As the Government announced that councils across England were to house homeless people by last weekend, the hotel sector has stepped up to help.  

Councils may be required to house all those sleeping rough, as well as those currently residing in hostels and night shelters, as many of these have been forced to close in recent days. Reports suggest that this could equate to roughly 45,000 'self-contained accommodation spaces' being required. The response across the industry so far has been overwhelming, with numerous hotel chains looking at their empty hotels and thinking how they could be usefully redeployed. In a time of national emergency, the sector is set to lead the way in helping the most vulnerable in our society.

How can the hotel sector help?

Designating your hotel to provide safe, secure housing for the homeless is no small task. However, it makes perfect sense for hotels that would otherwise be left vacant. Aside from the altruistic undertone of such actions, it also makes good business sense; keep your properties occupied and potentially income coming in during difficult times.

However, it is also a course of action that needs to be considered carefully so each party understands its roles and responsibilities.  The points below are just a few of those that you may wish to consider. 

How will this work in reality?

Will hoteliers be better placed to effectively 'hand-over' their properties to the Government during this crisis, or to retain the daily management themselves? 

There has been much publicity of the excellent arrangement where the ExCel Centre in London has been repurposed by the NHS to run as a field hospital. In such circumstances a handover period will be required, to effectively train the new staff to operate the property. It is advisable to create a handover protocol explaining how the property is to be handed over and what you expect the occupier to be responsible for.  

Some hoteliers already have long standing arrangements with local councils whereby a number of rooms are to house the homeless or vulnerable people.  These are essentially commercial agreements where the hotel retains control. Staff have been additionally trained to deal with the additional issues and needs which these guests present.  

Health and safety considerations

If you opt to hand your hotel over, you will effectively pass the responsibility of its day to day operation to the occupier.  If you retain the active management, however, you will be faced with a myriad of concerns. 

Homeless people are more likely in general to have respiratory problems and so be more susceptible to the virus. With the increased risk of symptoms being brought into the hotel, how do you effectively protect your staff? Supplies of PPE and regular, deep cleaning will be required. 

Hotels will need systems of monitoring those who are self-isolating, with regular checks on vulnerable guests. Meals will need to be delivered to rooms, and social distancing may need to be enforced to prevent occupants from gathering in common areas. You may need to ask guests to seal their linen in bags for 72 hours before a laundry service can be provided, to prevent the spread of the virus.

Is there an increased security risk, both to personnel and property, which will require extra training for staff and security staff, especially during the quiet hours? Guests in the hotel may need more support and liaison with emergency services than during the course of regular business. Hoteliers will certainly want to ensure that fire safety systems are in working order and practice evacuation drills.

Who is responsible for insurance and upkeep of vital systems during this time?

We suggest that the current policy holder (occupier / landlord) is best placed to remain the insured party. However make sure you notify your insurer of the change of use at the earliest opportunity.  Expect insurers to impose certain caveats and conditions, and perhaps levy an increased premium for the duration. Take this into account when calculating the overall costs of providing this support. If retaining your own staff for the day to day operation of the hotel, you will certainly want to check your public liability insurance and ensure you are fully covered.

As this is likely to be a short term arrangement, it would not be appropriate to pass down responsibility for structure and/or vital systems during this period. Your arrangement with the council is likely to be more akin to a commercial arrangement where such maintenance responsibilities remain with you.

Hotels operated under a lease – how can you ensure that you do not breach your lease?

Most leases will prevent a tenant parting with possession without the landlord's consent.  It is likely that if you hand over your hotel to an occupier to use you will be in breach of the lease.  However, we are aware that some landlords have already contacted their tenants to express their support.  

The need to move quickly will be paramount and so we would expect parties to enter into a short term licence with the blessing of their landlord.   But at the end of the day, it would be a brave (or foolish) landlord that would try to forfeit a lease on these grounds in the current climate.

How (and when) do you bring this arrangement to an end?

Be aware that, with the swiftly fluctuating situation, you may have to react on very short notice. What arrangements do you need to be able put in place to ensure continued accommodation for homeless people? 

You will want to ensure you have a similar handover protocol for the end of this arrangement as at the outset, involving at the very least a deep clean and a thorough inspection to check for loss or damage.  Operational managers should be involved to work up a practical checklist to give comfort that the Hotel is handed back in a condition that will enable it to be used immediately. 

Whilst no-one has any firm idea of a likely end date, current speculations centre on a 3-month lockdown. Any agreement should contain an end date that can be altered by agreement between the parties on a specified amount of notice to the other.  We would advise that this date should be less than 6 months to avoid complications and arguments about whether the occupier has obtained statutory rights to remain.   To avoid bad publicity vulnerable people living in the hotels should be given as much notice as possible. 

In an environment when hotels are closing and there is no prospect of immediate income, these arrangements bring welcome Government backed income.  However, they do more than this; they provide a feel good factor and a sense that we are all pulling together to help the most vulnerable at a time when they need it most.

Key contacts

Lucy Sturrock

Lucy Sturrock

Partner, Real Estate
United Kingdom

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