Every now at then at NewDog we like to go and see how the other half live, so last week we trotted along the latest Propel event, were what we noticed most of all is that the tables were laden with free gin. And something called ‘professional mayonnaise’.
However, before you run to the fridge to berate your mayo for only having amateur status, there were other things to learn. Propel covers the pub and restaurant sector, which is significantly more fast moving than the hotel sector, with trends igniting and flaming out like those strips of magnesium you were only allowed a tiny bit of in chemistry.
It seems that ‘competitive socialising’ is very much a thing, with friends paying to batter friends with axes, darts, cricket bats, all sorts. Why no one has leapt onto this before – other than the tricky assault and battery aspects – we have no idea. If you need us we’ll be down the Electric Shuffle.
The event started, as these things do, with a state of the nation, and things were looking alright for purveyors of pizzas and artisan cocktails. Graeme Smith from Alix Partners told the event that the consumer was continuing to spend on leisure and hospitality, with spending on eating out increasing by 5.9% on average over the last 12 months.
In 2024, 63% of consumers plan to spend at least as much as they did in 2023 in restaurants and bars and 65% of consumers agree that eating and drinking out is as important in their social life as it was before the cost of living crisis, making a stable case for occasions.
Value remains important, with that great sector bellwether, Greggs, reporting 8.2% like-for-like growth so far this year.
Smith added that listed companies were forecast to exceed 2019 profit margin levels this year, despite the impact of inflation, indicating the staying power of the sector.
However, for all the pro-level condiments and tiny spears, some things are familiar to us in hotel land.
Smith reported that the group had seen distress increase last year, but was not expecting to see a leap this year. What Alix Partners was anticipating seeing was an increase in deals, driving in part by a need to refinance (and terms not being as favourable as the last time companies spoke to their lenders) and in part by private equity groups coming to the end of their hold times/tethers.
The volatile trading and behaviours of the past few years have seen many private equity groups hold onto their investments for longer than their usual three to five year tastes, which meant that, with trading stabilising this year, exits were likely to be made.
What did this mean for the sector? More interest for the observers, but also shifts and changes in companies as they add rivals, build platforms and look to fill white space. What does this mean for hotels? A likely echoing. PE firms are bored of holding companies for ages and ages too, but find it hard to attract buyers who believe in the uplift they say they have created in value. As we saw with the aborted ChoiceHam, there is an appetite for scale coming from all directions. Will we see it this year?