Liberation Group is setting its sights on becoming a dominant force in the world of premium accommodation; the long-standing Regency member is gearing up to add 300 new rooms to its already impressive portfolio.
During the initial half of this financial year, Liberation Group – which encompasses the esteemed Butcombe Pubs & Inns and the former Cirrus Inns estate – achieved a remarkable 8.1% surge in like-for-like sales.
Under the leadership of Jonathan Lawson, the company's performance surged even further, with a staggering 10.8% rise in like-for-like sales during the second quarter. This growth outshone the already impressive 4.6% increase witnessed in the first quarter.
Of notable significance is the company's report of a 9% increase in drinks sales, coupled with a 5.2% elevation in food sales. However, the real standout was the 14.7% surge in accommodation revenue across the span of the first half-year.
While the Channel Islands segment experienced a slight dip of 0.6% in like-for-like sales during the initial six months, this was offset by a commendable rebound. The second quarter brought a 2.2% increase, recuperating from the 4.2% dip experienced in the first quarter.
Liberation Group, backed by Caledonia Investments since 2016, has managed to maintain occupancy rates consistently surpassing 80% across its properties.
With fewer than 100 rooms in 2019 to an impressive 400 rooms today, the group has unveiled a strategic plan to add a further 300 rooms to its existing properties, illustrating a determination to continue raising the bar for premium lodging in the South of England. This forward-looking expansion strategy involves judicious investments in both rooms and innovative pods, with the exciting initiative set to kick off later this year.
Jonathan Lawson, offered his insights:
“Our fantastic teams in the south of England and the Channel Islands have delivered an encouraging start to the financial year in both our pubs and drinks businesses, building upon a solid start to the year and then accelerating in the second quarter, taking advantage of some positive weather in June that has benefited a pub estate where more than 50% of our covers are external, boosting both food and drink and our own pubs which very much links to our roots as a craft brewer and innovator and are a key point of difference in the market versus generic brands.
Increasingly we see the group's integrated model as a significant strength in the market, which enables us to exploit sales opportunities, but to also leverage the scale of the group and minimise exposure to inflation that others may experience.
We have been particularly encouraged by the strong demand for our accommodation, which has seen occupancy levels consistently exceed 80%, even outside holiday weeks and bank holidays. This is a reflection of our broad appeal for both leisure and business users and a rapidly growing events business that we view as a significant opportunity for growth. Increasingly we see our managed pub estate as being occasion and experience led rather than being led by either one of the three categories of drinks, food or accommodation.
Whether it's a business meeting, cinema night, short break away, a comedy night with friends or a wedding, our pubs very much focus on creating reasons to visit and use the pub, rather than just opening the doors. Having navigated a potentially difficult first quarter, which included the integration of the 22 new pubs following the Cirrus Inns combination and an unseasonably cold Easter, we have seen momentum building in both our existing business and the new pubs. This in turn has enabled us to view the rest of the year with some confidence, despite the obvious uncertainty for our customers caused by rising interest rates.
We have commenced our investment plans for the year, with two substantial investments completed already in Dorset and Jersey and a further two investments signed off and commencing imminently, one in Somerset and another in Jersey, plus some investment into our Butcombe Brewery to create much-needed additional brewing capacity for next year given the record volumes over the last few months.
Once again, we are heartened by the continued strength of our high-quality tenanted pub business, which has shown a resilient performance in the first half of the year and is on track to deliver solid growth on an Ebitda per pub basis by the end of the year. Strong headwinds have continued in the first half of the year, specifically in utilities, food inflation and payroll. In utilities, we have now secured a new contract from October that will significantly improve our costs for the remainder of this year and next.
Food inflation has been stubborn, although we never shared the Bank of England's optimism last year that inflation would fall quickly in 2023. We have done our best to navigate this with our food teams and suppliers to provide our customers with the best quality and value possible, whilst also needing to deliver stable and robust gross margins. We are beginning to see the costs of certain food products decline and this is gradually reducing the headline rate of inflation, but this remains a challenge that we believe will last well into the autumn.
Payroll has been exposed to significant increases in National Minimum Wage in both the UK and the Channel Islands and we have also needed to ensure that we remain competitive in the markets that we operate in. To mitigate this, we have implemented a significant piece of work designed to improve productivity in our pubs, while also having people where we need them to serve our customers. We have now completed our second recruitment trip to South Africa, which looks to be even more successful than our first venture and we are hugely impressed by both the quality and attitude of some fantastic chefs and managers looking to join our business.
Our drinks business has had a strong start to the year, driven by a very strong sales performance from the Butcombe Brewing and drinks business and underpinned by another solid performance from our Channel Islands businesses, where our strong supplier relationships, own brands and experienced teams put us in a great position to exploit each sales channel available.
The second half of the year poses a number of uncertainties and challenges, including inflation and the impact of rising interest rates and higher mortgage costs which pose a risk to both consumer confidence and disposable income. But we remain positive about our opportunity to deliver growth and market share in both our pubs and drinks divisions and increasingly see our integrated group as a model that is very much fit for the modern market and where the value of the total proposition is greater than the sum of its parts."