We look to invest in businesses which are resilient to economic shocks, and our companies in the leisure sector have generally proved to be just that, writes Henry Stanford of Albion Ventures.
As venture capitalists, we look to invest in businesses which are resilient to economic shocks, and our companies in the leisure sector have generally proved to be just that, writes Henry Stanford, a partner at Albion Ventures.
While the recession as a whole hit the country hard, some people, paradoxically, have done rather well. For these fortunate individuals, low interest rates have resulted in cuts to their mortgage payments, increasing their disposable income. They are probably the principal reason the leisure sector has not collapsed to the extent many commentators were predicting.
Admittedly, the effects of planned tax rises and public spending cuts remain to be seen, but the current outlook for the sector is healthy. A recent survey, released in April this year, reported that 57 per cent of UK consumers plan to increase their expenditure on leisure activity in the coming months. Hotels, cinemas, health and fitness clubs and pubs, all of which are represented in our portfolio, are among the businesses that stand to benefit.
Consumers, though, have become more demanding as the economy has faltered. They want quality and service. They want value for their money and above all, they don’t want to be taken for granted.
This is why our partners have focused on service levels in our pubs, for instance, to make customers feel wanted. While licensed premises around the country are closing at an unprecedented rate – last year a total of 2,365 were shut, and closures have been running at 39 a week this year – the results from our own pubs in the North West, the Midlands and in London have bucked the trend.
‘Consumers have become more demanding’
The same goes for our hotels, the Crown Hotel in Harrogate, the Bear Hotel in Hungerford, the Bell Hotel in Sandwich, the Holiday Inn Express at Stansted Airport, and the recently reopened Stanwell Hotel near Heathrow’s Terminal 5. Following significant investment at each of these, all our hotels have redoubled their efforts to provide high quality accommodation, excellent food and flawless service.
Our cinemas include the Cambridge Arts Picture House, the Picturehouse at FACT in Liverpool, the Greenwich Picturehouse, the Ritzy in Brixton, the Exeter Picturehouse and Cinema City in Norwich. Films represent a relatively inexpensive night out and box office receipts have held up particularly well over the past two years. We also screen alternative events – such as live plays from the National Theatre or Q&As with film directors, which we beam around various venues. One successful innovation has been screening live opera from the Metropolitan Opera House in New York. When the latest season of 11 operas went on sale in Cambridge, they sold out within 24 hours.
The key is always to run a really good operation. We know we need to be better than the competition – better service, better amenities, better décor, better management. We know that weak operations will fall by the wayside. It’s our job to ensure we’re among the strong who survive.