Rooms for improvement
Settling into the bar of the Royal Forest pub on the edge of Epping Forest on a gloriously sunny Friday evening ahead of a meal in its restaurant would have been a real treat in itself for my family, but we also had the added enjoyment of being only feet away from our comfortable rooms for the night.
Herein lies the beauty of pubs with rooms to the customer, and I’m grateful that we are seeing a lot more such places opening, with boutique-style accommodation to match their top-notch food and drink offers. Pubs adding rooms is hardly a new phenomenon, but there is currently an explosion in the number of such properties as the model is proving to be a big winner for pub companies. Significant investment is flowing into the category.
At the Royal Forest, we were guests of parent company Heartwood Collection, which comprises a growing number of pubs, including five with rooms, as well as the Brasserie Blanc restaurants. As labour costs increase, the company is finding adding rooms into the mix is helping stabilise the model, according to chief executive Richard Ferrier, who calculates accommodation as three to four times more profitable than pubs and restaurants.
Although the rooms might represent only 25% of the revenue at Heartwood, they are crucially powerful drivers of food and beverage. The company’s five pubs with rooms are its highest grossing properties for food and beverage across the whole estate. “Rooms give us more dining occasions,” he says. “Monday to Wednesday nights can be as busy at weekends, with the early part of the week the corporate stays.”
This is very much the experience at other pub companies, including Butcombe Group, which operates 130 pubs across the UK and Jersey. For every one or two-night stay, the expectation is that 80% of staying guests will eat and drink on the premises. There was a realisation that the rooms were proving to be such a positive footfall-driving aspect that the company decided to make it a key pillar of its strategy.
Pub companies are effectively plundering a part of the market where hotels have failed badly. Incredibly, half of hotel guests order in or dine out when staying in a hotel rather than eating in a hotel restaurant or getting room service, according to research from CGA by NIQ. An admittance of this abject failure to offer an attractive combination of rooms and food and beverage was the decision by Whitbread (with Premier Inn) to exit 126 of its lower-returning branded restaurants and convert 112 restaurants into 3,500 rooms.
Is it any wonder that JD Wetherspoon has just announced its appetite for taking on space in hotels to run its successful pub format on a franchised basis? This comes on the back of early success with the model at the Haven site at Primrose Valley in Yorkshire, which is leading to a roll-out of the joint-venture arrangement.
This ability to successfully combine food and beverage with accommodation is proving revolutionary for those pub companies with the capital to invest in their estates – through either acquiring pubs with rooms that are ripe for an overhaul or building rooms on to their existing properties. The sweet spot is very much in the ten to 30-room size, and a price point in the £100-£200 bracket. This gives sufficient scale without moving into fully blown hotel territory and sits at a price-point competing head-on with the budget and small boutique hotels with limited facilities.
Needless to say, this major opportunity in the hospitality sector has been identified by a growing number of operators. Heartwood currently has 200 rooms across five sites, and the plan is to hit 500 in the next couple of years, while Butcombe is also expanding. JW Lees has just reopened the doors to Craigside Manor in Llandudno, while Arkell’s has added the Old Stocks Inn at Stow-on-the-Wold to its portfolio. Brakspear-owned Honeycomb Houses pubs has just acquired its 11th and 12th sites in the Cotswolds, and Stay Original Co is enjoying record trading at its six pubs-with-rooms sites in the south west of England. Also boosting their room counts are Fuller’s, Shepherd Neame, Young’s and Hall & Woodhouse.
Isn’t the space getting a little crowded? Not a bit of it, says Ferrier, who reckons corporate hotels versus the homeliness of a pub with quality rooms and food and beverage is a no-brainer for customers, and there is lots more growth to go for. “We want more of it,” he says. “The sector wants more of it. There are not enough bedrooms really, particularly at the high-quality pubs-with-rooms end. There are huge amounts of white space to go for.”
As my family enjoyed breakfast in the comfortable dining room of the Royal Forest after an early morning stroll across the lower edge of Epping Forest, we certainly dropped into the camp of wanting more of it.
Glynn Davis, editor of Beer Insider
This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Beer Insider would like to thank Propel for allowing the reproduction of this column.