Date: June 2018
Location: Throughout the UK
Name: Marston’s Inn
Marston’s, the UK regional brewer and pub operator, has set itself a medium-term target of 4,000 rooms, up from the 1,500 it has at present.
The pub group joined rivals Young’s and Fuller’s in seeking to leverage the popularity of the pub to drive additional revenue streams, challenging budget brands such as Premier Inn and Travelodge.
During an analysts’ site visit, Marston’s said that, where there was an opportunity to build less than 40 rooms, these would be constructed above pubs, with lodges of 60 to 80 rooms or more would be freestanding, but next to a c200 cover pub.
The group’s 104 room Ebbsfleet Lodge was adjacent to the group’s newly-built Spring River carvery pub. The company said that the site was generating GBP75,000 per week and rising and should contribute GBP1.5m in Ebitda pa.
As the number of rooms rises, the company was planning to rely less on OTAs, which it said provided around 70% of business and charged 15% to 18%.
Mark Brumby, analyst, Langton Capital, said: “Running pubs well takes a great deal of effort. Units need to be located, built, staffed and serviced. Their product needs to be produced, marketed, prepared, sold and served. The market is challenging but eating and drinking out remains an affordable aspiration for most consumers. Lodges are a growth industry.”
Fuller, Smith and Turner at the close of their financial year had 724 rooms, with plans to acquire new properties and building more in its existing estate.
CEO Simon Emeny said: “The year has seen another good performance with a solid set of results, particularly from Fuller’s Inns. It has been a year of building for the future – with a number of internal projects coming to fruition.”
The appeal of the pub as more than just a place to drink was echoed by Ben Stackhouse, founder & CEO, PubLove & Burger Craft, which has an estate of six hostels over pubs, who told Hotel Analyst: “There is a lot of unused space over the top of pubs which is free money, but it’s quite hard to make money out of hostels in such small spaces.
For a standalone hostel you need at least 100 beds, but we can do it with 60 because we run three businesses out of the same building – the pub, the restaurant and the hostel – and because there are a lot of synergies in running a pub and a hostel: we check in at 2pm, for example, which is just after the lunch rush.
“The majority of guests are backpackers, but a smaller majority than it used to be. There are less Aussies and Kiwis now – they all know about Airbnb and Gumtree and start out by sofa surfing when they arrive instead. We are getting a lot of Europeans and south-east Asians as well as some Chinese.
Graeme Smith, head of hospitality and leisure at global consulting firm AlixPartners, concluded to us: “Pubs enjoy a special place in the people of this country’s hearts. People have a positive predisposition towards pubs.”
THPT Comment: All makes sense, tourists like the idea in staying above a pub, pubs add an income stream with little additional operational cost and utilising otherwise dead space.
First Seen: Hotel Analyst