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Webba, you say " spend is materially lower for business traveller than the leisure brigade." - do you have any sources for that?
I'm still going over whether I want to stick with SPG long term (I'm expecting more of a bounce as things continue to open up short term). There is going to be less business travel in the future, and I'm not convinced that this won't have a meaningful impact on SPG's numbers.
I used to fly semi-regularly with work. We would fly economy / premium-economy, but be able to expense any spend on food/drink at the airport (with a limit high enough that effectively we could have whatever we wanted). I was happy because I could eat / drink whatever I wanted on the company's dime - rather than being stuck with whatever the lounge was offering - and the company saved money by not paying for business class. I have no idea now common this model is, but it seems pretty reasonable to me.
Your point on the rights issue is interesting. I understand the airport food business is highly framented, and some of those smaller businesses will have been struggling, giving a good oppurtunity for SPG to make some aquisitions. However, when we're talking about a bigger piece of a smaller pie, it's hard to know if it ends up being an improvement overall!
17 May- Friends and family will see big domestic market (relatively) when boris announces the RAG list for July expect a stampede particularly if the Green countries are our european cousins with a lat flow test as the barometer (free) i expected the price dip today as shares flipped from the placing.
tommy15 - yes totally agree with you about the recovery....we need a bit more clarity or the return of some sort of airport use as well....see how the next few weeks pan out with more news etc...
So to answer the various queries- Air travel- most of the income in UK and Europe is driven by leisure travel. Most business and long haul has the advantage of lounge business and spend is materially lower for business traveller than the leisure brigade. Dont discount airlines who have the holy trinity of lots of capactity (all added to the fleet in 2019) hedged low fuel and aggressive deals with airports to guarantee passenger volumes. This will inevitably lead to a price bonanza for consumers as they offer lots of cheap deals to get people confident in travel again and ultimately to maintain load factors.
Growth in rail is going to be leisure driven and put bluntly there are lots of brand casualties in the market who will simply withdraw from the travel channel as the traditional high st landlord entices them back with great property deals ( no base rents, rent free periods, capital contribution and longer leases than the travel market has offered.)
This year will be unique in the UK which is SSPs core market - rail will be huge as we have no where to travel so whilst i agree the reduction in commuters will hurt certain stations, others will be buoyant. im sure you saw the pictures in the height of the pandemic of over crowded trains on SWT taking "commuters" to Bournemouth.
I'm bullish on this as the rights issue gives the company cash to grow at a time when there will be market opportunities in existing and new markets. structurally growth will return and that's without the US market that SSP were just starting to gain traction in.
schjmh you're absolutely right, apologies. But the crux of my point still stands - I'm still not sure it's reasonoable to expect that degree of recovery for quite some time.
tommy15, I don't know where you are looking or where you get the figure of "a little under 600p before the pandemic" but the share price above 700p in August 2019s andfloating around the 680p in January 2020 and then dropped sharply once the pandemic hit?
Mary out of interest where does 700p come from?
This share was a little under 600p before the pandemic; since then it's been through a year of basically no rervenue, significant dilution, and the prospect of real long-term changes in commuter patterns meaning less footfall and, ultimately, less revenue.
I'm curious whether I've missed something that could take this share to a new all-time-high despite all of the above?
No buts here, going one way but not necessarily in a straight line.
I see a £7+ at a future point.
DYOR
I agree. Pret is a good example - it’s cheaper and higher quality, and also had a strong high street presence and has remained open to a far higher degree, so many may have “made the switch”.
While I think all the “the office is dead” talk overblown, I do agree that some people will take the opportunity to wfh a day or two a week - and it seems likely that the group of people with the freedom to do that will likely be a similar group to those with £5 to blow on a sandwich every morning.
My suspicion is that air travel for business will take a proportionately bigger hit - while I know many people who miss the human interaction in the office, I know very few who miss business travel, especially regular travel. Plus the high cost will be harder to justify now that we know remote meetings are “good enough”.
All of that said - I do wonder if SSP has further to go as a “recovery play”. In general the recovery move has been fairly muted in the UK, particularly when compared to the US where many lockdown-affected shares are at an ATH. Investors here seem to be more cautious - which is commendable - and I believe that the continuing uncertainty around variants, vaccine uptake and safety etc is still weighing down these recovery stocks; I’m bullish on the recovery and hope that this weight will be lifted over the next couple of months as lockdown continues to ease up.
So I agree that I won’t be holding these long term... but not quite ready to give up on them yet!
...would it be time to take some profits?
Pre-pandemic, this was trading well above 600p. Under the circumstances, the current value of about 345p looks great, bearing in mind that I've just added the rights issue shares.
I can see a long-term potential but, equally, I can see a few constraints.
Inevitably, there will be less business travel. More people will be working from home, some maybe two days a week or so. Trend of having meetings on Microsoft Teams or similar has been increasing for a while, well before the pandemic. This is likely to increase.
One of the main problems with SSP is that they are quite good at pricing their food out of the market. Why would you pay a fiver for a sandwich when you can get one for half a price at Greggs just outside the station, and still £1+ cheaper at Pret a Manger (which is of better quality anyway)?
Getting air travel back in action will be crucial for this company as that's where most of their profits are likely to come.