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By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
30 June 2012
Buying a hotel -- the Hotel Purchase Agreement documentation and process
The Hotel Purchase Agreement documentation and process is where fortunes can be won or lost. The hotel lawyers of JMBM's Global Hospitality Group® have decided to share some practical tips we have gleaned over the past 25 years from more than $60 billion of hotel transactions. Initially, these insights will be published as articles on the Hotel Law Blog at www.HotelLawyer.com and then they will be assembled into the HOW TO BUY A HOTEL handbook for our "We wrote the book™" series, much like the HMA Handbook and the Lenders Handbook for troubled hotels (see Resource Center at HotelLawyer.com for free copies).
Here is our first contribution on the "Buying a Hotel" series. . .
Buying and selling hotels - Hotel purchase agreement essentials
Key labor and employment issues
Catherine DeBono Holmes and Marta M. Fernandez | Hotel Lawyers
Hotel purchase and sale transactions: State-of-the-art procedures for all the key components of the deal.
With the perspective gained from more than $60 billion of hotel transactions over 25 years, the JMBM Global Hospitality Group® has developed state-of-the-art knowledge and procedures to facilitate the purchase and sale of hotels all over the world, whether the transaction involves a portfolio of hotel properties, iconic landmark hotels or single hotels.
In this article, we will share some of our hotel-specific insights concerning the key labor and employment issues that the seller and buyer should address as part of their negotiation of the hotel purchase and sale agreement. We will also discuss some of the important decisions that the hotel buyer must make with regard to hotel employees. In addition, we will highlight some of the special issues that will apply to any sale of a hotel that has a unionized workforce in place at the time of the transaction.
The first thing you need to know: Who Is the "employer"?
Is the hotel owner or hotel operator the "employer" of the workers at the hotel. Where the hotel is managed by anyone other than the owner, the answer will usually be in the hotel management agreement. If the seller is the employer, then the employment issues can be worked out between the seller and the purchaser in the purchase agreement. If the hotel operator is the employer, the buyer will also need to work with the operator on employment termination and transfer matters.
Because of the WARN Act notification requirements (discussed further below), the seller and buyer will want to make sure that these issues are decided more than 60 days prior to the intended effective date of the transaction.