Rural Pub Accommodation

Tourism South East has undertaken a ground breaking study, assisted by funding from the South East England Development Agency (SEEDA), to encourage investment in quality rural pub accommodation, leading to greater awareness and increased useage by visitors. It examines the potential of rural pub-based accommodation across the TSE region, with a view to feeding in to a programme or work with breweries, independent pubs, local authorities and business advisory agencies to deliver an enhanced product meeting the needs of visitors and local communities alike. The principal objective of the study was to stimulate and facilitate the development and sustainability of the rural pub accommodation product across the South East.

Study Outputs

The identified outputs of the study are:

1. TSE Pub Accommodation summary identifying the potential for new pub accommodation development and how to make this happen

2. new guidance for local authorities identifying how they might facilitate and support the development process Click here to download to download

3. guidance for business advisory services to support their on-going work with operators and investors, identifying key business performance issues

The project should be of interest to publicans, pub companies, investors, business advisors, planners, tourism professionals, economic development officers and others involved in the development and management of leisure and tourism facilities, and in strengthening rural economies and communities. TSE has worked with an Industry Network Group (consisting of breweries and pub companies identified as being key to successful implementation of the project's findings) as well as Local Authorities and Business Advisors e.g.Business Link.

Keys to Success

Follow the links below to read more about the keys to success.

Underpinning the Core Business

Impact on the Core Business

Drivers to Success

Planning Consent and Regulatory Issues

Risk Management

The drivers to success provide guidelines for Business Advisors – and indeed pub operators and investors – to assess pub schemes. In addition, as part of its Business Advisory Guidance, Tourism South East has put together some Toolkit materials to aid the business planning process for anyone thinking of investing in pub accommodation development. The pro-formas in the Guidance should be completed so that the Business Advisor or Project Manager (in the case of a brewery/pub company) has an overall view of the business.

The Operator's Toolkit - needs to provide basic contact details and an outline of what is proposed

The Business Advisor/Project Managers' Toolkit - needs to prompt the Advisor/Manager to cross check the common sense of the proposal and ask relevant questions to assess the validity of the application

The Financial Appraisal Toolkit - needs to provide the basic numbers required to assess the feasibility of the proposals.

The key performance indicators and investment indicators detailed in the main body of the guidance can clearly be applied to the data provided as a check to ensure that the scheme has been thoroughly researched, and to flag up any possible areas requiring further attention or support.

For further information contact Paul Jeffries or call 023 8062 5501.

Underpinning the Core Business

A recently published piece of research by J. Pratten (Journal of Contemporary Hospitality Management, 2004) examined the possible causes of business failure in British public houses. This work reported that the supply of outlets may well exceed the demand from consumers, and so the current rationalisation of the least economic properties may well continue. Introducing visitor accommodation may help to improve economic performance by diversifying in some instances but the prevailing economic climate means that thorough homework must be done first.

An ailing pub business due to external factors such as local over supply is not usually a good platform for introducing visitor accommodation, particularly if substantial capital borrowing is involved. Whilst external factors will account for many closures, the same research identifies a number of internal factors which frequently contribute to business difficulties and subsequent closure.

Factors identified include:

• Lack of licensee preparation in taking on a pub
• Absence of adequate financial controls
• Inability to offer a suitable product in an appropriate location using the necessary service skills
• Lack of assistance sought from pub company business development managers
• Lack of training provision from pub owning companies
• Lack of assessment of individual licensee’s skills, motives and abilities to undertake the role at interview stage In the context of installing visitor accommodation, the work highlights the importance of getting some basics in place beforehand in the existing pub business (if not already present):
• Putting in place adequate financial controls and performance monitoring systems for the business
• Making sure tenants and lessees of pub companies have the financial, technical and service skills necessary to run a pub, as well as a general ambition
• Strengthening the relationship between business development managers and licensees, and giving business development managers the tools to help those that are struggling or in trouble
• Helping licensees improve their ability to recognise problems and opportunities as they arise, and linking them to appropriate assistance at an early stage
• There are a number of organisations that can help in these areas including the pub companies, Business Links, Tourism South East and independent advisers. These can be found in the Key Contacts in Section 7 of the Business Advisory Guidance.

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Rural Pubs Risk Management

These guidance notes have already identified some of the key risks involved in visitor accommodation in pubs. Most important of all, you must ensure that you have an ‘exit’ strategy even if you plan to run visitor accommodation forever! At some point you may wish to retire, find an alternative career, or circumstances may force your departure from the venture (due to poor performance, change in owner's business strategy, etc). You need to make sure that your capital investment is as secure as possible, especially during the period when you are repaying any borrowed capital or have related capital risks to the project. If you are the owner of the pub, will you able to protect your investment through a greater future sale / lease value? If you are a tenant/lessee and investing your own capital in the venture (to a greater or lesser extent) are you able to recover your investment in the event of early surrender, and have you sought legal and accounting advice to ensure this is the case?

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Planning Consent and Regulatory Issues

Planning law not only affects the allowable use of a property, or ability to new build, but also impacts on issues such as signage and changes to listed buildings. Development requires permission where there is: Building, engineering, mining or other operations carried out in, on or over land, or any material change in use of any buildings.

Permission is not normally required for: Internal alterations if the use remains unaltered and external appearance is unaffected (but beware the additional constraints of a listed property) Difficulty in obtaining the appropriate planning permission from the Local Planning Authority is frequently cited as a major barrier to installing pub visitor accommodation. Under the Town and Country Planning Act Use Classes Order (2005) most pubs will have a consent for Use Class A4 (drinking establishments: use as a Public house, wine-bar or other drinking establishment) or Use Class A3 (restaurants and cafes: use for the sale of food for consumption on the premises). In most cases the installation of visitor accommodation within a pub property is deemed to involve a change of use to Use Class C1 (hotels: hotels, guest houses & boarding houses). This will require planning permission from the local authority.

There is usually a strong correlation between the positive outcome of a planning decision and early, well prepared and comprehensive communication with the local planning authority. It is strongly recommended that external advice is sought at an early stage, most likely from a planning consultant with appropriate expertise (such as a member of the Royal Institute of Chartered Surveyors, www.rics.org).

• Your local Business Link should also be able to link you to appropriate planning expertise. Useful points to consider when preparing a planning application include:
• Is the development of attractive design, using appropriate materials, and sympathetic to the location?
• Would landscaping make it more acceptable?
• Are you handling traffic issues well (e.g. access, parking and exit)?
• Are you improving the look of the area by renovation or preservation?
• Are you improving public amenities / access?
• Are you creating new or alternative employment?
• Have you consulted with neighbours, elected councillors…?
• Have you engaged specialist expertise to assist with your application?

As well as planning permission regulations, you should be aware of other regulatory requirements which may impact on your planned visitor accommodation, many of which may already apply to your business. Examples include:

• Building Regulations
• Business rates
• Health and Safety (liabilities, products, workplace)
• Fire regulations
• Disability Discrimination Act
• Visitor registration
• Booking contracts and cancellations
• TV licenses
• Price display
• Food Hygiene
• Signage
• Smoking policy

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Impact on the Core Business

A new visitor accommodation offer can impact on several key aspects of the core pub business. You should make adequate provision for crossover impact on:

• Finance and working capital
• Existing facilities, products and services
• Workloads
• Opening hours
• Atmosphere (pub or hotel?)
• Tranquillity
• Distinctiveness
• Type of visitor / customer to the pub bar and dining areas (e.g. need to cater for children)

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Drivers to Success

There are a myriad of factors, that make a pub accommodation offer work, some unique to the specific location or operator. However, there are a number of recurring themes that the operators and our team have identified as drivers to success:

• A clearly-defined target market for rooms business
• An understanding of the local competitive position
• A strong marketing campaign that is based on a clear view of the unique selling points of this particular business
• Building strong relationships with local business
• A good local reputation and involvement in the local community
• A high level of repeat business
• The ability to attract year-round demand
• A multi-stranded approach to marketing the accommodation, which is adequately resourced Product-related
• A quality physical product that also lends character and distinctiveness (a minimum 4-star standard)
• The quality of the restaurant offer – many of these pubs were already well-established as fine dining houses
• Attention to detail and personal touches in the rooms
• A strategy to maintain the physical product through annual to 3-yearly refurbishments
• Assurance of that quality (through inspection and grading)
• A product that is easy to find and easy to book Organisation and resource-related
• High degree of personal involvement and service
• Continuity of management, giving stability and demonstrating commitment
• Warmth of welcome and strongly developed customer care skills
• A mature business
• Realistic occupancy and rate projections that reflect local market conditions
• Good communication throughout (with staff, family, lenders, landlords, brewery, local authority etc)
• Finances that can support a seasonal business that will exhibit peaks and troughs
• A recognition that business will take time to build - up to 3 years to establish a market position
• Strong performance monitoring and control measures
• Motivated, enthusiastic, focussed and capable management team
• Good use of external advisory services and support

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