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The Journal of the British Association of Hospitality Accountants

BAHA members meetings Monday 24th January

PCI Compliance Phil Jones with

Payment Security Manager from Barclaycard and Richard Hollis CEO, Orthus at the Cavendish Hotel, Jermyn Street, London

Networking from 6.00pm

Monday 21st February

Social Media Aly Dombey

with of Revenue By Design For venue details visit the BAHA website: ENROLING NOW for the

BAHA Prize winners celebrate

BAHA Education and Training Programme – Finance

See page 3 for details

see page 5 for details

Hospitality & Leisure

In this issue: 3 BAHA Celebrates with 2010 Prize Winners

11 Technical Update – Employment Tax

16 HOTSTATS – UK Chain Hotels Review

7 BAHA triumph at BAHA Conference & IT Exhibition

12 Technical Update – A new lease of life?

18 Food Price Trends

10 Hotel Self Service Checking In

14 Technical Update – The Bribery Act 2010

20 Forthcoming Events

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Dear Members, A very Happy New Year! This is our first newsletter following the extremely successful BAHA Conference and IT Exhibition in November and this event was then followed by the sell out Annual Awards Lunch at the Grand Connaught Rooms in December. Consequently in this edition you will find a review of both of these major events in the BAHA Calendar. Further details can also be found at the BAHA and BAHA Conference website where the full set of photos can be viewed.

The BAHA Conference For an update on events available in January and February 2011 simply visit the BAHA website at Our education programmes for 2011 are underway with the start of the next ETP Finance group in February and the launch of the Revenue Management workshop series - full details can be found on the BAHA website or call Jane in the Education Office on 01202 889430 for details. A big thank you to all who have completed the web based BAHA Membership Benefits Survey - your comments have been extremely useful and will be used to shape policy for the year ahead. Many responses included reference to more regional events and we are very pleased to be able to offer a MasterClass Programme this year at the Birmingham based HOSTEC event at the NEC on 24th—26th January. Do come and see us in the BAHA Networking Lounge and join us for the three MasterClasses on Finance, Revenue Management and IT topics. See page 13 for details. Debra Adams, BAHA Education Programmes

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BAHA Celebrates with 2010 Prize Winners Two Mandarin Oriental Hyde Park Directors amongst top winners at ‘Annual BAHA Hospitality Finance, Revenue Management and IT Awards 2010’


n the presence of over 270 guests at the 2010 BAHA Annual Christmas Awards Luncheon – held 16 December at the Principal Hayley Group’s Grand Connaught Rooms in London’s Covent Garden – the winners of five major BAHA hospitality industry awards, together with the recipients of six student BAHA examination prizes, were publicly honoured. Top BAHA Award Winners Nominations for the following three top award categories, put forward by members of BAHA to a special BAHA selection committee, had to have: an exemplary track record; be willing to train and lead their staff; be totally dedicated to the hospitality industry, with the intention of remaining in the profession; demonstrate strong attention to detail; keep abreast of current codes of practice; and command respect within the hospitality sector and wider business community: ‘BAHA Hospitality Accountant of the Year 2010’ was awarded to Margaret Martin-Cruz, Director of Finance, Mandarin Oriental Hyde Park, London First ever ‘BAHA Hospitality Revenue Director of the Year 2010’ went to Claire Gilbertson, Director of Revenue, Mandarin Oriental Hyde Park, London First ever ’BAHA Hospitality IT Professional of the Year 2010’ was won by Stewart Fidom, Corporate IT Project Manager, Dorchester Collection

The other three BAHA Awards included: ‘BAHA Corporate Employer of the Year 2010’ – in recognition of outstanding commitment in promoting and developing financial education in the hospitality industry – was awarded to Radisson Blu Hotels and Resorts ‘BAHA Independent Employer of the Year 2010’ – in recognition of outstanding commitment in promoting and developing financial education in the hospitality industry – went to Portland Hotel Group ‘BAHA Overall Student of the Year 2010’ – based on BAHA Education and Training Programme (ETP) examination Alan Higgins, Financial results – was won by Adrian Director, Portland Hotels Orton, Accounts Assistant at collects his award Hellidon Lakes Golf & Spa Hotel (part of Q Hotels), Daventry, Northamptonshire

Adrian Orton says: I took a hospitality management course at college for 2 years, originally wanting to be a chef, probably due to my love of eating! From college I had various jobs in hotel operations starting with running bars through to Deputy General Manager of a country house hotel in Warwickshire. This position gave me a good insight into the financial side of hotels. Following the birth of my daughter I felt the need to balance the work/life relationship better. A move into accounts was a great way to remain in that fun hotel environment without the unsociable hours. I also believe that my operational background is very useful when it comes to understanding and discussing financial information with my colleagues. Whilst working as an accounts assistant for Q Hotels I have learnt a great deal, and would like to thank them for sponsoring me on this course. My Financial Controller, Philip, has also been unending in his support and I have the greatest of respect for everything he does.

Student of the Year: Adrian Orton with Paul Mitchell, Chair BAHA Education Committee

I really enjoy my new career path and look forward to one day achieving the position of Financial Controller in a 4/5 star property.

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2010 BAHA ETP Student Prizes At the BAHA Awards Luncheon, BAHA recognised the outstanding student successes in the three stages of the ETP programme. As already mentioned, the top student award – the coveted ‘BAHA Overall Student of the Year Award 2010’ – went to Adrian Orton, Accounts Assistant at Hellidon Lakes Golf & Spa Hotel (part of Q Hotels), Daventry, Northamptonshire. Adrian also won a cash prize and certificate for best performance in the February 2010 BAHA ETP examinations for Stage 1 – Introductory Financial Accounting.

From L to R Adrian Orton, Gillian Marriott, Nigel Dobson, Upendo Jordan, Fiona Wilson & Fabian Ecard

Cash prizes and certificates were then given to the top BAHA ETP students, based on their results in each of the BAHA examination categories, taken in both February 2010 and July 2010. The February 2010 BAHA examination prize winners were: Stage 2 – Operational Management Accounting: Gillian Marriott, Accounts Manager, the Cairndale Hotel & Leisure Club, Dumfries, Scotland. Gillian comments:

how to proceed, such as working a little every day and starting work on assignments early. Having completed the programme I felt confident enough to apply for the Financial Controller post when it became available. Now I get to organise my department the way I want it and prioritise some of the tasks which, in The BAHA Education and Trainmy view, are very important, such as ing Programme (ETP) is the entry cash flow management. This has been route to Associate membership of really important for my employer this BAHA for new and inexperienced year in these difficult trading times. I finance personnel in the industry. would certainly recommend the course to anyone who, like me, hasn’t got a formal accountancy background.”

“10 years ago now I joined the Cairndale Hotel as an accounts assistant learning all the aspects of the accounts function within the hotel until I was promoted 4 years ago to the Accounts Manager and continued to learn and grow within the Company. I feel very privileged to have had and still have the experiences and opportunities from the owners of the Cairndale Hotel and appreciate all the encouragement while studying Stage 2 of BAHA.” Stage 3 – Strategic Management Accounting: Fabien Ecard, Financial Controller, London-based Castlechain Ltd (including Bleeding Heart restaurants). Fabian says: “I came across BAHA whilst browsing the Restaurant Association’s website. It looked very professional and based on real experience and seemed a perfect way to learn and apply it to my professional environment. I found distancelearning hard to start with but the learning questionnaire at the start of each cohort helped me devise an action plan on

The July 2010 BAHA examination prize winners were: Stage 1 – Introductory Financial Accounting: Nigel Dobson, Revenue Controller at Foxhills resort hotel, health spa, golf destination and members club at Ottershaw in Surrey Nigel says: “I was lucky enough to take up my current post as Revenue Controller at Foxhills. This was a new role for me but has proved an interesting and enjoyable challenge, as well as giving me the opportunity to greatly expand my accounting knowledge at a somewhat late stage in my career. Foxhills can also lay claim to having two excellent championship golf courses, which prove to be a pleasant distraction from time to time, and allow me to follow my sporting instincts.” Stage 2 – Operational Management Accounting: Fiona Wilson, Accounts Supervisor, Mandarin Oriental Hotel Group. Fiona’s story is that:

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“I studied Commerce and Psychology at the University of Queensland in Brisbane, Australia. My first work experience after graduating was with a public practice accounting firm in Brisbane and once I finished my graduate program I travelled to Canada for a year out, to decide which direction I wanted to take with my career. After a year in Toronto I came to London to help out the accounts team at The Savoy for a few months, prior to the hotel’s closure for renovations. I’ve been with Mandarin for three years now, and in my role as Accounts Supervisor I work with our Regional Director of Finance, and am responsible for the accounts and financial reporting of the London office. As Mandarin is currently expanding in the region my role has and will continue to change accordingly. I am commencing CIMA studies in February and hope to qualify by the end of 2012. “ Stage 3 – Strategic Management Accounting: Upendo Jordan, Revenue Auditor, Selsdon Park and Golf Club (part of Principal Hayley Group), Croydon, Surrey I started out in HR, have worked in the Sales Department and am currently working in Accounts. My initial role in Accounts was that of Payroll Officer and I am currently working as Revenue Auditor. It was whilst I was working as Payroll Officer that I realised

I had a passion for accounting and wanted to further my knowledge in this area in order to further my career in accounting. On the advice of the Financial controller, it was vital that I gained some form of recognised accounting qualification and she suggested enrolling on the BAHA programme. As a mother of 2 young children, home study and the 18 month length of the course appealed to me and hence I decided to pursue the course. I found the time management difficult at times but on the whole it was manageable, especially as I was able to defer one of my examinations. I have now been at the Selsdon Park Hotel for over 5 years and currently working as Revenue Auditor. I hope to pursue a professional qualification in either CIMA or ACCA in the near future. During 2011 BAHA will continue to develop further Education and Training opportunities commencing with the launch of the Revenue Management workshop series in February 2011. Other projects are underway - please check the website for details.

If you would like electronic copies of the photos from the Annual Awards Lunch please contact the BAHA Administration office on 01202 889430. Written by Julian Demetriadi (CommunicationsPoint) and Debra Adams.

Reap the benefits of our Education Programme in Financial Management The








Management (ETP FM) is widely recognised within the industry as providing a firm foundation for aspiring hospitality accountants. The award is achievable in just 18 months and leads to exemptions from two papers of CIMA’s Certificate in Business Accounting and provides credit points against future learning with the Open University, as well as Associate Certified membership of BAHA. Each Stage costs £550 ex VAT (a total of £1,650 ex VAT for studying all three Stages) and includes membership of BAHA whilst studying. The programme is written by experienced educators and industry professionals and is geared specifically to the hospitality industry, with work-based assignments and real-life scenarios. A study of recent graduates of the programme found that it wasn’t just the candidates who benefited from the programme, but the business as a whole. We are enrolling now for the February 2011 programme. For further information, details of exemptions or to enrol online, please visit or contact the education office direct on 01202 889430; email:

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BAHA triumph at the 5th Annual BAHA Conference & IT Exhibition The 5th Annual BAHA Conference and Exhibition - entitled ‘Growing Profitability in an Uncertain Market - the Challenges to Come’ - attracted a record number of 375 delegates and exhibitors in November to the Sofitel Hotel, London Heathrow at Terminal 5


iven the current economic climate, it was testament to the agenda and content of the 2010 BAHA Conference and IT Exhibition – as well as the calibre of speakers and relevance of the topics presented and debated upon – that the event attracted a record 365 delegates, session presenters, and IT exhibitors to what proved a highly informative and enjoyable day, rounded off by the Gala Dinner. This too achieved an attendance record! A major innovation at the Conference was the attendance by BAHA’s first ever ‘Career Investment Scholarship’ recipients: Kate Baudouin, Assistant Director of Finance at Grosvenor House (European flagship of JW Marriott), Park Lane, London; Daniel Bensusan, Finance Clerk, Starwood Hotels and Resorts, Central London; Michelle Jump, Inventory Manager, Travelodge; Andrew Wells, Financial Controller, Macdonald Windsor Hotel (owned by Macdonald Hotels and Resorts) in Windsor, Berkshire; and Chantal Beukes, Sales Executive/Pipeline Coordinator, STR Global. The scholarships were awarded to outstanding young employees – 30 years of age or under – working in finance, revenue management or IT within the UK hospitality industry. Nominated by senior practitioners within the profession, the winners had each demonstrated, at an early stage in the careers, why they were very worthy recipients of these our first ever annual ‘BAHA Career Investment Scholarships’.

CEO Panel Forum led by David Clarke CEO of Best Western partner and Chief Operating Officer, citizenM hotel group; and Brian Hicks, Director of Revenue Management, InterContinental Hotels Group. They examined the ‘Challenges and Trends for the Hotel Industry’s Future’, under the adept chairmanship of David Clarke, Chief Executive of Best Western Hotels, who recently took part in Channel 4’s TV series ‘Undercover Boss’. Some of their key conclusions included:


Technology will play a larger role, speeding up processes, and will be a necessary enabler in the hotel business – more needs to be learnt about it and staff need educating about it or the industry will have missed the boat


Profitable investment in technology will be a big challenge as technology changes so fast; and there is so much to learn in terms of what the future of technology holds. It is vital to be certain about where the investment is made to ensure the needs of guests are met as well as the return on investment. The big danger is investing in technology that will be soon replaced by something better


E-procurement is something to go for where practicable, but care needs to be taken not to upset the traditional relationship between a chef or a sommelier and their suppliers, as this brings value

BAHA Scholarship winners celebrate


A key presentation highlight of the Conference was a widely acclaimed ‘CEOs Panel’, comprising four senior hotel industry executives – Robert Cook, Chief Executive, Malmaison and Hotel du Vin; Michael Levie, a founding

Social media represents a massive opportunity for the hotel industry


The need to listen to hotel guests more. Though the industry is good at knowing what guests want, it is often not so good at delivering it – especially if too focused on the extra revenue stream needed to page 7


A Guide to the Use and Interpretation of the Uniform System of Accounts for the Lodging Industry – Tenth Revised Edition Written by Howard M Field FCA FBHA FIH and published by the British Association of Hospitality Accountants If you have to prepare, read or refer to hotel operating management accounts or financial agreements you may have heard of the Uniform System of Accounts for the Lodging Industry (‘the Uniform System’) – and, if not, then maybe you should know more about it. The Uniform System is described as ‘an industry specific responsibility accounting system’. First published by the Hotel Association of New York City in 1926, who own the copyright, it is regularly revised in the USA by a joint committee formed by the American Hotel and Lodging Association, and the Hospitality Financial and Technology Professionals (HFTP). BAHA has been part of the consultation process for the past 20 years or so.

Howard Field

Despite its local and national origins in the USA, the Uniform System has become widely adopted and accepted throughout the hospitality industry on a worldwide basis. As well as for operational managers, its terminology and usage has relevance to many commercial and legal arrangements, especially leases, management and franchise agreements. The Tenth Revised Edition contains several major changes from earlier versions, as well as introducing a fundamental requirement for hotel accounts to follow its formats and recommendations exactly for accounts to be considered to comply with the Uniform System. The Guide has been produced to assist those based in the UK and internationally to interpret the Uniform System. The Guide complements the official publication and is an essential tool for international users and readers to: * understand the formats, terminology and features, especially the changes from earlier editions * point out aspects of relevance to those who produce hotel accounts * aid specialists involved in drafting and interpreting agreements referring to the Uniform System * assist with training of accountants and non-accountants * illustrate how statistics are used for monitoring and benchmarking performance * provide explanations for those concerned with monitoring compliance The Guide has been written by a practitioner and professional who has been involved in the hotel industry, and with BAHA, for over 40 years. Editorial assistance has been provided by representatives from HFTP, as well as practising financial and legal professionals. Howard is also undertaking a review of the implementation of the Uniform System of Accounts for the Lodging Industry in Hong Kong, to help to compile a guide to its use and interpretation tailored to address local issues. As an educational tool, as well as a resource for users and those needing to understand hotel accounts and reports based on the USALI formats, the HCCA guide will help to clarify its application and to address some anomalies related to local practice. It is planned that the Guide will be ready for publication early in 2011. Copies of the UK Guide are available from BAHA, priced £25 plus £2.00P&P. A special offer is available until 28th February £20 inc P&P. See order form enclosed. Copies of the Tenth Revised Edition of the Uniform System Of Accounts for the Lodging Industry are available from the BAHA Administration Office priced £54.00 for members.

provide that requirement. If the functionalities are well provided, then the ‘wow’ factor will be achieved and guests will return.


Free Wi-Fi is indeed the future – people want it and the hotel industry should supply it

The 2010 BAHA annual conference also marked the first opportunity for BAHA delegates to learn more about the future plans and agenda of the British Hospitality Association (BHA) from its newly appointed Chief Executive Ufi Ibrahim. Indeed, there could have been few better qualified and more influential industry leaders to give a keynote address on ‘Tourism – the significance for the UK economy’ than Ufi, who was formerly Chief Operations Officer of the World Travel & Tourism Council (WTTC). Having welcomed Prime Minister David Cameron’s speech last August which extolled the importance of tourism, the new BHA Chief Executive told BAHA delegates that she believed it was now time to create the conditions in which the hospitality, tourism and leisure industry could grow and prosper. In this objective, she has been supported by the findings of the recently published study into ‘Economic Contribution of the UK Hospitality Industry’ – commissioned by the BHA and undertaken by Oxford Economics, which highlighted the importance of the hospitality industry to the UK economy.

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The report revealed that hospitality is the UK’s fifth largest industry in job terms – employing over 2.4 million people (1 in 13 of total jobs), contributing £34 billion in gross tax revenue. It also forecasted 236,000 net additional jobs, compared to today, by 2015 – provided a supportive government framework was put in place. Achieving this is a BHA priority concern. The study lays the base for setting BHA’s agenda and future actions, enabling the Association to lead the industry in positive partnership with government. “We are seeking a real change from the new Government so that it champions the hospitality industry through a strong partnership that benefits the BHA’s members, the wider society and the UK economy in general,” explained the BHA Chief Executive. “Against this background of intense BHA activity, the industry continues to expand. According to our latest British Hospitality: Trends and Developments 2010, over 100 new hotels with 10,400 rooms will have opened in 2010, and a further 43,000 rooms are planned for the period 2011-15. The success of the BAHA Conference owed much to the fact that there was something of equal measure and importance in the Conference programme to meet the requirements of all the members – comprising finance, revenue management and IT professionals. In the morning, for instance, revenue managers had their most pressing questions answered by an expert team in a ‘Revenue Management Question Time’ – chaired by Michael Prager, Senior Vice President Sales Hilton EMEA (Europe, Middle-East and Africa). The team of expert panellists included: Revenue Management Specialist Warren Mandelbaum who was formerly Head of Revenue Management, Whitbread Hotels & Restaurants; Ciaran Fahy, Managing Director, The Cavendish London; Moz Shigdar, Group Revenue Manager, BDL Hotels; Fabian Specht, Regional Managing Director EMEA, IDeaS; and Heather Hart, Managing Director, RevExcel, and Chair of BAHA’s newly formed Hospitality Revenue Management Community (HRMC) Committee. The afternoon featured 18 education seminars on a range of topics. All in all, the 5th Annual BAHA Conference and IT Exhibition proved to be a major success both educationally and socially – right from the 9.15am opening overview of the UK hotel industry and future forecast by PricewaterhouseCoopers’ (PwC) and STR Global, to the last activity of the day: the greatly enjoyed after-dinner entertainment of medieval market stalls, containing fairground attractions, and a disco! BAHA would like to take this opportunity to thank publicly the supporters of the 2010 BAHA Annual Conference and IT Exhibition – American Express, Beacon Publishing, Cleverdis (SMART Report), Global Blue, Hostec @ Hospitality 2011, Hospitality Upgrade, IDeaS a SAS company, Keystep, PKF, Softbrands and Swiss Com plus all the companies who took part in the Exhibition. Photos from the event can be downloaded from

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Hotel Self Service Checking In With the Christmas season fresh in the memory, many of us will be recovering from traditional 21st century festivities - turkey, wine and shopping. This year’s presents were less likely to be gold, frankincense and myrrh, and more Goldfrapp CDs, Frank Lampard posters and celebrity fragrance “Purr”!


s with presents, whilst the giving and receiving of hospitality has endured over the years, the delivery of hospitality has changed considerably. In today’s hospitality industry, the challenge of improving on the guest welcome whilst changing with the times is an ongoing debate. Do you greet your guest from behind a desk and educate them about all the hotels facilities? Would the guest be happier checking in as quickly as possible so that they can down bags and flick on the TV? Whatever the answer, no one likes queuing and many now question the need for a front desk; a throwback to the days of guests signing into leather bound ledgers and picking up their pre-electronic room keys. Technology now enables a wholly different process. Banks led the way with the self service convenience of ATMs. They are now removing many cashier desks in preference of self service. ‘Pay at pump’ improves the service of petrol stations, self check out lanes are in retail stores from B&Q to M&S and it is now uncommon to buy a train ticket or check in for a flight without a kiosk. The common element across these businesses is this; if the customer can manage a simple process themselves, the business reduces the time their customers spend in queues. This is also true in an hotel reception, but whilst self service is not new for hotel guests, why is it a relatively new concept for hotels? The large budget brands lead the way in the UK. They are replacing reception desks with self service kiosks. Kiosks provide the guest with room key and receipt and results are remarkable. Hotels are reporting a 10-15% increase in customer satisfaction. Interaction between the guest and staff is greater without the barrier of a desk. Hotels can redeploy staff to be more attentive to customers when they need it. The kiosk has increased the speed of the check in considerably from 10 minutes to under 2 minutes, with prepay reservations processed in seconds. Another reported benefit is that the kiosk always offers upsell items and customers feel they are making a choice, rather than being sold to; increasing revenues from upsell items by more than 10%. Whitbread believes that “queuing up for a human interaction that might take five minutes compared to kiosks that can do it in 20 seconds adds enormous value to the customer service”. Such technology is not limited to budget operators. Hyatt’s Andaz brand boasts that, “with no reception desk and no check-in queue, you are invited to relax in the lounge (lobby) while the check-in comes to you (staff use portable PC's) - offering the highest level of personal and uncomplicated service”. This personalised process will clearly come at a price.

that replace the room key with the customer’s mobile phone. The idea is that hotel guests can open their door either by making a call or by holding their chip-enabled phone against a compatible lock. Return on investment from these trials is yet to be proven, as well as reducing the hotels opportunity to upsell. Whilst such trials are interesting and are worth keeping an eye on, the business process clearly needs to be better. Will a guest want to make a call every time they want to get into their room? How can they recharge their phone whilst they go for dinner? The assessment from research group Gartner indicates a level of caution around early adoption here, describing a “level of fragmentation” in mobile technology that will delay mass adoption until at least 2015. There was similar excitement around the launch of WAP, which has now largely disappeared. Hotel innovators now introducing a self service option are catching up with other industries. Results from kiosks have proved to be as effective in hotels as in other industries. So with seasonal hospitality over for another year at least, and with hotel guests more used to self service options than ever before, what better time to invest in self service technology for your hotels?

By Dominic Child and Mark Jelley Dominic is Major Account Manager at Shere, winner of the ‘Best Use of Technology’ Award, Cateys 2010. For further information on self service, please email or see Mark is Chair of the BAHA IT Committee

Other hotels are looking at various emerging technologies

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Technical updates

From the BAHA Technical Committee, chaired by Diana Mountain at Staff Accommodation When HM Revenue and Customs audit the employment tax compliance of hotels, restaurants and pubs one of their biggest earners is accommodation provided to staff. However, with care, it may be possible to minimise or even remove potential liabilities. In principle, whenever accommodation is provided to an employee, this will give rise to a benefit that must be included on a form P11D, which will give rise to a tax charge for the employee and National Insurance Contributions (rising to 13.8% next year) for the employer. Exemptions The first point to consider is whether it is possible to avoid a tax charge completely. HMRC is very reticent when it comes to applying the potential exemptions. In practice, the one most likely to be in point states that where "it is necessary for the proper performance of the duties that the employee should reside in the accommodation provided" no taxable benefit arises. It is not good enough to suggest that an employee can do his or her work better because they live in. It must be "necessary" for them to be able to carry out their duties properly. The most obvious example would be somebody who had overall responsibility and might need to be on the premises to deal with an emergency. This can either be a hotel or pub manager or possibly someone with caretaking responsibilities. Recently, the writer has managed to press for a claim on behalf of someone with significant duties out of hours in a hotel. However, it was hard work and took six months of negotiation. Valuation Unless any exemption applies, then the employer has a responsibility to record benefits of this kind on the year-end form P11D. This can be easier said than done since while you may know which employees are occupying a room or flat that is provided for them, valuing that accommodation can be tricky. The good news is that if it is on the site, for example a spare room in a hotel, then the method of calculating the tax is to look at the marginal additional cost to the employer of supplying it. Typically, this would be no more than the cost of laundry. Many employers charge a relatively nominal sum to their workers for the occupation of rooms and this should cover any taxable benefit. If the employer rents property, the taxable benefit will be the cost of the rent. This can be a little tricky, where accommodation is shared and people move in and out regularly but in these circumstances, it is necessary to do the calculations. Another problem is that tax is payable when property is available, even if it is not occupied. Therefore, if somebody stays in a flat five days a week and goes away at the weekend, they will still have a benefit based on all seven days.

are included within a PAYE Settlement Agreement. This does not save any money but allows the employer to settle the tax for the employee and in addition, saves the need to put any benefit on a P11D. Take Care It is very easy to forget or ignore the obligation to ensure that this benefit is correctly taxed and charged to National Insurance Contributions. You should make sure that this does not happen, as eventually, the taxman will catch up with you and by that time, you will almost certainly end up settling your employees' liabilities on their behalf, even if only because you can't track them down. If those liabilities cover a number of years they can really mount up. Philip Fisher heads the Employment Tax and Rewards Team at PKF(UK)LLP. He can be contacted at or on 020 7065 0300.

PAYE Settlement Agreements If desired, in some cases it may be possible for the employer to agree with HMRC that accommodation benefits

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A new lease of life?

The International Accounting Standards Board (IASB) has recently issued an Exposure Draft which could bring about the most wide ranging change finance departments have had to deal with since the adoption of IFRS.

Companies reporting under UK GAAP are not yet affected but given the current state of flux of UK GAAP and the continual convergence projects to align UK reporting with International Accounting Standards, the principles of the Exposure Draft could ultimately be reflected in UK GAAP in due course. The headline message is that the distinction between operating leases and finance leases will disappear – the consideration of whether the risks and rewards of an asset have passed to the lessee will no longer be relevant. The accounting treatment will be significantly different from that currently adopted. Currently, an operating lease has only an income statement impact with the total rental charge being spread on a straight line basis over the length of the lease. The proposed standard impacts not only property leases but any type of lease including TVs, photocopiers and computers. The proposed standard requires capitalising the lease as an asset at the present value of total rentals due over the term, with a corresponding lease creditor. The asset is then depreciated over the lease term, and the creditor is adjusted each period end to reflect the cash paid and the unwinding of the discount. This means the income statement now has a lower charge within EBITDA (the income statement is now hit with depreciation and interest expense rather than operating expense) but increased depreciation and interest expense. Consider the following very simple example: Scenario 5 year lease at £2,500 per year Company's cost of borrowing is 6% (this is an assumption and is used as a guide only)

Current accounting for operating leases Income statement has a charge of £2,500 for each of the 5 years No balance sheet entry Proposed accounting for operating leases Prepare discounted cashflow of the lease Discount factor

Discounted cashflow

Cash due

Pay date






























Treatment in year 1 Capitalise the asset at the discounted value ie £11,163 and create a lease creditor This fixed asset value is then depreciated over the life of the lease ie 5 years The interest element of the finance lease is also expensed but as an interest expense and is expensed in relation to the balance of the lease outstanding.

Income statement impact Proposed accounting made up of Year

Current accounting

Proposed accounting




Difference %




































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The impact In the above example, the income statement charge in the first year is 10% higher than under the current accounting standard. Conversely, in the final year of the lease, the charge is 11% lower. Also, EBITDA is £2,500 higher under the proposed accounting but depreciation is £2,233 higher each year. The interest expense is also higher. This will result in EBITDA no longer being the ideal proxy for operating cashflows. The balance sheet has an asset within property, plant and equipment but also has a lease creditor with an element shown as current. This means net debt has worsened impacting the gearing the ratio which could impact debt covenants. The devil is in the detail The example above is deliberately basic and small scale but highlights the significant impact the proposed standard would introduce. As with any new standard there are bits of detail which should be considered. Some of the key factors are below:


Break clauses – an assessment needs to be made of the likely length of the lease.


Turnover rents – these would be estimated at the outset and then revised at each balance sheet date.


Lease incentives – the new standard is silent on these but non-standard incentives could give rise to judgemental accounting.


Discount rate – this should be the rate charged by the lessor but cannot always be reliably determined, in which case the incremental cost of borrowing by the lessee is used. This is highly judgemental and means two companies with the same lease could have very different accounting costs.


Deferred tax – if you currently present group figures under IFRS but individual company statements under UK GAAP then there will be a difference between the tax treatment and accounting at group giving rise to deferred tax.

Some commentators have suggested that the earliest mandatory date of adoption would be accounting periods beginning on or after 1 January 2013. Although this may seem a long time away, it will come round far too quickly for businesses with a lot of leases.

Article courtesy of Mark Edwards at BDO (

BAHA Goes to HOSTEC 2011

Come and enjoy coffee and pastries at the BAHA Networking Lounge at HOSTEC this year at the NEC Birmingham on 24th - 26th January 2011. You should have already received the email with a special invitation to BAHA Members with certain HOSTEC privileges. Hostec at Hospitality is the largest technology event in hospitality and foodservice to run in 2011 - and your only opportunity to experience such a broad selection of the latest innovations and current thinking. BAHA Masterclasses at HOSTEC 2011 Finance Masterclass “UK Industry Update” by Mark Dickens of TRI HOTSTATS - Monday 24th at 3.00pm A Tri HOTSTATS Presentation on the latest UK Hotel Industry Statistics reviewing the latest full year data and trends for London and the Provinces from over 500 Hotels – plus a view of the future with the latest forecast! IT Masterclass “PCI Compliance” by Richard Hollis of Orthus—Tuesday 25th at 12 noon. A presentation on the unique challenges of PCI Compliance in the Hospitality Industry. An overview of the standard, terminology, strategy, compensating controls and the Eagles’ approach to information security risk management. Do not be a negative headline waiting to happen – come and understand – in really practical terms -how to approach and deal with the issue! Revenue Management Masterclass “Roadmap to Revenue Management Automation” by Ally Dombey of Revenue By Design - Wednesday 26th at 3.00pm This workshop looks at the development of revenue management skills in hotels and the improvements in Revenue Management key performance indicators that can be obtained without putting in a system. We look at the criteria that hotels have used to make decisions about automating their revenue management processes and what you can expect to achieve with and without automation. For further information visit the BAHA website at

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This is a much more onerous burden for organisations, requiring them to demonstrate their genuine efforts to prevent corruption in order to avail themselves of the ‘adequate procedures’ defence for which government guidance will be published in early 2011. No prescriptive standards will be provided but guiding principles issued so far suggest that a company should:

x x x x x x x

Technical update The Bribery Act 2010

Have you been lucky enough to enjoy some lavish corporate hospitality, or have you looked on enviously when others have been treated at your expense? Do you turn a blind eye to any gifts to staff from your favourite suppliers? Now you may no longer be able to afford to be ignorant as we face a new challenge with The Bribery Act 2010 (BA) coming into force in the UK in April 2011. This legislation reflects an updated zero-tolerance approach to bribery, with companies facing an unlimited fine and individuals a maximum of ten years imprisonment. As well as preventing the payment or receipt of bribes by UK entities, this Act introduces a corporate offence of ‘failing to prevent bribery’, against which an organisation will only have a defence if it can show that it had adequate preventative procedures in place. The BA creates four offences: 1. Giving, offering or promising a bribe (i.e. active bribery); 2. Requesting, accepting or receiving a bribe (i.e. passive bribery); 3. Bribing a foreign public official; 4. Failure by a commercial organisation to prevent bribery by its ‘associates’. Under this last strict liability offence an organisation could face liability as a result of the unsanctioned actions of third parties. The definition of ‘associates’ includes all levels of employees and third parties acting for or on behalf of the organisation, which could be subsidiaries, joint ventures or third party service providers, all or any of which may be found to be performing services on a company’s behalf.

Demonstrate a top level commitment to prevent bribery Implement a comprehensive risk assessment Implement due diligence policies and procedures for all business relationships Implement clear, practical, accessible and enforceable commercial policies and procedures Ensure that the above become part of the culture of the organisation Monitor and review the above to ensure compliance

The BA extends its application beyond UK borders, including non-UK businesses which have some business activity in the UK, representing a stricter new approach to corruption than the US Foreign Corrupt Practices Act 1977. In the private sector the BA prohibits giving and receiving bribes with the intention that some function or activity will be performed improperly. This will include not only functions of a public nature, but also activities connected with a business or with a person’s employment. However, the BA contains no requirement that the person paying a bribe to a foreign public official is motivated by corrupt or improper intent. This should be noted particularly in the context of the provision of hospitality. It is thought that most routine and inexpensive corporate hospitality is unlikely to break the law because there would be no reasonable expectation of improper conduct. Lavish or unusual hospitality will be more risky. Some comfort can be drawn from the draft guidance which says that “reasonable and proportionate hospitality or promotional expenditure which seeks to improve the image of a commercial organisation, better to present products or services, or establish cordial relations, is recognised as an established and important part of doing business”. It goes on to say that the higher the expenditure and the more lavish the hospitality, the greater the inference that there is intention to influence the public official! In conclusion, the wide application of the Act means that it cannot be ignored and there is no avoiding the changes to practices, policies and the conduct of business that must be promptly implemented. Organisations should review and update their anti-corruption policies and procedures in order to protect themselves from liability, giving careful consideration as to how business is conducted, such as the provision and receipt of hospitality, both internally and through external third parties. The above is an edited version of a longer article provided by Felicity Jones, Partner at Watson, Farley & Williams – the original article will be posted on the BAHA website

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Hospitality Data Compliance

TOP 10 TIPS FOR SELECTING A QSAC A good Qualified Security Assessor Company (QSAC) can take the pain out of implementing a Payment Card Industry (PCI) Data Security Standard (DSS) Compliance Programme for your business. Courtney Bryan, Hospitality Compliance Executive at Orthus gives the Top 10 Tips for selecting a QSAC.

“In 2010 there were over 84 reported breaches and over a 100 forensic investigations carried out in the Hospitality Industry in Europe alone.” “Credit card fraud rose by 132% in the last year. Every minute more than 25 credit card frauds were committed in the United Kingdom”.

1. Use only an approved QSAC The PCI Security Standards Council (PCI SSC) maintains a list of certified Qualified Security Assessor Companies on their website. These companies have undergone the appropriate training, possess the quality assurance procedures and required insurance to provide advice and assistance. Check the PCI SSC for a list of approved QSAs. If the company your considering is not listed there – find one that is. 2. Good stead Before signing up, check whether the QSA company is in remediation. The PCI SSC performs quality control checks against all QSAs and if found to violate the council’s stringent requirements, the organisation will be put into remediation. To check whether a company is in remediation visit the PCI SSC website listing. 3. Vetting questions Get to know your QSA before hiring them. Interview them as you would a potential employee. To be effective, a QSA must understand your business. Don’t wait until after you have hired them to see if they understand the hospitality business. Vet them before the engagement. Ask how many Reports of Compliance (RoCs) they have completed in the last 12-24 months?” Too few shows lack of experience and too many may indicate not enough time is spent with each client. 4. Get 5 references Although no business is exactly the same, it is important to choose a QSA who has experience and knowledge of your industry. Ask for relevant references and speak to individuals at the companies. Get at least 5 examples of other work they have done in your specific industry. 5. Trust & confidence Confidentiality is essential as you will be disclosing sensitive information about your organisation, including infrastructure and operations. Ensure you get a confidentiality agreement in place prior to discussing your business with a potential QSA. A good QSA will ask you for this up front.

6. Compliance guarantees Everyone knows that there is no such thing as 100% security; therefore it is important to work with a QSA who can offer some kind of reassurance or guarantees in the event that things go wrong. Look for a QSA that will put some skin in the game and share the risk with you. At the end of the day if you have a breach, it’s your company’s name in the paper. Look for a QSA that understands this and works all the more closely with you to reduce that risk. 7. Low budget means PCI fail Never before has the phrase “you get what you pay for” been truer than in the QSA provision world. Low budget tends to underpin a half hearted approach and is an attempt to simply tick compliance boxes. If serious about the security of your customer’s data remember cheap isn’t always cheerful. The point is that the cheapest QSA isn’t necessarily the best. Good, quality information security compliance advice and assistance is invaluable. 8. Strategic partnership Your QSA should work as a business partner rather than a client auditor who is only available prior to an audit or assessment. You should consider your QSA as an extension of your compliance resources and they should be available on call 365/24. This partnership will result in significant cost savings through the implementation of compensating controls designed for your business by a partner who understands your business. 9. Right solutions for your business Choose a QSA who takes an effective risk based approach, who can effectively interpret requirements suited to your business and implement the right solutions with the least impact to your day to day business operations. 10. Onsite vs. offsite Finally, be wary of any QSA who says they can make you compliant without ever doing any work onsite to validate things. Ask the question beforehand “How much time is spent onsite vs. the time offsite?”

For more information about selecting a QSA or if you have any questions about PCI DSS compliance contact

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UK Chain Hotels Market Review – Nov 2010 12 months after London hoteliers recorded a dramatic return to profitability growth the capital continues to thrive, according to the latest Hot- Stats survey from TRI Hospitality Consulting


ollowing the massive decline in profitability levels experienced by hotels in London following the banking crisis in October 2008, November 2009 was the first month in which London hoteliers were able to increase profitability levels. At 7.5%, the margin of growth in November 2009 was a dramatic turning point from the declines experienced during the rest of the year and marked the beginning of a strong period of trading for London hoteliers. This month, Gross Operating Profit per Available Room (GOPPAR) increased by a further 10.7% to £85.38, boosting the calendar year average to £68, a figure which is 14.7% higher than the year-to-date average of 2009. Meanwhile, Total Revenue per Available Room (TrevPAR) grew by 8.4% to £168.20 from £155.14 in 2009. November is typically a strong corporate month in the capital, illustrated by the above average achieved room rate, at £138.10 against a year-to-date average of £123.95.

an attendance of more than 250,000 people over an eight day period.

“The draw of London as a world-class destination for business and leisure visitors as well as major events is undeniable. Undeterred by strikes on the Underground, student fees protests and the heaviest November snowfall in 17 years, hoteliers in London have once again recorded significant increases in profitability; and long may it continue,” said David Bailey, deputy managing director, TRI Hospitality Consulting.

In addition, major events in the capital fuelled significant increases in achieved room rates in the nondiscounted rack rate (+21.6%) and leisure (+19.4%) sectors, due in part to the World Travel Market exhibition at ExCeL, which attracted approximately 27,000 visitors over a four-day period and the success of the ATP World Tour tennis finals at the O2 which boasted

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RevPar growth is once again lost in costs in the Provinces In contrast to the rapid return to growth and strong period of trading in the capital, hotels in the Provinces suffered further losses as cost levels continue to impact the bottom line, according to the latest HotStats survey. Despite a 3.6% increase in Revenue per Available Room (RevPAR), to £49.87 from £48.15, TRI’s unique HotStats survey revealed that GOPPAR levels actually fell by 1.1% to £29.81 from £30.13, which is on the back of a 12.8% decline in profitability during the same period in 2009. For provincial hoteliers, RevPAR growth primarily remains in volume as the corporate sector continues to return, which, during November, resulted in a 1.9 percentage point increase in room occupancy levels to 70.7%. However, evidence of the challenges which remain in the Provincial market are highlighted in the decrease in ancillary spend this month, which meant TrevPAR movement was reduced to an increase of just 1.1%, against the 3.6% increase in rooms revenue. This was due to a 1.1% decline in food and beverage revenue per available room, to £30.51 and further impacted by a 12% drop in meeting room revenue per available room. This movement leaves year-to-date profitability levels in the Provincial hotel market approximately 0.7% behind last year. Across the UK, hotel performance remains mixed, but it is typically those cities which are able to accommodate major conference, exhibition and sporting events which are able to find some respite from the ongoing challenges in the market. Following the success of the Ryder Cup, Cardiff hoteliers picked

up where they left off in October, with a 4.5% increase in GOPPAR to £40.87 from £39.12, thanks in part to the demand created by the rugby Autumn Internationals. Similarly, in Manchester, events at the recently renovated Manchester Central, including the Chartered Institute of Personnel and Development (CIPD) Annual Conference & Exhibition, resulted in a GOPPAR increase of 2.4% as RevPAR grew by some 6% on the back of a 7.5% increase in achieved average room rate. In contrast, the poor weather towards the end of the month crippled the Scottish transport infrastructure and Edinburgh Airport was closed for several days hampering international arrivals. As a result, declines in both volume and rate caused GOPPAR in the Scottish capital to drop by 14.4%.

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Food Price Trends PSL have been tracking the price of food product for 17 years now and we have a comprehensive database which we summarise monthly in what we refer to as “Food Trends” The main factors affecting the price of the products are:SEASONALITY- New season products will always demand a premium price but the prices generally reduces after the initial surge and supply meets demand. DEMAND- Will Turkey prices go up in December SUPPLY- Earlier this year the fallout from the Volcanic Ash Cloud reduced the availability of Airfreight and caused huge increases on some products. (e.g. Mangetout & Fine Beans doubled in price from some suppliers) The below graph details the price movement of a 4/5* hotel group using PSL pricing and compares those prices to the open market. The “Open Market” is determined by data PSL received from potential clients and price matching compared to PSL prices. Currently the overall basket cost is 3.1% higher than in 2009 with all product categories showing increases year on year (For a more detailed breakdown on individual product categories and product trends visit

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Hospitality Fire Safety Since coming into force in October 2006 there have been numerous prosecutions of hotels under the Regulatory Reform (Fire Safety) Order 2005 (FSO). The introduction of the Regulatory Reform Order 2005 (RRO 2005) has taken responsibility for fire safety away from the Fire Service and has firmly placed it in the hands of the owner/occupier of the building. Fire Risk Assessment One of the main areas of the new legislation is the requirement for companies employing five or more persons to have a written fire risk assessment. The complexity of the assessment will, to some extent, depend on the number of employees, the complexity of the premises, and the hazards likely to be present. Prosecutions Some examples of hotels being prosecuted under the RRO for failing to have suitable and sufficient fire risk assessments and management systems in place include: Following a fire at the Royal Hotel (Waterfoot), the managing director was fined £18,000 and ordered to pay costs of £1,750. The company responsible for the hotel admitted responsibility for a number of offences which included not completing a formal fire risk assessment.


The Hallmark Manchester, a luxury hotel near Manchester has had to pay £127,000. Hallmark Hotels pleaded guilty to three breaches of the Regulatory Reform (Fire Safety) Order 2005. It was visited by firefighters in April 2008 during renovations and according to Cheshire Fire and Rescue Service, they were so concerned about what they found that fire safety officers were brought in the same day and served a prohibition notice closing the hotel.


The court heard that there was no operable automatic detection or manual call points on the third floor of the 160-capacity hotel, while on other floors there were faulty smoke detectors and substandard fire exits. Also staff had not been properly trained in fire safety. The hotel was allowed to reopen four days later after remedial action was taken.


A hotel company and its chief executive have been found guilty of ten offences under the Regulatory Reform (Fire Safety) Order 2005. Awan Investments Ltd were ordered to pay £27,000 in fines and costs, while Malik Mohammed Bashir paid £5000.


The company manages Ventures hotel in the Paddington area of London. Officers from London Fire Brigade visited the hotel on 2 March 2009 after concerns were raised by two guests following an overnight stay. They found a number of fire safety failings including no suitable or sufficient fire risk assessment, blocked emergency exits and wedged open fire doors.


A hotelier was charged with four breaches of the Fire Safety Order. These included bedrooms without means of escape, inadequate emergency lighting / artificial lighting, incorrect testing of the fire alarm system and a prohibition notice being issued to stop the second floor being used. However, he continued to ignore recommendations and fire safety officers believed that the risk would ultimately lead to fire deaths in the hotel. He was fined a total of £145,000 for the offences and ordered to pay £49,488 to Suffolk Fire & Rescue and £8,039 for legal costs he had claimed and was not entitled to.

Information For more information on the legal duties and responsibilities under the Regulatory Reform (Fire Safety) Order 2005 (FSO) or if you would like assistance carrying out a fire risk assessment or would like to attend a ‘fire risk assessment training course’ please contact: Heidi Carslaw ACII, Aston Scott Ltd Tel: 0845 302 8257 Email:

Kathryn Haw Dip CII, Aston Scott Ltd Tel: 01732 220101 Email:

Aston Scott Ltd is authorised and regulated by the Financial Services Authority | Registered Office: Malling House, West Malling, Kent ME19 6QL | Registered in England and Wales, No. 1341849

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BAHA London Members Meeting â&#x20AC;&#x2DC;PCI Complianceâ&#x20AC;&#x2122; at the Cavendish Hotel, Jermyn Street, London to book email:

24th - 26th January

BAHA Regional Master classes at the HOSTEC Lounge at the Birmingham NEC

24th January

IOH Revenue Management Seminar at the Warwick Room, Hilton Birmingham Metropole, NEC Time: 8.00am to 10.15am - to book visit

7th February

HSMAI European Revenue Management Conference, London - to book with special rates for BAHA members

21st February

BAHA Members Meeting - Social Media presented by Aly Dombey of Revenue By Design, venue to be confirmed

The BAHA Meetings Programme is sponsored by Fourth Hospitality a leading supplier of on-demand business intelligence solutions for the Hospitality industry

Patrons & Partners Gold sponsors include: Agilysys Best Western Hotels Clarity Hospitality Fourth Hospitality Global Blue IDeaS - A SAS Company KPMG Softbrands, an Infor Affiliate Aston Scott BDO CMS Hospitality CTB Accounts Cowgill Holloway EasyRMS Eproductive FM Recruitment Kerry Robert Associates Keystep Micros-Fidelio Orthus Par Springer-Miller PKF

PricewaterhouseCoopers Shere StockCheck STR Global Symon - Digital Signage Rieo Communications Rubicon The Ritz Hotel, London TopSource Touchstone NAV TRI Hospitality Consulting Venners Xn Hotel Systems Ltd

Patrons are valued members of the British Association of Hospitality Accountants, providing the Association and its members with a wide range of services and technical advice. Visit to view links to all our patrons.



The British Association of Hospitality Accountants BAHA Administration Office, Suite 6, Merley House Business Centre, Merley House Lane, Wimborne, Dorset BH21 3AA. Telephone +44 (0)1202 889430 Fax +44 (0)1202 887967 Email:

BAHA Times - January 2011  

The British Association of Hospitality Accountants Monthly Journal - January 2011 Edition.

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