By Triana O'Keefe, editor – Australian Hotelier
Pubs must measure their margins and cost percentage benchmarks against those of comparable venues, says Patrick Maher, hospitality specialist at Ferrier Hodgson.
Despite the "romance" commonly associated with pubs, Maher told Australian Hotelier that they are a specialised asset requiring operational experience, quality processes and management control systems (MCS) to operate efficiently.
He said margins vary significantly depending on location and venue offering, which is why benchmarking against similar venues is key.
“For traditional style hotel assets, we find the following guidelines apply," he said (see graph below).
Maher said revenues in the broader hospitality sector are improving across all revenue lines; however at the same time, hotels are seeing significant increases in competition from small bars, clubs, licensed cafes and restaurants.
"Add to this inflationary cost pressures, and more than ever pub operators need to be on top of their game to deliver profitability,” he said.
The Ferrier Hodgson director said one of the common denominators in distressed venues is their failure to reinvest.
“Very quickly market share is lost, and the ensuing spiral of declining revenue, declining profits and declining capex results in lower asset values. Quality operators are those who read the market and constantly improve the quality of their offering. Budgeting for regular capex is vital to maintaining this in the long run,” he said.
Ferrier Hodgson has seen the hotel sector transition through a number of boom and bust cycles over the last 30 years. At various times throughout this period it has also acted as one of the largest pub operators in Australia.
For Ferrier Hodgson’s complete industry analysis see the latest edition of Australian Hotelier: 2015 Leaders Forum.