BizSale Small Business Blog. Small businesses for sale.

Following our observations towards the end of last year that Blackpool had guest houses, self-catering apartments and hotels for sale to the tune of £72 million, despite a healthy tourism season, budget chain Travelodge has defied the recession and announced plans to invest £115 million in 26 new outlets this year.

You might remember that a surge in the overall cost of hotels for sale in the Las Vegas of Lancashire was put down to lenders' reluctance to give buyers a leg up the holiday accommodation ladder. Well, there's no such financing problems for Travelodge, which will add over 2,000 rooms and 500 jobs to its roster.

And which areas of the country can look forward to the new hotels? Well, you have the town/city centre sites like Edinburgh, London and Aberdeen, and then a few seaside locations for good measure (including Colwyn Bay and Morecambe).

Travelodge chief executive Grant Hearn commented that the prevailing economic climate "has accelerated the forecasted structural change of the hotel market" as consumers opt for low-cost accommodation "rather than overpriced full-service and mid-market establishments".

The expansion leaves Travelodge's UK portfolio standing at over 400 properties and 30,000 rooms.

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Fourteen outlets had already closed over the past few months, and now cafe and coffee kiosk operator Puccino's has officially thrown in the towel. That means another 29 units will stop trading immediately and 43 are being transferred to Puccino's Worldwide Ltd.

Before collapsing into adminstration, Puccino's shifted more than 5.5 million espresso shots every year, holding 80 outlets in the south-east alone. Its fall marks the latest line of coffee shops to be swallowed up by the downturn, after Coffee Republic went into administration in July and BB's Coffee & Muffins, O'Briens and Tchibo all disappeared.

That said, the latest report from Allegra Strategies – the coffee shop consultancy – claims the sector has shown "remarkable resilience" during the recession, though its predicted growth for 2010 is slow.

Allegra reckons branded coffee chains like Caffè Nero, Costa and the inevitable Starbucks will keep on blossoming next year – its report even goes as far as suggesting they'll "outperform the retail sector" as cafe culture becomes further engrained in British society.

Interestingly, it gives a nod to the so-called "Third Wave" of artisan independent coffee houses springing up across the nation, based on "an Antipodean coffee culture".

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If you're keeping an eye on hotels for sale in the London area, you'll be glad to hear the results of PricewaterhouseCoopers' latest UK hotel forecast – it shows the industry's over the worst, though a drop in corporate travel has undoubtedly left the sector weakened.

Liz Hall, the accountancy firm's head of hotels research, says budget hotels have found it particularly tricky to swim upstream as three and four-star operators hold on to customers through value-for-money deals.

"Midscale customers have been able to negotiate discounts at their usual locations rather than switching to a cheaper option," she explains. "We are also seeing a selected reduction in brand standards among some chains as hotels seek to contain costs."

Some four and five-star hotels have even looked to cut their star ratings to trim "unnecessary expenditure in areas not valued by guests", Hall adds.

PricewaterhouseCoopers' info shows average London room rates have been going up for the past five years in a row, but by the end of this year the average room is set to cost £10 less than in 2008 – and could cost £20 less by the end of next year.

Out of 60 hotel owners questioned, three-quarters said they feel more optimistic now than they did six months ago.

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Small businesses in the UK are taking deliberate steps to diversify during the recession, with the owners of restaurants, pubs and firms in the leisure sector in particular admitting cash flow is their main concern at the moment.

That's one of the main findings to come from new research by business insurance advisers at Aviva. While three-quarters of pub, restaurant and leisure bosses surveyed by the group singled out money as their primary challenge, 70 per cent of beauticians, shops and salon owners said the same.

Offering new products or services, opening at weekends, trading for longer hours and targeting new customer groups are the most common actions being taken by small businesses to weather the economic storm, as well as increasing the promotions and discounts they have up for grabs.

Just two per cent of those questioned by Aviva revealed they had applied for one of the government's business assistance programmes, such as the Enterprise Finance Guarantee.

"Britain's small business community remains entrepreneurial, creative and opportunist at heart, with an innate ability to be both flexible and versatile," commented David Bruce, the company's commercial product manager.

"The ability to anticipate and adapt to the changing environment is key for any successful business, and business owners are clearly leading the way in this regard."

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We've been charting rock-bottom cafe prices and the recent rise in coffee bars for sale with interest here at Bizsale, and now we hear the sun could be setting on the "Starbuckisation" of London.

Various reasons are being singled out for the £47 million lost by the chain's UK cafes during the downturn, from soaring milk prices to sterling's collapse pushing up the cost of imported coffee.

There's also the small issue of the coffee chain "muscling in on top locations with sky-high rents" for its cafes, as the capital's Evening Standard puts it.

"Dozens of less successful branches are being shut or sold, with more closures to come next year – an extraordinary turnaround from the 50 or more openings a year during the boom," the paper notes.

Some of the "underperforming" sites shutting down include two outlets in the City and one in Fitzrovia, near the West End.

The coffee chain's people have admitted that such closures will keep happening throughout 2010 as part of "cost-saving initiatives" and their aim to create "a healthier store portfolio".

We'll leave the last word – for now – to Britain's official best barista, Gwilym Davies (he was crowned in March):

Starbucks has done "a fantastic job" for smaller cafes and coffee bars, he reckons, because the corporation has created a lot of coffee customers … but its prices simply do not tally with its products.

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Ten Coffee Republic outlets owned outright by the chain are to close, following the company’s collapse into administration earlier this week.

This has prompted some retail analysts to question whether the future of the ‘latte revolution’ is over. The problems that Starbucks have had with many of their international operations, cutting 7000 jobs and closing of all their Australian outlets, have been widely reported as a direct effect of the recession.

But on closer analysis, we find that the total number of coffee bars has actually increased by around 300 across the whole of the UK over the last year. Café Nero is doing a rollicking trade. Tiny chains are also expanding. Restaurateur Fiona Hamilton bought the Beanscene coffee chain out of administration in 2008 and has already announced plans to double the current 12 outlets.

Even Starbucks aren’t faring too badly in the UK, noting only a slight drop in sales.

Coffee Republic, run by the brother and sister partnership of Bobby and Sahar Hashemi, badly managed its franchise expansion programme, which was rolled out too fast without the necessary controls.

Other chains are finding no wane in the public’s appetite for a strong cappuccino, which seems to be one staple people don’t feel the need to cut back on. A coffee out makes people feel better, but as successful operators know, it has to be good. Furthermore, coffee house operators are finding this a good time to be renegotiating landlord leases.

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