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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:

 
26 January 2018

If you are a hotel executive or other highly compensated individual in the hospitality industry, you need to be aware of how the new Tax Act (H.R. 1 – Tax Cuts and Jobs Act) might affect your estate plan. In some cases, the impact will be significant. In the brief article below, JMBM’s tax attorneys recommend that you review your existing estate plan to ensure that the Tax Act does not alter your plan’s original intentions. They also point to substantial new planning opportunities provided by the Tax Act, and you will want to be advised of those, as well. What better way to start the new year than by making sure your assets, and your family’s future, are protected?

How the New Tax Act Could Affect Your Estate Plan

President Trump signed into law H.R. 1, which has a major impact on estate planning. The new law doubled the federal exemption for estate tax, gift tax and the tax on generation-skipping transfers (GST), starting January 1, 2018; the lifetime exemption for each of these taxes is now $11.2 million per taxpayer. Married couples together have a total of $22.4 million of lifetime exemption. The exemptions are reduced by lifetime transfers prior to 2018 and are indexed for future inflation. The annual gift tax exclusion amount also increased to $15,000 per donee per year.

The increased gift, estate and GST tax exemptions are not permanent. This part of the Tax Act is scheduled to expire in 2026 and return to the prior exemption amounts ($5.6 million plus inflation after 2018). Changes in control of Congress and the Presidency could also terminate the increased exemptions. While it may make sense for some clients to take advantage of the increased exemptions to engage in additional estate planning, there is also a potential risk that the new exemptions will unintentionally alter existing estate plans, requiring important immediate changes.

As the increased exemptions may significantly skew a client’s existing estate plan, it is important for all clients to review their estate planning documents to make sure they continue to reflect their intentions. Many estate plans for married couples use a formula to divide assets at the first death between a “marital” portion passing to or held in a trust for the surviving spouse and a “bypass” portion intended to bypass the estate of the surviving spouse. The bypass portion may be allocated to a trust for the surviving spouse and/or descendants. It may also be allocated directly to descendants, skipping the surviving spouse entirely, or may provide fewer benefits to the surviving spouse than the marital trust. Similarly, at the second death, the estate plan may have a formula dividing assets, based on the GST exemption, between children and grandchildren.

Depending on the exact language of the document, these divisions may be very different now because of the larger exemptions. For some clients, the new division will be acceptable. For others, it will be important to update the language of their estate planning documents to avoid a sharp reduction in what the surviving spouse receives and what the children and grandchildren receive.

Clients may also want to take advantage of the opportunity to pass larger portions of their wealth to younger family members at minimal tax cost, through lifetime gifts and other traditional wealth transfer techniques.

The estate, gift and GST provisions of the new Tax Act present substantial new planning opportunities. They also have a potentially significant impact on existing estate plans. Clients need to review their existing documents to determine this impact. We are ready to help you with all aspects of this analysis and to advise you on the various available alternatives.

About JMBM’s Taxation, Trusts & Estates Group

JMBM’s Taxation, Trusts & Estates Group is one of the largest and most active groups of its kind within a full-service law firm. Recognized by U.S. News & World Report / Best Law Firms® with a First-Tier ranking in the Los Angeles metropolitan area, our practice focuses on the needs of individuals and families, and their business interests. Our attorneys provide estate planning, wealth transfer planning, trust administration and the resolution of trust disputes. Our tax lawyers understand business concerns, and work closely with colleagues in the Firm’s corporate and real estate groups to ensure the tax efficiency of organizational and transactional decisions.


This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. Please contact us if you would like to discuss any issues that affect your hotel interests or see how our experience might help you create value and avoid unnecessary pitfalls. Who’s your hotel lawyer?


Picture of Jim ButlerJim Butler is a founder of the JMBM law firm and chairman of its Real Estate Department. He founded and chairs the Firm’s Global Hospitality Group® and its EB-5 Finance Group which provide business and legal advice to owners, developers and investors of commercial real estate, particularly hotels, resorts, restaurants, spas and senior living. This advice covers purchase, sale, development, financing, franchise, management, labor & employment, litigation, ADA, IP, and EB-5 matters for such properties.

Jim is recognized as one of the top hotel lawyers in the world and has led the Global Hospitality Group® in more than $71 billion of hotel transactions and more than 3,800 hotel properties located around the globe. They have helped clients with more than 1,000 hotel management agreements, 1,000 hotel franchise agreements and more than 100 hotel mixed-use projects.

JMBM’s EB-5 Finance Group has advised on more than 100 EB-5 projects, closed more than $1.5 billion of EB-5 financing, and sourced more than half of that for our clients. EB-5 Investors Magazine named Jim one of the top 25 EB-5 lawyers in the United States, and Jim serves on the Public Policy Committee of the IIUSA, the EB-5 industry’s trade group for regional centers.

Contact Jim at +1-310-201-3526 or JButler@jmbm.com


Hotels we have worked on over the years. Visit our hotel photo gallery to see some of the more than 3,800 properties around the globe that the hotel lawyers of the Global Hospitality Group® have been involved with, on behalf of our clients. For a more comprehensive list of hotels properties and projects we have worked on, see our Credentials.

Published on:

 
22 January 2018

Protecting guests’ information (and employees’ information) from hackers is one of the biggest business challenges faced by hotel owners today. Data breaches can result in loss of reputation and loss of revenue, and can trigger costly lawsuits and government investigations.

In his earlier article, Not Just Heads in Beds – Cybersecurity for Hotel Owners, my partner Robert Braun reminds hotel owners that they are generally required to indemnify brands and managers for costs incurred, which could include the cost of a data breach. Now, in his article below, he discusses why hotel data breaches are prevalent and what owners need to do to create a secure data environment for the properties they own.

Cyberattacks on Hotels — What Should Hotel Owners and Operators Do?
by
Robert E. Braun, Hotel Lawyer

This article was originally published by Hotel Business Review and is reprinted with permission from www.hotelexecutive.com.

Almost as soon as there were data breaches, hotels became a prime target of hackers, and the hospitality industry has consistently been one of the most commonly targeted businesses. Since 2010, hotel properties ranging from major multinational corporations to single location hotels have been impacted.

The recent report that Hyatt Hotels was a victim for the second time in as many years has raised more concerns about the industry’s ability to address cybersecurity. While consumers are so used to receiving breach notices that “breach fatigue” has set in, the second successful attack on Hyatt is sure to raise the eyebrows of regulators, plaintiffs’ lawyers, and guests. The data breach will affect the loyalty, trust and consumer perception of all Hyatt Hotels guests. So how can hotels prove to guests that they are safe and trustworthy?

“While the company claims that it has implemented additional security measures to strengthen the security of its systems, no explanation was given as to why these additional measures were not implemented after the first attack,” said Robert Cattanach of Dorsey & Whitney. “Estimates of actual harm have yet to be provided, which is typically the weak spot of any attempted class action, but the liability exposure seems problematic regardless.”

Hyatt is in no way alone. On November 2, 2017, the BBC reported that Hilton was fined $700,000 for “mishandling” two data breaches in 2014 and 2015. The attorneys general of New York and Vermont said Hilton took too long to inform their guests about the breaches and the hotels “lacked adequate security measures.” Hilton discovered the first of the two breaches in February 2015 and the second in July 2015, according to the article, but the company only went public with the breaches in November 2015. The company has said there is no evidence any of the data accessed was stolen, but the attorneys general said the tools used in the data breaches made it impossible to determine what was done.   Read More

 

Bob BraunBob Braun is a Senior Member of JMBM’s Global Hospitality Group® and is Co-Chair of the Firm’s Cybersecurity & Privacy Group. Bob has more than 20 years experience in representing hotel owners and developers in their contracts, relationships and disputes with hotel managers, licensors, franchisors and brands, and has negotiated hundreds of hotel management and franchise agreements. His practice includes experience with virtually every significant hotel brand and manager.

Bob also advises clients on condo hotel securities issues and many transactional matters, including entity formation, financing, and joint ventures, and works with companies on their data technology, privacy and security matters. These include software licensing, cloud computing, e-commerce, data processing and outsourcing agreements for the hospitality industry.

In addition, Bob is a frequent lecturer as an expert in technology, privacy and data security issues, and is one of only two attorneys in the 2015 listing of SuperLawyers to be recognized for expertise in Information Technology. Bob is on the Advisory Board of the Information Systems Security Association, Los Angeles chapter, and a member of the International Association of Privacy Professionals. Contact Bob Braun at 310.785.5331 or rbraun@jmbm.com.


This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. Please contact us if you would like to discuss any issues or development that affect your hotel interests. We would like to see if our experience might help you create value or avoid unnecessary pitfalls. Who’s your hotel lawyer?


Picture of Jim ButlerJim Butler is a founding partner of JMBM and JMBM’s Global Hospitality Group® which provides business and legal advice to hotel owners, developers and investors. This advice covers hotel purchase, sale, development, financing, franchise, management, labor & employment, litigation, ADA, IP, EB-5 matters any many other areas.

Jim is recognized as one of the top hotel lawyers in the world and has led the Global Hospitality Group® in more than $71 billion of hotel transactions and more than 3,800 hotel properties located around the globe.

Jim’s group has advised on more than 100 EB-5 projects, closed more than $1.5 billion of EB-5 financing, and sourced more than half of that for our clients.

Contact Jim at +1-310.201-3526 or JButler@jmbm.com

Published on:

12 December 2017

California has enacted a number of new regulations related to labor and employment that go into effect when 2018 begins. Hotels owners and developers with properties in California need to be aware of how these rules apply to their workforce so they can meet their legal obligations and remain in compliance with the law. A round-up of upcoming changes, written by the JMBM Labor & Employment group, is below.

California Labor & Employment Law Update: Key Changes in 2017 and What’s Slated For 2018
by
The JMBM Labor & Employment Group

The legal landscape for California employers continues to evolve at the state and local level – ranging from prohibitions on inquiries into an applicant’s salary and conviction history, additional sexual harassment training requirements, to new immigration obligations.  The following is a high-level summary of the most significant changes in state and local labor and employment laws, which go into effect on January 1, 2018, unless otherwise noted.

EXPANDING POWERS OF THE DEPARTMENT OF LABOR STANDARDS (DLSE)

DLSE can now independently commence investigations; petition for injunctive relief; and issue citations for suspected discrimination or retaliation based on a wage claim (SB 306). 

The DLSE has new powers starting January 1, 2018. With SB 306, the DLSE will now be authorized to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of DSLE investigations. The new law also authorizes the DLSE to petition a superior court for immediate injunctive relief based on a finding of reasonable cause. Such relief can include a court order that the employer reinstate employment or otherwise reverse its alleged retaliatory action against the employee. This is a huge departure from existing law which does not allow for the DLSE to seek this type of relief during an investigation.

The new law also authorizes the DLSE to issue citations directing specific relief to persons determined to be responsible for violations.  The law establishes review procedures, including procedures for requesting a hearing before a hearing officer, and for a petition for a writ of mandate.  The law subjects an employer who willfully refuses to comply with a final order to civil penalties payable to the affected employee.  The law also allows employees to seek injunctive relief in court.

Contractors can now be directly liable for wage claims against subcontractors (AB 1701).

On or after January 1, 2018, a direct contractor which undertakes a contract in the state for “the erection, construction, alteration, or repair of a building, structure, or other work,” must assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier.  The DLSE is authorized to bring an action to enforce this liability.  It authorizes private civil actions to enforce the liability against a direct contractor.  The new law does not apply to any work being done by an employee of the state or any political subdivision of the state.  It requires a subcontractor, upon request from the direct contractor, to provide specified information regarding the subcontractor’s and third party’s work on the project and allows the direct to withhold disputed sums upon the subcontractor’s failure to provide the requested information. CONTINUE READING →

Published on:

20 November 2017

JMBM’s ADA Compliance and Defense team, led by my partner Marty Orlick, continues to help hotels and other businesses achieve compliance under the Americans With Disabilities Act (ADA), and is actively defending numerous ADA lawsuits brought against our clients.

Today, he shares one of the stranger tales of serial ADA litigation and describes how the judicial system in New Mexico stopped the plaintiff and her lawyer from filing frivolous and malicious ADA lawsuits.

New Mexico Judge Dismisses 99 ADA Lawsuits as Fraudulent and Malicious
Entertains Sanction Motions
by
Martin H. Orlick, Chair, JMBM’s ADA Compliance & Defense Group

On October 26, 2017, a judge dismissed 99 ADA lawsuits, ordered an in forma pauperis plaintiff  (a person without funds to pursue the cost of a lawsuit) to pay filing fees of $38,300 and authorized the defendants to file fee and sanction motions.

Surely, this plaintiff’s lawyer rues the day she answered an ad on Craigslist looking for a civil rights lawyer to file ADA litigation in her jurisdiction.

What’s going on?

A Strange Set of Circumstances

The Arizona-based organization, Litigation Management and Financial Services, Inc. (LMFS), a descendant of the notorious ADA plaintiffs’ group Advocates for Individuals with Disabilities, used Craigslist, indeed.com and other online media to find and engage disabled plaintiffs to file ADA lawsuits, and lawyers to represent them. The online advertisements resulted in hundreds of ADA lawsuits filed against businesses in New Mexico, Nevada, Colorado and Utah.

It is also how a disabled plaintiff and her lawyer came to file 99 ADA lawsuits in New Mexico, alleging each defendant’s business violated the ADA and related anti-discrimination laws.  According to court documents, the deal LMFS made with this plaintiff and her counsel, worked like this:

  • The plaintiff was paid $50.00 per lawsuit filed.
  • The plaintiff’s counsel received $100 per filing for serving as counsel of record for each lawsuit filed.
  • LMFS drafted all pleadings and defended any motion practice in exchange for the lion’s share of any settlements that resulted from the lawsuits.
  • LMFS also arranged for a driver to take the plaintiff to some — but apparently not all — of the businesses that were sued, for a photo-op.

CONTINUE READING →

Published on:

17 November 2017

We are saddened to learn of the death of Jerry Merkin, former publisher of Hotel Management and a well-known and admired industry leader. Jerry’s long career in hospitality helped shaped the industry and the careers of those who had the good fortune to get to know him. We will miss him.

The Merkin family is in our thoughts and prayers.

Information about Jerry’s life, career, and donations are available in the news release, below.

Hotel Industry Icon Publisher, Jerry Merkin, Passes Away at 85

New York, NY, November 17, 2017—Hotel industry publisher Jerry Merkin, an industry icon for more than four decades, passed away at 85 earlier this week following an extended illness. He is survived by his children, Joan and David.

Merkin spent his entire career in publishing, most of which was covering the hotel industry, first as publisher of Hotel & Motel Management, now Hotel Management, and in 1992 as founder/publisher of Hotel Business. Both publications continue to be industry leaders. He is a recipient of the Lodging Conference Above and Beyond Award.

“In 1989, Jerry was one of the first to join the newly formed board of directors of AAHOA,” said Mike Leven, retired president of Las Vegas Sands and founding father of AAHOA. “He was a champion of human rights and contributed mightily to the successful effort to free so many from discrimination and injustice. His life was a model to be admired and honored.”

“I am deeply saddened by the loss of my dear friend and colleague Jerry Merkin,” said Steven Belmonte, CEO, Vimana Franchise Systems, LLC. “Our industry has truly lost one of the good ones. I can sum up Jerry in three simple words… kind, gentle, and honorable. I will always remember Jerry walking around the various hotel conference floors with a giant stack of Hotel Business magazines under his arm. I remember I advertised in his very first issue. I don’t believe that magazine would be here today if it weren’t for Jerry, his passion, and his love of the industry. I have known him for over 25 years and I never saw him do anything that wasn’t good, helpful and meaningful.”

“After his family, hotels were Jerry’s life,” said Stacy Silver, president of Silver Hospitality Group and former publisher of Hotel Business. “He was a true mentor to me and shared his passion for the industry and news on a daily basis. He taught me that selling is not a business, but an art and our job was to understand a client’s needs and help them be successful. If you were able to do that, then they will want to do business with you and that is true success. He will be greatly missed.”

In lieu of flowers, donations may be made by check payable to New York University, indicating that the donation is in Mr. Merkin’s honor. Please mail checks to:

Reshma Persaud
In honor of Jerry Merkin
New York University
Office of University Development
25 West Fourth Street, Room 334
New York, NY 10012


Picture of Jim ButlerJim Butler is a founder of the JMBM law firm and chairman of its Real Estate Department. He founded and chairs the Firm’s Global Hospitality Group® and its EB-5 Finance Group which provide business and legal advice to owners, developers and investors of commercial real estate, particularly hotels, resorts, restaurants, spas and senior living. This advice covers purchase, sale, development, financing, franchise, management, labor & employment, litigation, ADA, IP, and EB-5 matters for such properties.

Jim is recognized as one of the top hotel lawyers in the world and has led the Global Hospitality Group® in more than $71 billion of hotel transactions and more than 3,800 hotel properties located around the globe. They have helped clients with more than 1,000 hotel management agreements, 1,000 hotel franchise agreements and more than 100 hotel mixed-use projects.

JMBM’s EB-5 Finance Group has advised on more than 100 EB-5 projects, closed more than $1.5 billion of EB-5 financing, and sourced more than half of that for our clients. EB-5 Investors Magazine named Jim one of the top 25 EB-5 lawyers in the United States, and Jim serves on the Public Policy Committee of the IIUSA, the EB-5 industry’s trade group for regional centers.

Contact Jim at +1-310-201-3526 or JButler@jmbm.com

Published on:

 
25 October 2017
Click here for the latest articles on Data Technology, Privacy & Security

Cybersecurity breaches and risk management continue to be a concern for businesses of all sizes and types. A recent warning distributed by the U.S. Department of Homeland Security and the FBI regarding targeted hacks in several critical industries is an illustration that anyone can be vulnerable such tactics, including the hospitality industry. My partner Bob Braun, senior member of JMBM’s Global Hospitality Group® and co-chair of JMBM’s Cybersecurity and Privacy Group, summarizes the recent report and its conclusions below.

Homeland Security Warns Against
Threats to US Infrastructure
by
Robert E. Braun

The Department of Homeland Security and Federal Bureau of Investigation distributed an email warning late on Friday, October 20, 2017, that the nuclear, energy, aviation, water and critical manufacturing industries have been targeted along with government entities in attacks dating back to at least May. In particular, the agencies reported that hackers had compromised some targeted networks, but did not identify specific victims or provide other details.

While the report focused on threats to nuclear and conventional power, water, and other infrastructure, the very fact that the DHS and the FBI chose to make a public statement highlights how important the issue is to all industries, and the concern that an attack on infrastructure could have a devastating impact on all aspects of the American economy.

The report noted that, as in many malware attacks, hackers seek to compromise networks with “spear phishing” – emails tailored to reach specific individuals – with malicious attachments and tainted websites with a goal of obtaining credentials that allow the hackers to access computer networks. CONTINUE READING →

Published on:

 
12 October 2017
Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Resort Fee issue, please do NOT contact us! We do not represent consumers with complaints against hotels. We are part of the fabric of the hotel industry and are committed to informing, educating and assisting players in the hotel industry.

What does the FTC say is your potential liability for mandatory hotel charges?

In evaluating what you should do about the new furor over mandatory hotel charges, it would be helpful to have a clearer understanding of what the FTC seems to be saying on the issue. The chart below is our translation into “street English” of the FTC pronouncements discussed earlier. (See How Resort Fees became an explosive $2.7 billion issue which contains links to the original FTC press release of November 29, 2012 and the most recent FTC Economic Analysis of Hotel Resort Fees of January 2017.)

We believe we understand what the FTC is saying. We may not agree with it. We do not know whether the Trump administration will rein in the FTC on its perceived mission regarding resort fees, and we do not know whether the current FTC position will be upheld as a valid interpretation of the law. However, courts normally accord great deference to the interpretation of agencies charged with administering their laws, and it is imprudent to ignore the FTC’s recent actions.

In weighing options, even if they ultimately win on legal issues, hoteliers should also consider the negative effects of litigation — including direct costs in terms of legal fees, senior management time, and good will. And there are a number of worrisome plaintiffs who may pursue the issue, including the FTC, State Attorneys General, other governmental and consumer groups, and class action plaintiffs’ lawyers. Any victories by the hotel industry may be largely offset by the costs to obtain them.

So what are your options on mandatory Resort Fees?

The basic thrust of the actions by the FTC, the investigation by the State Attorneys General and most consumer class action suits is that it is a deceptive and misleading business practice for hotels to advertise their room rate online unless the first and most prominent price given includes all mandatory Resort Fees and other charges. They say that it is not sufficient to give the room rate and then have a less prominent disclosure of additional charges. CONTINUE READING →

Published on:

 
9 October 2017

It is budget season again — that time when operators and owners sit down to agree on the financial blueprint for the next year. My partner Bob Braun has worked on many hundreds of hotel management agreements and issues arising under them. Today, he shares some insights about the how to maximize the budget opportunity for constructive dialog between owners and operators.

It’s Budget Season
What are you doing about it?
by
Robert E. Braun, Hotel Lawyer

Importance of budgets

It’s hard to overstate the importance of a budget in the relationship between a hotel manager and owner. The budget is the way that a manager describes, in black and white, how it plans to operate the owner’s property; it is the document that translates operating standards into action, and how the owner can expect to profit from the manager’s efforts. It is also an important opportunity to be sure that the operator is giving due consideration to the owner’s financial expectations and/or exit strategies.

Many of the larger independent management companies present a budget with little opportunity for dialog. In significant part, they diminish the direct impact of asset and property management teams. This means people sitting in an office 3,000 miles away make key budget decisions for properties that they have not seen or on markets they have not visited, based on STR reports and raw data. Generally, one would think that the property-level asset management team would be the best to guide the budget process because of their hands-on knowledge – not the corporate budgeting team.

Budget challenges owners face

Unless owners have a wealth of operating experience or hire experienced asset managers, they will likely be at a severe disadvantage when they review budgets. Consider typical challenges of the budget timing and process:

  • Managers typically deliver budgets to owners in early- to mid-November, which leaves only 45 to 60 days before the beginning of the new fiscal year. While an owner may be able to analyze and comment on the budget and propose changes, the process itself is lengthy and makes it difficult to complete in a timely manner. Operators have scheduling conflicts during that busy period, and typically take two to three weeks, or more, to prepare a response for the owner’s review. Managers work on budgets almost year-round, and larger management companies have staffs that are dedicated solely to creating budgets. They have developed expertise in creating a budget that owners can only match by expending the necessary time and expertise, which takes a commitment that many owners don’t understand; after all, didn’t they already engage a manager for its expertise?
  • No matter the level of owner approval rights – which range from what might be complete control to very limited influence – managers run the budget process and establish the assumptions underlying the budget, making it difficult to make changes. Leveling the playing field requires owners to engage asset managers to conduct a “shadow” budgeting process.
  • The budget for any single year will impact budgets for years to come. While budgets are generally “zero-based,” a budget for any given year is more realistically derived from the budget for the prior year, and budgets ultimately contain a variety of “legacy” items. While the old budget should, reasonably, provide a setting for the new budget, a variety of factors should (but often don’t) get adequate consideration, including new labor agreements or laws, renovations and their implications, new supply, addition of new product internally (such as restaurants or bars), and outside influences, such as changes in the convention market and other drivers for the hotel market.
  • Operators rarely provide great detail on the most significant cost to owners – labor expenses – and therefore do not give owners the opportunity to identify potential savings. Similarly, operators often give greater weight to occupancy than rate, which may actually reduce the profitability of a hotel.

CONTINUE READING →

Published on:

 
06 October 2017
Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Resort Fee issue, please do NOT contact us! We do not represent consumers with complaints against hotels. We are part of the fabric of the hotel industry and are committed to informing, educating and assisting players in the hotel industry.

Resort Fees are a $2.7 billion issue — a juicy target for Federal and State governments as well as plaintiffs’ lawyers

It is very likely that the Resort Fee issue will present challenges in the near future to all stakeholders in the hospitality industry. The prior articles in this series talked about what Resort Fees are, and key developments that warn of an eruption of government and private claims over Resort Fees.

This article provides a brief history of how Resort Fees have grown to be a $2.7 billion a year issue in an emotionally charged dispute between antagonists. We think this background is important for the correct analysis of problems and solutions involved with Resort Fees.

Dangerous misconception about drip pricing for Resort Fees

The emergence of Resort Fees and the government’s failure to take action for many years has apparently led to a dangerous misconception, at least in light of fast-unfolding events. This misconception is that it is OK to advertise room rates (without the Resort Fee) on your website, as long as the Resort Fee is disclosed somewhere — in the fine print or otherwise — before the consumer books the purchase. Some would argue that this was never OK, but recent developments make this a perilous position. This is not OK according to the FTC 2017 Report and other consumer groups. (see the previous article regarding the eruption of government and private claims over Resort Fees)

Early rumblings.

Hotels have charged various service fees for decades. We found references to Resort Fees in 1997. In 2001, a class action lawsuit was filed against Hilton, Hyatt, and Starwood for imposing mandatory “energy surcharges” to guest bills. In 2006, Wyndham settled an action by the Florida Attorney General over undisclosed automatic surcharges under investigation since 2001. In 2012, the FTC took a series of actions described below in response to consumer complaints of mandatory fees and drip pricing.

Big tremors.

On November 28, 2012, the FTC published a press release about a formal warning it had issued to 22 hotel operators notifying them that their pricing may violate section 5 of the FTC Act as fraudulent, deceptive and misleading business practices. The warning letter noted that price quotes for room rates without mandatory fees sometimes had footnotes or separate disclosure of the additional fees, but suggested that this treatment might be inadequate. The letter said, “These practices may violate the law by misrepresenting the price consumers can expect to pay for their hotel rooms.” CONTINUE READING →

Published on:

 
03 October 2017
Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Resort Fee issue, please do NOT contact us! We do not represent consumers with complaints against hotels. We are part of the fabric of the hotel industry and are committed to informing, educating and assisting players in the hotel industry.

Resort Fees: It is not just the FTC. Now there are 47 Attorneys General focused going after perceived abuses of Resort Fees

Consumer complaints have been protesting Resort Fees for almost two decades. In 2012, the FTC took its first major action. The hotel industry took some action, but many consumer groups and regulators apparently don’t think it is enough.

In May 2016, a national investigation was initiated by the Attorneys General of 46 states and the District of Columbia as to whether DC’s Consumer Protection Procedures Act (the “CPPA”) and similar acts of other states have been violated by deceptive price advertising techniques related to drip pricing regarding Resort Fees.

On June 7, 2017, the Attorney General for the District of Columbia (joined by the other 46 states) filed an action against Marriott to enforce subpoenas related to this investigation, and we are now aware that a number of owners, operators, and brands are receiving subpoenas or inquiries from other State Attorneys General relating to this task force’s nationwide investigation.

The rhetoric in the papers filed by the DC Attorney General is predictable: The FTC issued warnings about drip pricing in the hotel industry in 2012. Despite national criticism of the practice and consumer complaints, it appears the practices have continued.

Click here to read the papers in the lawsuit in DC v Marriott filed June 7, 2017.

What is your action plan for compliance and defense of Resort Fee litigation?

If you don’t have an action plan now, you should get started before you are served with a subpoena or complaint. We expect a flurry in the near future and are already assisting clients in dealing with a broad range of Resort Fee strategies and assessments.

Why do something NOW? Here is why. This is serious! CONTINUE READING →