Month: May 2022

Previewing the Queen’s Speech 10 May 22

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Tomorrow’s Queen’s Speech will as ever set out the Westminster Government’s programme of legislation for the coming Parliamentary year, some of it specific to England some of it directly or indirectly applicable to the UK as a whole. It has been the subject of considerable media interest over the last week and, in particularly in the broadsheets over the weekend. Doubtless some of that comment will have been encouraged or aided by HMG itself. 

I not going to be around for a week from tomorrow morning, so I won’t be in a position to circulate any detail of the highlights until the following week.  As this is essentially a schedule of the proposed legislation programme, none of which is guaranteed to come into force and any of it that does typically taking many months if not the full year or more to come to fruition, a week’s delay in any commentary neither here nor there.

In the meantime, tourism related legislation to watch out for include:

1. Actions to give Councils in England greater powers to bring vacant (retail?) properties back into viable usage.  The coverage of this issue that I have seen has majored on forcing (encouraging?) landlords to rent out vacant properties and/or give greater (better?) CPO powers to Councils.  The devil will be in the detail.

Understandably, the necessarily superficial discussion in the media hasn’t ventured too far in to the thorny thicket of cause and effect. It is to be hoped any the legislation will go there and will aim to tackle the multiple causes of vacant retail properties and not just gift local government the authority, commonly described as “powers”, to try and deal with the obvious visible, physical symptoms. 

Real “power” doesn’t just include the authority to do something but also the realistic opportunities and means to do it effectively.  In this case it seems to assume that once the reluctant landlords can legally be persuaded, or forced to let or sell currently vacant properties, that the private, public, third sectors or a combination of all three have a ready stream of viable usages lined up for currently vacant properties and critically then ready access to both the capital and revenue funding to expedite their plans, at scale.

It is very unclear to me, whether these measures are going to be aimed at dealing with the recent ubiquitous problem of multiple vacant retail properties, currently often in reasonable physical condition, in your typical high street and beyond, or more at the longer-term property blight (semi dereliction?) that is found in some but not all places. Or is it, as I sincerely hope, aimed at both? 

I am also unconvinced by the popular view, or inference that the UK is somehow full of stubborn, “greedy” landlords who take some form of perverse pleasure in keeping their properties empty and gaining no rental or other obvious income from doing so. I naturally tend to presume that many land lords are keener than most to find mutual financially viable usages for their once more valuable assets? I do recognise there are many reasons for owning property and I am regularly told about some often-perverse benefits (fewer or less painful disbenefits?) that allegedly arise from leaving buildings empty, once they become vacant.  If these benefits genuinely exist, then let’s hope the new legislation targets them effectively and doesn’t simply end up shifting the responsibility (blame) for failing to adequately address rapidly escalating retail blight on to local councils who until now have had few functioning levers to do anything about the effect, let alone all the root causes.    

I can’t help thinking there may be some potentially pertinent lessons here from coastal resort regeneration in the 1990s and 2000s (still ongoing).  Much of that related to former guest houses and some hotels and the blighting effect of poor-quality HMOs on neighbouring accommodation and the wider business community. The problematic difference of course is that much of the problem of HMO blight was, and still is, being resolved by improved use as better quality residential of visitor accommodation, for which there was and still is a natural demand.  Meaning in short that properties built and conveniently located for a particular purpose (housing people) haven’t had to find a fundamentally different purpose for which their fixed location might not be entirely suitable.  

Its arguable whether the bulk of the solution to retail blight is more, different or better bricks and mortar retail? There will almost certainly  be a need to be some fundamental repurposing or change of use for a good proportion of it. That begs questions about what realistically and practically are the other viable usages for a relatively sudden and still developing oversupply of traditional retail units in your typical high street environment?  It also begs the question, will Government, in tandem to some repurposing, now bite the bullet and start actively levelling the tax, business rate and other costs of doing business from whatever platform or from whatever physical location? Unless I am mistaken, this too has been “promised” in recent years.

Levelling the fixed cost base would undoubtedly do much to help bring some new and different forms of retail back into currently vacant retail spaces, reducing the negative impact of empty premises. Importantly it would allowing local authorities to focus on dealing with a then smaller number of the residual, harder to use or repurpose properties; properties that they and the public or third sector are probably best placed to tackle, on a not for profit or non-commercial basis, with the very limited funding they now have available for non-statutory, good to do but hard to resource public good projects.

2. It would also seem that HMG are set on tackling holiday home and vacant property issues in England by two parallel and complimentary changes.  These proposals fall well short of the same changes recently announced by the Welsh Government for introduction in 2023.  It is proposed that owners of holiday home in England will now have to meet a minimum 70 days let per year threshold and a 140-day available to rent criteria, whilst demonstrating some genuine effort let the property commercially before it can qualify as a business, be rated as such and in many cases then qualify for 100% small business rate relief.  The hope I assume is that this will stop home owners falsely claiming the business rate benefits and, in many cases, paying neither Council tax or business rates on what is effectively a second home. 

How the regulation is to be policed by whom and with what recourse is, as ever, an interesting area for discussion.  It is pity that there are apparently no proposals to use this opportunity to harmonise the different furnished holiday letting criteria with holiday home criteria. It is complex area revolving around whether the property is owned and treated for taxation as a business or as an investment. The fact that two outwardly similarly end usages for a property (putting up holiday makers) are governed by different criteria for the length of that usage, just makes a complex area more complicated and less easily policed. 

I am guessing that the hope is that anyone who isn’t genuinely running a holiday accommodation business will choose to revert to paying Council tax to reduce the hassle or avoid any risk of being caught out claiming a benefit for which they are unentitled. I hesitate to mention it but the still awaited DCMS consultation on proposals for statutory registration in England has a part to play here.  It beggars’ belief that in the digital age there is still no central point of reference for who provides what commercial holiday accommodation where, how or in what circumstances in England, let alone any practical means of checking whether it is then fit and safe for that purpose.

A preferably robust mandatory registration scheme seems like a good starting point for properly regulated commercial accommodation provision.  When something big goes horribly wrong somewhere in the accommodation chain as it inevitably will do, there are going to some very big questions to be asked. By rights these should fall to HMG who now are demonstrably aware of but evidenced by their continuing lack of action, demonstrably seemingly unconcerned about the woeful failings in some of the unregulated provision of UK of accommodation in England as a whole.

In parallel to a cracking down on the criteria for registration for business rates, it is proposed that Councils in England will be given discretionary powers to charge up to 100% additional Council tax charges on holiday home and implement existing powers to charge up to 300% charges on any genuinely vacant properties, after only 12 months rather than 24 months, as is the case now.  Whether, as apparently intended, these moves will free up more housing for local usage (purchase or rental) encourage more second and holiday home owners to at least put their properties to fuller use to generate money into the local economy through tourism, or simply help generate income for hard pressed local service provision, remains to be seen. For some the combined outcome of these two move will be that they go from paying nothing at all for local services to paying twice the going Council tax rate.

3. As with every Queen’s Speech one of hardest areas will be spotting what has been previously promised by Government but isn’t now going to be driven forward, at least not in this year’s legislative programme.  It has been suggested that one of a potential number of promised changes that hasn’t made it past the starting post is legislation on the distribution of tips automatically charged to, or willingly volunteered by customers within the hospitality industry. Last September the Government proposed that they would make it a legal requirement that all tips placed on bill or given went to the staff members: https://www.gov.uk/government/news/all-tips-to-go-to-staff-under-government-plans-to-enhance-rights-of-2-million-workers .

It has been said that Government either now don’t feel this is the right time to direct where this additional income should go in a period when many hospitality businesses are still struggling, that there is simply insufficient legislative time to push the necessary regulation through in this year, or that they believe that the proposed voluntary codes may prove to be sufficient on its own?  It will be interesting to see whether the proposals on the distribution of tips have indeed fallen before the first hurdle (for now?) and indeed to look back to see what other of the many proposals and promises made in the last year or more might have either been quietly dropped, delayed or amended beyond recognition since they were first aired. 

If nothing else this is a timely reminder to us all that there is a long, well-trodden path leading from headline and often deliberately headline grabbing initially announcements to legislation and critically enactment and implementation.  Not everything announced makes it all the way to the end of the path and that which does may not be as originally previewed. There nothing wrong with this, provided we don’t routinely mistake outline proposals for copper-bottomed promises or then make plans or adjust expectation on those promises, until we have seen the form they eventual take, if and when they are delivered on.

The degree to which administrations make apparent promises that they don’t then fully deliver on does change significantly over time, driven by a range of circumstances. Based on your own experiences of past policy announcements on all manner of things, you should be easily able to judge where you think we are in that ever changing cycle and therefore, the degree of credence you can safely give to any future policy headline announcements that are now being routinely made.

Britannia Hotels one to watch?

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If you are a destination with one or more of the 61 hotels in the Britannia Hotels group, or indeed a popular destination with major older hotel stock holdings, then the latest results and board statement from the group may be one to watch.  Britannia, which if the Which? annual consumer major hotel groups survey is anything to go by are arguably the UK’s least love hotel brand (worst performer for 9 years in a row) have recently posted results for the year ending 31 March 2021

These results have been picked up by local and regional media as they relate to local hotel holdings. I am not aware of any obvious national comment. Most of that coverage is superficial, some possibly even giving the impression that the results are for what should be the rather better 2021-22 year? The results for 2021-22 will not be posted until this time next year. However, the report while skating over 2021- 22, does make significant reference to expected performance in the current 2022-23 year and, critically I believe, reference to the board’s ongoing tactical and strategic plans for the immediate and longer-term future.

Perhaps not surprisingly given the period covered by the report, the group made a loss of c £9m against a profit for the year ending 31 March 2020 (i.e., mainly the pre pandemic 2019-20 year) of £10.2m. Turnover dropped 68% or c £82m from £120.4m to £38.3m. The average staff head count for the year fell by around 1,000 on the 2019-20 numbers of 2,740.  Of these 63 where in central management and office staff and the other 900 odd in frontline staff.

The accounts may not necessarily give a full fine grain picture? We know for example, that during this period (and again in late 2021-22) Britannia were particularly quick to act to reduce costs and, especially staff costs, by closing venues and reducing staff numbers, whilst other groups were perhaps more hesitant and subsequently able (willing?) to make greater use of furlough?  We are aware that Britannia were particularly active in using their hotels (and Pontins holiday park) for other covid-19 related accommodation purposes, in some case handing over the venues entirely to be staffed by Home Office and other provider’s contractors as part of their arrangements.

 How these measures may have positively or negatively affected the bottom line isn’t immediately clear from the headline figures, nor does it appear to be mentioned in the account’s supporting narrative comment. I would assume that they helped cushion the impacts? Having closed venue and let staff go in 2020 and then reopened for 2021 main season, Britannia were then able, with fewer restrictions and financial penalties again close hotels and let staff go almost overnight, in response to the late 2021 “plan B” reintroduction of some covid-19 restrictions. We will not know the net financial effect on Britannia’s 2021 – 22 year for some time. Reading between the lines of the board comments on the coming 2022-23 year, the group may not be expecting to have returned to profit during the year to 31 March 2022, yet to be reported, and are, like everyone else, facing some strong headwinds for 2022-23. 

More interesting for destinations that host Britannia hotels or those with large older hotel stock, who might in future become hosts, are the board’s comments on their strategy for 2022-23 and beyond. Among comments on tight control of cost, competitive pricing and the care and safety for both staff and customers is a potentially telling reference to investment: “Our priority continually remains to maintain occupancy levels and manage operating costs to exploit further investment in new properties”. I read that as a strategy of investment in further acquisitions, rather than a focus on investment in relatively recently acquisitions.  I might be wrong, or it could of course be a strategy to invest in both? If I am right, despite difficulties, Britannia are intent on expanding their holding either in existing, or for them, new destinations. Whether that is a good or a bad thing is for others to judge, dependant largely on local circumstances and the desire for a high-volume low-cost accommodation operator.

If you have reason to be interested in the workings of the Britannia group, I would recommend you to scan their Group Strategic Report for the period to 31 March 2021.  The meat of the report, which is worth reading in full, can be found on pages 2 and 3. The Companies House filing can be accessed: here

Various, mainly local media reports can be accessed by Googling Britannia Hotels financial results. Most are fairly superficial and major as much of the group’s performance in the Which? major hotels group survey than they do on the financial performance for 2020- 21.  Their relevance I think lies with their ability to stoke a generally poor local perception of Britannia’s local operations and to add to a wider negative national perception of the brand as a whole.  This I think may make destination managers’ ability to work closely with the group’s hotels, as they need to do, rather more difficult than it might otherwise be.  I can’t help thinking that group’s combined offer is of national significance and that Britannia have sufficient presence in a number of major popular destination to warrant tentative discussions around a combined strategy from those destinations, rather than the current apparently piecemeal approach?  I would welcome views.