Only restaurants and pubs that are well-capitalised, well-invested operators with relevant consumer offerings will survive the current hospitality crisis, analysts at US bank Jeffries predict.
Limited interest from investors and cost inflation could see “independents struggle” as they are forced to increase prices.
Hospitality units shrank by 2% quarter-on-quarter last month while venue closures were up 12% compared to December 2019, a report from the CGA found.
Sales in December grew by 2% versus pre-pandemic levels while dining increased by 7.2%.
“Strikes impacted London trading, with outside the M25: +2.8% and inside the M25: -0.3%. (vs 2019)” Jefferies said.
“Hotels remain our preferred leisure sub-sector,” Jeffries added, even though stocks in the hotel sector risk losing value as global economic troubles persist.
However, some hotels will benefit from downtrading, travel recovery, having experience-creating value and maintaining a healthy balance sheet, Jefferies argues.
Whitbread, owners of Premier Inn, and Holiday Inn owner IHG are rated a “buy” by the investment bank.