Pete Seymour reflects on 2020 from business-sales perspective and outlines Graham and Sibbald’s Hotel and Leisure Forecast for 2021…

Initially shaping up to be a strong year on the back of increased support from financial institutions, 2020 was utterly stymied when Covid hit, and any Deal that had not concluded prior to lockdown was effectively placed on hold. That said, we did begin to see a significant increase in viewings and interest when the sector was finally permitted to reopen in the summer. This resulted in numerous formal offers being submitted but the deals on hold remained that way while funding issues were resolved. Alongside this temporary paralysis we were able to settle several new leases and a few smaller cash deals but the completion of larger prospects remained a challenge.

For Sale

Meanwhile, as the volume of completed sales reduced significantly, Market demand began to dampen. At Graham and Sibbald, we entered lockdown with eight deals under offer and ended the year with 14 deals, which has now risen to 19. With over £9.3m worth of assets formally under offer, we are expecting a further £3m-£5m to follow suit. This alone suggests that there is demand in the market place but unfortunately there is little or no appetite from the banks to facilitate them. Instead, the deals we are seeing are funded by cash-rich individuals or entities who are looking to take on established and historically well-performing businesses they can develop further once a level of normality returns. We expect this to remain the case during 2021 until the mainstream lenders return to the market to support purchasers who rely on bank debt to complete a transaction.

What Can We Expect This Year?

With the COVID vaccinations being rolled out across the country, a boom in trade is expected once pubs, restaurants and leisure facilities are able to open their doors once again. Ongoing difficulties with international travel mean that the staycation market is forecast to be a popular choice for people seeking a break from the new normal. However, it is likely that hospitality venues may continue to suffer from a lack of conference/corporate events for some time due to many people still working from home.

Similar to what we have seen previously when the sector felt more ‘normal’ during the later summer months, we remain hopeful that this will again return. We encourage all businesses to ensure that they are making the most of any grants, support and relief available to cope through the next few months until then. There is still a steady flow of buyers looking to invest across the UK, bringing with them plenty of optimism for the right assets. It is hoped that this will increase in the coming months.

Pete Seymour is Head of Licensed Trade and Leisure Agency at Graham and Sibbald. Throughout 2020 and early 2021, the firm valued a number of properties from beach hotels and guest houses, to pubs and restaurants. Their team of specialist chartered surveyors work extensively in the Scottish hospitality sector, advising and assisting clients on all aspects of commercial property transactions.

Visit www.g-s.co.uk for more information.