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Hotel Lawyers -- featured subjects and articles
Meet the Money® 2014

ADA defense and compliance

EB-5 financing

Workouts, bankruptcies & receiverships

Hotel Management Agreements

Hotel Franchise & License Agreements

Hotel industry trends

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
15 April 2014

DTLA against the San Gabriel Mountains - WSJThe coolest new downtown in America

If you haven’t been to what the cognoscenti now call “DTLA” (downtown Los Angeles) for a while, you might not recognize it. Gone are the days the sidewalks were rolled up at 5:00 pm and you had to go to Hollywood or Santa Monica for drinks or some fun. Earlier this year, Brett Martin of GQ magazine dubbed it “the coolest new downtown in America.”

In fact, the introduction to Brett Martin’s article is a great summary of the miraculous change in the demographics of DTLA that provide part of the reason that everyone seems to want to buy or build a hotel in Los Angeles today. Here is what it said:

America’s Next Great City Is Inside L.A.

For decades, Downtown has been the dark center of L.A.: a wasteland of half-empty office buildings and fully empty streets. But amid the glittering towers and crumbly Art Deco facades, a new generation of adventurous chefs, bartenders, loft dwellers, artists, and developers are creating a neighborhood as electrifying and gritty as New York in the ’70s. Brett Martin navigates his way through the coolest new downtown in America.

What does this “renaissance” mean in terms of the LA market for hoteliers?

Expanding markets are good for the hotel business. DTLA has become a destination and a hub of activity and excitement. Los Angeles has had so little hotel development over the past few decades, that it is one of the most underserved markets in the US now. And as hotel room rates jump, it is suddenly feasible to buy or build hotels that made no economic sense just a little while ago.

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
2 April 2014

A fundamental shift has taken place in the realm of hotel management agreements (HMAs) and we decided we could just not wait any longer to update our popular handbook on this important subject. So, it is with great excitement that my partner and co-author, Bob Braun, and I announce the publication of the 3rd edition of The HMA & Franchise Agreement Handbook.

Like all the handbooks in our We Wrote the Book™ series, it specifically addresses the needs of hotel owners, developers, investors and lenders. The news release below explains what all the commotion is about and will tell you how to get your free copy of The Handbook. As always, we invite you to share your comments and thoughts about the book with us.

Along with all the latest financing sources, and deal technology, we will be talking about HMAs and franchise agreements at the Meet the Money® national hotel finance and investment conference May 7-9, 2014. We hope you can join us there!

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
7 March 2014

Comfort letters are more important than ever as franchising continues to be a dominant form of branding hotels. As many of our recent articles have noted, there has been a sea change in the hotel world. Franchise agreements have become the dominant means of branding most hotels in the US, except for a few of the most upscale and luxury brands.

This popularity of franchising has made comfort letters more important than ever simply by the predominance of the franchise model, and lender’s desire to get certain protections that they feel comfort letters offer.

In today’s article, my partner, hotel lawyer Robert Braun, explains what comfort letters are and the kind of provisions they usually contain.

Comfort Letters – Comfort for Whom?

by
Robert E. Braun | Hotel Lawyer

If you are buying, building or refinancing a hotel, you’ll almost certainly be looking to a bank or other lender to finance the hotel, and when you do, you’ll need to negotiate dozens of documents, some long, some short, but all of them necessary to get your loan. In other articles, we have talked about the importance of subordination, non-disturbance and attornment agreements (SNDAs). SNDAs are used in the context of a hotel management agreement (HMA) — usually only long-term branded HMAs — to define the rights of lenders vis a vis the hotel operator in the event of the owner’s/borrower’s loan default, breach of the HMA, foreclosure by the lender or a deed-in-lieu of foreclosure.

But what about franchised hotels? Lenders who take security in a franchised property will want a “comfort letter,” an agreement between the lender and the franchisor that defines the rights of lenders and franchisors if the hotel owner defaults on its loan obligations, the franchise agreement or other related arrangements. In other words, lenders seek SNDAs to deal with their rights and obligations with respect to HMAs. They use comfort letters to deal with their rights with respect to franchise agreements.

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Published on:

6 March 2014

Meet the Money® National Hotel Finance and Investment Conference will focus on hotel development and deals

LOS ANGELES–Meet the Money® 2014 will bring owners, operators, developers, consultants, investors, brands, lenders and other capital providers together in Los Angeles to explore the opportunities of what is predicted to be a breakout year for hotel development and deals. Held May 5-7, the annual national hotel finance and investment conference will focus on ground up development, expansion, repositioning and rebranding as well as the big increase in hotel acquisitions and financings, refinancings and recapitalizations.

“Now is a great time to be in the hospitality industry,” said Jim Butler, founder of the conference and Chairman of the JMBM Global Hospitality Group®, which hosts the two day event. “Improving economics for the last 4 years has laid the groundwork for an even bigger 2014, with a big increase in new development and transactional activity.”

Experts also expect to see a continuing increase in value appreciation in all hotel markets for at least the next three to five years, creating a wave of new development as it becomes cheaper to build new rooms than buy them.

Over 100 hospitality industry insiders are confirmed as speakers in Meet the Money® 2014 panel discussions on this year’s most urgent topics, new development, successful strategies for buying or selling hotels, Chinese investment, hotel-residential and other mixed-use projects, the ADA, labor and employment issues, and public-private partnerships. Separate panels will explore luxury, select service and full service hotels, as well as the ins and outs of financing large and small deals.

“Meet the Money® provides essential information for getting the most out of the upcoming year, and our attendees are able to network with some of the most successful leaders and creative minds in the industry,” said Butler. “The conference is a valuable resource for anyone looking to make smart deals or plan new development.”

Meet the Money® is held at the Sheraton LAX. Registration fees are $950. For more information about the conference and to register, please visit MeetTheMoney.com or contact Carol James at (415) 984-9654 or CJames@jmbm.com.

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Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
2 March 2014

Hotel Lawyer with a guest column from an operator of independent hotels

A growing number of hotel owners are facing the question of whether and how to brand their hotels, and who should operate them. The New York Times recently estimated that more than 2,500 hotels were reflagged in a single year, and that does not count the growing wave of new hotels coming on line through the development pipeline.

The hotel lawyers of JMBM’s Global Hospitality Group® think the branding and management decisions faced by anyone reflagging a hotel or developing a new one are among the most important a hotel owner will ever make, and we have written a fair amount to share our experience gained over more than 1,000 hotel management agreements and many hundreds of franchise agreements. [See links at the end of this article.]
After some of our articles were published on this subject, our friends at Benchmark Hospitality International started a dialog with us about their views on this subject. After a robust exchange of emails and a telephone conversation or two with Alex Cabanas, CEO of Benchmark, I don’t know that we have any significantly different approaches, but Benchmark did have a different way of putting it, and some of their terminology may facilitate clearer thinking. In any event, we thought this “voice” should be heard, and accordingly, we offer this guest column for your consideration.

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Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
26 February 2014

The ascendancy of hotel franchise agreements.

Branded hotel franchise agreements continue their rise to dominance in the hotel landscape. Hotel management agreements are not dead, but the advantages of having a hotel operator independent of the brand have been widely recognized and continue to propel the franchise model. (The considerations of branding and using branded (versus independent) management are discussed at length in “When should you choose a brand for your hotel? And when should the brand manage your hotel?“)

What’s really negotiable in a franchise agreement?

The most common question we hear from clients is, “What’s really negotiable in a franchise agreement?”
Franchisees are told by the brand that the franchise agreements are not negotiable, but then they hear that someone else has been able to negotiate at least one or two contract terms. Potential franchisees don’t want to waste time chasing something they cannot get, but the contracts seem so one-sided, and they want to get as much substantive relief as they can.

Based on our experience with hundreds of hotel franchise agreements, JMBM’s Global Hospitality Group® knows that there is plenty of wiggle room to get some important concessions if you know what to go for and don’t waste your effort where it won’t do any good.

One of the biggest mistakes owners make when trying to negotiate a franchise

One of the biggest mistakes we see is owners trying to negotiate the franchise terms themselves. Their lack of experience shows that they are amateurs, and the brands quickly realize that they don’t have to give much by way of concessions.

While we don’t recommend negotiating your franchise agreement without an experienced advisor, hotel lawyer Bob Braun has laid out a few areas where we have been able to help owners improve their contract terms. Depending upon your circumstances, there may be significant other opportunities.

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Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
6 February 2014

Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce the successful closing of a number of hotel and real estate purchases by members of its Chinese Investment Group™, and the promotion of Eudeen Chang to Vice Chairman of the Group. Chang is a founding member of the Group as well as a senior member of the Firm’s JMBM’s internationally recognized Global Hospitality Group®.

The attorneys in JMBM’s Chinese Investment Group™ help Chinese investors make investments in the United States – particularly those involving hotels and real estate. They also provide guidance on corporate structure, formation, tax issues, governance and regulatory compliance.

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
23 January 2014

As the economy and the hotel industry fundamentals continue to improve, hotel values have recovered to pre-recession levels in many of the top 35 hotel markets, the number of hotel transactions has jumped and new capital is pouring into hotels. This new capital — whether focused on new, ground-up development, or the purchase of neglected assets with a view to deep renovation and rebranding — is increasingly seeking new brands and management for their hotels. We have not seen this many people looking for a great operator and a fair hotel management agreement in many years!

Veteran hotel owners and developers know that all this good news needs to be tempered with some cold realism about the process they are about to undertake. They know that finding a great operator and negotiating a hotel management agreement they can live with is critical to the success of their investment and the value of their hotel.

In light of the many biased articles about hotel management agreements being written by operators (or by advisors to operators), my partner Bob Braun felt it was time to challenge all the “hay that has gone through the horse” and is being spread around.

The HMA Handbook and the Hotel Law Blog provide important information on this topic. For a more detailed discussion of relevant issues, we suggest you look at the links at the end of this article.

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Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
22 January 2014

Hotel Developer Forum in Los Angeles

With hotel development beginning to blossom in many national markets where the cost to buy a hotel substantially exceeds the cost to build one, JMBM’s hotel lawyers recently held a Hotel Developer Forum focused on the City of Los Angeles. The program was moderated by Jim Butler, Ben Reznik and Guy Maisnik. Bud Ovrom and Michael Santana were guest speakers.

Bud Ovrom is the General Manager of the LA Convention Center and is charged with figuring out how to get 4,000 more hotel rooms to support the Convention Center, which is at the heart of the remaking of Downtown Los Angeles. Santana was appointed as the Chief Administrative Officer for the City by former Mayor Antonio Villaraigosa in 2009, and recently agreed to continue in that position at the request of newly elected Mayor Eric Garcetti. Santana is the Budget Chief for Los Angeles and has negotiated all the development incentive deals made by the City since he took office.

There were a number of interesting take aways for the developers attending this gathering. One is that the City of Los Angeles wants to see 4,000 new hotel rooms developed in the downtown area serving the Los Angeles Convention Center — and the City is willing to provide economic incentives to make it happen (up to 50% of the property specific revenues from transient occupancy taxes, sales takes, property taxes and the like).

But these City incentives come with strings attached, which developers will have to weigh against the benefits of the incentives. Read on for the details.

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
17 January 2014

Hotel Lawyer on Hotel Mixed-Use.

Four%20Seasons%20Philadelphia%20Liberty%2002.jpgProposed $1.2 billion, 59-story Comcast Center with Four Seasons Hotel in Philadelphia, PA.

JMBM’s hotel lawyers are proud to be the hotel legal and advisory team for the developers on the Four Seasons luxury hotel component of this spectacular project. This is one of the high-profile hotel-retail-office mixed-use projects we have been working on for more than a year.

Hotel mixed-use is back! Hotels are being added to projects with retail, residential, office, entertainment and other uses — and the multiple uses enhance each other’s value, so the value of whole is worth more than the sum of the parts. If this subject interests you, see the links below the press release.

Here is the press release from Comcast and Liberty Property Trust announcing the project.


PRESS RELEASE
Comcast Corporation and Liberty Property Trust
Designed by Lord Norman Foster and developed by Liberty Property Trust to achieve LEED Platinum Certification, the 59-story tower will include a Four Seasons Hotel. Thousands of jobs and billions of dollars of economic activity will be created in Philadelphia and the Pennsylvania commonwealth.

Comcast Corporation (Nasdaq: CMCSA, CMCSK) and Liberty Property Trust (NYSE: LRY) announced today they will jointly develop the “Comcast Innovation and Technology Center” on the 1800 block of Arch Street in Center City Philadelphia. The proposed $1.2 billion 59-story, 1,121-foot tower will neighbor Comcast Center, Comcast Corporation’s global headquarters, and become a dedicated home for the company’s growing workforce of technologists, engineers, and software architects. The facility will also create a media center in the heart of the City by becoming home to the operations of local broadcast television stations NBC 10/WCAU and Telemundo 62/WWSI and offer space for local technology startups.

Designed by world-renowned architect Lord Norman Foster of Foster + Partners, the glass and stainless steel tower will complement Comcast Center as a new energetic dimension to Center City. The 1.517 million rentable square foot project will include a new Four Seasons hotel and a soaring, block-long lobby with a glass-enclosed indoor plaza accompaniment to Comcast Center’s existing, dynamic outdoor plaza. The lobby will feature a restaurant and a new concourse will provide direct connections with SEPTA’s Suburban Station, enhancing accessibility and providing new options for commuters. The $1.2 billion mixed-use tower is expected to be the tallest building in the United States outside of New York and Chicago and will be the largest private development project in the history of Pennsylvania.

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