Catering Scotland

Having worked in the hospitality, licensed trade and leisure sectors for over a decade, Pete Seymour is accustomed to the ebb and flow and the peaks and troughs of the commercial property sector. As CateringScotland.com’s latest guest contributor, he is best placed to offer advice and guidance to current and potential buyers of hotels, bars, pubs, restaurants, catering premises and leisure facilities. In the first of a new regular series of commercial property articles, features, interviews and guides, Peter provides an overview of the Scottish hospitality property sector to date.

During the last 12 years I have seen some pretty bleak times as transactional volumes died off following the credit crunch of 2007-8, and our sector was particularly hard hit. As the value of assets in this niche sector is based upon three elements – the property interest (heritable or leasehold), the goodwill, and the fixtures and fittings. While valuers combine these three elements into one value, the banks at this time took a less risky approach and focused primarily on the closed value of the asset. As this would normally exclude the goodwill, fixtures and fittings and licenses from which the property may benefit, the impact of this approach was significant. Effectively, it shut out the mainstream lenders from going concern heritable sales, as any prospective purchasers now needed too much upfront cash to be able to proceed at a sensible price. This in turn prevented decent businesses being openly marketed as cash buyers became increasingly thin on the ground.

Although the market slowly began gathering pace around September 2014, we are now in a phase of political apathy regarding Scottish independence and Brexit. Right now, the market has been comforted, to a certain extent, that nether of these scenarios is going to fundamentally change how businesses operate.  Other macro-economic factors may well have an effect on the discretionary pound, but right now the public are willing to spend where quality offers are presented to them in the main sectors of restaurants, pubs and hotels. Given the additional support available from the banks – with some of them even lending on full market value again – we are now seeing better quality businesses being openly marketed, and transactional activity increase.

We expect 2018 to be a very good year, all in all, with values and multipliers improving as transaction volumes increase and confidence grows.

Pet Seymour is Head of Licensed Trade and Leisure Agency at Graham & Sibbald. Their team of specialist chartered surveyors are currently working on a market analysis of the Scottish licensed trade market, to be released this April.  Keep an eye out here at CateringScotland.com or email licensed@g-s.co.uk to receive your copy.