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Rent Moratorium extended until March 2022

The government has confirmed that the rent moratorium protecting commercial tenants from eviction for not paying rent, introduced last year in response to the pandemic, will continue until 25 March 2022.

MP Steve Barclay, chief secretary to the Treasury, delivered an economy update in the House of Commons this afternoon, confirming the moratorium extension. In the event of commercial negotiations between tenants being unsuccessful, tenants and landlords will enter binding arbitration.

He said: “All tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord as soon as restrictions are removed on their sector if they are not already doing so. We believe this strikes the right balance between protecting landlords and supporting those businesses that are most in need.”

Kate Nicholls, UKHospitality chief executive, welcomed the measures and said the legislation will “form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought”.

Hospitality Industry Loses Case To Reopen Earlier

The High Court has ruled in favour of the Government regarding allowing restaurants and bars being allowed to open ahead of the planned easing of lockdown measures.

The case was brought by Greater Manchester night time economy tsar and founder of Parklife and The Warehouse Project, Sacha Lord, and Hugh Osmond, founder of Punch Taverns.

They sought to challenge the decision to delay the reopening of indoor hospitality until May 17, arguing there is no justification or scientific basis for indoor hospitality to remain closed while other businesses such as non-essential retail have been permitted to resume trading.

The judgment came just hours before a SAGE report emerged, indicating that ministers had been advised that “eating out in any food outlet or restaurant was not associated with increased odds” of catching COVID.
In the report, SAGE scientists admitted that the risk of “transmission in hospitality, retail and leisure are relatively low” with just 226 outbreaks in hospitality venues since the pandemic began.
It is unclear when the SAGE report was written or submitted to ministers, but the report was not disclosed by the defence during the legal proceedings.

In the overview, the Honourable Mr Justice Julian Knowles dismissed the call for Judicial Review to bring forward indoor reopenings as ‘academic’, noting the necessary hearing would now be unlikely to take place before May 17, the date by which indoor hospitality is already scheduled to reopen.

Despite orders to expedite the case, the final judgement was delayed due to a backlog in the court system.
Hugh Osmond said: “This case is not ‘academic’ for an industry that is losing £200m every day it remains closed, for the over three million people who work in our industry, or for the tens of thousands of businesses, suppliers, landlords and contractors forced into bankruptcy by government measures.

“Our legal action gave them a fighting chance, yet once again in 2021, the strong arm of the state has come crushing down on hope and aspiration.

“The judge said that COVID ‘justifies a precautionary or cautious approach on the part of the Government’. But when a crucial SAGE report is ignored, this goes far beyond caution, and questions need to be asked about when this advice was sought and why this important evidence was not disclosed.

“I am deeply concerned that the judge’s main reason for refusing judicial review was because our claim ‘was not brought promptly’, even though we issued our claim days after the roadmap became law on 25 March, with the court taking a month to provide its ruling.”

He added: “This judgment drives a coach and horses through our normal constitutional processes. Are we really being told that we should have issued legal proceedings on the basis of a Prime Minister’s press conference and a yet to be published set of laws?
“Our democracy should be better than this. The roadmap was based on models, not data, and today we have the data.

“Vaccination, infection and hospitalisation rates are all far much better than was forecasted and the Government now has a chance to turn this around, to capitalise on the NHS’s brilliant vaccination roll-out, to follow the data rather than arbitary dates based on outdated models, to believe in vaccines and to get rid of these appalling and severe restrictions once and for all.”
Sacha Lord said: “We are disappointed with the outcome. While this fight has always been an uphill battle, made harder by the Government’s delaying tactics and refusal to mediate, we are pleased that the case has shone a light on the hospitality sector and the unfair and unequal guidance within the recovery roadmap.

“Through our legal challenges, we have achieved significant outcomes for the sector, abolishing the substantial meal requirement with our previous court action and lobbying hard to remove the 10pm curfew. Both of these results have had a hugely positive impact on operators nationwide who have been unfairly treated throughout this crisis and undoubtedly saved many jobs throughout the industry.

“Through our legal action, we have sent a clear, strong message direct to the heart of government. We will continue to advocate for those who have been unfairly impacted throughout this crisis, and despite the outcome, we will continue to hold the Government to account and demand evidence-based decisions, rather than those drafted without detailed analysis or based on bias or whim.”

On the ongoing impact on the hospitality industry, he added: “The hospitality sector has gone above and beyond to implement measures which provide safe, secure environments – measures which were, let’s not forget, advised as safe by the Government themselves and which the court already deemed to be effective based on the evidence we provided in support of our previous judicial review.

“There are thousands of bars, pubs and restaurants across the country which are still closed and whose owners and employees are struggling financially due to these unfair restrictions.
“For the 40% minority who do have outdoor space, this weekend’s weather has only exacerbated the ongoing struggles the industry has continually faced, and I’ve heard of countless pubs that have been forced to close early or who have had zero customers due to the bad weather.

“Not only does this severely impact on business and sector recovery, but on the staff whose wages, and ability to pay rent, food and bills, are at the mercy of something as unpredictable as the weather.”
Having considered the ruling with their legal team, Osmond and Lord have decided that there is insufficient time to challenge it before May 17. Osmond is reviewing other legal options in relation to the matter.

Manchester pubs contribute to Stonegate’s £746m losses

The UK’s largest pub company Stonegate has revealed that the enforced closure of its sites has yielded a £746m loss and forced it to go to investors and debt markets for £1.4bn of additional funding. The Financial Times (FT) has also warned a further lockdown would force it to consider more debt or selling assets.

The operator of more than 4,700 pubs under brands such as Slug and Lettuce, Craft Union, Proper Pubs, Yates and Classic Inns expects normal trading to return from July. Pubs suffering losses are understood to include The Lost Dene, Be At One and The Slug & Lettuce, all in Deansgate along with other Manchester city pubs including The Ark in Whitworth St. West and The Town Hall Tavern in Tibb Lane.

The group recorded the multi-million pound loss largely due to estate depreciation and costs stemming from its £1.27bn acquisition of Ei Group in March 2020 – which made Stonegate the largest pub operator in the UK. The pub company, which employs some 17,000 people, comprises an estate of 1,270 managed division sites and 3,200 leased and tenanted venues across the UK.

Stonegate’s published accounts on Companies House reveal the operator’s revenue fell by 17% to £707m in the year to the end of September 2020. The same period in which Britain’s pubs were shuttered between March and July, saw Stonegate slash costs and benefits from £70m in state support – comprising £62m from the furlough scheme, £4m from the government backed Eat Out to Help out initiative in August, and a £3m boost from business rates relief, according to the FT.

A pub company this size is better able to weather the covid financial storm than other smaller competitors. Many smaller pub-co chains and independent pubs may not reopen due to the dramatic financial impact of the Covid crisis.

If you run a small chain of pubs or are an independent publican and you’re struggling to pay rent, suppliers and the taxman we can usually help.

Company Rescue has been helping struggling business owners for over 20 years with sensible FREE advice. If your hospitality business is experiencing problems, contact us FREE on 0800 9700539. Chat to one of our experienced advisers and we will see how we can help you!

Roadmap to Reopening Hospitality

So, finally, the hospitality sector has target reopening dates to work towards. Having waited patiently for weeks and months hospitality businesses can finally start to plan for their reopening. On Monday (22nd Feb.) Boris Johnson announced a long-awaited series of dates for returning to some sort of normality, split into four key steps with a minimum 5-week gap between each stage to be continually monitored:

  • STEP 1 Monday 8th March – Schools return, care home visits eased.
  • STEP 2 no earlier than Monday 12th April – Non-essential retail, personal care premises (hair and nail salons) can reopen. Indoor leisure (gyms and swimming pools), self-contained holiday accommodation and finally Hospitality can reopen (but only to serve people outdoors). Social distancing measures and other restrictions will however still be in place.
  • STEP 3 no earlier than MONDAY 17th May – Sees even more lifting of lockdown restrictions. Most social contact rules will be lifted, six people or two households can meet indoors, and indoor hospitality and hotels will be permitted to open
  • STEP 4 no earlier than Monday 21st June – in this last step all legal limits on social contact are to be removed and with the hope of reopening the final closed sectors of the economy which includes nightclubs and theatres.

This new roadmap will hopefully bring positivity for the people of the UK; However, these dates are not however set in stone, merely the earliest possible date that restrictions could be eased. There are minimum five-week barriers between each of these steps and barriers will only be raised if it is safe to do so. The government has four conditions that need to be met before each stage of lockdown is eased. The four conditions are that the vaccine programme continues to go to plan, evidence shows that the vaccines are reducing deaths and numbers requiring hospital treatment, infection rates do not risk a surge in hospital admissions and the new variants do not add to the risk of lifting restrictions. If all four of these requirements are met, then we are likely to see these restrictions lifted close to the minimum target dates set out in the roadmap.

Whilst this is good news for the hospitality sector for many pubs and restaurants that do not have outdoor facilities (including many city centre sites) it means a further wait of nearly 12 weeks. Sadly, many will fail during that period.

All eyes are on the Chancellors budget next week (3rd March) to see what additional economic support measures, if any, are announced.

 Hospitality Rescue has been helping struggling business owners for over 20 years with sensible FREE advice. If your hospitality business is experiencing problems, contact us FREE on 0800 9700539. Chat to one of our experienced advisers and we will see how we can help you!

Written by Luke Harris

‘Swift’ support package needed as operators deal with ‘flood of cancellations’

Hospitality trade bodies are calling for a speedy support package for the industry after further restrictions announced on the weekend have left operators dealing with a “flood of cancellations”.

Hospitality businesses in Wales were closed on Saturday and it was announced that businesses would be closed in mainland Scotland from Boxing Day, while London and other areas recently put into Tier 3 were put into a new fourth tier, meaning residents will not be able to leave their areas or mix with other households even on Christmas Day.

Home Grown Hotels and Lime Wood Group hotelier Robin Hutson tweeted that the cost of the Tier 4 announcement to his hotels was in the region of £500,000.

Andrew Grahame, chief executive of the Farncombe Estate in the Cotswolds which includes Dormy House, Foxhill Manor and the Fish, tweeted that it had “devastated” business, and although the properties were full for Christmas on Saturday morning, by the evening occupancy was down to 30%.

He added: “Furlough is not enough.”

Managing director of the Vineyard Group Andrew McKenzie said on Twitter that more government support and compensation were needed “to keep businesses afloat and as many jobs as possible intact”, adding that having three closed hotels in Tier 4 “is bleeding us dry”. Restaurateur Mitch Tonks said without guests travelling west from Tier 4 “we are dying on our feet”.

Even businesses in Tier 1 have said they are struggling due to the Christmas period travel restrictions. The Hambrough restaurant and bar on the Isle of Wight, which is in Tier 1, said 90% of bookings have been wiped out over Christmas and New Year following the Tier 4 announcement.

UKHospitality wrote to the prime minister last week requesting a enhanced grants for English businesses, and a clear exit strategy from restrictions.

In an open letter to first minister Nicola Sturgeon, chief executive of the Scottish Tourism Alliance Marc Crothall quoted a hotel business which will incur losses of £600,000 because of the new restrictions.

The letter said: “Your subsequent announcement that restrictions will be tightened for the foreseeable future is clear and understood and is a decisive response to the health risk. The ask of the industry is that the Scottish government now delivers a similarly swift and committed response to the economic consequences of this action.

“An additional upweighted ‘extraordinary’ package of funding must urgently be identified from within the Scottish and UK budgets to support both our frontline businesses and the supply chains over what will now be a significantly more challenging period than any of us had previously understood or anticipated.”

Crothall added that “without a more equitable and upweighted level of support being made available quickly, it is likely that many more businesses will be forced into temporary or permanent closure” with operators now dealing with a “flood of cancellations and have lost much-needed revenue” due to the change in restrictions and forthcoming lockdown on Scotland’s mainland.

He said the scale of job loss will be “grave” without longer-term financial support and the scale of “damage and devastation” to businesses, local economies, communities and livelihoods will be “unprecedented without immediate, more meaningful, targeted and robust support”.

Christmas Saviour or Christmas Killer?

As details slowly emerge about the government’s plans at the end of this second national lockdown, the hospitality sector is asking if this is the “final nail in the coffin” for many pubs, bars & restaurants.

The prime minister announced yesterday (23rd November) that the current 4 week lockdown, due to end next Wednesday 2nd December will be replaced by a revised and tougher three-tier system to try to control the virus in England.

Scotland, Northern Ireland and Wales are all currently subject to their own rules, but the government is working hard to bring the four nations together to agree a joint plan for Christmas and the New Year.

Details, which are expected to be announced on Thursday (26th November) will confirm which areas are to be placed in which of the three tiers. Boris Johnson warned in the Commons yesterday that “more regions will fall, at least temporarily, into higher levels than before” and that the system will last until next Spring.

The restrictions facing the hospitality sector will vary depending on the different tiers and appear to offer little confidence to the sector, which has continued to suffer dramatically during the pandemic, despite taking huge precautions and spending millions on safety.

One thing is for sure, customers won’t be able to stand at the bar and chat to friends, family or colleagues. In simple terms, here’s what the new three-tier system will mean to hospitality:

Tier 1 (the lowest tier) – As previously, establishments can only provide table service, although the 10pm curfew has been extended to 11pm. Last orders will be at 10pm with a strict 11pm closure time.

Tier 2 – Will have to close unless they are serving a ‘substantial meal’ which can be accompanied by alcoholic drinks.

Tier 3 – Hospitality businesses can only offer a take-away service.

Industry body UKHospitality warned the measures would result for more lost businesses and jobs heading into the crucial Christmas season, in a sector that has been amongst the worst hit to date.

Its chief executive, Kate Nicholls, said: “The government is making a point of saying that these measures are needed in order to save Christmas.

“In reality, they are killing Christmas and beyond for many businesses and their customers who look forward to, and rely on, venues being open at this time of year. Sadly, for many staff, it will be a Christmas out of work.”

Ian Wright, her counterpart at the Food and Drink Federation, said: “There is real danger that continued restrictions will result in two thirds of pubs, clubs and restaurants – customers to food manufacturers – closing before the vaccine arrives”.

The Institute of Economic Affairs think-tank said the restrictions would mean a “death sentence” for countless pubs and restaurants. Its head of lifestyle economics, Christopher Snowdon, said: “The government has decided to lay waste to thousands of pubs by requiring a ‘substantial meal’ to be served with drink. There is no scientific basis for this, and it will be impossible for wet (drinks-only) pubs to comply”.

All three are demanding further urgent financial support for the hospitality sector.

A quarter of hospitality businesses fear going bust

New data from the pub industry released today showed that almost a quarter of hospitality businesses think they will go bust by the end of the year without new government support.

Yesterday Boris Johnson unveiled sweeping new measures to curb a rise in coronavirus cases, including a 10pm curfew on all hospitality firms.

The move, which the sector slammed as “devastating”, heaps pressure on an industry which had just begun to recover from the spring’s lockdown. 

The survey, which was carried out by market researchers CGA on behalf of the British Beer & Pub Association (BBPA), UKHospitality and the British Institute of Innkeeping (BII) before the announcement was made, showed that 23 per cent of their members expect to fail in the next three months unless further help is given.

Thus far, one in eight hospitality staff have already been made redundant, with many more jobs expected to be lost when the furlough scheme ends in October.

Although chancellor Rishi Sunak is set to unveil a new “winter economy package” tomorrow, both he and PM Boris Johnson have heavily hinted that the initiative will not be extended.

On average, the businesses surveyed said that they expected their workforces to be 25 per cent lower this coming February than a year previously – a loss of 675,000 jobs in just 12 months.

In order to stave off such a situation, the bodies have called for a new sector-specific employment package, as well an extension of the business rates holiday and VAT cut on restaurant food.

The proposals echo those made by a group of the UK’s most prominent fast food chains earlier this evening.

Emma McClarkin, chief executive of the BBPA, said that the sector was “already teetering on the edge” before the new restrictions were announced.

She said if the government did not take extra steps to prop up the sector, it would be “unforgivable”

“Only by taking these measures can the Government save our pubs, hospitality businesses and as many as 540,000 jobs. If the Government doesn’t act now it would be unforgiveable.”

UK Hospitality chief executive Katie Nicholls agreed, saying that the future of the sector was “still in the balance”.

“Many venues have still have not reopened and those that have are operating at reduced capacity and a fraction of normal revenue. We have already had some high-profile casualties and far too many job losses”, she said.

“The additional restrictions announced this week place even further burdens on a sector that is operating with razor-thin margins and needs all the help it can get. It is vital that these restrictions are reviewed regularly.”

Business Interruption Insurance policies to pay out over Covid-19

The High Court has ruled in favour of a group of insured businesses. The Hiscox Action Group (HAG) felt aggrieved that their policies provided by Hiscox Insurance didn’t cover loss of business due to the Coronavirus.  The insurers argued that the policies only covered local lockdowns or specific shutdowns on their properties caused by a disease.    The case was brought with the help of the FCA.  16 insurers agreed to be defendants, so that clarity could be provided for wording that was present in 17 different policies. Read more here

Travelodge to propose CVA

Just last month, Travelodge hit the news for looking at a CVA again.

Today we are told that a CVA is to be unveiled which includes a new commitment from shareholders to inject up to £40m of new equity.

The borrowing capacity has been increased to £100m, compared to the £60m initial amount.  

An insider for the hotel chain says that this CVA will be not result in any hotel closures and all its 564 sites would revert to their full rent agreements from the end of next year. Additionally, landlords would receive £230m in rent for the period between the successful conclusion of the CVA and 31 December 2021, despite being under the mechanism, as well as being promised payments equating to a 50% share of any earnings before interest, tax, depreciation and amortisation above £200m during the next three years.

The CVA plan is currently being questioned by landlords so the prospects of it being endorsed by the majority of creditors is unclear.

Carluccio to be bought

Just over a month since the last news hit the media about the state of Carluccio’s administration and we hear of a promising deal in the line-up for the struggling high street restaurant chain.

The owner of the Giraffe restaurant chain, Boparan Restaurants, led by tycoon Ranjit Boparan, is said to be making a deal to takeover the Carluccio’s brand, head office and around 30 of its restaurants. 

If this deal is set in stone, around 900 employees will be saved and there will be a short-term guarantee of the brands future.

FRP Advisory declined to comment.

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