Expert Insight
NEWS from
Kate Nicholls UKHospitality Chief Executive
After a four-year, three edition hiatus our influential benchmarking report is back, and comes as the hospitality industry emerges, blinking, into a harsh post-pandemic world. A world of pain, some might say.
The UKHospitality Christie & Co Benchmarking Report 2022 is the first such in-depth look at the sector since 2018, when we paused production so that the then newly-formed UKHospitality – a merger of the British Hospitality Association and the Association of Licensed Multiple Retailers – could find its feet.
Because of the impact of Covid in 2021 and the restricted trading in the first half of the year, the returning report covers the six months up to and including 31 December 2021. Maybe due to the exceptional circumstances in which the industry finds itself, the survey saw the largest response in its history, with 4,791 licensed managed outlets and 357 hotel outlets providing a robust sample size from which to draw analysis.
So, what has our first report as an integrated trade body, and the first to include hotels, revealed?
The three main sources of income for licensed operators are generally wet, food and accommodation sales, contributing 43.2%, 31.3% and 18.8% of revenue respectively, with machine and other income forming the balance.
This revenue profile is the most diverse the report has ever seen, with a significant increase in accommodation sales, as operators continued the pre-pandemic trend of developing high-margin letting rooms, which has since accelerated due to the rise of staycations in the last two years.
Prior to coronavirus, payroll costs were steadily increasing year-on-year on the back of the National Living Wage (NLW) increases. The survey did reveal, though, a surprising decrease of 1.2 percentage points due to furlough, as well as staffing efficiencies that operators adopted to prevent margin erosion.
Total running costs, however, increased to 55.2% of turnover, before rent is taken into account, a 2.7ppts increase on the previous survey, in 2018, and driven by rising utility, operational and premise costs. We expect these costs to increase further in 2022 (and beyond) as inflationary pressure, rising energy prices and general operational challenges take hold.
While the Levelling Up and Regeneration Bill, as well as the Non-Domestic Ratings Bill seek to provide relief through structural intervention, they are unlikely to deliver the immediate relief that operators need, welcome though they are in the longer term.
It’s the long-term view of operators that provides hope and optimism amid the gloom, with many of them confident of top-line growth in 2022 due to pent-up
consumer demand. Temper some of that optimism, though, with the fact that others are less confident in improving profitability due to the wave of new cost pressures that materialised in April, including the NLW increase and the return to 20% VAT.
The original benchmarking survey in 2007 aimed at providing ‘an understanding of the average costs associated with running a licensed business in the UK’, and we believe that, 15 years and 13 editions later, it remains as relevant to operators and their suppliers now, as it did then. With full year trading returning for next year’s survey, we anticipate an accurate benchmark against which operators can compare performance.
Christie & Co is a strategic partner for business buyers and sellers, offering experience and insight in sectors including hotels, pubs, restaurants and leisure.
You can purchase the full report, or download an abridged version at:
www.ukhospitality.org.uk/page/ Bechmarking2022Abridged
6
August 2022
www.venue-insight.com
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