Letting rooms

Pub accommodation is undergoing a renaissance, with regional brewers investing heavily in letting rooms. John Porter offers advice for licensees...

Pub accommodation is undergoing a renaissance, with regional brewers investing heavily in letting rooms. John Porter offers advice for licensees planning to follow their lead.

Providing accommodation, or letting rooms, is a traditional element of the pub business - historically, an inn offered accommodation to travellers while a tavern simply provided food and drink. While there are still plenty of pubs which offer accommodation, in many others rooms have been converted to storage or staff accommodation, or simply been locked up and neglected.

However, there seems to be a renaissance in the pub accommodation business. Regional brewers such as Fuller's and Shepherd Neame are investing substantial sums in inns which combine accommodation with a traditional pub offer. Mitchell's of Lancaster, which no longer brews, recently set up a new division to run hotels with function facilities in its trading area.

There is also evidence that many potential tourists are put off by what they perceive as the high cost of hotel rooms. A recent survey by budget hotel chain Premier Lodge found that 73 per cent of people believe hotel rooms are overpriced. Pubs offering value-for-money accommodation could tap into this market by marketing short holiday breaks.

Finding a market

Of course, none of this automatically means that every pub can turn lettings into a successful sideline. The first thing you need to decide is if there is a market for the accommodation you can provide. In rural areas and holiday destinations this may be obvious, but even in locations off the main tourist beat there may be demand from business travellers or other visitors.

Check existing local accommodation guides and tourist offices to see how existing accommodation providers pitch their offer.

Counting the cost

The next question is whether the additional trade generated by letting rooms will justify the extra costs to your business. This is particularly relevant if there are going to be capital costs involved, such as building new rooms or adding en suite bathrooms. If this is the case, you will need to do your homework to establish the likely level of demand, and if you are seeking financial support for the project the bank or other lender is likely to insist on seeing a well researched business plan.

Even if it is just a matter of bringing existing rooms into use as letting bedrooms, there will be costs involved in getting them up to the appropriate standard, in terms of furniture and decorations.

There will also be additional ongoing staff costs involved in cleaning and servicing rooms. Providing breakfasts will also mean extended operating hours.

You can't burn the candle at both ends, so if you are closing the pub at 11pm or later, you may need to employ someone else to handle the morning shift.

Residential licence

If you plan to serve drinks to residents outside normal licensing hours, you will need a residential licence, currently issued by licensing justices. This is often called a Part IV Licence because of the section of the 1964 Licensing Act which it relates to.

A residential licence allows premises which are regularly used to provide board and lodging to serve alcohol to residents and their guests outside normal hours, providing only the residents pay for the drinks.

Only premises which serve breakfast and at least one other main meal can be granted residential licences; bed and breakfast accommodation only does not qualify.

If the sleeping accommodation is provided in a separate building, such as an annex or accommodation block, the residential licence applies providing the building is occupied and managed as part of the licensed premises.

Details of any changes to the procedures resulting from the Government's planned licensing reforms will be explained on thePublican.com when they are known.

Other legal issues

Legal considerations include:

Planning permission for any structural changes to the building.
Compliance with fire safety regulations. The local fire safety officer has a duty to inspect premises offering accommodation, and will issue a Fire Certificate.
Compliance with the Disability Discrimination Act - by 2004 at the latest, service providers must have taken reasonable measures to ensure their premises can accommodate people with disabilities.
Security - guest accommodation should be separated from the working areas of the pub such as the kitchen, cellar and bar, in order to ensure both guest's safety and pub security. It may be necessary to create a separate entrance.

Diamond ratings

The recent research for the Premier Lodge hotel group suggested that tourists would like a clearer indication of the facilities they can expect to be provided by accommodation.

At the moment, there is no statutory scheme for rating accommodation, and there are a number of different rating schemes operated by local authorities, commercial guide books etc.

Studies suggest that on average, less than five per cent of customers express dissatisfaction with their accommodation. Overseas visitors, in London in particular, show higher levels of dissatisfaction than domestic visitors. In the most recent study, 19 per cent of visitors to London said that their room was poor.

Those arguing for a statutory scheme have cited:

The unacceptable level of customer dissatisfaction and no formal channel for complaints.
No mechanism for taking action against persistent offenders.
Enforcement of fire regulations, building controls, planning and environmental health is poorly resourced and not well co-ordinated.
A statutory scheme would send a signal to the general public that the Government and industry have a commitment to raise standards and improve quality.

Opponents of statutory regulation have cited the lack of hard evidence that statutory regulation schemes abroad have raised standards. A statutory scheme would also raise costs and increase the burden of regulation on business still further.

In an attempt to move the industry forward without the need for further regulation, the English Tourism Council has established its Diamond ratings for accommodation, including that provided in pubs. The ratings reflect visitor expectations, with quality seen as more important than facilities and services.

The English Tourism Council Diamond ratings

One Diamond Guest Accommodation offers:

Clean accommodation, providing acceptable comfort with functional décor and offering, as a minimum, a full cooked or continental breakfast.
Other meals, where provided, will befreshly cooked.
A comfortable bed, with clean bed linen and towels and fresh soap.
Adequate heating and hot water available at reasonable times for baths or showers at no extra charge.
An acceptable overall level of quality and helpful service.

Two Diamond Guest Accommodation offers, in addition to that offered by One Diamond:

A sound overall level of quality and customer care in all areas.

Three Diamond Guest Accommodation provides, in addition to Two Diamond:

A good overall level of quality. For example, good quality, comfortable bedrooms; well maintained, practical décor; a good choice of quality items available for breakfast; other meals, where provided, will be freshly cooked from good quality ingredients.
A good degree of comfort, with good levels of customer care.

Four Diamond Accommodation provides, in addition to Three Diamond: