The hospitality industry is adapting to a new trading environment and while there continues to be economic uncertainty the market is being lifted by signs of banks making finance available again, a new report by property agent Christie & Co has revealed.
The company's Business Outlook Summer 2012 publication, its first interim report into the sectors it covers, suggests that the industry has learnt to operate in a "new normal", with the first half of 2012 having seen steady transactional activity.
"The ongoing crisis in the eurozone and the fears of a double-dip recession in the UK didn't inspire great confidence as the year took shape," said Christie & Co UK managing director Simon Hughes.
"However, while transactional activity has been of the steady variety, we are buoyed somewhat by indications of a possible return of debt funding."
Hughes added: "One thing that is clear is that the market is still functioning as operators have learnt to adapt to what is a ‘new normal'."
Jeremy Hill, Christie & Co's director and head of hotels, said that with the banks understanding their exposure better, high-profile properties had come to market at a far more pragmatic price.
He added that cash buyers were dominating the market - such as Topland Group, which acquired Von Essen's Cliveden out of administration in a cash deal in March.
"The continuing fragile economic environment has meant that trading has been as timid as many predicted but we would still expect this to pick up in the latter half of 2012, particularly as further distressed assets and portfolios inevitably come to market," Hill said.
Simon Chaplin, director and head of restaurants at Christie & Co, said that although the first quarter of 2012 saw like-for-like sales fall overall, there was hope for the sector to pick up later in the year.
"The life in the sector was confirmed by a number of sales made by Christie & Co in the regions where, as forecast, independent operators were encouraged by the availability of some funding to enter the sector. Regional operators also looked to expand their empires."
Chaplin added: "While eating out remains something of a treat for UK consumers as the economic uncertainty continues, it is clear that it is one pleasure that consumers are loathe to give up altogether - which offers hope for the remainder of what is likely to be an eventful year."
Neil Morgan, director and head of pubs at Christie & Co, said the start of 2012 had been busy, driven by the refreshing of estates by some of the country's biggest pub companies.
"Encouragingly, the appetite for acquisition has kept pace with the rush of disposals. This has been especially evident in the regions, where small regional pub companies are gaining pub assets and, in turn, local status," he said.
Morgan added that sentiment had been buoyed by a return of debt funding to the sector, including the re-emergence of the traditional brewery loan.
"While pubs are still closing, the rate of closure remains on course. We believe a further 2,500 pubs need to close before the sector becomes truly taut and competitive."
By Kerstin Kühn
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