Recently, a Chinese government delegation visited Jeffer Mangels Butler & Mitchell LLP. The delegation included some of the highest-ranking officials from a top Chinese government agency – “China State Administration of Foreign Exchange” – an agency that directly oversees the investment of $3 trillion of China’s foreign reserve. CONTINUE READING →
19 September 2017
As of January 1, 2018 owners of General Partnerships, Limited Partnerships or multi-member Limited Liability Companies may soon find themselves economically liable for the unpaid tax of former partners/members of those entities. JMBM Tax Attorney Jamie Ogden briefly describes the new audit regime, who it affects, and what you need to do to protect yourself from uncertainties.
Important tax news for owners of
Partnerships and LLCs
Jamie Ogden, Tax Lawyer
On June 13, 2017, the Treasury Department republished Proposed Treasury Regulations regarding the new partnership audit regime enacted as part of the Bipartisan Budget Act of 2015. Generally, the new partnership audit rules will be effective January 1, 2018.
As a result of the new partnership audit regime: (1) individuals and/or entities that were formerly owners of General Partnerships, Limited Partnerships and multi-member Limited Liability Companies (together “Partnerships”) during prior, audited tax years may escape liability for unpaid tax, and correspondingly (2) the existing owners of such Partnership (i.e., the owners of the Partnership at the time of the IRS collection process) will bear the economic burden entirely. Thus, in the absence of properly drafted Partnership and Operating Agreements, any existing owner of a Partnership may be economically liable for the unpaid tax of former partners/members of the Partnership. It is therefore critical that Partnerships and their owners review and modify their existing partnership and operating agreements immediately. CONTINUE READING →
10 May 2017
Hotel Real Estate: Forecasting Clear Skies with Some Clouds and Slightly Cooling Temperatures
For well over a decade, the members of the hotel industry’s preeminent think tank, “LIIC – The Lodging Industry Investment Council,” are annually surveyed to develop a list of the major hotel investment opportunities and challenges for the coming year. This exhaustive survey results in the LIIC Top Ten; a highly regarded profile of investment sentiment and attitudes for the lodging industry for the forthcoming 12 months. Altogether, the members of LIIC represent direct acquisition and disposition control of well over $40 billion of lodging real estate.
Members are highly active and have the pulse of the market, with 45% of LIIC hotel investors having successfully purchased a hotel in the last 12 months and an additional 16% having made offers but not been the winner. Moreover, 76% plan to sell a hotel over the next 24 months.
The hospitality industry’s most influential investors, lenders, corporate real estate executives, REIT’s, public hotel companies, brokers and significant lodging equity sources are represented on the Council. LIIC serves as the leading industry think tank for the lodging business (www.liic.org).
Mike Cahill, LIIC co-chairman, produced this year’s survey (www.mikecahill.com). Mr. Cahill is CEO and Founder of HREC – Hospitality Real Estate Counselors, a leading international hotel and casino brokerage and advisory firm (16 offices nationwide) specializing in lodging property sales, debt financing, consulting, appraisals and litigation support (www.hrec.com). Nate Shartar and Alexander Cammarata, Associates in HREC’s Denver office, assisted throughout the process.
- Hotel Real Estate: Forecasting Clear Skies with Some Clouds and Slightly Cooling Temperatures: Overall, the 2017 LIIC Survey is more positive than 2016 and starkly different than the peak year survey in 2015. Responses reveal a calmness, compared with wide spread nervousness in April 2016. Chinese investment is expected (36%) to slow slightly and Brexit’s impact on US hotels is considered slight. Private Equity followed by Listed REITs are predicted to dominate the purchase of Upscale to Luxury hotels; while, Regional Owner/Operators are projected to dominate the purchase of Economy to Upper Midscale hotels.
- Movement in the Hotel Real Estate Cycle?: Most investors (68%) believe we are still in the extra innings of the current cycle which began in 2009; however, an astute, highly intelligent minority (32%) believe we have begun a new cycle. Projections for the US economy are positive, with 60% forecasting GDP growth averaging greater than 2% over the next 24 months.
- Asset Pricing Bid/Ask Settles, Values Flat to Maybe Increasing: Over the next 12 months, 54% project that lodging real estate values will be flat in comparison to 2016. However, a sizable group (36%) forecast a slight increase in values (up to 5%). Favorite investment target, Upper Upscale lodging properties.
- 2017’s Greatest Threats to Hotel Investment?: The top three threats on the horizon:
- New Lodging Supply: 90% of LIIC members cited new hotel supply as the current and dominant top investment concern. Hypocritically, 81% are building new lodging assets.
- Increasing Interest Rates: With interest rates increasing gradually up to 100bps over the next 24 months, sellers need to understand the impact on asset pricing for hotels they are looking to sell.
- Government Mandated Minimum Wage Increases: Investors (28%; down from last year) are threatened by government mandated minimum wage increases and the corresponding impact on hotel operating costs (74% anticipate a gradual negative impact over the next five years).
- Hotel Transaction Market Continues Slight Cooling: 52% of responders forecast the total dollar volume of U.S. hotel transactions in calendar 2017 will be down relative to year-end 2016 and 22% believe volume will be flat. Similarly, 46% believe the number of assets sold to be down; while, 32% anticipate the number of assets sold to be flat.
- Hotel Debt Available, Yet Less Favorable: Hotel investors are “debt leery” causing 56% to seek refinancing of existing debt over the coming year even though 52% believe the optimum refinance window closed in the last six months. Owners have more concern with interest rate increases on senior debt than lender’s available leverage percentages.
- Lodging Development Marches Along: Investor attitude stays positive on the concept of building new lodging properties. As to developing hotels, 66% of LIIC responds “yes, if you are selective about product and markets”. Respondents are putting their money behind their votes, with 81% of relevant LIIC members having new hotels actively under development.
- Want to Buy a Hotel? Quantity and Quality: Quantity: 42% of investors believe that a “below average quantity” of hotels are available for purchase closely followed by 44% at “average quantity.” Quality (desirability to purchase): 52% believe the quality is average and 28% suggest negatively “slightly worse than 2016”.
- Markets NOT to Invest in?: LIIC members were asked which of the top 25 markets they “would not consider buying a hotel” in: Houston, TX (64%), Nashville, TN (32%), Detroit, MI (28%), New York, NY (28%), St. Louis, MO-IL (28%)Sleeper – where to buy? New Orleans! Not one vote against recorded.
- Marriott and Starwood Merger? If you own a Starwood branded hotel, 36% surprisingly believe the value of Starwood lodging investments have increased specifically due to the merger. On the other hand, the primary concern (22%) stressing hotel owners is decreasing negotiating leverage with Mega Marriott going forward.
10 January 2017
I have often mentioned how much I enjoy working with all my friends and colleagues in the hospitality industry. I am also fortunate to work with the talented, committed group of lawyers who comprise Global Hospitality Group®. It is with pleasure that I let you know that one of our members, Brandon Chock, has been promoted to Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM).
Brandon has a keen legal mind, more than 10 years’ experience in the world of real estate, finance and hospitality, an awesome work ethic and is an all-around pleasure to work with. I love having him on my team, and our clients love him on their team, too!
Brandon has played a key role in numerous hotel transactions, including: CONTINUE READING →
27 April 2016
In Memoriam: William G. Sipple
All of us in the hospitality industry will miss the warm smile, good humor and practical insights of our colleague, Bill Sipple, who left us too soon. I am proud to have counted Bill as a good and long-time friend.
A seasoned hospitality executive, he was the consummate professional and all who worked with him in any capacity recognized the value of his leadership. It was always great working with Bill on any transaction, whichever side of the transaction he was on, but I always liked being on his side the best. His talents, focus, and energy made him one of the lights of our industry. He calmed rough waters, got deals done, and was just plain fun to spend time with.
Thanks for all you gave to our industry, Bill. Your family is in our thoughts and prayers.
22 June 2015
US Supreme Court voids Los Angeles ordinance requiring hotel operators to turn over guest records on demand
In a 5-4 opinion rendered on June 22, 2015, the United States Supreme Court held that a Los Angeles municipal code provision violates the US Constitution’s Fourth Amendment prohibition on unreasonable search and seizures. The invalidated LA Code provision requires hotel operators to make guest records available to the police upon request. This case may be significant because many cities throughout the country have similar laws, and they are now all constitutionally suspect. On the other hand, for reasons discussed below, most hotel operators will probably not care to challenge a records request, and there are expedient alternatives available to cities and police, including administrative subpoenas. See below to access the full Supreme Court opinion in City of Los Angeles v. Patel.
Read on to learn more about the Los Angeles City code’s provisions, the history of the challenge in the District Court, appeals to the Ninth Circuit, and the US Supreme Court’s decision. CONTINUE READING →
5 January 2013
Hotel Lawyer on how new privacy law enforcement may affect your mobile apps used in marketing. Hotel lawyer Robert Braun has an alert that may save you an unnecessary class action or troublesome lawsuit (or enforcement action). Although, the California Attorney General has started the furor, the impact of this approach will affect any company who deals with even one consumer in the state of California, and thus is likely to affect most of the hospitality industry in the United States, and many companies outside the US.
Here is what it is all about.
Privacy on the Move
California Imposes New Requirements
on Mobile Apps
Robert E. Braun | Hotel Lawyer
Hotel companies are actively entering the mobile application space as a means of gaining market share and solidifying guest relations. In addition to online travel agents like HotelsbyMe.com, a number of brands including Omni, Choice and Starwood have developed mobile applications. However, as mobile applications gain popularity, hotel companies should consider how privacy and security laws will impact how they can use those applications.
The California online privacy law
In 2004, California enacted the California Online Privacy Protection Act (“CalOPPA”). This law requires operators of websites and online services to “conspicuously post” privacy policies about the personal information that is collected, how the consumer can access or request changes to personal information, how the operator of the site will notify consumers of changes, and the effective date of the policy.
7 October 2012
Hotel Lawyer on hotels’ liability for failure to protect hotel guests personal identities
My partner Robert Braun advises hotel owners in a wide range of operational issues, including information management. Because of the ubiquitous use of credit cards by hotel guests during a stay, as well as the growing demand for WiFi availability, hotels have been increasingly targeted by identity thieves. In his article below, Bob explains how hotels’ liability for this new type of guest security has grown and what hotels can do to protect their guests’ identities.
Hotel Liability for Guest Information and Identity
What you need to know
Robert E. Braun | Hotel Lawyer
A version of this article was first published in the September 21, 2012 issue of Hotel Business and is reprinted with permission.
Not too long ago, keeping guest information safe was a fairly straightforward process – perhaps the most innovative development was providing an in-room safe for valuables. This approach made sense at the time, when guest security was a matter of securing people and their physical possessions.
The industry now recognizes that hotel guests have valuables to protect that go far beyond watches and wallets, or even laptops and iPads – – perhaps the most valuable information a hotel guest has is his or her identity, and unless a hotel actively safeguards it, those valuables are at risk. The ubiquity of credit card, wireless internet and other options, while essential to hotel operations, is also a source of insecurity.
24 August 2012
Hotel Lawyer on card processing fees.
The financial reforms following in the wake of the banking mess brought new regulations on the use and charges for credit and debit cards. There may be some benefits here for hoteliers, but there certainly are some decisions to make.
In addition to all the work he does on hotel management agreements and hotel franchise agreements, my partner Robert Braun represents a number of merchant card processors, banks and merchants in structuring credit card processing arrangements, both within the United States and internationally.
Today, he shares some of his insights on the recent legal changes in laws on card processing and the potential impact on the hotel industry.
Credit Card Fees and the Hospitality Industry
Impact of the Durbin Amendment
Robert E. Braun | Hotel Lawyer
Dodd-Frank affects hotels and other merchants
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 certainly sparked fierce debate about government regulation, consumer choice, innovation and entrepreneurship. The Durbin Amendment, a last-minute addition to the Dodd-Frank Act, drastically lowers swipe fees – the fee charged to merchants every time a customer pays with plastic – on debit cards issued by big banks, cutting into the banks’ revenue while, presumably, lowering costs for merchants and therefore consumers. The reduction in fees was significant: the Amendment reduced fees to 24 cents from a previous average of 43 cents, according to a Federal Reserve Board report.
17 July 2012
Hotels and restaurants are among many other businesses that monitor employees at work through video surveillance, and through employees’ use of company-issued computers and smart phones. While employers gain benefits such as reducing theft, decreasing liability and ensuring safety procedures are followed, employees can feel that this electronic monitoring violates their privacy. In his article below, Mark Adams, a litigator in JMBM’s Global Hospitality Group®, shares with us how courts are ruling in lawsuits that deal with electronic surveillance of employees. He also gives employers advice on how to prevent these lawsuits from happening.