Welcome to the big house 

No, not that big house, the hotel sector is remarkably law abiding compared to other asset classes. Or it’s better at getting away with it.

This particular big house came up at the recent Propel Hospitality Excellence in Pub & Bar Retailing Conference, which is a step out of the old routine for us, and no, it’s still not THAT big house, although student bar jobs where vodka may have been watered down are best left unmentioned here. 

What was mentioned throughout the course of the day was the value of pubs with rooms. It’s an oft-repeated theme in this column that the hotel sector has a lot to learn about experience from pubs-with-rooms and a day with the pub folk only served to remind us how very true that is. 

Philip Turner, managing director, Chestnut Inns, was the source of the ‘big house’ comment – it was the internal name the company had given its larger sites featuring rooms and served as a klaxon to remind everyone in hospitality why we’re all here. Triggering this for Turner was the need to find a new artisanal marmalade maker  – because that’s what people buy to remind them of their stays – but whatever it takes.

He described hotels as ‘the H word’, so maybe he won’t be invited over any time soon, but the former banker, who oversees 260 bedrooms – 354 by July – had lots to teach if we can get past that, telling attendees: “We are either the destination or the destination within the destination. We’re either the only thing in that place or the best thing there.” 

Fans of Hilton’s dog policy will also be interested to hear that Chestnut Inns was also pro dog, because, well, dogs are great, but also because of the correlation of dog ownership with household income: people who own dogs have more money than cat owners. And 70% of the visits made by people with dogs were outside the school holidays. Start investing in liver snaps, people. 

Jonathan Lawson, CEO, Liberation Group, where over half the group’s pubs have rooms, was targeting 700 rooms after a start of 10 in 2016. He noted the deviation from the H word, commenting: “We want people to stay in our businesses and eat and drink in our pubs. We’ve been more prudent with the rate because our economic engine is driven by F&B. That’s what people want to do, people want to eat and drink.”

And then they want to stagger upstairs. The group was regularly seeing 90% occupancy with their F&B first policy, which is a few light years away from that of most hotels.

Rooms are all good for pubs, even those offering a discount on rate during the week, because, said Stephen Owens, managing director, pubs and restaurants, Christie & Co: “Historically the hotel sector has attracted higher multiples that the pub sector and when you have significant rooms it will push up your multiples. The security and profitability of rooms pushes up the multiples.” 

Shepherd Neame managing director Jonathon Swaine concurred, adding: “Rooms is a lovely revenue stream with high participation in F&B. They are the beating heart of a pub; a home away from home is a good thing.”

For those not quaking in their boots about regional pub companies with 700 rooms, Lawson wasn’t afraid of you either. He described his competition not as hotels but “more Airbnb, and also competing with the customer who is considering an outlay of a significant amount of money on an overseas trip or whether something experiential can be delivered more locally”.

All this is relevant to hotels because last week saw Airbnb’s Q1 results and the platform isn’t going away. Learning from the experiential skills of the UK pub sector is key to competing with Airbnb and falling back on ‘well it’s just leisure and now that corporate is back we don’t care about leisure any more’ isn’t going to work.

Airbnb’s co-founder and CEO, Brian Chesky told analysts that the company was focused on “expanding beyond our core” and in particular “expanding the inter-corporate business accommodation”.

He said: “From dollars and number of people, this is by far the smallest area that we’re putting people on. But it’s actually where I’m spending the majority of my time. And I think the majority of the leadership’s time is now being spent focused on transforming the company from an accommodations business to a multi-vertical or multi-category company.”

The group has previously had issues in the corporate market around Duty of Care, but if it can resolve those, its value offering in a time of rising hotel rates is going to start looking attractive. That or it’s everybody down the pub. 

Scroll to Top