In light of the dramatic increase in COVID -19 cases across Europe and globally, many governments are looking to hotels in order to ease the strain hospitals are currently facing. The need for beds has become an urgent priority for many hospitals as the infection begins to take hold.
Many hotel businesses have shown their willingness to help and have been in touch with health authorities to explore ways forward. The opportunity to convert hotels into hospitals, as well as quarantine and self-isolation centres, and accommodation for the homeless, could provide a much needed respite for governments in tackling this virus.
The purpose of this alert is to help the hotel industry understand and navigate the potential legal issues that might arise.
Key considerations for hotel operators include:
- The need to comply with local healthcare regulatory laws, regulations and codes of practice, including a consideration of the extent to which these might be relaxed while the crisis is ongoing.
- The practicalities and cost implications of refurbishing hotels in order to accommodate patients and provide medical or quasi-medical services.
- Ensuring they have the correct insurance policies to cover any risks.
- The practicality of becoming a medical centre given their proximity to the nearest hospital.
- Whether it would be advantageous to volunteer services before potential requisition of premises by the government.
- Understanding employment law obligations where staff will be laid off or have fundamental changes to their jobs, including potential need for collective consultation, as well as monitoring employment schemes, such as the job retention scheme recently announced by the UK government, which provides for a contribution to pay for furloughed employees.
- Considering any additional staff training needs, and implementing and maintaining appropriate safeguards for the wellbeing of staff in the context of a medicalised hotel model (including physical and mental wellbeing).
- Considering whether background checks are required for any staff who have contact with vulnerable people.
- Mapping any additional flows of personal data, and assessing the data privacy compliance position in light of this.
- Obtaining approvals from the hotel's owners and other stakeholders and considering any planning or municipality restrictions on the use of the property.
- The potential positive media attention gained from working with the government to help combat the virus, which could be leveraged to gain stronger relationships with customers.
- Where hotels are to be turned into homeless shelters, it will be important to put in place clear arrangements to delineate responsibility for care and monitoring with the authorities and partner organisations, given the potential for those vulnerable people involved to contract COVID-19 as well as to have other health and welfare issues.
The following are legal and regulatory concerns hotel owners should take into account before repurposing their establishments into medical centres:
Obtaining Healthcare Regulators Approval
Hotel operators will need to comply with local healthcare regulatory laws, regulations and codes of practice - though these may be relaxed in order to facilitate measures to assist in the response to the crisis, and it is possible that healthcare authorities may take responsibility for these requirements - simply taking advantage of hotels as available real estate.
Taking the UK and Spain by way of example:
- United Kingdom: Health and social care services are regulated by the Care Quality Commission (CQC). Before a care provider can carry out regulated activities, they must register with the CQC and satisfy them that they meet a number of requirements. For example, the CQC is required to take account of the Health and Social Care Act 2008: Code of Practice, which sets out criteria against which a registered provider will be judged on how it complies with the registration requirement for cleanliness and infection control. Providers must have regard to the Code when deciding how they will meet the regulations. However, the Code is not mandatory, and so a registered provider may be able to demonstrate that it meets the regulations in a different way (equivalent or better) from that described in the Code. However, on 16 March 2020, the CQC announced the suspension of routine inspections "to focus on supporting providers to deliver safe care during COVID-19 pandemic"1 and has since shifted towards other, remote methods to give assurance of safety and quality of care. We would anticipate a similar pragmatic approach to new registrations in order to assist with the response to the crisis.
- Spain: The different autonomous regions are responsible for establishing the requirements for opening a hospital. Such regions have issued their own decrees to this effect, and therefore, these requirements may differ from region to region. Of importance is Decree 51/2006, from the Governing Council, on the legal regime and procedure of authorisation and registration of centres, services and health. This Decree is to be read in conjunction with Order 288/2010, of 28 May, which regulates the general and specific technical requirements of health centres and services without hospitalisation, and of health services integrated into non-health organisations in the Community of Madrid. In response to the outbreak, on 12 March 2020, the authorities published an Action Plan against COVID-19 that establishes, among other measures, the implementation of medicalised hospitals as an intermediate care resource to attend to patients with coronavirus. The action plan is available here2.
Although seldom used, many governments have or are able to give themselves additional powers to requisition buildings during times of crisis.
To take three jurisdictions by way of example:
- On 14 March 2020, the Spanish government declared a State of Alarm and issued Royal Decree 463/2020. These measures allow the Minister of Health to ensure the provision of the services that are necessary to protect the public health. One of the measures foreseen is the temporary occupation premises of any kind to combat the spread of the virus.
- In the United States, the President’s invocation of a national emergency, and enabling provisions under multiple pieces of legislation, expands the powers that can be exercised by the President in times of emergency.
- In the UK, the Civil Contingencies Act 2004 provides the government with particular powers in emergencies such as loss of human life, human illness and injury. We expect the UK government to prefer that hotels voluntarily provide their services or a mutual agreement is made, but it is not inconceivable that powers under the Civil Contingencies Act could be used or the government may pass specific legislation to deal with the situation.
Transition to a medicalised hotel model may result in a reduced business need for full-time employment of hotel staff. In the UK, for example, where 20 or more employees are dismissed for redundancy within the same 90 day period, employers will be under an obligation to consult with elected employee representatives for at least 30 days and also notify the Department for Business, Energy and Industrial Strategy. As an alternative, some employers may seek to reduce staff working hours, although this approach is risky - if such a change is made unilaterally, this will pose a high risk of constructive unfair dismissal claims (subject to eligibility requirements) and/or claims for unpaid wages, unless there is a clear contractual right to do so (which would be unusual).
The UK government has recently announced a job retention scheme to try to avoid redundancies as a result of the pandemic. The scheme is designed to cover the wages of people who are "furloughed" (i.e. not working) due to the business impact of the pandemic. It provides a grant of up to 80% of an employee's salary (subject to max of £2,500 pcm) and will be backdated to 1 March 2020. The aim is that these grants will enable businesses to furlough their staff rather than make redundancies. The provisions of the scheme will be in place for an initial three months with the option to extend them. It will be operated by HMRC, and the Government expects the first payments to be paid within weeks.
Some hotels may consider adjusting the roles of their existing staff. Whilst reasonable changes to duties or responsibilities are relatively low-risk, and are typically a reserved contractual right, the safest route may be to seek employee consent. Depending on the nature of the change, this could also involve collective consultation, particularly if there is a unionised workforce. To the extent that hotel staff are required to relocate to a separate premises (on a temporary or permanent basis), employers should assess whether they are able to rely on a contractual relocation provision, again bearing in mind that any such power must be exercised reasonably. The provision of certain benefits, such as transport vouchers or temporary financial assistance, could be used to mitigate the risk of related claims, as will a clear communications plan.
For any hotel staff that do remain, employers must take necessary steps to protect their wellbeing and to ensure their working environment is safe. In light of the virulence of the COVID-19 outbreak, staff are likely to need additional training, and stringent health and safety procedures must be implemented and actively monitored to ensure any risks to hotel staff are mitigated as far as possible. Employers must also be mindful of their data protection obligations to the extent that any sensitive employee health data is processed as part of these procedures, as well as ensuring compliance with rules in relation to working time. Employers should also consider the mental wellbeing of staff.
Where staff will have contact with vulnerable people, it may be necessary to undertake background checks.
Real Estate Issues
If a hotel operator or owner re-purposes its premises as a medical facility, much will depend on how, contractually, it holds the property. If the operator holds the hotel under a management lease from the hotel owner, for example, the parties will need to review the permitted use provisions and other restrictions that dictate how the property can be used. Other covenants will also be relevant, such as those which relate to dangerous acts or acts which might be liable to become a public nuisance - and equally, covenants that may restrict any internal alterations needed for conversion to hospital use. Equally, under a management agreement or franchise arrangement the operator will need to seek specific consent from the landowner before making any agreement with the government.
Hotel operators will no doubt already be reviewing management fee structures as part of the COVID-19 crisis, but in the event that the hotel is temporarily re-purposed, some elements of the fee arrangements will need to be reviewed and discussed, and potentially concessions sought, with the hotel owner.
If the hotel is held under a management lease, government legislation in some jurisdictions may assist hotel operators who are concerned about rent payment during the COVID-19 pandemic. For example:
- In the United Kingdom, the Coronavirus Act 2020 has imposed a moratorium on forfeiture of commercial leases for non-payment of sums reserved as rent until 30 June 2020 (with a right for the government to extend further);
- For Germany, on 25 March the Bundestag approved a new and very similar law. Here, arrears in rent due to the COVID-19 pandemic, which accrue between 1 April and 30 June, will not entitle the landlord to terminate the lease for cause. This new law becomes effective on 1 April; and
- In Poland, a bill is being presented to parliament that in general allows for a 90% decrease in rent, for tenants whose activity in shopping malls has been forbidden or limited, for the duration of the COVID-19 pandemic. The bill also provides that leases may not be terminated by the landlord until 30 June at all (subject to some exceptions).
It is also likely that funder consent would be needed under the terms of any relevant facility agreement. Note that in the United Kingdom, for example, the Bank of England's Prudent Regulation Authority issued a letter on 26 March, urging lenders to consider carefully their treatment of borrowers who breach loan covenants arising directly from the COVID-19 pandemic and its consequences.
Furthermore, there are likely to be planning or municipality restrictions on the use of the property that will need to be reviewed, and appropriate concessions sought from the relevant authority if these are not directly overridden by government order or actual requisition. In England and Wales, for example, a change of use from hotel to hospital operation is a material change of use from use class C1 to either C2 or D1, which ordinarily would require planning permission (unless it is for less than 28 days) - though, from a practical perspective, it seems highly improbable that the relevant authority would be motivated to take any action and/or be resourced adequately to do so.
Each hotel business will need to carefully map any additional data flows resulting from conversion of hotels to medical premises. The business will then need to consider some initial key queries, including:
- Will the hotel business process the personal data of patients and other visitors / guests such as healthcare professionals and homeless people?
- If so, which data fields may be relevant? Will this include special categories of data, such as the health data of patients and visitors?
- Which party determines the purposes (i.e. the "why") and means (i.e. the "how") of data processing activities? Will this be the hotel, or the hospital outsourcing its patients, or both?
To the extent that hotels process personal data in this context, hotels may be reluctant to assume the rigorous responsibilities imposed on data controllers under the GDPR in respect of patients. Hotels may consider themselves to be data processors, acting for and on behalf of controllers (which may be the health authorities). However, this will be a fact-specific assessment.
More generally, data protection authorities across the world are providing guidance on data processing activities and the fight against COVID-19. On 16 March, the European Data Protection Board issued a statement that data protection rules do not hinder measures taken in the fight against the COVID-19 pandemic. However, even in these exceptional times, data controllers must ensure the protection of the personal data of the data subjects.
Current Situation in the UK
At the time of writing, the UK had yet to see any hotels establish themselves as a hospital. However, there has been growing sentiment within the hotel industry of the need to take action and support the National Health Service. Chief Executive Rob Patterson of Best Western Great Britain commented on 16 March 2020:
"If the NHS (National Health Service) wants additional bed space, and we can partner with other companies to provide the right medical equipment and supplies and do it safely, then we would be willing to start having those conversations immediately. Whatever we can do to help.3”
This has prompted discussions with other leading hotel chains such as Hilton, Holiday Inn and Whitbread to begin formal talks with the UK government in establishing a solution4.
An alternative approach to providing assistance- for hotels to provide relief to NHS staff, many of whom are working tirelessly to help those in need and require a convenient place to rest - has already been taken up by a prominent sporting figure Gary Neville5 and businessman Roman Abramovich6. Both men are providing free accommodation to NHS staff in London and Manchester.
In Cornwall, hotels are to be used to provide accommodation to patients who have been in hospital with conditions not related to COVID-19 and who are well enough to be discharged but are not yet ready to go home7.
Aside from hotels exhibition venues in London, Birmingham and Manchester are being converted into temporary Nightingale Hospitals to help ease the strain of the NHS8.
On 23 March, the government asked all non-essential businesses and venues to close, including hotels and other accommodation providers, subject to some limited exceptions. For hotel owners concerned with how this will impact guests, Baker McKenzie has put together a client alert outlining the key issues.
Response Adopted in Madrid
Hotels in Spain have taken a more active approach. In the Comunidad de Madrid (Order 1158/2018 of the Department of Health), different hotel companies have offered the regional government their hotels for the care of those affected, totalling so far 9000 beds that could be used for this purpose. Companies such as Room Mate Hotels was the first to offer their services, others such as Palladium Hotel Group and Ilunion Hotels have also volunteered. On a national level, the Costa del Sol Hoteliers' Association (Asociación de Empresarios Hoteleros de Costa del Sol) is creating an inventory of hotel companies offering their facilities to public authorities.
The launch of the medicalised hospitals have been effective as of 18 March, in the Comunidad de Madrid. The two first operative medicalised hotels are the Ayre Gran Hotel Colón and the Marriot Auditorium, selected because of their proximity to different hospitals of Madrid. In order to attend these hotels and those expected to be opened in the coming days, the regional government has organized a pool of 4400 medical graduates and will provide the available nursing staff, which will be under the supervision of healthcare professionals (mainly, general practitioners).These hotels have so far made available 425 beds for patients, but the evaluation of the different hotels offered continues to increase the number of beds available.
So far, only the Comunidad de Madrid, the region so far worst affected by the epidemic, has provided for this possibility. On 12 March 2020, the authorities published an Action Plan against COVID-19 that establishes, among other measures, the implementation of medicalised hospitals as an "intermediate care resource to attend to patients with coronavirus"9.
According to this plan, health care is structured around five types of care resources, under the supervision of the regional Department of Health: ICUs, hospitals, medicalised retirement homes, medicalised hotels and the own patient houses. These last three are established with the intention of avoiding a potential collapse of the hospitals in view of the foreseeable increase in cases in the coming days.
- In this sense, and although the document does not detail how the medicalisation of the hotels will be carried out, the main characteristics are:
- Medicalised hotels will only treat patients who require isolation, either because they have mild symptoms or because they are in the recovery phase, and who cannot or do not want to be at home (for example, when living with people at risk).
- These patients will be isolated and treated by doctors and nurses, who will continuously monitor the progress of their symptoms to determine whether they can return home or should be transferred to a hospital.
- The main factor that will determine the hospitalization of these patients will be the appearance of dyspnea or respiratory difficulty, since in that case it will be necessary to use respirators, which are only available in hospitals.
- The Department of Health has not communicated the medical material that these centres must have. However, it has specified that the ratio of doctors and nurses per patient will be "reasonable", by virtue of the type of patients attended.
- The different services of these hotels (laundry, cleaning or dining service, among others) will be managed by the Department of Health, which will proceed to adapt them to existing needs.
In view of the high number of hotel companies that have offered their hotels to the Community of Madrid for this purpose, the regional authorities have decided to give preference, for the time being, to the use of lower buildings with a greater number of windows. However, if necessary, it is even planned to fit out pavilions for this same purpose. On 20 March 2020, it was announced that a field hospital with 5500 beds is being created inside Ifema, the city's trade fair and exhibition facility, with support from the military10.
From a different perspective, the Spanish Government has issued the Order TMA/277/202011, which grants the status of "essential services" to a list of 371 hotels and other tourist accommodation facilities within the Spanish territory. Such facilities must be closed to the public, but shall provide accommodation for those workers carrying out essential activities (healthcare assistance services, food supply, and transportation and maintenance services, among others). The Spanish authorities may expand or modify this list in the future.
If you would like more detailed information, please get in touch with your usual Baker McKenzie contact, or our dedicated COVID-19 team here.