While no one has a crystal ball to accurately predict the future of the hospitality industry, Eric Stossel, Managing Editor of Lodging Hospitality has the next best thing: access to experts and insiders who have their fingers on the pulse of the industry. I was recently interviewed by Eric, along with other hospitality practitioners, for one of his articles that forecast the year ahead (see Capital Markets Key to Hotel Real Estate Rebound).

There was plenty of prognosticating going on by pundits at the ALIS conference in Los Angeles this week, as well, and I took a lot of notes. Here's what the experts think the hospitality world will look like in 2012.

• The fundamentals are looking good. Three top industry researchers presented information at ALIS that forecast positive growth for the hospitality industry in 2012: STR's Jan Freitag estimated growth at 4.2 percent growth, PKF's Mark Woodworth pegged it at 5.4 percent and Suzanne Mellon, with HVS at 6.5 percent.
• Supply growth is at an historic low, lifting occupancy and rate across the board.
• Experienced investors will continue to buy notes and distressed assets.
• The transactions market is stabilizing -- equity funds, existing owners, and people with strong financial relationships will begin to do more acquisitions.
• The top 25 and top 50 markets will begin to look attractive again, as recovery and purchases move down the food chain and into secondary and tertiary markets.
• For those who are positioned correctly, it will be a very good year to buy a hotel.

Challenges Remain

• The flagging debt market is hampering developers who are straining at the bit, and borrowers desperate for replacement capital.
• The specter of defaults and foreclosures is looming larger for those that borrowed in the abundant years of 2006 and 2007. Those CMBS loans will begin to hit the market this year.
• Franchisors are demanding that long-delayed PIP (Property Improvement Plan) requirements are implemented, but financing for these improvements is difficult to obtain.

While these challenges are real, and will affect some hotel owners more than others, the overall trends point to steady growth and improvement throughout the industry. As I told Eric Stossel, "We're nowhere near the peak, but we are approaching some long term norms in 2012 and beyond."

You may want to read the following Hotel Law Blog articles:

Hotel Lending: "NOW" could be the best time for hotel lending in 20 years

Hotel Lawyer: So, You Think You Want to Buy a Hotel?

With a team of hotel veterans who have been through every cycle since the 1980s, have been through more than 1,000 workouts, bankruptcies and receiverships, and wrote the book on troubled hotel loans (The Lenders Handbook), we have a few thoughts to guide you safely on this journey.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

ADA pop quiz

In less than 2 months, on March 15, 2012, new ADA Standards become mandatory. If you can't answer "YES" to each of the following three questions, you may be in trouble.

1. Do you know what the new ADA Guidelines will require for your hotel, restaurant, or other "place of public accommodation"?
2. Do you know that there is NO "grandfathering" to escape the most sweeping changes to the ADA Standards in 20 years?
3. Have you done everything the law requires to bring your property into compliance with the new rules?

If you are unsure about the answers to the first couple of questions, click here for a link to an executive summary of what you need to know.

ADA Defense Lawyer: New ADA regulations kick in soon. Say goodbye to "grandfathering" under the ADA.

And if you are unsure about the answer to question #3, you may want to contact our ADA experts for a free consultation to see if we can help you. It doesn't matter whether you have one small property or a national portfolio. (See contact information below).

Expert ADA defense is good, but a pro-active compliance program is better!

The ADA is being aggressively enforced by "advocacy groups," private litigants and the Department of Justice (DOJ). To give you an idea of how aggressive the enforcement action is, our team has defended property owners and operators in more than 450 ADA lawsuits, and at this moment we are assisting clients in five DOJ investigations.

When the new ADA requirements go into effect you can count on the fact that private advocacy groups and the government will be making sure you're in full compliance. This is the old story about an ounce of prevention. It is much cheaper and more effective to complete your own ADA compliance plan before you have to respond to lawsuits or government investigations.

JMBM's ADA compliance audit.

We can help you defend suits and avoid costly mistakes and surprises with our ADA compliance audit. We use local, experienced accessibility consultants. But we add to your team the guidance and practical judgment gained from defending more than 450 ADA lawsuits.

In ADA defense and accessibility matters, we represent hotel owners and operators, as well as retail, restaurant, and financial institution clients across the United States. Representative clients for single property and national, system-wide accessibility audits and compliance matters include Red Lobster, the Olive Garden, Landry's Restaurants, Extended Stay America, Strategic Hotels, Best Western, Accor, Destination Hotels & Resorts, Kimpton Hotels & Restaurants, Joie de Vivre Hotels, Rockbridge Capital, Wells Fargo Bank, JP Morgan Chase Bank and Union Bank.

Our solutions are practical and scaleable -- whether you have a single small property or a national chain or portfolio. Contact us now, BEFORE the DOJ or that advocacy group file a claim.

Contact Jim Butler at 310.201.3526 or jbutler@jmbm.com.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Hotel lawyer in Los Angeles, looking at a new first in the hotel conference industry. The Americas Lodging Investment Summit or ALIS runs next week from Monday through Wednesday, January 23-25, 2012, at the JW Marriott in downtown Los Angeles. ALIS is one of the major annual hotel investment conferences and gets some of the best attendance in the industry. In 2012, it returns to Los Angeles after several years of being held in San Diego. It is always a great way to get a handle on what's happening in the hotel industry at the beginning of the year, and many of us look forward to it as a regular annual event.

However, this year, the conference is creating something of a stir with what seems to be an industry first. For several weeks, rumors have abounded that the conference promoter, BHN, has "bought out" all of the public space at the JW Marriott. The practical impact of this is that only people with ALIS Conference badges will be permitted in any of the public spaces at the conference hotel.

Today, I received an e-mail sent to all registered ALIS delegates. It confirmed the rumors. Among other things, this e-mail from the "Alice Registration Team" said the following:

Security will be tight at both the JW Marriott Hotel and Nokia Theatre. ALIS has secured all public areas at the JW Marriott Hotel beginning Monday, January 23. In order to access both venues, only registered ALIS delegates with ALIS name badge and picture ID will be granted admittance.

In short, all of the "lobby lizards" that attend hotel conferences will be shut out. If you don't have a badge, you will not be able to get into the hotel's restaurant, bar, lobby, or any other public spaces.

I've been attending hotel conferences for at least 25 years and this is the first time I have ever heard of public spaces being closed to the general public. I would be curious to know if any of you have seen this procedure at any other industry conferences.

I believe it is the first in the hotel industry.

Why should "lobby lizard freeloaders" be able to take advantage?

There are certainly two sides to this issue. On the one hand, after producing JMBM's annual Meet the Money® conference for 22 years, we can certainly understand the concerns of the conference producers.

The hotel industry is gathered together under one roof for a few days only because the hotel conference is being produced there. A tremendous amount of time, effort and expense go in to producing a successful hotel conference.

Why should lobby lizard freeloaders be able to take advantage of this gathering without paying the price of admission to the conference? Isn't this like stealing from the conference producers? And the lobby lizard trend can become a death spiral. Everyone who sees all the freeloaders wonders why they bothered to "do the right thing" and pay the price. After all a $2,000 admission fee is a significant cost to meet with all the people that you already know or a few new ones you want to meet.

I suspect that in the last few weeks the ALIS conference has received hundreds of new registrations that would not otherwise have received if lobby lizards were permitted in the conference hotel. This is a lot of lost revenue that goes to support the AH&LA and line the pockets of BHN.

So isn't this a smart and innovative move by the ALIS conference producers?

Another side of the coin?

In our experience, there are several types of lobby lizard species. Some lobby lizards never pay to go to any conference and hang out for meetings during the entire conference. Some find themselves out of a job and go to the conferences as unemployed persons hoping to meet a few people for job prospects when they really don't have the money to buy a conference admission.

Some firms pay full registration for a number of their people, and then are joined by a few additional staff members for particular meetings or for the conference, however, the additional people never attend any of the conference sessions, receptions or other events. They just sit in on certain meetings with the registered colleagues -- often in a hospitality suite taken by the firm. Some people just "stop by" for a meeting or two when colleagues attending the conference give them a call because they're in town.

Are there different equities for these people, depending upon the situation? Isn't it an unfair imposition on registered delegates to make them leave the conference hotel if they want to meet with someone in Los Angeles who is not registered for the conference? How will they find a table or seat when they get back? Is it reasonable to make registered delegates spend an extra 30-60 minutes in attending an off-site meeting? Isn't there something a little offensive about taking control of an entire hotel - particularly when there are no other convenient (nearby) meeting places outside the hotel?

What's your opinion? We want to know!

If this move to stamp out lobby lizards is as financially successful as I guess it will be, this approach may soon become universal for all hotel conferences. The only thing that will stop it is broad public outcry that makes conference producers aware of other equities or consequences from their move.

I have never been a lobby lizard freeloader in my hotel lawyer career. I certainly have mused over the expenditure of $2,000 to attend the conference where I rarely go inside a live session. And it galls me that I pay the money while others don't.

Still, something seems a little too heavy-handed about this approach to stamping out lobby lizards. What do you think? We would really like to know!

Give us your thoughts by clicking on "Comments" at the bottom of the blog article, Hotel Lawyer in Los Angeles: ALIS - What's the commotion all about? Closing the conference hotel to outsiders. .

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Hotel Lawyer on Hotel Management Agreement disputes between Owners and Hotel Operators.

While there are always disputes simmering between hotel owners and hotel operators, the past few years has witnessed a big increase in the number of disputes ripening to litigation and arbitration. In a recent article, we discussed some of the root causes of this trend and role of the economy. That article was entitled, "Litigation and disputes between hotel owners and operators are on the rise. Why?"

I believe that most owner-operator disputes stem from the owner's belief that the operator is not operating the hotel in a satisfactory manner and is treating the owner unfairly. A bad economy drives the parties to take action. When discussions fail to resolve the issues, litigation or arbitration claims often result.

Operators as fiduciaries: Why is this important and what does it mean?

As I mentioned in the recent article, some of these disputes pivot on the fiduciary responsibility of the operator. This is an important legal concept for hotel owners to understand. Generally, a hotel operator is the "agent" of the owner. Every agent is a fiduciary. A fiduciary has many duties such as a duty of loyalty, full disclosure, and noncompetition. A fiduciary also has a duty to prefer his principal's interest (the owner's interests) over his own interests.

I discussed these important concepts in a sidebar recently published in an article by Jason Freed of HotelNewsNow (a division of Smith Travel Research) in his article, Economic woes drive owner-operator disputes. I have reprinted that sidebar below with a few formatting edits to make the reading a bit easier.

The difference between an ordinary contract and a contract with a fiduciary

"In a typical contract between two parties, say you and a contractor putting in a concrete driveway for your home, neither party is a fiduciary to the other. You are each act in your own best interest within the terms of the contract.

In contrast to the typical business contract, the hotel management agreement creates a completely different type of legal relationship between the hotel owner and the hotel operator. It has repeatedly been held by the courts to create an "agency" relationship. Operators originally crafted this relationship because they wanted total control of the hotel without ever having to get approval of the owner. They got this control by being designated the owner's agent to hire all employees, set up all bank accounts, enter into all agreements for the hotel, set marketing strategies, and so on.

Fundamental rules apply to every agency and fiduciary relationship

But over hundreds of years, the English common law developed fundamental legal principles that will apply in every agency situation. For example, an agent is a fiduciary. A fiduciary has many duties such as a duty of loyalty, full disclosure, and noncompetition. Some of the rights and duties that come with an agency relationship can be waived by a fully informed written consent, and others cannot be waived no matter what.

Every hotel manager is the agent and fiduciary of the owner

We believe that virtually every hotel manager is the agent of the owner, no matter what the hotel management agreement says. Some operators like Marriott try to avoid the "agency" label in their management agreements. Other major brands usually acknowledge they are agents and deal with their obligations in a different manner. But it is very common for any knowledgeable party to look for and to assert that the hotel operator is an agent.

Morals of the marketplace versus fiduciary duties

If the operator is an agent, then as a matter of law, the operator assumes fiduciary duties (except under the law of Maryland, which Marriott had amended to remove the universal common law provision). These fiduciary duties go beyond the terms of the hotel management agreement and are more strict than the so-called "morals of the marketplace" that governs typical commercial contracts. Again, it is common for knowledgeable hotel counsel to assert and seek to enforce these fiduciary duties.

One of those fiduciary duties is the obligation of the agent to prefer the principal's interests (i.e. the interest of the hotel owner) over its own. This is certainly not a novel claim in agency law, but has not been that common in hotel management agreement litigation to date.

Hotel Management Agreement Audit™

Establishing the existence of the agency relationship and the corresponding fiduciary duties is best done by a careful examination of the terms of the hotel management agreement and all the other facts to assess these rights and duties.

At JMBM, we do this with something we call the Hotel Management Agreement Audit™. This is not a financial audit performed by accountants and auditors, it is a legal and business analysis performed by experienced lawyers and hotel advisors.

More resources on Hotel Management Agreements

You will find a lot more valuable information related to this topic on the Hotel Law Blog under the topic "Hotel Management and Franchise agreements", including a classic article on the 5 biggest mistakes a hotel owner can make.

Also see The HMA Handbook: Hotel Management Agreements for Owners, Developers, Investors and Lenders.

Articles about terminating hotel management agreements

Terminating hotel operators: M Edition lawsuit against Marriott has a new twist -- Marriott is replaced overnight

More on M Waikiki Edition lawsuit against Marriott - What Marriott's General Counsel says

M Waikiki's Edition lawsuit against Marriott and Ian Schrager - an owner's HMA dispute with Marriott

Terminating hotel operators: Turnberry Resort drops Fairmont flag

Hotel management agreement terminations -- Is there a better way?

Terminating hotel management agreements when things don't work? Not easy, but not impossible either.

Hotel bankruptcy trump card. Terminating hotel management agreements without liability -- the alchemy of lead to gold for troubled hotels and hotel loans?

Ritz-Carlton Bali hotel management agreement termination further court order

Ritz-Carlton breached contractual and fiduciary duties under hotel management agreement giving rise to free termination, $10.3 million in damages plus attorneys fees. When will hotel operators "get it"?

How to terminate a hotel management agreement when an operator really deserves it!

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Hotel Lawyer: Hotel Management Agreement litigation and controversies are on the rise.

I was recently interviewed by Jason Freed of HotelNewsNow (a division of Smith Travel Research) for his article, Economic woes drive owner-operator disputes and it got me thinking.

Hotel lawyers will tell you that there are always disputes going on between hotel owners and operators, and that most of them are resolved at the bargaining table without any legal action.

But the number of owner-operator battles has really escalated over the past few years. This is not just a matter of these disputes getting more media attention. There are a lot more disputes. What you see in the press is just the tip of the iceberg.

The root cause of owner-operator disputes

While each dispute has a specific cause or issue, at the heart of the matter you will find the belief that the operator is not operating the hotel in a satisfactory manner and is treating the owner unfairly.

Operators don't want to give up their lucrative management agreements and many of them can't or won't change their actions to satisfy owners who bear all the financial risk of the hotel investment. In times like these, owners may find themselves dipping heavily into other funds to meet negative operating cash flows or mortgage payments. Many face foreclosure -- and loss of their entire investment -- with the operator's sub-par performance. They feel cheated when operators continue to take all their money "off the top" (from gross revenues) and the operators won't cooperate to improve the situation.

The role of the economy

Clearly, bad economic times create a lot more friction between hotel owners and operators. When everyone is making lots of money, most people don't feel desperate to correct every wrong. When hotel operations hit the skids, and owners have to write checks to keep the doors open, they want fast and responsive cooperation on critical issues.

Our current economic "recovery" is one of the slowest in history. Recovery in the hotel industry has been very uneven depending on the hotel's location, property type, market and other factors. Where hotels are performing better, friction between hotel owners and operators tends to ease. But for many, the improvement is neither big enough nor fast enough to quell the owner's dissatisfaction over operator shortcomings. As a result, we see the trend of hotel management agreement disputes continuing and increasing for quite a while.

Operator as fiduciary

Some owner-operator lawsuits pivot on the fiduciary responsibility of the operator. This is an important legal concept for hotel owners to grasp. Jason Freed's article included a sidebar I wrote on this very topic and I will share it with you in my next blog post.

You will find a lot more valuable information related to this topic on the Hotel Law Blog under the topic "Hotel Management and Franchise agreements", including a classic article on the 5 biggest mistakes a hotel owner can make.

Also see The HMA Handbook: Hotel Management Agreements for Owners, Developers, Investors and Lenders.

Articles on Hotel Law Blog about terminating hotel management agreements

Terminating hotel operators: M Edition lawsuit against Marriott has a new twist -- Marriott is replaced overnight

More on M Waikiki Edition lawsuit against Marriott - What Marriott's General Counsel says

M Waikiki's Edition lawsuit against Marriott and Ian Schrager - an owner's HMA dispute with Marriott

Terminating hotel operators: Turnberry Resort drops Fairmont flag

Hotel management agreement terminations -- Is there a better way?

Terminating hotel management agreements when things don't work? Not easy, but not impossible either.

Hotel bankruptcy trump card. Terminating hotel management agreements without liability -- the alchemy of lead to gold for troubled hotels and hotel loans?

Ritz-Carlton Bali hotel management agreement termination further court order

Ritz-Carlton breached contractual and fiduciary duties under hotel management agreement giving rise to free termination, $10.3 million in damages plus attorneys fees. When will hotel operators "get it"?

How to terminate a hotel management agreement when an operator really deserves it!

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

ADA Defense Lawyers. Is your pool, spa and fitness facility compliant with the ADA 2010 Regulations? If you think your property is grandfathered, then you are wrong! There is no grandfathering.

As we mentioned in our recent posted article "Updating Service Animal Policies of Your Hotel," the Department of Justice published revised final regulations implementing the Americans with Disabilities Act (ADA) for title III (public accommodations and commercial facilities) on September 15, 2010 (the "2010 Regulations").

Based on the 2010 Regulations, all "Public Accommodations," including "Places of Lodging" (hotels, resorts, most timeshares, restaurants, etc.) must bring certain elements of the facilities described below into compliance with the 2010 ADA Standards as of March 15, 2012.

• No one is exempt.
• There is no safe harbor.
• The ADA's "readily achievable" standard will apply.

If you are not already working on bringing your property into compliance, then you should call us to assist you with the creation of a compliance policy.

by

Martin Orlick and David Sudeck | Hospitality Lawyers

Certain regulations become effective March 15, 2012. Hopefully, you are already working on bringing your swimming pools, wading pools and spas, golf facilities, fitness facilities, steam rooms, and saunas (and more -- see below) into compliance with the 2010 Standards for Accessible Design (specifically the 2010 Standards for Public Accommodations and Commercial Facilities: Title III), which were adopted by the Department of Justice on September 15, 2010 as part of the revised Regulations of the Americans with Disabilities Act ("ADA"). Compliance with the 2010 Standards become mandatory for certain properties and certain elements of all properties as of March 15, 2012.

What is the standard and what facilities are affected? Title III of the ADA requires that each "public accommodation" remove architectural barriers where "readily achievable." No property will be "grandfathered" (even if built prior to 1990; i.e., the implementation of the ADA). There is no "safe harbor" applicable with respect to those elements in existing facilities that are subject to supplemental requirements (i.e., elements for which there are neither technical nor scoping specifications in the prior 1991 Standards). By way of example only, the following elements of a public accommodation must be modified to the extent "readily achievable" to comply with the 2010 Standards:

1. Exercise machines and equipment.
2. Golf facilities.
3. Miniature golf facilities.
4. Play areas.
5. Saunas and steam rooms.
6. Swimming pools, wading pools, and spas.
7. Shooting facilities with firing positions.

This is not an exhaustive list, and compliance requires expertise. Under the ADA, all businesses have an on-going obligation to evaluate their properties to bring them into ADA compliance to the extent "readily achievable."

If you're not well into your compliance program now, you may have some serious compliance challenges soon! By now, you should be well underway on your system wide ADA compliance program to meet the March 15, 2012 compliance deadline. You should be conducting professional, privileged accessibility surveys of your facilities and developing strategies to prioritize your compliance.

The March 15, 2012 ADA compliance deadline will be here before you know it. Are you confident that your facilities, including reservation systems, websites and Telecommunication Relay Service capabilities would pass Department of Justice or federal court scrutiny? You should be critically evaluating what your organization is doing to meet the impending deadline. Whether you own a single property or a portfolio of properties, you should be conducting a baseline ADA compliance audits of your facilities as part of a good faith effort to bring them into compliance.

Having litigated hundreds of ADA cases for property owners and managers, one thing is clear, the best way to avoid litigation from advocacy groups or the Department of Justice, is to bring your facilities into compliance.

A proactive approach to compliance can help you avoid or minimize liability and expensive governmental and private enforcement. Compliance is the law and as importantly, it is good business.

JMBM has conducted individual property and portfolio-wide ADA compliance audits and helped develop compliance programs for the nation's leading hotels, financial institutions, restaurant chains and similar business. Consider your ADA compliance strategies and consider JMBM's ADA expertise to help guide you through the process.

ADA Defense Resources

You can access the full library of ADA materials on Hotel Law Blog by going to the home page, selecting the tab at the top that says "HOTEL LAW TOPICS", and then clicking on "ADA Defense" in the drop down menu . . . or by clicking here.

My colleagues and fellow members of the Global Hospitality Group®, Marty Orlick and David Sudeck recently led a Lorman webinar on the 2010 amendments to the Americans With Disabilities Act. You can access it on demand at:

The Changing Landscape of ADA Litigation and Compliance Practice in the Hospitality Industry

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Congratulations to Hotel Management on a great annual hotel conference in Washington DC.

Our heartiest congratulations to Stacy Silver and Stephanie Ricca of Hotel Management and their team for a great first day (just ended) on their 3rd annual hotel conference, now called NATHIC (North America Hotel and Tourism Investment Conference). This was my first time attending this conference, but it certainly won't be my last.

Washington DC makes an excellent venue for a conference, because it is efficient to combine the conference with business meetings with so many hotel companies based in the greater metropolitan area. Washington DC is a capital of the hotel industry.

So here is my take on the trip to Washington, DC and the NATHIC conference so far.

With the conference starting at 2 pm, I had plenty of time before the conference for some business meetings. One of them was to catch up with long-time industry colleague, Clay Dickinson, Executive Vice President of Jones Lang LaSalle in the Strategic Advisory group.

Maybe you have heard this before, but I have not and thought it was a great way to describe how we all should describe our products or services to our customers or clients. Apparently Clay learned this from his stint with IBM a few years ago.

In essence, this is what he said:

• Customers buying a drill do not really want a drill. They want to make holes in something.
• Customers buying a computer do not want a box of electronic parts. They want to accomplish particular tasks (word processing, data management, financial modeling, and the like).
• We all need to explain to our constituencies how our product or service will help them accomplish what they really want, and not talk about the product itself in terms of features, except to the extent they help the customers accomplish what they want.

Even if the road ahead is a little bumpy, we're not slipping back into recession

Patrick "JP" Ford of Lodging Econometrics led off on the first panel with some interesting data on where we are in the industry. But I was most impressed with JP's positive outlook on for the hotel industry.

He does not believe we will slip back into recession, despite the recent turmoil in the markets. He says "We are on track." And while there may be some instability, the industry will continue to trend upward.

Lodging Econometrics is particularly known for it data on the construction pipeline. In this area, JP says that new construction peaked in 2008 and the boom cycle ended in 2009. New construction starts have been dormant since then with new supply scheduled to be less than 1% growth this year - significantly under long-term industry average.

Lodging Econometrics projects that new construction projects will start up again in 2012 and financing will be back in 2013.

Looking more deeply into recent hotel transactions

One of Ford's other observations that I found interesting was the makeup of the hotel transactions - the players in the purchase and sale of hotels. Of course transaction activity is up substantially in 2011 over 2010, but JP noted that:

• REITs have been the biggest buyers in 2011 (at least until August 2011) accounting for $3.6 billion in hotel purchases in 2011 vs. $1.8 billion in 2010.
• Equity funds have been net sellers this year.
• Privately held hotel companies have been biggest sellers - by 3.5 times.

It will be interesting to see where this goes with REITs largely on the sidelines for the past 60-90 days.

Robert Mandelbaum gives us some good news on hotel industry prospects even if the economy continues to struggle.

I have been an avid follower of Robert Mandelbaum's work for many years, often reading the great research that he, Mark Woodworth and other PKF Research colleagues have produced over the years. I have heard Robert speak at industry conferences and even worked recently on a significant litigation matter with Mark Woodworth.

But until NATHIC, I had never had a chance to sit down with Robert and chat a bit. It was a real pleasure to meet him. (And yes, he said he reads the Blog!)

Robert led off his presentation with a cogent explanation of why the hotel industry will likely not be spooked by continued struggles of the economy, European tumult and other factors. No one is under the impression that these headwinds help the hotel industry, but many of us have wondered how our industry can continue to improve when unemployment remains high, consumer confidence is on a roller coaster, and the markets are so uncertain. Here is what Robert said, in a nutshell:

1. PKF has observed a strong correlation between corporate profits and lodging demand. Corporate profits continue to do well, and the rise in corporate profits seems to boost business travel.

2. We all wish that the unemployment situation was much better. But when you look below the surface, the implications for the hotel industry are much more positive than one might think.
3. Although the general unemployment rate is above 9%, people with college degrees have an unemployment rate closer to 4%.
4. And the more education you have, the more money you tend to make. And fortunately for the hotel industry, high-income, high-education people tend to travel more and stay at hotels.
5. Moodys Analytics says the outlook for high income people is more favorable in years to come.

Coming at it from another direction, Robert gave some insight on the correlation of GDP to lodging demand. For many years there has been an extremely high correlation, with virtually a 1 to 1 direct correlation. But for a number of years that correlation has seemed "broken."

Robert and his team examined the 4 basic components of GDP and found that two of them seem to have a much higher correlation to lodging demand. Those two are business investment and consumer spending. Robert says that the favorable forecast for these factors drives more optimistic forecasts for the lodging industry.

When will ADR move?

Most markets are growing in occupancy, but have not yet reached the long-term average. But the real laggard has been the rate. Fortunately, there is no significant new supply. And even with modest growth in ADR, profits will continue to improve.

PKF says that 17 of 50 markets they follow will be at or above long-term average occupancy rates in 2011. Half of the markets will not reach the long-term average occupancy rates until 2013.

On ADR, only 2 of 50 major markets will achieve prior peak ADRs of 2006 or 2007 in 2011, and this will be a slower recovery - even in nominal dollars as opposed to inflation-adjusted dollars. That recovery is probably 2013 or 2014.

NOTE: Robert has a fancy formula for expressing this, but in street English he says that a change in ADR has 50% more impact on NOI than a corresponding increase in occupancy. That is why the current trend for increasing ADR has such an important impact on profitability of the hotel industry.

The bottom line?

PKF is projecting 15.1 to 15.2% growth in the bottom line for 2012.

Poor health of the economy does not seem to match continued strength of the lodging industry. Robert thinks they have the explanation (see above discussion on lower unemployment among the more educated, more affluent, more traveling population).

Robert does add that some new data has just been released by Moodys and it is a little more pessimistic than 90 days ago. But performance during the first part of this quarter was ahead. So the results will probably net out for the year in 2011. However, 2012 will likely be a little slower than hoped for or projected.

PKF also has a "recession forecast" - which Moodys says is only 25% chance. Under this scenario,- the most pessimistic -RevPAR growth will still be 2.4% in 2012. That is positive RevPAR growth even in a recession.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Important new court case on terminating hotel management agreements -- Fairmont v. Turnberry.

JMBM's Global Hospitality Group®, together with Dennis Richard of Richard and Richard, represented the owner of the Turnberry Isle Resort & Spa in obtaining a significant decision involving Fairmont Hotels & Resorts. On Friday, October 14, 2011, a Miami Federal District Court denied Fairmont Hotel's request for a preliminary injunction to be reinstated as the operator of the hotel.

We think this is an interesting and important decision. We believe that this 71-page opinion written by Magistrate Judge Goodman and adopted and reaffirmed by Judge Donald L. Graham is destined to become one of the more important cases in the area of hotel management agreements. Grounded on solid legal precedent -- with English common law, a landmark U.S. Supreme Court case by Chief Justice John Marshall, and a well-known line of hotel cases -- and public policy, this is one of the best-written, most thoroughly researched and comprehensive decisions in the area.

The Court's decision can be downloaded by clicking Fairmont v Turnberry.

Terminating hotel operators: M Edition lawsuit against Marriott has a new twist -- Marriott is replaced overnight

More on M Waikiki Edition lawsuit against Marriott - What Marriott's General Counsel says

M Waikiki's Edition lawsuit against Marriott and Ian Schrager - an owner's HMA dispute with Marriott

Terminating hotel operators: Turnberry Resort drops Fairmont flag

Hotel management agreement terminations -- Is there a better way?

Terminating hotel management agreements when things don't work? Not easy, but not impossible either.

Hotel bankruptcy trump card. Terminating hotel management agreements without liability -- the alchemy of lead to gold for troubled hotels and hotel loans?

Ritz-Carlton Bali hotel management agreement termination further court order

Ritz-Carlton breached contractual and fiduciary duties under hotel management agreement giving rise to free termination, $10.3 million in damages plus attorneys fees. When will hotel operators "get it"?

How to terminate a hotel management agreement when an operator really deserves it!

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

One of the bright spots at Steve Van's Fishing for Solutions lender conference was the keynote address given by FelCor Lodging Trust Chairman, Thomas J. Corcoran. Known for his blunt and sometimes salty candor, Tom sounded a call for a reality check for doomsayers, likes where we are now in the hotel industry and expects things to get better.

Yes, he reads the newspapers, knows all about the "market volatility" and pokes fun at how the world cringes on reports that Slovakia may not approve the European bailout of Greece. Everyone is over-reacting to news he says.

Here are the details . . .

In his keynote at Prism Hotel's 11th lender conference (Fishing for Solutions), FelCor Chairman Tom Corcoran provided a welcome note of optimism. (For other insights provided at the Dallas lender conference, click Hotel Lawyer in Dallas listening to the Special Servicers.)

Noting the recent dive in stock values, Corcoran observed that the public markets are not optimistic about the hotel industry.

But he said, "You have to feel good about the Smith Travel Research numbers and projections for 2012, if they are real. I think the year will turn out a lot better. We will continue to see general improvement."

Corcoran acknowledged that there is a lot of uncertainty out there. But compared to a year or two ago, deals are getting done.

He had high compliments for the special servicers in attendance, saying "This has not been kick the can down the road. The lenders are extremely bright. They adopted an approach that has gotten a lot more money for their stakeholders."

In looking back, Corcoran thinks that people will say most of the lenders were very smart and avoided the mistakes of the past.

And Corcoran believes that people are going to look at hotels as a good place to get a better yield, so we will see money invested in our industry in 2012.

The markets get it all wrong.

Here are a few more of Corcoran's observations.

"The public markets keep predicting doom and gloom but they keep getting it wrong. There is such a disconnect between the markets and reality that they keep getting it wrong and they will this time too. I don't think the doom and gloom scenario is very likely."

"There is so much over-reaction to any negative news. Like what will Slovakia do on the Greece situation."

"The one thing we cannot control is the public sentiment -- how people feel. People act on their perceptions. If they feel good, they do more."

"This pattern of slow recovery discourages stupid money and stupid investors. That is good for us in the hotel industry."

"If you are in the business and you take opaque reservations, you are an idiot. You cannot make any money on this kind of business. The business does not reflect real cost of the reservation. You are better investing in another sales person and getting real profit to the bottom line."

"There will be an OTA study coming out soon that will be helpful to get people to make better decisions."

"This is all about the revenue side. I feel good about where we are."

Kris Hudson of the Wall Street Journal has an excellent article on Mr Corcoran's presenation at this event. To read it, click FelCor Chairman: Decline of Hotel Stocks Ignores Industry's Results

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

For 11 years now, Steve Van and his team at Prism Hotels have held what is probably the best lender conference in the country. Attendance is by invitation only. The one-day program is attended by industry leaders and about 100 of the Who's Who of the hotel lending world. If you are a special servicer, you want to be at this meeting. The convocation has swelled in size from about 35 at the first meeting, but Steve resists all the temptations to grow too large so that this remains an informal meeting place for serious dialog and candid discussion.

Generally, the conference delegates include the top people from the major special servicers, such as Midland Loan Services, C-III Asset Management, CW Capital, Berkadia Commercial Mortgage, ORIX Capital Markets, KeyBank Real Estate Capital, Bank of America and the like - all the people you would like to see but never find at the major investment conferences. The sessions are highly interactive, more akin to think tank sessions and sharing of experiences and concerns than the typical conference lecture format.

I was privileged to lead a panel of thought leaders on "Trends in Hotel Loan Sales," and Guy Maisnik (my partner and vice chair of our Global Hospitality Group®) spoke on the panel "Special Servicers Survival Guide for Loan Defaults - CMBS 201: What has changed?"

Here are some highlights of the meeting that I thought were noteworthy . . .

Steve Van's 10 thoughts for the industry

Steve Van's warm welcome to long-time industry friends was punctuated with some tough realism:

More than 2/3 of the CMBS loans coming due have already been extended and cannot be extended further because of limitations in the PSA (Pooling and Servicing Agreement that governs all the CMBS loans in a particular pool).

In addition to the PSA limitations on how many loan extensions can be granted, there is also an express absolute prohibition on any extensions being granted beyond the life of the pool. Many pools are now approaching their end of life.

PIP (property improvement program) pressures will force borrowers and lenders to act. By and large, the brands have been lenient on maintaining their brand standards since the meltdown started. But many hotels needed upgrades then, and little has been done for almost 3 years. The brands are near the end of their patience, and will enforce PIPs. They don't care anymore if hotels can't cover operating costs, much less debt service.

For FelCor Chairman Thomas J. Corcoran's optimistic keynote address at the conference, see Hotel Lawyer with optimism for the hotel industry from at the Dallas Lenders Conference, Fishing for Solutions 2011.

And for Kris Hudson's Wall Street Journal article on the conference, see FelCor Chairman: Decline of Hotel Stocks Ignores Industry's Results

Kevin Donahue of Midland moderating a Special Servicer panel with Michael O'Hanlon of Berkadia, Tom Biafore of Kilpatrick Townsend, and Clark Rogers of KeyBank.

One of the most interesting panels from my perspective was led by Kevin Donahue of Midland. Michael O'Hanlon of Berkadia, Tom Biafore of Kilpatrick Townsend, and Clark Rogers of KeyBank were also on the panel.

Here are some extracts from that panel that I found intriguing.

On the backlog of distressed loans

Clark Rogers, KeyBank: The pace of workouts is exceeding the pace of transfers. There is still a backlog of large loans. But absent another economic shock, I expect the volume of workouts to decline and normalize in 3-5 years. We are seeing a definite improvement but lot of external factors could change all this. There are so many external factors.

Michael O'Hanlon, Berkadia: We have seen a dramatic reduction in transfers. Our resolutions are outpacing transfers, excluding large floaters. People were able to secure some decent financing in the window up until August. A lot of loans in special servicing were liquidated through full pay offs, and liquidation. But now, we are starting to see contracts fall out mainly due to lack of financing. Hopefully will see that open up next year again.

The floaters are coming

O'Hanlon: Although conduit loans are reducing by number, there are some huge mega-loans (many billions) that are getting to the point where they have to be worked out. Then we have the floaters. They are all ending their 3 year extension period. They will be back in special servicing because no one can get financing. These loans are at 70 bp and don't work at 3 or 4%

Donahue: It is sad when you say a loan does not work at 3% interest! . . . The floaters will be a challenge. They were all on shorter terms. They have a lot of challenges. Even though it might be in the interest of the trust to extend these loans again, there are many that cannot be extended any more.

O'Hanlon: There are big floaters. There will all be in default. There is no way to get rid of them other than to take huge losses.

Donahue: The documents are not well structured. No one thought about what happens in this case. I would estimate that up to 60 or 65% of the loans coming due now will be floaters. Most of these loans are pegged to LIBOR, without a floor. They have avoided default because it is almost free money. In order of magnitude, there are $50-60 billion in floaters coming due, and hotels probably represent 25-30% of floaters.

Kevin Donahue, head of special servicing at Midland Loan Services, said that people want to be optimistic but keep looking over their shoulder for something bad to happen. In this environment, he said that hotel RevPAR today should stand for "Really exuberant voices Predicting A Recovery."

Rogers: The hotels with floaters are the trophy stuff in gateway markets. There is tremendous demand for this product.

When does the outlook brighten and the economy improve?

Rogers: I am not sure we ever got out of the recession. We saw a lot of liquidity that came from the government. That liquidity created optimism. We have to see meaningful employment growth and solve the housing problem to get out of this. The international volatility also creates uncertainty. I don't see where the jobs come from. I see this being a long, drawn out process.

O'Hanlon: I think we will be status quo through 2012 and 2013. It may be 2014 or 2015 before we can hope to see anything different.

Donahue: It is all about jobs and consumer confidence. Bloomberg was quoting that less than 90 days ago a large bank in Belgium would not need bailout. Today it took $100 million bail out. It is the same in the hotel sector. We don't see an increase in distress levels, but don't see a decline.

Clark: What if Europe blows up? A large percentage of NY occupancy is from Europe

O'Hanlon: Corporations have more cash now than ever, but all companies are cutting back on expenses, travel, marketing, hiring. Some markets are doing well, but others are not so great.

Donahue: It is all about the lack of certainty. Until that is resolved, there will not be improvement in commercial real estate.

What is happening to the flow of distressed hotel loans? Watch out for the "floaters."

Experience varies among the servicers. Generally 2011 has been a year when resolutions have exceeded the pace of new transfers of distressed loans. The improved liquidity and financing available in the first part of 2011 through August helped special servicers sell distressed assets to all cash buyers.

The special servicers who "kicked the can down the road" or played "extend and pretend have been vindicated. They have increased their stakeholder's returns significantly and now look like "geniuses." Maybe they are, and maybe all the grousing comes from frustrated buyers who were denied all that upside that patience preserved for the lenders who waited.

There is something like $80 billion of CMBS loan maturities coming due in the next two three years. Many of those loans cannot be extended any longer. Many of the new maturities are floating rate CMBS loans or "floaters" with interest rates near zero.

Special servicers expect to see a significant influx of distressed loans starting in early 2012. The big question is whether this will create buying opportunities the opportunistic investors have been expecting for almost 3 years.

Is greater investment opportunity coming?

There will be no flood of distressed loans. To date, the big discounts some investors have hoped for have been elusive at best. However, there are a few factors which suggest greater opportunity could be coming soon. They include:

• Financing was the key to many resolutions up to August 2011. Market volatility and uncertainty have put that on pause. When does financing return?
• Many of the floaters have interest rates at 70 basis points (bps). Yes, LIBOR-based loans with no floor are at 0.7% interest. Many have reached maximum extension, and cannot be refinanced even in good markets at current LTVs, much less interest rates of 4 or 5%.
• Many of the mega-loans and floaters coming due will have to worked out or sold.
• Floaters do not have the wide latitude for servicers to rework the loan that is available for fixed rate CMBS loans. The people who developed these loan pool structures never thought through the difficulties now being confronted.
• The floater loan pools have many of the large, trophy hotel assets in them.

Cause for Optimism?

On the more positive side, the panel seemed to agree that over the past few years, people raised capital for distressed assets with unreasonably high expectations of return and product availability. In the last 6 months, the capital has gotten more realistic. Sellers and buyers are both more realistic. And there is leverage available again, or there was until recently. All of these things have an positive impact.

Smith Travel says industry fundamentals remains strong and look good for 2012, but everyone is waiting for "footsteps in the night"

Jeff Higley of STR said, "While fundamentals look good, there is great uncertainty about the economy, and therefore about what will happen to the hospitality industry. It is like everyone is expecting to hear footsteps in the night."

Jeff Higley did a nice job of presenting the latest update on industry statistics. Nothing significant has changed since the last report at The Lodging Conference. Hotel Lawyers in Phoenix: "It's not just me. The market has changed in just the last 60 days!"

In short, it has been a stronger summer than expected. Demand is there. An all-time record number of roomnights are being sold. Supply growth is now less than 1% and likely to stay there for a while - at least in 2011 and 2012.

RevPAR growth in the luxury and upper end of the industry is poised to hit double digits this year and next.

But while fundamentals look good, there is great uncertainty about the economy, and therefore about what will happen to the hospitality industry. Jeff said everyone's mood was like someone expecting to hear footsteps in the night.

Put another way, people want to be optimistic but keep looking over their shoulder for something bad to happen.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

My partner, labor and employment lawyer Scott Brink, has informed us that the California Supreme Court is scheduled to hear oral argument in a high-profile labor law case, Brinker Restaurant v. Superior Court, on November 8, 2011. He believes it is likely we will see a decision within the following 90 days.

The outcome could curb a wave of class action lawsuits in California -- or provide the fuel for more of them.

At issue in the case is whether California employers must ensure that their employees actually take their meal and rest periods or merely make them available. Here is Scott's update.

The California Supreme Court will hear oral argument in Brinker Restaurant v. Superior Court (Hohnbaum, et al., real parties in interest) on November 8, 2011, according to the Court docket issued this week. The Court generally issues decisions within 90 days after completion of oral argument and submission of post-argument briefs, if any. A decision is expected by mid-February, 2012.

At issue in the case is whether California employers must ensure that their employees actually take their meal and rest periods or merely make them available. Guidance is also anticipated regarding the time in the workday in which meal and rest periods must be taken and whether or not legally-compliant meal and rest period policies can protect an employer against class actions even when these policies are unevenly enforced.

The decision is extremely important to California employers because meal and rest period claims have been the basis of hundreds of class action lawsuits in California. The Court's decision could make it more difficult for plaintiffs to bring these claims as class actions, or, depending on the ruling, could establish rigid guidelines which may foster more class actions. Either way, California employers and plaintiffs class action lawyers alike have eagerly awaited this decision since the Supreme Court took up the case in October 2008 and look forward to receiving guidance from the high court.

Under California law, nonexempt employees are entitled to uninterrupted, off-duty meal periods of at least 30 minutes for every five hours worked. While there are certain limited exceptions to this rule (such as a revocable written waiver of the meal period in limited circumstances), employers are required to compensate employees for on-duty meal periods. In addition, California law assesses employers a penalty equal to one hour of pay at the employee's regular rate for every day there is a meal period violation.

The lower court in the Brinker case held that California law requires employers only to "supply or make available" meal periods.This view is consistent with several Federal District Court decisions as well as the California Court of Appeals decision in Brinkley v. Public Storage. The California administrative entity charged with enforcing wage and hour laws, the Division of Labor Standards Enforcement, takes the position that employers have "an affirmative obligation to ensure the workers are actually relieved of all duty" during meal breaks. The California Supreme Courts decision in Brinker should put this dispute to rest.

For more information about how California wage and hour laws or the Brinker case may effect your business, please contact me or my partner, Scott Brink.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?
________________________

Scott Brink is a senior member of JMBM's Global Hospitality Group® and a partner in JMBM's Labor & Employment Law Department. Scott is a management labor lawyer with more than two decades of experience representing employers in all aspects of labor relations and employment law including union prevention, collective bargaining negotiations, defense of unfair labor practice charges before the NLRB, wrongful discharge litigation, individual and class action employment discrimination and wage-and-hour claims, sexual-harassment litigation, arbitrations, personnel policies, California wage and hour law, and employee discipline and discharge. An experienced trial attorney, Scott has litigated a number of high-profile and complex cases involving a wide range of labor and employment law matters. For more information, contact Scott Brink at RSB@jmbm.com or +1 (310) 785-5365.

________________________

Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

ADA Defense Lawyers. What are some of the most common questions asked of our ADA Defense Lawyers? Many of them relate to "service animal" policies at hotels, restaurants and other places of public accommodation. One of the most read articles on Hotel Law Blog was a posting I did 5 years ago on this subject. Who's crying "Woof"? What you must know about the ADA requirements for disabled guests and their service animals . . .

But with recent developments, we thought it was time to update that information with the effect of the latest amendments to the regulations on this subject published by the Department of Justice implementing the Americans with Disabilities Act (ADA).

Many thanks to hotel lawyers David Sudeck and Marty Orlick for their help on this article.