Dear Sir, THE letter from a concerned cafe bar owner no doubt reflects a lot of concern from small bar/restaurant owners here on a difficult at best, declining trade year on year, and a most uncertain 2009 around the corner.
Of course if one imports products they will cost more than those locally produced, and the fall in the pound against the euro will be noticed and can affect visitors. However, the main problem is two fold. Firstly the introduction of the all inclusive holiday, keeping a large section of tourists inside the hotel, and the overload of bars/restaurants there are operating. There are just too many operations running for the number of clients, and the portion of the available cake gets smaller each season. Yet one can still see, that in virtually every new building made, the commercial ground floor will have its obligatory bar/cafe, meaning the portion of cake gets reduced again.
On his point about a greedy landlord, with so many people wanting to sell up and get out of this business, it's a brave (or foolish) landlord who looks for an increase, should be grateful he has a reliable tenant; within a few hundred metres of my office in Puerto Alcudia I could name at least half a dozen bar/restaurants looking to get out.
One main problem for operators, is that the traspaso that used to exist, i.e.: an indefinite lease (time wire) is now virtually a rent contract. Usually for a five-year term, with no guarantee with fixed terms to renew at the end of such contract. Result is the landlord can ask for whatever he wants, but the tenant knew this when signing such a contract. The answer to this is to have a built-in option to renew at a fixed price, or extend the period to 10'15 or 20 years when making an initial rental contract. With the amount of premises likely to be on the market this winter, it should be a buyers market whereby future tenants can insist on either of the two above options. If not, then with a short´-term rental period, one has little to sell-on, with a reducing asset.
Having said all this, let us hope that 2009 will turn out to be a successful season, one thing for sure, is that with the indecent weather experienced in northern Europe, combined with all the doom and gloom, taking a holiday away from it all, will be at the top of the list for many under the listing essentials!
Yours sincerely,
Graham Phillips
Palma