Apr/May 2023
CLH News
15
Adjudicator Issues Guidance to Improve MRO Option The Pubs Code Adjudicator (PCA) has issued statutory guidance to pub companies to remove barriers for tenants and ensure a fair and consistent approach to the Market Rent Only offer. Following investigations into arbitration disputes and listening to tenant concerns that there can be barriers and disincentives to accessing the Market Rent Only (MRO) option to go free of tie the PCA says that it is now is doing more to improve access to MRO. Following consultation, the PCA has exercised her powers to issue statutory guidance. The full detail of the guidance is published on the PCA’s website. In summary, it addresses the following issues:
MRO RENT INFORMATION the statement the PCA says that: “A lack of information supporting the proposed MRO rent can hinder the tenant’s understanding of how the rent has been calculated. This can in turn impact their ability to effectively compare the MRO rent to the tied offer and negotiate. This guidance means tenants should receive information to help them (and on referral, the independent assessor) understand how the pub company has calculated the proposed MRO rent. The guidance sets out in full the minimum information to be provided. It includes information such as non-confidential comparable evidence the pub company has used, a detailed profits valuation, barrelage assumptions and more. The pub company should also be clear whether tenant improvements are disregarded, and if so which. There is no requirement for tenant improvements to be disregarded from MRO rent, although the pub company can offer to, or the tenant can seek to negotiate. A tenant needs to be clear on the position the pub company is taking, so they can make a meaningful comparison with the tied rent offer where their improvements may have been disregarded.”
UPFRONT COSTS adding that: “Pub companies may require the tenant to pay large sums of money upfront to go free of tie, such as for deposits, rent in advance, and where MRO is through a new tenancy, terminal dilapidations. This guidance means that a relevant factor in considering if proposed MRO terms and conditions are unreasonable, will be the extent to which the pub company has considered any gradual build-up to an increased deposit or less frequent rental payments. The PCA expects that some build-up period would be usual and (unless proper-
ly justified) a decision to offer no such period at all may lead to a finding that a term or condition is unreasonable. This guidance also means in most cases it will be unreasonable for a pub company to require the tenant to complete terminal dilapidations or compliance issues as a condition of entering the MRO tenancy. Although this means a schedule of dilapidations should be avoided, if the pub company chooses to serve one, this should not cause the tenant to incur charges simply for asking for, or taking, the MRO option.”
RECORDS OF DECISION-MAKING Concerns the guidance says, have been raised by tenants and their representatives about the perceived consequences of asking for MRO. These worries centre on tenancy renewal where the pub company can give notice under the Landlord and Tenant Act that it intends to take the pub back. It is a breach of the Code for the pub company to subject a tenant to detriment for using or attempting to use their Pubs Code rights, including to break the tie. An allegation that this has happened could be the subject of arbitration or investigation. This guidance makes it clear that the pub company would be expected to have a record of its reasons for decisions, such as if it chooses to take the pub back for its own use as a managed operation.
WHY THIS GUIDANCE IS IMPORTANT in conclusion the statement says: “A tied tenant’s right to the MRO option is a valuable one – it allows them to break the tie at certain points in their tenancy. This is typically at rent review or renewal of their agreement, or more exceptionally, where there is a significant increase in price or trigger event having an impact on trade. Even if the tenant does not intend to go free of tie, they can request MRO to compare a free of tie deal to their tied offer at rent review. It means a tenant can check they are no worse off than if they were free of tie, and many have used the MRO offer to strengthen their hand in negotiations and get a better tied deal. The PCA must take this guidance into account in carrying out their functions. This includes in investigating Code breaches and taking enforcement action as a result. The PCA (and any appointed arbitrator) must also take it into account when arbitrating Code disputes.” The guidance will come into effect from 1 May 2023, including in relation to cases where a MRO notice is served on or after that date.
Restaurants Continue to Lose Out Due to Diner No-Shows 1 in 20 UK restaurant bookings between the start of the year and February 2023 have resulted in no-shows, according to a recent report from restaurant booking system ResDiary, and its diner-facing recommendation app, Dish Cult. It follows a continuing trend of no-shows that have cost the average restaurant £1,325 between the start of the year and February 2023. The ‘Beyond the Booking report’, detailing responses from a survey of over 200 restaurants and 820 UK consumers, found that while more than half of UK restaurants have some form of a deposit system in place, 38% still operate without one. While more than half of UK restaurants have some form of a deposit system in place, 38% still operate without one. Of those operating with a deposit system in place, almost half (48%) have a minimum booking size. This number can vary depending on the venue type or their market, but on average, the minimum number required before a deposit is taken on a booking is eight people. Commenting on the report’s findings, Colin Winning, CEO at ResDiary, said: “With almost half (49%) of diners booking dinner reservations a week or more in advance, managing bookings and commitments is vital in helping restaurants to operate efficiently, maximise revenue, and provide excellent service. “While the trend of no-shows is a challenge for restaurants, implementing a deposit system can ensure
customers are far more likely to arrive at their booking. The risk of losing a deposit in the current climate is enough to prevent a no-show and to enable restaurants to manage their bookings effectively.” In terms of practical implementation to secure the booking, restaurants are advised to ensure they invest time in communicating with diners ahead of their booking, sending confirmations in advance and one day prior to the booking. Laura Barnes, Senior Relationship Manager at ResDiary said: “Make sure your confirmation and reminder emails have your no-show terms clearly outlined to ensure there are no disputes should cancellation fees need to be collected. “It’s also important that you make your messaging as friendly and as approachable as possible, as this can help build brand loyalty and repeat visits from diners.” Kate Nicholls, chief executive of UK Hospitality which represents about 100,000 venues across the Country said: “We are seeing it across the UK and it’s more severe in tourist locations where you rely more on booked rather than walk-in trade. “We are seeing a significant level of cancellations and it’s really difficult at the moment because of the costof-living crisis, “ and has urged customers to call if they want to cancel: “Just let people know if you can’t make it,” she added.
Aqilla Helps Independent Hotel Reach a Level of Financial Control to Rival Global Groups When Sage 200 Extra Online was withdrawn, it was the perfect opportunity for Robert McCluskey, Financial Controller at The Spa Hotel in Tunbridge Wells, to implement new accounting software that would offer advanced financial analysis, reduce the time spent on manual tasks, and gain a competitive advantage for this independent hotel. He chose Aqilla’s cloud-based accounting software to help achieve these strategic goals. Explaining his reasons for choosing Aqilla, Robert said, “Having come from larger hotel groups, I’m used to working with the level of financial analysis you get from bigger applications. QuickBooks was never going to do it, and the bigger packages are out of my range, but Aqilla is in that middle space where you can get lots of functionality from quite a light product and a low cost of ownership.”
THE CHALLENGE The 70-room independent hotel has several revenue streams, including a Spa and Leisure Club, restaurants, conference services and events. Different business applications are in place to support each department; the hotel management system covers bookings and housekeeping, and a spa and leisure club system manages therapy bookings and memberships. There is also a food and beverage till system, which stores information to help manage stock and predict purchasing needs in line with historic trends. There are around 2,000 metrics that can potentially be harvested and analysed daily for improved financial control. The data from each system is currently imported into Excel. However, it wasn’t possible to upload Excel data into Sage. This meant that the financial analysis could only span the volume of data the accounts team could manually input each day – on average, just 30 lines. Particularly important following the impact on the business caused by the pandemic, improved financial analysis would help the hotel control costs, increase efficiencies and make more accurate predictions.
THE SOLUTION
Sage’s limitations meant that Robert could only tap into a small percentage of the total data available to him, limiting his range of performance measures and the quality of the insights from such a small data pool. Aqilla’s Excel Add-In means that Robert can combine 100 per cent of his data in Excel before importing it to Aqilla. He explained, “I was only able to manually input about 30 lines a day. Now I have almost 100 automatically uploaded that I use to check costs and performance. He continued, “With Aqilla, I push a button, and it takes seconds to populate the data. The sheer volume it can handle is incredible, and it gives me the kind of detailed insights you’d expect from a much larger system. It saves me an insane amount of time — maybe as much as two hours a day — that I can spend improving efficiency.” Robert also uses Sharperlight, a self-service BI tool integrated with Aqilla that draws information out for reporting purposes. He explained how it saves time trying to find the source of discrepancies, “I’d often get to the end of the month and wonder why my spreadsheet is different to the accounts. Drawing reports from Aqilla via Sharperlight means my reporting is always in sync.” Quantifying some of the advantages the finance team have experienced since switching to Aqilla, Robert added, “The daily banking process used to take two and a half hours with Sage. With Aqilla, it takes less than an hour. The bank reconciliation process at month end that used to take three or four days now takes me less than half a day.” Streamlined, accurate accounting and access to cross-company data can help hospitality businesses recover from the challenges of Covid and get through today’s turbulent economic times. Summing up, Robert says, “Our accounting needs are basic; bank rec, general ledger and purchase ledger. Mainly, I want to get large volumes of data in and out of the system, fast. The level of analysis we can get from Aqilla and our ability to combine data from various sources gives us a real advantage. I’ve got big system analytics from a fast and light mid-range system. It doesn’t matter if it’s 10 or 100 lines, I push a button on the toolbar, and the data is in.” For further information email or info@aqilla.com visit www.aqilla.com
