After another long hard winter, operators in the UK have emerged blinking into the light to gear up for what they will hope will be a buoyant Spring and Summer trading period. For many, the Royal Wedding would have been an unexpected, but very welcome, means of kick-starting the party season, but their challenge will now be to keep up momentum and to see a real increase in profits. This may be no easy feat. New regulation continues to emanate from the Government, and, after the March Budget and the decision to retain the beer tax escalator, some operators feel positively persecuted. Across the Licensing, Hospitality and Leisure industry as a whole, there are few consistent trends. Just as one sector appears to rally from the downturn, another seems to flounder. In this precarious environment, operators cannot afford to be tripped up by red tape – it may be the difference between survival and closure.
Not for the first time, operators in London, particularly those at the luxury end of the hotel and restaurant business, seem to have escaped the squeeze affecting customers elsewhere in the UK. The last few months have seen a succession of high-profile restaurant openings, many of which are backed by top chefs. Takings in existing outlets are said to be sharply up from the end of last year. There is a particular flurry of activity in Mayfair with at least five new openings since Christmas. In the capital at least, diners seem to feel that the worst is now behind us, and are simply not prepared to continue to forego what has become more a lifestyle choice than an indulgence.
The booming market for luxury hotels in London seems even more at odds with those elsewhere in the UK. Refurbishments and re-launches have come thick and fast since the start of the year, including at the Waldorf Astoria in Syon Park, Corinthia, and Four Seasons. Perhaps most prominently, the St Pancras Renaissance (owned by Marriot International) finally re-opened for business in March after a £200 million restoration, 76 years after it originally closed for business. Notwithstanding an unsettled Middle East and the tsunami in Japan, in February luxury hotels hit occupancy rates of almost 70%.
At the other end of the market, the picture is very different. Country hotels and pubs were hit hard by the snow prior to Christmas, and growth remains flat. Notwithstanding recent unexpected dips in the rate of inflation, some recent research by Begbies Traynor, the rescue and restructuring specialist, indicates that the number of businesses showing signs of distress in the bar and restaurant sector has increased by 68% since the same time last year. This statistic would seem to tally with the scathing comments from across the hospitality industry at the Treasury’s refusal to remove the beer tax escalator in the March budget. Many will look back with increasing cynicism at the Prime Minister’s commitment last autumn to lead a “pub-friendly government”, with the pub at the heart of the “Big Society”. In previous editions of the Operator we have looked at the Government’s proposed reforms to “rebalance” the Licensing Act 2003. Late last year the Home Office produced its response to the public consultation and it seems that to a degree the concerns of the Licensing, Hospitality and Leisure industry have to some extent been heard and acted upon.
Undoubtedly the most significant victory for the industry is the revision to the appeals process. Decisions of the licensing authority will not have immediate effect which means that pubs will be permitted to continue to trade whilst awaiting the outcome of an appeal against revocation of their licence. Also of note, is their u-turn on what weight Police representations will be afforded. During the initial consultation, it was proposed that licensing authorities would be obliged to accept all representations, notices and recommendations from the Police. This has been dropped from the Bill, although it seems that an instruction to this effect may still be included in the Guidance to the Act.
However, the Government policy programme to build the “Big Society” still keeps a foothold in the reforms. Their intention to give greater weight to the views of the local community has been maintained; applicants will now be required to demonstrate the steps that they will take to consider the interests of their local area. The controversial plan to lower the burden of proof on licensing authorities from making decisions based on a “necessity” test to an “appropriateness” test has also survived, as have the proposals in respect of Early Morning Restriction Orders and the Late Night Levy. The Government has stood its ground on its intention to act tough on those operators who sell alcohol to underagers. The law relating to persistent sales, two or more sales in three months, will see a doubling of the maximum fine to £20,000 and new powers will allow an extension of the voluntary closure period from 48 hours to two weeks. Unfortunately, a number of the proposals that remain, in our view, run contrary to the Government’s objective of avoiding penalising the majority of premises who sell alcohol responsibly and will impose costly burdens on the responsible operator.
Turning back to the celebrations of the last few months, it seems that many operators, particularly those in the Trade, have approached the Royal Wedding with great gusto. Wedding breakfasts, street parties, discos, barbecues, fireworks, live music and other entertainment has been taking place across the UK. Although the cost of staging these events will have been considerable for the smaller operator, the potential rewards would have been great. However, from a legal perspective, and as we’ve highlighted in previous editions of the Operator, on a day to day basis any licensed operator must contend with ever more regulation, and this is even more the case when their business is diversifying. Many entrepreneurial operators are well used to staging such events, but the uninitiated should tread cautiously.
It may be that the Government is aware that such regulation may be a serious constraint to growth – it has just launched the ‘Red Tape Challenge’, a public consultation on current levels of regulation: http://www.redtapechallenge. cabinetoffice.gov.uk/home/index/. Licensees have been invited to submit their views on regulations that affect the food, drink and hospitality sector between 6 and 20 May, and when the consultation closes, ministers will either have three months to decide which regulations to scrap or must justify those that they intend to keep.
In this edition of the Operator we consider some of the topical issues affecting the sector. In his article on page 4 Ben Kemp looks at some recent decisions of the High Court which have considered the extent to which an appeal court is entitled to hear new evidence on licensing appeals. In their article on page 6 Jonathan Grimes and Adrian Darbishire consider the significance of the first conviction under the Corporate Manslaughter and Corporate Homicide Act. In his article on page 8 Mark Beardsworth looks at corporate liability and offers some ‘top tips’ to help operators prepare for the legal challenges they will face in the future. In her article on page 9 Lucy Thomas looks at lease renewals and suggests some simple steps that could be taken to deal with that process. Finally on page 10 Simon Halberstam reviews a landmark case that has been taken to the European Court of Justice which has the potential to change the way in which sports broadcasting rights are sold across Europe.
If you are a corporate or individual operator in the Licensing, Hospitality and Leisure industry, then we at Kingsley Napley offer a fully intergrated service, advising you on all applicable regulations and on all commercial issues which you may encounter in running your business. Our team of specialist lawyers can advise on all applicable issues in the sector and can provide you with the peace of mind that your business is operating lawfully. With innovative and experienced lawyers, we are known for our ability to present clients with pragmatic and cost-effective legal solutions. For further information, please call 020 7814 1200 to speak to a member of the team.