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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:

15 September 2020

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on the coronavirus.

Boutiques may be adapting faster than other hotel sectors, but still hurting

The theme of the Boutique Lifestyle Leaders Association’s (BLLA) upcoming Boutique Lifestyle Digital Summit is “Dare to Adapt” and there are some compelling arguments as to why the boutique space may be able to adapt to the current economic crisis faster than other sectors in the hotel industry.

“Boutiques can pivot easily,” said Frances Kiradjian, Founder and CEO of the BLLA. “They can make decisions quickly without checking in with brands.”

Take cleaning, an area of great to concern to guests in the current COVID-19 environment. As new information and cleaning methods come to light, boutiques can implement them quickly. As Kiradjian said, “By design, some boutiques have a smaller footprint and fewer rooms, smaller elevators, smaller public spaces, and dedicated staff members who care about delivering a customized experience for each guest.”

Guy Maisnik, Vice Chair of JMBM’s Global Hospitality Group, who will moderate the panel “Protecting Your Assets Amid a Pandemic” at the BLLA’s Digital Summit, agrees that boutiques have great flexibility, and being nimble and able to change quickly is critical in this market.

“For one thing, many hotels have gone toward smaller guest rooms and larger indoor communal public spaces,” he said. “Obviously, such configuration does not work in this environment.”

Maisnik said that many boutiques are heavy on food and beverage, which provides needed income. Those that have outdoor areas, such as rooftop decks will fare even better.

Kiradjian points out that guests wanting a quick getaway to relieve the monotony of sheltering-in-place, are looking for a smaller hotel like a boutique, due to social distancing requirements.

“Boutiques located with an urban area’s “drive market” have another advantage,” she said, noting that travelers continue to avoid air travel.

Even with these advantages, boutiques are struggling to gain occupancy and stay above water.

“Owners in all hotel sectors are talking to their lenders,” said Maisnik, explaining that lenders are refraining from receiverships and foreclosures, as the capital to buy foreclosed properties hasn’t come forward. “Right now, lenders are waiting and seeing”, he said. “Some borrowers have turned in their keys, but not many.”

What does the future look like?

“In normal circumstances, entrepreneurs take risks,” said Maisnik. “But this is not a normal circumstance, and the risks are not predictable. No one could possibly predict a global pandemic.”

“Wall Street is doing well,” he said. “But given the political environment, it is not going to look good for the bankers on Wall Street to shut down the employers on Main Street. Wall Street and Main Street need each other.”

As workouts and bankruptcies increase, Maisnik thinks we may see unique applications of existing law that will help borrowers, especially those whose businesses were doing well before COVID.

“When issues are litigated in the courts, we will find some judges very sympathetic to borrowers,” he said. “Everything, including force majeure in certain jurisdictions, is on the table.”

Click here for more about the BLLA’s Digital Summit, taking place on September 17 & 18, 2020.

CONTINUE READING →

Published on:

17 July 2020

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Hotel Management Agreements and Hotel Franchise & License Agreements, and download our HMA & Franchise Agreement Handbook.

Franchise and Management Disputes in the Time of Covid
by
Robert Braun

If you are reading this, you are almost certainly in the hospitality industry, and you are most likely in a financial and emotional distress. During trying times, hotel owners rely more than ever on their brands and managers – the professionals that owners engage to protect the multi-million dollar investments that they have made in building, maintaining and upgrading properties. Owners rely on brands to drive occupancy and revenue, and on managers to make the most effective and efficient use of those revenues to drive the bottom-line revenues that allow owners to cover debt service, insurance and other expenses, and provide a return – without which no thinking investor would finance a hotel.

At the same time, the Covid-19 pandemic has driven hotel occupancy and rates fallen to levels that were previously unimaginable. Brands and managers are not to blame for the pandemic, but this is the time when they must stand up and work with owners to preserve their assets and prepare for the eventual – and lengthy – return to normal, whatever that normal may be.

Unfortunately, in many cases, brands and managers have not always met the challenge. Many brands and managers have simply submitted, without explanations, edicts regarding closing or reducing operations, demanding funds, and reduced responsiveness. Hotel companies have, across the board, furloughed or laid off large portions of their workforce, making it difficult to obtain the guidance and support owners need.

What Should Owners Do?

Take the First Step. Owners cannot and should not wait for their brands and managers to provide solutions. Under current circumstances, owners maybe more aware of the status of their projects, their strengths and weaknesses, than their managers and brands. Owners should take a hard look at their properties and determine what the best course of action may be, whether it is eliminating some operations (in many areas, that decision will be made by local or statewide authorities), reduce staff, or even close (understanding that closing hotel, and maintaining a closed hotel, is an expensive proposition).

Be the Squeaky Wheel. Rather than wait for management to deliver a working capital request, require updated projections of cash flows and cash needs, and use those as a tool to make appropriate changes in operations. Many, if not most, management agreements require an owner to provide working capital funds on 10 days’ notice (in some cases less); those demands may be impossible for an owner to meet, putting the owner in default and giving managers and brands additional leverage.

Read Your Agreements. Much has been made of the effectiveness, or lack thereof, of force majeure clauses. But that is not the only provision that will impact a manager’s or brand’s obligations and an owner’s rights. A thorough review of a franchise or management agreement is necessary to create a game plan. The devil may be in the details, but so are opportunities and alternatives.

Create a Game Plan. Now is the time to consider whether changes need to be made in the owner-manager-brand relationship. That might consist of changes to fees (not just management or royalty fees, but to marketing and other ancillary costs), operating standards and property improvement plans, but also a re-evaluation of whether the brand is the right brand or the manager is the right manager. Some brand-managed properties would benefit from third-party management, and in some cases, the brand was a bad fit from the beginning, and the pandemic has exposed greater fault lines.

Create Allies. Whatever decisions an owner may make, it cannot implement them with cooperation from all if its stakeholders, including lenders, investors, vendors, governmental authorities, and workers. An owner that creates a united front with all of the parties that depend on the survival and ultimate success of the property will have a better chance to achieve that success and come out of this crisis strong, and ready to take advantage of a recovery.

Be Bold. Sir Winston Churchill is credited with first saying, “Never let a good crisis go to waste.” This is a crisis like no other, and owners should not be timid in considering how they can better their position. However difficult these times are, we should remember that they will ultimately become a memory, not a reality, and we should prepare for the reality that follows.

The Global Hospitality Group of Jeffer Mangels Butler & Mitchell LLP works with owners and others in the hospitality industry during this crisis to create effective and meaningful solutions to intractable problems. CONTINUE READING →

Published on:

13 July 2020

See how JMBM’s Global Hospitality Group® can help you.

Click to see our category-killer experience with hotels. See also our distressed loan credentials. And click here for the latest blog articles on loan modifications, workouts, bankruptcies and receiverships, and here for The Lenders Handbook for Troubled Hotels.

Meet the Money® Online: CMBS Special Servicing FAQs

It’s estimated that 20 percent of hotels in the U.S. have debt held in commercial mortgage-backed securities (CMBS). Among these hospitality industry borrowers are hotel owners needing financial relief due to the COVID-19 pandemic, many of whom are unfamiliar with working with master servicers and special servicers in the complex world of CMBS.

Unfortunately, there is much misinformation circulating in the business media about how special servicers work with borrowers needing debt relief.

On July 8, 2020, we addressed the myths and realities of working with CNBS special servicers in our Meet the Money® Online virtual roundtable, “CMBS Special Servicing FAQs.” The panel, moderated by JMBM’s Global Hospitality Group® Chair Jim Butler, featured CMBS experts including:

  • Andrew Hundertmark, CEO, Argentic Services Company
  • Curt Spaugh, Director, SitusAMC, Special Servicing Division
  • Lindsey Wright, Senior Managing Director, Greystone Special Servicing
  • Thomas J. Biafore, Partner, Kilpatrick Townsend
  • Robert B. Kaplan, Partner, Jeffer Mangels Butler & Mitchell

Frequently Asked Questions about CMBS Special Servicing for distressed hotel and retail projects

Roundtable Topics discussed include: CONTINUE READING →

Published on:

01 July 2020

See how JMBM’s Global Hospitality Group® can help you.

Meet the Money® Online: Hotels and Information Security
Protecting Guests and the Bottom Line

Last week, speakers from Manhattan Hospitality Advisors, Tiered Communication Services Inc. and Willis Towers Watson joined Bob Braun of JMBM’s Global Hospitality Group® for the second in a series of Meet the Money Online webinars.

If you missed “Hotels & Information Security – Protecting Guests and the Bottom Line,” you can watch the full webinar here.

You can also find the presentations made by our expert panelists on the Resource Center page:

Where Technology and Security Meet in Hotels

Jonathan Adam, co-founder and Chief Technology Officer, Tiered Communication Services, Inc., covers the primary elements required for information security, and how a secure hotel network should be designed. Meet the Money® Online June 2020.

Best Practices and Imperatives for Information Security

Bob Braun, co-chair of JMBM’s Cybersecurity and Privacy Group, and senior member of JMBM’s Global Hospitality Group® discusses why information security is so difficult to achieve, the importance of documentation, and why verifying third parties is critical. Meet the Money® Online June 2020.

Cyber Security – A Must in Today’s Viral World

Jack Westergom, Managing Director and Founder of Manhattan Hospitality Advisors explains why hotels are frequent targets of cyber crime, areas in which hotels can be proactive, and why you shouldn’t count on your brand for protection. Meet the Money® Online June 2020.

Cyber Insurance in the Hospitality Industry

Heather Wilkinson, SVP, FINEX E&O/Cyber, Willis Towers Watson, discusses why hotels need to determine their specific exposure, the importance of understanding what your cyber insurance actually covers, and the 5 main cyber threats that hotels are facing today. Meet the Money® Online June 2020.

 

While we weren’t able to gather in person for the 30th year of Meet the Money®, the national hotel investment and finance conference, we are continuing to provide the industry with research analysis and insight through Meet the Money Online. Join us on July 8, 2020 for the next in this series of informative webinars, the CMBS Special Servicing FAQs Virtual Roundtable. CONTINUE READING →

Published on:

30 June 2020

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on ADA Compliance and Defense.

As ADA lawsuits continue target hotels, it is critical that hotel owners understand what the ADA requires during the online reservations process. Stuart Tubis of JMBM’s ADA Compliance & Defense Group, explains below.

 

ADA Requires Hotels To Describe
Accessibility Features On Website
by
Stuart Tubis, JMBM’s ADA Compliance & Defense Group

Many hotels are not aware that the ADA imposes several requirements during the reservations process, including posting descriptions of the hotel’s physical accessibility features on its online reservations system.  Starting around early 2018, serial ADA plaintiffs have filed significantly more lawsuits against hotels regarding this issue.

In addition to the many physical accessibility requirements at places of lodging (hotels), such as accessible parking and accessible guest rooms, the ADA also requires places of lodging to take certain actions during the reservations process to help individuals with disabilities obtain an accessible guest room.  Specifically, places of lodging are required to do the following:

  • Ensure individuals can reserve accessible guest rooms in the same manner and time as other guests;
  • Provide descriptions of accessible features of the hotel and guest rooms as part of any reservations process (such as website booking);
  • Ensure that the hotel’s accessible guest rooms are held for individuals with disabilities and not rented out to those not requesting an accessible room (unless all non-disabled rooms have been booked); and
  • Once reserved, ensure that the accessible guest room is hard booked and not rented to anyone else.

These requirements derive from 28 C.F.R. § 36.302(e)(1), which is provided in full below.

CONTINUE READING →

Published on:

29 June 2020

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on ADA Compliance and Defense.

ADA website cases continue to be filed against hotels nationwide, but some courts are pushing back against serial plaintiffs. My partner, Marty Orlick, shares the news below from a website case filed in the Northern District of New York.

ADA Website Litigation Update — Serial Plaintiff Gets No “Lucky Charm”
from New York Federal Judge
by
Martin Orlick, Chair, JMBM’s ADA Compliance & Defense Group

In a case indicating that courts may be weary of serial plaintiffs filing multiple cookie-cutter lawsuits, a United States District Judge in the Northern District of New York has ordered a plaintiff to show that she has standing to bring ADA hotel website accessibility lawsuits to federal court.

The disabled plaintiff, who resides in Florida, has filed 29 nearly identical ADA website cases in the Northern District of New York seeking injunctive relief, damages, and attorneys’ fees. In this specific case, Deborah Laufer v. 1110 Western Albany LLC and Ryan LLC, the plaintiff sought an unopposed default judgement when the defendant failed to respond to the complaint.

The Court, however, determined the plaintiff failed to establish Article III standing to bring the lawsuit and refused to enter the default judgment.

Achieving Article III standing in federal court

To have standing to seek injunctive relief in federal court, plaintiffs must establish they have sustained (or are in immediate danger of sustaining) a direct injury as the result of the alleged wrongdoing, and that the injury is concrete and particularized, not hypothetical or speculative.

In this case, the plaintiff claimed injury due to the alleged lack of information on a hotel’s website about accommodations for disabled guests, as is required under the ADA’s 28 C.F.R. Section 36.302(e).

But Hon. Brenda K. Sannes, of the United States District Court of the Northern District of New York states in an Order dated May 8, 2020:

“There appears to be a serious question as to whether Plaintiff has established standing, in this, or any of her other cases, and thus whether the Court has subject matter jurisdiction over these actions. See, e.g. Laufer v. Laxmi & Sons LLC, 1:19-cv-01501 (BKS/L) (Dkt. No. 15, at 7. May 6, 2020). (“There are no facts in the Complaint or Plaintiff’s affidavit indicating that she has ever traveled to Rensselaer, New York, or anywhere in New York, or that she has any reason to travel anywhere in New York or any reason to seek lodging anywhere in New York.”)

The Judge has ordered the Plaintiff to file briefs in 29 actions, addressing whether she has standing, and to specifically reference the legal issues and case law discussed in the Memorandum-Decision and Order the Court entered in Laufer v. Laxmi & Sons, LLC.

What does this mean for hotels?

The 29 lawsuits filed by the plaintiff in the Northern District of New York, are among the more than 235 nearly identical lawsuits she has filed nationally.
CONTINUE READING →

Published on:

25 June 2020

See how JMBM’s Global Hospitality Group® can help you.

Meet the Money® Online: CMBS Special Servicing FAQs
for CMBS borrowers, investors and holders

A virtual roundtable of current perspectives, challenges and opportunities for hotel and retail projects

JMBM’s Global Hospitality Group® is excited to announce that next up in our Meet the Money® Online series is a virtual roundtable discussion among some of the top experts in the complex world of CMBS. If you are a CMBS borrower, investor or holder – or are involved in properties affected by CMBS – you will not want to miss this important conversation.

The online event will take place on Wednesday, July 8, 2020 at 10:30 AM PDT / 1:30 PM EDT. Register now.

Join our experts online for this 1-hour event which will answer the questions most frequently asked of CMBS special servicers and will also cover important considerations that CMBS holders, borrowers and investors often miss, including:

  • What are special servicers seeing now after the first wave of COVID-19 relief requests? How are forbearance requests being handled?
  • Which loans have larger underlying issues that will require a more complicated and protracted workout?
  • What are the critical appraisal and valuation issues today? What does stabilized value look like, and what assumptions are going to be used?
  • What are the most important effects of Pooling and Servicing Agreements? What do the documents say (or don’t say)?
  • What inconsistencies are showing up and where are they coming from?
  • What are the red flags for loan modifications (or purchase/sale) that could affect the all-important CMBS tax structure?
  • What impact does securitization structure—REMIC, Grantor Trust, CLR/QRS—have on workouts?
  • Can a “special purpose entity” file bankruptcy with independent directors and other bankruptcy remote features in loan documents or corporate structure?
  • Can a hotel be considered “single asset real estate” (or SARE) for streamlined bankruptcy purposes, and why do creditors care?
  • What should we anticipate moving forward?

The program will be moderated by Jim Butler, Chair of JMBM’s Global Hospitality Group®, a founding partner of JMBM, and one of the top hotel lawyers in the world. Devoting 100% of his practice to hospitality, Jim is author of www.HotelLawBlog.com and chairman of JMBM’s Global Hospitality Group® which focuses on representing hotel owners, developers, and capital providers. CONTINUE READING →

Published on:

22 June 2020

See how JMBM’s Global Hospitality Group® can help you.

Meet the Money® Online: Hotels and Information Security
Protecting Guests and the Bottom Line

Speakers from Manhattan Hospitality Advisors, Tiered Communication Services Inc. and Willis Towers Watson will join Bob Braun of JMBM’s Global Hospitality Group® for this informative online program.

Please join us this week, on Thursday, June 25, 2020, when Meet the Money® Online addresses an issue of critical importance to the hospitality industry: information security.

As privacy laws demand companies do more to protect customer and employee data – and cyber hackers become more sophisticated – making sure your hotel’s information is secure has never been more important.

This free webinar will take place on Thursday, June 25 at 10:30 AM PDT / 1:30 PM EDT. Register Now.

Join our panel of cybersecurity experts and hospitality veterans for a 1-hour webinar to discuss:

  • What personal information hotels collect and how they use it
  • The role of hotel owners, operators and brands in guest information
  • Technology aspects of information collection, use and protection
  • Insurance issues – how to mitigate risk and cost using insurance
  • Legal obligations and compliance

This discussion will be moderated by Robert E. Braun, partner and co-chair of the Cybersecurity and Privacy Group at Jeffer Mangels Butler & Mitchell LLP who works with companies on their data technology, privacy and security matters. Bob is also a senior member of JMBM’s Global Hospitality Group® and has more than 20 years of experience in representing hotel owners and developers in hotel management and franchise agreements, condo hotel securities issues and many transactional matters, including entity formation, financing, and joint ventures.

Our speakers include:

  • Jonathan Adam, Co-Founder and Chief Technology Officer, Tiered Communication Services, Inc.Jonathan Adam is a founding member and CTO of Tiered Communication Services, Inc. With 17 years of hotel experience, he pairs high end development projects with extremely secure advanced technology systems for an unsurpassed guest user experience, driving amazing rates of return to owners. He holds multiple technology patents, and co-founded the ySuite Incubator in Austin and PracTECHal Solutions headquartered in Las Vegas. The ySuite team owns and operates multiple hotels in the Austin area, and utilizing the TCS technology infrastructure, they generate significant amounts of high margin add-on revenue through new hospitality revenue channels.
  • Jack Westergom, Managing Director and Founder, Manhattan Hospitality AdvisorsJack Westergom is Managing Director and Founder of Manhattan Hospitality Advisors. Jack is a veteran hotelier whose background includes asset management, hotel/resort operations, international marketing, investment relations and real estate development including many of the top 25 hotels and resorts in the world. Manhattan Hospitality Advisors has provided oversight on over $18 billion of hospitality assets around the world and has helped hotels to successfully navigate through four real estate downturns.
  • Heather Wilkinson, SVP, FINEX E&O/Cyber, Wills Towers WatsonHeather Wilkinson is SVP in the FINEX Cyber & E&O practice for Willis Towers Watson with over fourteen years of experience in the cyber insurance industry. Heather is a founding member of the Willis Towers Watson E&O and Cyber Broker Team; she joined the organization in 2006 and has been instrumental in placing some of the largest towers of E&O and Cyber insurance placements in the world. She is uniquely qualified to handle Cyber and Professional Liability issues and placements and is based in Los Angeles.

There is no fee for this program.

REGISTER NOW CONTINUE READING →

Published on:

26 May 2020

See how JMBM’s Global Hospitality Group® can help you.

Meet the Money® Online: State of the Hospitality Industry

More than 1,100 people registered for last week’s Meet the Money Online webinar, “The State of the Hospitality Industry”.

If you weren’t one of them and would like to watch the full hour-long webinar, you can find it here, on the Resource Center page of HotelLawyer.com.

Also on the Resource Center page you can find the thought-provoking presentations made by our expert panelists:

U.S. Hotel Overview
Vail Ross of Senior VP, Global Business Development & Marketing, STR presented noteworthy statistics on the state of the hotel industry and the impact that Covid-19 has had on construction.

U.S. Hotel Outlook: Navigating the Storm
Jamie Lane, Senior Director, Economics & Forecasting, CBRE, examines the economic outlook for the U.S. and what it means for lodging. His presentation includes assumptions, updated CBRE forecasts and differences in recovery timing by chain scale and markets.

State of the Hospitality Industry Today: Hotel Values and Cap Rates
Suzanne Mellen, Senior Managing Director, HVS, reviews how hotels are being valued in this uncertain economic environment and when hotel values will recover to pre-Covid levels.

U.S. Lodging Industry 2020. COVID-19: Shocking Unprecedented Downturn
Daniel Lesser, President & CEO, LW Hospitality Advisors, explores long term sector paradigm shifts and where the lodging industry will go after hitting rock bottom.

We missed gathering in person with all our industry friends for what would have marked the 30th year of Meet the Money® the national hotel investment and finance conference.  However, through Meet the Money Online and the Hotel Law Blog, we will continue to provide the industry with research, analysis and insight, and most importantly our take on “what it all means” as we move forward into economic recovery.

CONTINUE READING →

Published on:

19 May 2020

 

Click to see our category-killer experience with hotels, and click here for the latest articles on Labor & Employment.

Hotel Lawyer on opening our country back up — California update

As California lawmakers release new guidance on easing stay-at-home restrictions, many employers are wondering how they can safely begin to reopen their businesses. In their latest update, JMBM’s Labor & Employment Group discuss the four phases of reopening and what employers can expect as they implement new workplace requirements. – Jim

California Employers’ Road Map to Reopening the Physical Workplace
by
Marta Fernandez

In only two months, California employers have experienced an unprecedented disruption to business and the adoption and implementation of myriad new laws aimed at remedying the economic effects of COVID-19 and limiting its spread. But even now, as California lawmakers from the Governor to local mayors agree that it is time for California to get back to doing business, there is great uncertainty as to when and how this can safely occur.

The process will obviously be gradual and subject to reversal at any time.  Business operations will eventually return to full capacity, but the workplace will be different for months, if not years, to come as a result of new laws and the nature of the pandemic crisis itself.

When it comes to employee matters, how can an employer best develop a plan to navigate the uncertainty of emergency orders restricting operations, new laws and regulations, and an entirely new business environment?

We suggest that employers work with their professionals to implement their own four phase plan:

  1. Determine when your business can lawfully reopen and to what extent
  2. Assess how the timing of bringing employees back affects the risks and costs associated with reopening your business
  3. Identify any limitations on your discretion to choose which employees to bring back and when
  4. Understand new workplace requirements and create systems to implement them

Read the full alert here for a discussion of all four phases.

Online Resources

CONTINUE READING →

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