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Mon 3rd Jul 2017 - Multi-site operators blast PCA and MRO process, hospitality industry biggest contributor to UK economy
Multi-site operators blast PCA and MRO process: Leaders of 12 multi-site operators have put their names to a letter to the government blasting inaction by the Pubs Code Adjudicator (PCA), Paul Newby, which they say is failing the Market Rent Only (MRO) option process. The letter, which is being sent to pubs minister Marcus Jones and constituency MPs, has been signed by Oak Taverns director Simon Collinson; Dave and Leo Day, of Golden Lion Group; Pleisure managing director Nick Griffin; Vince Healy, of Ascot Inns; New Pub Co founder Peter Linacre; GC Mallen & Co owner Garry Mallen; John McElhinney, of Windmill Taverns; Ken Ryan, of Barter Inns; McLean Inns managing director Mark Stockhausen; Philip Thorley, of Thorley Taverns; Whiting & Hammond owner Brian Whiting and All Our Bars chief executive Paul Wigham. It stated: “We have read with interest recent comments on take up of MRO. We think there is a far more complicated set of issues that underlie this entire process which is failing tenants, and that the public need to be aware of them. MRO was born of legislation the government saw fit in order to regulate the landlord/tenant relationship. This was made complicated by opaque, unintelligible regulations that demonstrate a lack of understanding of the process of landlord and tenant relationships, compounded by unrealistic implementation dates all of which led to uncertainty of application. The PCA was put in place to regulate and adjudicate the process in a fair and expeditious manner. Neither the Pubs Code, nor the PCA have delivered so far and after a year, we are not aware of a single case that has successfully navigated the PCA to arrive at an adjudication. There was a natural commercial reaction from all parties. Pub-owning businesses are duty bound by their shareholders to protect their value, while operators wish to make our businesses more sustainable by achieving a fairer share of the ‘pub profit cake’. This has quite naturally led to debate over certain key aspects such as inter alia new lease versus deed of variation, stocking policies, unreasonable clauses and alternatives to MRO process within the confines of property law. There are a number of complaints that have been raised with the PCA, many of which will be over similar topics. They are less ‘complaints’ as such, more like ‘preliminary issues that require decisions so that we can all move forward’. Some of these are basic issues that could be clarified by the PCA in an adjudicating capacity. Yet despite constant chasing and requests, there is no clarity, direction or urgency from the PCA. Some of us lodged these issues with the PCA in late summer 2016 and we are no nearer clarification. More worryingly, we are incurring substantial fees in the process of getting nowhere. We estimate informally between three operators, we have collectively incurred professional fees to date of almost £50,000 and to complete the process may require as much again. This is beyond ridiculous. It is a major deterrent to anyone entering the process. We may simply be pushed out of the process because our pockets are not as deep as the other side. The press and some misinformed commentators believe the lack of cases represents a lack of desire on the part of the tenants but the reality is they are financially bullied out of the process whether by accident or design. If the average review cycle is five years and one year has passed, it could mean as many as 20% of tenants could have been scared out of the process and accepted tied rents that may be less beneficial to the tenant and hugely beneficial to the pub-owning businesses. The inertia needs to end. The PCA is looking like a ‘rabbit in the headlights’ and we have implored it to act. Several of us have written to the PCA on numerous occasions since the start of the year yet nothing has changed. It calls into question the ability of either the process, the PCA, or both. Tenants and the pub-owning businesses both need action, direction, and decisions from the PCA. Give us the rules and we will all play by those rules rather than wiping out value in legal and professional fees. Otherwise, this process will collapse at severe cost and embarrassment to the industry in general.”
Hospitality industry biggest contributor to UK economy since recession: The contribution of the hospitality industry to the British economy has grown more quickly than that of any other sector since the 2008 downturn and looks set to create another 500,000 jobs over the next five years. According to data from Ignite Economics, hospitality is Britain’s fourth largest employer, accounting for 3.2 million direct jobs and a further 2.8 million indirect jobs. The research, commissioned by industry trade body the British Hospitality Association (BHA), said the jobs are spread around the country, with hospitality ranking as a top six employer in every region of the UK. Hospitality’s gross value added – the increase in economic value from the production of goods and services – of 5.9% is almost double that of the economy as a whole. Labour productivity in the sector has grown at more than double the rate of the overall economy since 2008, the data shows. The industry gross value added of 3.2% per hour worked compares with 1.5% for the wider economy. The findings will underline how, although Britain has outpaced many other developed nations in job creation since the financial crisis, it is often delivering relatively low-wage and low-skill jobs. While the sector’s growth outlook remains uncertain, Ignite calculates in the best case it would create an additional 518,000 more jobs by 2021 than under a worst-case scenario. Last year, hospitality and tourism brought £73bn to the economy, or £161bn including the indirect impact, including £15bn in exports and £38bn in direct tax receipts. BHA chief executive Ufi Ibrahim said the research confirmed “the colossal value of hospitality and tourism to the economy and well-being of the country”. However, it also showed the growth outlook was “highly uncertain, given the pressures of falling real living standards, the costs of implementing the National Living Wage, increases in business rates and the potential lack of labour following exit from the EU”. Ibrahim called on the government to cut VAT on tourism, allow the Low Pay Commission to set the living wage and bring forward a fundamental review of business rates. The government must also work with the industry to reduce dependence on EU workers and increase the number of UK workers entering hospitality, she said. She told The Times: “We are fundamental to ensuring the UK remains open for business. With the right strategic support from government, economic stability and access to labour we believe hospitality and tourism can continue to grow and become a career of choice for more people.” Ignite Economics founder Ed Birkin said: “Labour-intensive industries appear to be out of vogue with the current government, but they provide a key role in job creation, preventing significant socio-economic issues associated with high levels of unemployment.”
Odeon reports profits drop by more than half as audience numbers fall: Odeon has reported profits fell by more than half last year as it filled four million fewer seats and the company was sold to Chinese property and media company Dalian Wanda. The company, which operates 111 cinemas, saw turnover increase 1% to £220.1m for the year ending 31 December 2016 compared with £218m the previous year. Pre-tax profit dropped to £9.9m compared with £21.6m the year before according to accounts filed at Companies House. The results came as the company’s attendance figures fell from 172 million in 2015 to 168 million. The company stated: “The company continued to invest to grow future earnings and enhance the high quality of the existing estate. In terms of asset additions, £25.7m was invested in additional sites (both for 2016 and future periods), other revenue generating projects and in capital maintenance of the estate. Three cinemas were added to the company’s portfolio in the year, expanding our customer proposition and brand profile in key local markets. These were in Oldham (seven screens), Orpington (seven screens) and Northwich (five screens). A number of cinema refurbishments were completed in the year and capital investment in retail facilities continued as an integral part of the strategy to maximise future retail profitability. Further estate development activity is planned for 2017 and beyond including the introduction of recliner seating in selected cinemas. The business has a robust medium-term plan, which is consistent with the strategy for growth. The UK group will continue to invest in its existing portfolio of sites and seek new opportunities.” Odeon said the cinema sector remained steady last year, despite the decrease in attendance. Films such as Rogue One, Fantastic Beasts and Where to Find Them and Bridget Jones’ Baby were particularly strong performers. Odeon was bought by US company AMC Entertainment, which is owned by Chinese conglomerate Dalian Wanda, last year in a deal worth £921m. It was previously owned by private equity firm Terra Firma, which bought Odeon and UCI in 2004 before merging the two rivals.
Dalata sells leasehold interest in Croydon hotel: Ireland’s largest hotel operator Dalata has sold its leasehold interest in the Croydon Park Hotel in Croydon, south London. The company stated: “Dalata has sold Kasterlee UK, the company that holds the leasehold interest in the Croydon Park Hotel. The hotel made a small loss of £20,000 in the six months to end of June 2017.” Dermot Crowley, deputy chief executive for business development and finance, said: “I would like to thank the management and staff of the Croydon Park Hotel for the commitment and dedication showed while the hotel was part of Dalata Hotel Group.”

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