As featured in the Queensland Hotels Association’s August 2020 edition of the QHA Review.
It has been great to see so many Queensland venues returning to some degree of normality over the past few months. What is becoming clear is that the road to recovery involves many swings and roundabouts – something we have witnessed in Queensland even in the last week.
While we have seen increases of approximately 25% to 32% in retail liquor sales throughout the COVID-19 period, there is no questioning the unprecedented impact the recent shutdown has had on hospitality venues. As such, it is important to keep abreast of the current (and evolving) options available to venues, which may assist to mitigate the impact of the government restrictions and any downturn in trade your venue may be experiencing. In the spirit of identifying a ‘silver lining’ in the current environment, we provide the following updated tips and comments to assist you in navigating this ‘new normal’.
Please note: The information contained in this article is current at the time of publication. Elements of the article may change as restrictions continue to evolve.
Gaming Rooms & Gaming Machine Operations
The hospitality industry has collectively welcomed the implementation of Stage 3 in the State Government’s roadmap to recovery, which (amongst other relaxations) allowed venues to reopen their gaming facilities, including pokies, TAB and Keno facilities. We recognise that many venues, in keeping with their obligations under the Industry COVID Safe Plan, have considered or implemented:
- reduced or restricted capacity of gaming rooms;
- crowd control measures (such as designated entrances and exits);
- increased cleaning and sanitisation;
- limiting of the number of operational gaming machines in compliance with social distancing requirements; or
- removal of gaming machines or altering the layout of their gaming rooms.
It is a timely reminder that you will require the approval of the Regulator if you intend to relocate your gaming area to a different part of your premises, or to increase or decrease the number of machines in your gaming area. You do not need approval to merely reposition the existing machines within your gaming area, provided that the disconnection and reconnection of machines is done through your licensed monitoring operator (LMO).
Renovations, refurbishments and reconfigurations
We have seen many hoteliers use the enforced limitations on trading (specifically in relation to venue capacity) as an opportunity to make changes to their venues without further interruption to their business. Examples include:
- minor alterations, such as re-painting, furniture and equipment refreshes (such as pool tables, jukeboxes and televisions) and décor adjustments;
- renovations to bars and service areas (noting that any change to the licenced area of your venue will require approval from the OLGR);
- changes to or relocation of gaming rooms and DOSAs (again, this will require OLGR approval); and
- expansions and constructions of new areas, including bars, function areas and beer gardens.
It is important to consider whether your renovation works will require the approval of the local government (e.g. building approval or town planning approval) or the OLGR.
New venue transactions
The past few months have seen an increase in new pub, hotel and club transactions. A common feature employed by purchasers is the inclusion of contractual conditions precedent which (in addition to regular conditions such as the obtaining of liquor and gaming approvals) do not trigger settlement until the venue sees a return to ‘normalised’ turnover figures. Ordinarily, this takes the form of two consecutive months reflecting figures similar to those from 12 months prior and can include itemised breakdowns (such as revenue generated by specific sections of the venue, including individual bars, functions or dining) to allow thorough scrutiny of a business’s trading status. When coupled with other mechanisms such as a sunset date – which allows a prospective purchaser to terminate the contract if the turnover obligations are not achieved – these contractual provisions afford prospective buyers additional certainty, particularly in relation to valuations in what is a truly unique transactional market.
Hoteliers can operate with the comfort of knowing that the Federal Government has confirmed that the JobKeeper subsidy will extend through to 28 March 2021. While the threshold of a 30% turnover reduction remains unchanged, from 28 September 2020 businesses will be required to reassess their eligibility to the scheme, with reference to actual turnover from the June and September 2020 quarters. JobKeeper payments between 28 September 2020 and 3 January 2021 will be reduced from $1,500 to $1,200 per fortnight, per eligible employee.
In January 2021, eligibility will need to again be reassessed with reference to the June, September and December 2020 quarters. From 4 January 2021 to 28 March 2021, JobKeeper payments will again be reduced to $1,000 per fortnight, per eligible employee.
While the extended JobKeeper operates in a ‘tiered’ manner, designed to taper off towards the end of March 2021 as businesses get back on their feet, the extension of this scheme is another welcomed support for the hospitality industry. It is important that owners and operators carefully review the eligibility of their part-time or casual employees, as those employees engaged in the business for less than 20 hours per week are entitled to a reduced contribution. The extension of the scheme for an additional six months provides hoteliers much-needed peace of mind, along with the opportunity to undertake further forward planning for their venues (which could include the decisions outlined above).
If you have any queries about what the current support and restrictions mean for your venue, or would like to discuss other ways you can make the most of this season, please do not hesitate to call me on 07 3224 0230.