HOTEL PROBLEMS

Dominion, Volume 11, Issue 9, 5 October 1917, Page 6

HOTEL PROBLEMS

WHAT EARLY/CLOSING MEANS

EVIDENCE OF LICENSEES. ■,

Interesting evidence relating to tho rents and general financial position of • Wellington hotels were placed'before tho Statutes Revision Committee of the Legislative Council' when tho Sale cf Liquor Eestriction BjH was being considered. Tho evidence taken by the committee has been printed. The licensees of the hotels were pressing their claims ■- for reduced rents in view of the anticipated effect of six o'clock closing in the ' reduction of business. Tho licensee of .he Duke of Edinburgh Hotel stated that his rent was <£150; per. month. He had paid .£5700 to ' the outgoing tenant for, goodwill of a lease with two -rears and a half to run. He calculated that his takings between 6 p.m. and 10 p.m. were 66 per cent, of the whole takings. The licenseo of the Albert Hotel stated that he had paid £2850 for a five-year lease, the rent being .£IB2O per annum. ■:■ This was an increase of £520 on his rent for the previous term. Sixty-five per cent, of his takings were secured within ""the hours proposed to be cut off. ..'■■-■ The licensee of Barrett's Hotel stated , that he had purchased a seven-year lease v" of the hotel for £3000.- The rent was £63 per week, increased since to' £70 per ■week when somo improvements were made. The.reduced hours would affect .' his takings to the extent of 45 per cent. "At the expiry of my old lease two years and nine months aso, said the : ■:■■■ licensee of the Brunswick Hotel, I took ■:"* five-year lease, my rent (under protest) ■-', being raised to £25 per week, and.tho • goodwill fixed at £3750 This sum was paM to the owners. The house is situ- .:"£&■ in a suburban part of the' city, and 'it'Nyould bo utterly impossible except "ftrite.-bijr bar trade.' Six o'clock closing Imeds.a decrease of Mly 60 per cent, of /mjf.'business, and spells a word I would ■' hardly like to mention. ' Tho lease of the Tramway Hotel, Newtown, Tvas taken up.two lesseee gave a premium of A7OUU, ano a W weekly for a. wren-years lease.'' This Tionse has seven -rooms, just enough, .according to ;he evidence, to •comply with the Licensing Act. , ''.«? Th/rent of the Te Aro Hotel >: £20 ' W "week, and the premium paid foi a Bliort'' lease was £4000. , . The,lessee of the Terminus Hotel *nich.^ia 3 eißht bedroomsi paid XMOO for goodwill of a lease with four andla, half years to run. His rent is £22 10s. : P? ThV ? licensee of the Cecil Hotel, Wei- ■ iiistdn:''gav6 evidence as follow-S:— lae 'freehold of a considerable part of the 'Hotel Cecil is owned by mo and my bro''thera's trustees in the estate of my, late 'father, 'We employ a staff of forty-eight, arid pay' in wages the sum of £100 per ■week. The annual rates amount to £564 6s. 2d. There is a mortgage on the property of £18,000, bearing, interest at 6 pef'cerit. per annum, so that the total annual'outgoings in rates and interest are £1644. A tally of the takings' m my -.'■ "hot'et'Was taken; I understand, at 11.6 re-■'"q'tiestf-of the National Efficiency Board, vand'it was found that 45 per cent, of the ''takings w.ere taken between 6 p.m. tni 10 ' "p'.m? "The boarding establishment of our : 'h'6tel ! is run at. a loss, and at the piesent fl price/of food and wages I cannot -pos,'sibly carry on my present business. With '-. the reduced hours for sale of liquor I am of opinion that it would not be pos- . sible for me, after paying other out- ' . - Roinss, to pay the snm of £30 per week ■which is necessary for payment of interest and rates. This would make no provision for reduction of.the principal .snm under the mortgage. ' Unless seme compensation is paid to our estate, or the period of' the war is rery ehort, it •will not be possible for U3 to carry on ..and meet our obligations. I* Another case placed before the committee was that of the licensee of the Post Office Hotel, who owns the freehold. ;'-.-'• "The purchase price paid for the pro? perty in- March, 1910, was £25,150," he said."The Government capital valuathe property, which does not take ; into the. value of the licence, is £12,500, the difference hc-tween the Government /capital valuation and the purchase money being £12,650. The. amonnt at present due by me on a r>. ortpage, of, the freehold to the trustees in ithei estate- of. W. H. Levin (deceased) is £11.850. This.bears interest at 5} per cent, per annum.,- The rates no.my rjro- •■ perty amonnt to just over £200. niakin? ; ■ the total outgoings for/ rates and interest : over'£Bso per annum. At least one-third of the takings of my hotel are taken .he- ; . tweeh the hours of B p.m. and 10 om„ ; and with the reduced income I will rot be able to meet the obligations in the :'.. J' wry. .'of rent and interest on my property. My hotel is not-suited'for the * doing of a larje--hoar-dine business. I | have accommodation for nineteen people, , .besides a staff of twelve. Durinfr-ihe last 'four'years my'books show the following loss in the house department of n>v hotel: 1913-14. £12 Ifls. td.; 1914-15. ,£lß!> .is. 'id.; "1915-16. £176 7s. 5d.: 1916-17. >275 -. 55:.8 d." This, is wifnbuf charging either -rent'or.wages to the boarding -ment of the hotel. The '{reduced hows ..-will not. enable me to .reduce my stn*. and unless some compensation is nrovid- ■■' ed for my loss I will be faced with irsol- ':.. -.vency." -.■-.' I < :-:• Owner-Licensees. ! .The position of owner-licensees in Wel- !.. lington was. illustrated by the evidence !"> -of several witnesses. ■ ■-Patrick Joseph 'Griffin, Gresham Hotel, ; "Wellington, said:—"l am the owner of the freehold and also the licensee of the . Gresham Hotel, Wellington. I purchased the ; property about two years ago from . the Public Trustee for the sum of I ; £24,000. To bring the place up. to date as a licensed hotel I expended a further ; sum of £6000, making £30,000 in all. The closing, of the bars at 6 o'clock will reduce the market value of my hotel by at least £10,000. To enable me to pur- . chase' this property and effect improve- ■ ments on it I had to borrow £15,000 from ' ''< the National Bank. .. i -Richard Dwyer, Empire Hotel, Wellington,, said:— "l am the owner of the freehold an am also the licejisae cf the Empire Hotel, Wellington. After the last poll in 1915 I purchased the freehold of my hotel for £59,800. To convert the place into a first-class modern hotel I spent a further. sum of' £16,200. on improvements, repairs, alterations, and furniture—making a total cost of £76,000. To complete the -transaction I incurred 'financial obligations to the extent of £55,800: The record taken for the •National Efficiency Board shows that 40 '; per cent, of the takings of my hotel are \. taken between 6 p.m. and 10 p.m. With j. the reduced hours the. hotel will not bo j ;worth the amount of the mortgages oh 1 it. and I will bo ruined financially. With the additional three hours in the ' morning token off the hotels, it can :■ saMy be said that their takings will bo diminished by 10 per cent.

Tenant-Licensees' Proposal. . The tenant-licensees were strongly re--.presented before tlie committee. I'heir • proposal was that the rents should ha reduced by one-third all round. Atr. A. Gray, K.C., who appeared on behalf of the tenant-licensees, said that his clients, who formed the majority of the licensees throughout the Dominion, believed.that the most equitable method of dealing with the matter would be to make a definite proportionate ,-reduction of rent; They suggested that a fair proportion would be one-third of i the rent payable under their leases, and a refund of one-third of any premium paid for the purchase of the-lease, based i upon the theoretical payment per annum of a proportionate part of that payment ■; treated as ren.l' in advance. "I have al- • ready explained, and T will explain again, i that the latter proposal refers to the preI TH-im itself." said Mr. Gray. "Take (lie i ease of a man who has a lease for five i venrs of an hotel, for which he. has paid a premium, of, say, £2500. with a rental [' nf anything from .ClOdO to JSOM per ani num. We sav that ho to get a ; refund, or rather a rebate, not only of a I proportionate-part of the rent, but also a ';' j-efntid f of : a proportionate nart of the 1. premium paid, together wiflia proporI tionate part of the interest which he has bad to hecome liable for in order to pay to the landlord that premium. Take the '■ concrete case of an hotel in Wellington, of which there is a lease for five years, 'recently acquired at the rental of vEIBOQ i per-annum. The-lesaee paid a premium

of .£2BOO to acquire the lease. Having regard to the facts that .the lessee-licen-sees will now be deprived of seven-six-teojiths of their hours in which they liavo been permitted to sell liquor, and that, according to the evidence that will bo submitted to you, a very largo partin some cases tho larger part—of their takings are received during the evening hours from 0 p.m. to 10 p.m., it is considered that they are justified in asking, not for a reduction of seven-sixteenths in rent, but for one-third. In addition to that, they think that, as in most cases a premium is paid to the owner of the hotel, thero should bo a proportionate reduction of tho premium paid. Here is a concrete instance: An hotel m Wellington has been leased for five, years at a rental of JSIBOp. A reduction of one-third would make (he rent ~£l2OO. The lessee has paid .£2BOO to acquire tho lease. As his takings are going to bo reduced very much in consequence of tins measure, he thinks, and those who are situated in like case also think, that he is entitled to something in the nature of a rebate or refund of portion of what; he has paid for the lease, in view of tho law then existing, by which he was permitted to sell liquor from 0 a.m., till 10 p.m. 'Although it would be difficult to say that he should have a definite proportion of the premium returned to him, it ib suggested that as a fair compromise ho should have an allowance m the shape of a further reduction in rent, based upon a proportion of the amount paid by way of premium, with interest online outlaj', spread over the whole term.-

Tho Country Hotels. The position of the couutry hotels was illustrated by several witnesses. John Foster, of Fester's Hotel, Wanganui, said: "I am owner and licensee of Poster's Hotel, Wanganui,. purchased in May, 1916, freehold, for .£25,000. I borrowed .£16,000 of trust money on first mortgage at 6 per cent, and .£3OOO on second mortgage at 51 per cent. Kates, .£149 10s. per annum; staff, twenty-eight; weekly wages, JXi; insurance, .£203. I cm-, sider GO per cent, of my business is done between 6 p.m. and 10 p.m. I cannot see any possible chance of carrying on my •business with reduced hours." The evidence of Peter Theodore. Peier6on, Club Hotel, Marfan, was also taken. "I am owner and licenseo of the Club Hotel, Marton," he said. "I purchased tho freehold •on August 9, 1915, f° r .£IO,OOO. I was ordered by Licensing Committee to rebuild hotel, and rtbuilt it at a cost of v£sooo, work being finished March, 1917, and furnishing cost i.IOOO. A fair estimate of my taking; would be that' I take on usual week-days one-half and on Saturdays two-thirds of. my takings between 6 p.m. and 10 p.m. I wanted to build a cheaper house, costing .£2500, but between, the Health Department "and the Licensing Committee I was compelled' to expend at least The weekly outgoings in interest and rates amonnt to £17. With six o'clock closing I will be.unable to meet r.iy obligations, and be obliged to file my petition in bankruptcy/' Henrv Joseph Dalton M'Manawiy, Rangitikei Hotel, Bulls, said: "I am the owner of the freehold of the Kangitikei Hotel, situate at Bulls, and am also the licensee. I purchased the freehold of the hotel and the goodwill of the licence in Way. 1915, for £5000,- and immediately expended a further sum of .£SOO in improvements. These improvements were necessary to secure- the licence from the Licensing Committee. The principal_ value of my property is in the hotel licence, and I purchased it after the last election, relying on the result'of the poll then taken. A fair estimate would be that at least half my takings are taken during the hours that it is proposed to close the bars. If the present reduced hours remain permanent my house will be of very little value. There is a n-ort-gage of .£SOOO, bearing interest at 0 per cent., on tho property. With the reduced hours of the licence the freehold of my property and the licence is not worth the mortgage." /'