Small, personalised businesses are being forced out of the market by prohibitive rents, warns hospitality consultant Max Lawrence
The hospitality industry has historically provided an outlet for individuality and entrepreneurship. We are one of the very few sectors that, even within today's branded marketplace, still has the vast majority of businesses in the hands of private ownership.
However, rising property prices in both the leasehold and freehold markets are making it progressively more difficult for today's entrepreneurs to gain a foot in the door.
Landlords are increasingly looking for inflated rents, along with hefty rent deposits beyond most start-up budgets. Branded concepts are moving in and agreeing impossibly high square footage rents, thus setting a precedent for other tenants when their rent reviews come along.
In the freehold market, small hotels often have a greater value as residential accommodation, and vendors are increasingly applying for change of use to residential status before sale.
At the same time, a growing number of travellers are turning their backs on the homogenised "could-be-anywhere" offering of the large chains and are seeking niche experiences.
Landlords need to take a serious look at their portfolios and seek to encourage the specialist retailers and restaurants that make the high street interesting. This must include a move to encourage shorter and more flexible leases, rent-free periods and a move away from the damaging system of precedent rent reviews, restrictive clauses and upward-only rent reviews, which hamper business growth.
There are small beacons of light with landlords such as the Howard de Walden Estate, which, working with small operators, has transformed Marylebone High Street from a dull backwater of charity shops and fast-food outlets to one of London's coolest retail Meccas. Their recognition and foresight on the importance of retaining the small outlets and creating that unique shopping and dining experience is, alas, all too rare.
In the freehold market, key industry associations, influencers and planning authorities need to consider more carefully change of use requests, to ensure that opportunities for small businesses continue, enabling them to provide greater and more personalised choice for our visitors.
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