Welcome to your regular newsletter from Bird & Bird's Hotels & Leisure team
We are delighted to share the September edition of Check-In - Bird & Bird's regular newsletter for Hotel & Leisure businesses.
The newsletter focuses on hot topics and legal developments impacting on various aspects of the sector around the globe. In our Spotlight on COVID-19, you can find details of two international trackers that have been created by our team to help guide your business through this challenging time. You can see more of Bird & Bird's regular updates on how to navigate this period of global uncertainty on our dedicated COVID-19 webpage.
We are delighted to include three guest articles in this edition: Russell Kett (Chairman, HVS London) examines the impact of COVID-19 on the European hotel sector; Chris Sheppardson (Founder, EP Business in Hospitality Magazine) explores the importance of sustainability in building towards the future; and Ece Özelgin (Special Counsel, BTS & Partners) looks into the repercussions of COVID-19 in Turkey from a privacy perspective. Thank you very much to our guest contributors!
At the end of the newsletter, you can also find details of our events and recent news, which we think might be of interest to you and your team.
In this newsletter:
International: Key requirements and government support available for the international hotel sector
The impact of the COVID-19 crisis on the hotel sector is unparalleled, with the industry being one of those hit hardest by the pandemic. In response to this, our team has worked together to create an international hotel sector tracker, which provides an overview of the current requirements hotels must be aware of and government support available to the sector in each of our office locations.
Our international Hotels & Leisure team is supporting a number of hotel businesses during this challenging time, helping them navigate their way out of the crisis. Our tracker will help hotel businesses keep up to date with the latest guidance and government requirements in the jurisdictions in which they operate.
For each country, the tracker summarises lockdown status, hospitality status, hotel facilities status, and government support. We hope you find it useful.
UK: How do the regulators and courts view Business Interruption insurance policies?
Businesses around the world have been affected by extensive disruption and/or closure as a result of the Coronavirus pandemic. This had led to enormous financial loss in addition to other economic and personal hardships. Many businesses have made claims to seek to recover these financial losses under their Business Interruption (BI) insurance policies.
Our Business Interruption insurance tracker allows you to see at a glance how regulators and courts across key jurisdictions view insurance policies and the coverage claims that have already been made. The tracker currently covers Australia, France, Germany, Hong Kong, Spain, The Netherlands and the UK.
The High Court judgment on the FCA's expedited business interruption insurance test case, The Financial Conduct Authority v Arch and Others  EWHC 2448 (Comm), was handed down on 15 September 2020. Click here to read the judgment and here to read our commentary.
Europe: The impact of COVID-19 on the European hotel sector
With thanks to Russell Kett (Chairman, HVS London) for contributing this article.
There is no doubt that the COVID-19 pandemic has had a most dramatic effect on the hotel business throughout Europe and words like ‘unprecedented’ and ‘unique’ are used liberally to describe the situation. Performance data from STR for the first half of the year compared with 2019 show how dramatic the effect on the hotel sector has been with RevPAR since March 2020 nose-diving, with many hotels closing their doors.
Reflecting back on previous downturns in the last 20 years enables us to recognise that the sharp declines in RevPAR in the period post-9/11 and following the Global Financial Crisis of 2008-09 were followed by a period of recovery, resulting in an overall cycle of some six years in each case. The various terrorist-related atrocities in 2016 in many European cities had a much less devastating impact on hotel performance.
We are therefore encouraged by this resilience and envisage that, notwithstanding the exceptional decline in business during Q2 of 2020, the hotel sector within Europe should have re-established its RevPAR 2019 performance by 2024.
Turkey: COVID-19 and its repercussions from a privacy point of view
With thanks to Ece Özelgin (Special Counsel, BTS & Partners) for contributing this article).
As in other parts of the world, Turkish tourism is also struggling with the COVID-19 outbreak. Although Turkey started to ease its restrictions as of the beginning of May, the drastic effects of COVID-19 on the tourism sector still exist.
The Turkish Ministry of Culture and Tourism has been actively working on reviving Turkish tourism, while also looking for a comprehensive program to protect public health.In May, the Ministry announced the “Safe Tourism Certification Program” (“Program”), which will be effective during COVID-19. The Program introduces certain obligations, such as obligation to wear a mask, use thermal cameras, disinfect carpets and cabinets, hygiene and sanitation training of personnel etc.
While the Program obligates certain measures, some of them directly intervene in the rights and freedoms of tourists, especially privacy of private life, and requires special attention due to their direct relations with the principles and obligations under the Law on the Protection of Personal Data No. 6698.
Negligence of hotel staff: Consideration of a carrier's liability under Regulation 261
Amongst a growing body of case law on Regulation (EC) 261/2004, the ruling of the Court of Justice of the European Union in NM, acting as liquidator of NIKI Luftfahrt GmbH v ON considered the responsibilities and liabilities of a carrier providing accommodation for a passenger whose flight had been cancelled, under Article 9(1)(b) of Regulation 261. Helpfully for airlines, the court concluded that a carrier will not be liable for the negligence of the staff at the provided hotel, as this would be beyond their responsibilities under the Regulation.
Marriott International announced a significant data breach two years ago following which the UK's data protection regulator, the ICO, issued a statement in July 2019 citing an intention to fine Marriott £99.2 million for breaches of the General Data Protection Regulation (GDPR) . Whatever comes of that intention, recent filings in the High Court in London reveal that Marriott now faces the additional threat of a customer class action which cites GDPR non-compliance in respect of the same security breach.
UK employment and immigration update
Over the last few months, we have seen a number of developments in the employment and immigration sphere which have significant impact for the hotels and leisure sector.
New immigration rules
The government has issued new immigration rules, which will be of particular relevance to employers in the hotels and leisure sector, many of which are heavily reliant on migrant labour. In our article, available here, we break down the new rules and implications for your business.
Supreme Court decisions
The UK’s Supreme Court has issued a number of key decisions over the last few months with direct implications for employers in the hotels and leisure sector. We explore these further in two articles. In the first, available here, we examine the implications of Morrisons’ data breach claims for employers (of particular interest given recent fines and the consequent focus on data compliance in the hotel sector). In the second, available here, we look at the Uber gig economy and Asda equal pay claims, both of which are likely to be of interest to hotel employers.
Diversity and inclusion
The Black Lives Matter (BLM) protests have prompted many employers to reconsider their approach to diversity across their workforce. In a series of articles, we consider the implications of the BLM protests and steps that employers can and should be taking to support diversity and protect their business, and how employers can be better allies and drive effective change.
The importance of sustainability in building towards the future
With thanks to Chris Sheppardson (Founder, EP Business in Hospitality Magazine) for contributing this article.
In recent times, there has been a genuine shift in how many companies and their leadership teams think on the issue of sustainability, as well as a re-focusing on service, with boards beginning to place people back at the heart of many strategies. These have been areas of some genuine concern in the early stages of the past decade where many believed that little was really done more than the sounding of good intentions. But since 2015, there has been a genuine change in the narrative, and with each passing year more real action materialises.
Many will argue that the COVID-19 crisis will have been a catalyst for genuine change, but the truth is that change was already being demanded and was actively in progress. The COVID-19 crisis has just helped push the need for change to a faster pace. The emergence of the millennial generation and Gen Z has increased the call for stronger and higher standards in business. Investors too are seeking more actual evidence of strategies which impact positively on sustainability.
The world has woken up to sustainability and hospitality needs to be seen walking the talk and leading by example.
Technology and digital drive: Need and opportunity in the Spanish hotel sector
As part of the "anti COVID-19" plan, hotels are now faced with the challenges that come with measures such as the automation of processes and the implementation of rigorous health, safety and hygiene standards and protocols. Thus, in addition to the use of hospital disinfectants, the installation of screens at reception desks, the offer of masks and gloves, the reduction of decorative items and the use of disposable materials in room service, in many cases new roles have been created such as "the hygienist" (Barceló). Marriott has introduced "Cleaning Boards", and other companies now have "Supervisory Committees" to ensure the application of these cleaning protocols and disinfection procedures in accordance with the requirements of the health authorities.
However perhaps the most remarkable factor, and certainly the one that represents the largest investment, is the commitment by many hoteliers to technology as a transforming element in order to make hotels fit for the post-COVID world.
Our international Hotels & Leisure team recently co-hosted another successful webinar which explored the question: are hotels still good value?
We were delighted to co-host with HVS, AlixPartners and EP Magazine a webinar on the forecast valuations in the hotel sector, and to share our thoughts on how the sector will hold up against the pandemic.
We were joined by a number of leading experts who provided thought provoking insights. Overall, the picture was relatively optimistic. Whilst it is forecast that full recovery will take until 2023, valuations are likely to only see a decline of between 10-20%, and many are now beginning to see opportunities in the market.
The webinar was very well received, with more than 500 delegates joining us on the day.
If you missed it, you can watch the recording here.
Save the date! We will be co-hosting a webinar exploring sustainability in the hospitality sector
As operations seek to rebuild, it is very clear that many clients, employees and investors want to see stronger structures resulting in long term sustainable business models.
Our webinar, taking place on 21 October, will focus on some of the key issues which will impact on the rebuilding process. Please let us know if you'd like to find out more and receive an invitation to the webinar.