Lincoln International discusses the challenges affecting the UK hospitality industry, prevalent market dynamics and how businesses can demonstrate value.

Lincoln Perspective

In times of uncertainty, investors can look at hospitality companies that have property assets via freehold / long leasehold property with positive premium values as one way to mitigate any risk concerns. In these types of investments, fewer outgoings are paid to landlords, yielding a lower operational gearing. Security is therefore provided by the property asset, underpinning the company’s value.

At Lincoln, we think creatively to help corporates and investors identify other separable assets that sit behind companies. To attract investor interest, companies should unlock less traditional value streams outside of cash flow / EBITDA multiples. These value streams can take several forms: intellectual property (IP) value, alternative use, lease premium value, etc.

Lincoln successfully highlighted the hidden value of assets in two recent transactions.

The Groucho Club has been sold to Artfarm The Groucho Club is a private members club in Central London that celebrates art in all forms The company’s value was significantly underpinned by the freehold ownership Central London real estate hospitality asset valuations were reduced post-COVID-19 Lincoln advised Groucho Club to revalue the freehold and ran a process to identify the most qualified property valuer. The resulting valuation underpinned the successful sale of the business

TimeOut has secured a New Loan Facility Time Out is a world-renowned brand known for guiding locals and tourists to the best experiences in cities and has a global hospitality portfolio with the ability to secure property in upcoming areas of major cities Lincoln organized a competitive process resulting in commissioning two valuation reports that demonstrated the company’s asset values and ultimately resulted in its refinancing Value of the brand IP based on implied royalty rates Value of the lease premium of a highly successful Marketplace

Lincoln’s professionals are eager to meet with companies in the hospitality industry to help underline the values that attract investor interest.