A new hotel can bring more financial benefits, but it can also add risk. A London hotel firm that plans to open in Cambridgeshire must look beyond the room count and a business plan. The new site may need its own firm, bank deal, staff plan, lease, and set of local rules.
Early legal work can help keep risk in check. It can also help you spot flaws well in time. At this time, talking with business solicitors Ely or Cambridge can be a wise step.
In this article, we will discuss in detail what London hoteliers need to know about corporate law when opening a second site in Cambridgeshire.
Structural Corporate Design: Ring-Fencing Assets
The first task is to ask a basic but key point: Who will own the new site? A hotel group may run both sites from one firm. Yet some firms may want to use a new firm for the new site. This can help avoid different risks, such as staff claims, lease terms, debt, or trade loss.
A new firm can hold the site or run the trade, and the main firm can then sit above it as a parent firm. That being said, if the parent firm gives a bond, loan, or other surety, its own risk can rise. That’s why, before you pick a set-up, map out:
- Who owns the site?
- Who signs the lease?
- Who hires the staff?
- Who owns key stock?
- Who takes new debt?
- Who holds brand rights?
- Who gets paid by whom?
You should not set up a new firm just for show. Keep in mind that the set-up must fit the real flow of cash, staff, stock, and risk.
Group Governance and Financing Agreements
Once a group has two sites, it needs clear rules on who can do what. This is where group rules and cash flow can go wrong. The parent firm may fund the new site. It may also lend staff, stock, or cash. Each such link should be clear and backed by a sound deal. You should not rely on a vague note that says one firm will cover the other. Set out the terms, and state the sum, rate, due date, and who bears the risk. Also check any bank deal with care.
Due Diligence on Restrictive Covenants
A hotel site may look ideal on a map but still pose a legal risk. That’s why, before you sign, check the title, lease, and past deal terms. Moreover, look for any clause that may limit what you can do at the site. This may cover:
- Use of the site
- Hours of trade
- Food or drink sales
- Signs and ads
- Noise
- Use of Shared Space
Furthermore, pay close attention to any restrictive covenant. A past owner may have agreed not to use land in a set way. So you should not wait for a risk to show up once the work is done. Ask for a full title and lease check early, so you do not have to face any problems later.
Local Employment Law
A second site means more than new space for staff. It can mean new chefs, desk staff, house staff, site leads, and part-time staff. Moreover, check if each role, work site, pay set-up, and work plan fits the law. Key points to check include:
- Pay rates
- Work time
- Rest breaks
- Paid leave
- Staff terms
- Right to work
Your Hotel is Growing!
A second site can be a key step for a hotel group. But the best time to fix a legal gap is before the doors open. You should start with the group set-up. Then check cash flow, title, lease terms, staff plans, key deals, and local licences. Remember, a sound plan can help the new site grow with less risk. It can also make the group more fit for the next site when that day comes.
Legal Disclaimer:
Please be advised that this article is for informational purposes only and should not be used as a substitute for advice from a trained legal professional. Opening a new hotel site can involve complex issues in company law, finance, property, staff law, contract terms, planning, and local licensing. The rules may also vary based on the site and the type of hotel trade. Please seek the advice of a legal professional if you are facing issues or need advice on opening, buying, leasing, funding, or running a second hotel site in Cambridgeshire.
