been used to reduce existing debt levels.

Pubs: The Hong Kong-based property developer CK Asset Holdings has purchased Greene King. The offer values the entirety of the group at £4.6bn. The directors have voted unanimously to recommend this cash purchase to the shareholders.

Hotels: The newly incorporated company Citrus UK Bidco, owned by ICAMAP Investment and Cadim Fund, part of Ivanhoé Cambridge, has acquired EasyHotel for £139m, including 12 hotels and 26 franchise properties.

September 2019

Pubs: Stonegate Pub Company seek to acquire Ei Group for £3bn. This has been considered favourably by Ei Group shareholders. The transaction of the 4,000 assets is expected to complete in the first quarter of 2020.

Pubs: The Broadway Plaza leisure scheme in Birmingham has been acquired by Legal & General for £46.95m from Aviva Investors. The Broadway Plaza has tenants such as Odeon, Hollywood Bowl, Travelodge and is in the process of opening an indoor adventure golf venue shortly.

Leisure: Hashtag hotels, which operates 17 sites across UK and Ireland, has gone into administration, 5 months after the launch.

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Author

Elysia Wilson-Gunn

Elysia Wilson-Gunn

Senior Associate

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