So much attention in the United Kingdom and Europe is on Brexit that it may be easy to forget other laws, regulations and considerations that will have an impact on the hotel industry this year.
REPORT FROM EUROPE—Hoteliers in the United Kingdom and European Union need to be aware of several pieces of legislation taking effect in 2017 and beyond, sources said.
European lawyers might be most active when it comes to legal issues swirling around Brexit, the exit from the European Union of the United Kingdom. But outside of Brexit, here are some new laws and likely considerations European hoteliers need to keep top of mind.
General Data Protection Regulation
The European Union-formulated General Data Protection Regulation, which becomes law in May 2018, will include requirements to strengthen processes that protect guest data.
Sophie Burton-Jones, principle associate at law firm Mills & Reeve, said the law will cross EU member nations, whereas now it is interpreted by each nation.
The law is an attempt to strengthen types of notices given to individuals when data is being collected. It will make customers more aware of what they are consenting to, and it adds to the types of provisions that data collectors must include in contracts, Burton-Jones said.
“Collectors will think more carefully as to what they are collecting and what they are doing it for,” she said, “and audits will need to be more thorough.”
Penalties will be heavier, too, Burton-Jones said.
“Monetary penalty is at the discretion of (EU) information commissioners, but that will be increasing and linked to worldwide turnover. Fines will be quite significant—4% of worldwide turnover, or €20 million ($21.2 million), whichever is highest,” Burton-Jones added.
Burton-Jones suggested hoteliers should analyze what audit processes they had in place with the notion they might need to be strengthened.
Transfer of Undertakings Protection of Employment regulations 2016 (TUPE)
Sources said that Brexit may force the legal framework for TUPE to be altered, as it relates to business transactions between the U.K. and the EU, and vice-versa.
TUPE covers the transfer of undertakings—that is, in a sale of an asset, the assets of that asset (notably employees) should change with it.
“This is an EU concept, and it runs through all member states,” David Buckle, an employment lawyer at Cubism Law, said. “The indications are any changes would not change people’s terms, but the problem is when the terms of the buyer differ from the terms of the seller. Right now, it is easier to equalize those terms, but after any split, the U.K. is free to change the law.”
Buckle added the U.K. would probably not get rid of TUPE in its entirety once it has left the EU, but that is not to say parts of the legislation won’t be altered.
“All commentators and employment lawyers say these have to be potentially axed,” Buckle said.
The law states that after 12 weeks’ employment workers supplied by third parties have the right to equality of contract, which usually transpires first in terms of pay, he said.
“The U.K. is the greatest user of agency workers in the EU. Everyone is against this. Issues concern what is ‘pay’ and how workers are incorporated. The law has been frowned on due to its complexity and use, but when it goes, it will greatly affect hotels, which use a lot of such workers,” he added.
Business rates re-evaluation
Richard Roberts, COO of property consulting and professional advisory services Altus Group’s U.K. division, said business rates for commercial businesses in the U.K. usually are altered every five years, but have not been since 2010.
Business rates are taxes on non-residential property, including hotels, and are based on rateable values combined by a multiplier figure, calculated by the government.
Rates are set to change this April, but one problem inherent in new legislation is rates will be based on April 2015 values and the “market today is arguably stronger in some areas and property types but not consistent across the country,” Roberts said. He added that for hotels, no published summary valuations exist, and rates are not valued on a rate-per-square-meter basis.
“It’s unlikely that information is published on the internet,” Roberts said, “and two 10,000-square-foot hotels next to one another might not be consistent.”
Roberts said the biggest headache of the new legislation might be its appeal process.
The old system, which still has 250,000 to 300,000 appeals outstanding, according to Roberts, was structured so that businesses paid their rates at the end of the process.
“As of 2017, the new system will have a sequential three-stage process, designed to avoid speculative appeals. The ‘challenge stage’ will be the real game-changer, where much more supporting information is required and within a fixed time scale,” Roberts said.
“Then after that challenge the process goes to a valuation tribunal, but now that is a separate application … and you cannot add information during the process, which is something (hoteliers) are likely to want to do,” he said.
Roberts said all of this might not necessarily result in more surveyor fees, but “at this stage, we still have not had the regulations processed, so there is no clarity.”
The business rates scheme does contain transitional relief, Roberts said, to allow the burden of increased taxes to not fall all at once.
The flipside is if money is owed to a business, then the monetary return is phased in as well, he said.
In Wales, no transitional relief will be provided.
“It should not land a windfall to the government … if the total ratable value pool doubles, for example, then the multiplier should fall to mirror that,” Roberts said.
He said the onus is on hoteliers to know now what to expect.
“There is a lot of scaremongering but a limited amount of real information. Get proper advice to find out what is your liability,” he said.
He warned less scrupulous agencies have a tendency to pop up when business rates are about to change.
“Do not pay upfront fees to anyone,” Roberts said.