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Many hotels whether owned or rented share occupation with others ie the spa, hairdresser’s, health and beauty salons and maybe even a shop.
Sharing occupation can generate an extra income stream for the owner of a freehold hotel or help pay the rent for tenant hoteliers.
As an owner of a hotel you can consider sharing occupation by way a licence, concession agreement or lease.
Sharing occupation by way of a concession arrangement with a smaller business is a tactic which department stores have used for many years.
The question of whether tenants of medium to large premises can follow this approach will be determined by the terms of their lease.
A concession arrangement is separate from assignment or subletting and is not affected by the restrictions on these types of disposal. The lease may place no restriction on the tenant’s ability to share occupation, require the landlords consent to do so or alternatively contain an absolute prohibition. If permitted by the lease it is important to both landlord and tenant that the arrangement only amounts to a personal license rather than a sublease.
The benefit to the tenant would not only be the licence fee they can recover, but also the potential increase in custom arising from the diversification of goods and services. The concessionaire will benefit from the opportunity to test their business before committing to a lease of their own.
The landlord may be reluctant, but provided both the landlord and tenants interests are adequately protected, a concession arrangement which improves the uncertain financial position of a tenant should also benefit their landlord.
If you require further information on any commercial property matter relating to your hotel or business please contact Allison Bunney Head of Commercial Property Coodes Elizabeth House Castle Street Truro Cornwall TR1 1QX Telephone: 01872 246207 email info@coodes.co.uk
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