Articles Posted in Ask the Hotel Lawyer™

Published on:

15 February 2019

$87 billion in hotel transactions involving more than 3,900 properties

LOS ANGELES—The hotel lawyers of JMBM’s Global Hospitality Group® are pleased to present their updated Hospitality Credentials, which include clients and projects that represent more than $87 billion in hotel transaction experience involving more than 3,900 properties worldwide – more than any other law firm.

“If you are a hotel owner, developer, or capital provider, our hospitality lawyers can provide expertise and experience you just won’t find elsewhere,” said Jim Butler, Chairman of JMBM’s Global Hospitality Group. “Whether you are buying or selling a hotel, developing a new one, need a privacy and cybersecurity plan, or defend an ADA lawsuit – we have lawyers who know the ropes, and can guide you every step of the way.”

JMBM’s Global Hospitality Group provides a full range of services to the hospitality industry including:

  • ADA compliance & defense
  • Cannabis
  • Celebrity chef agreements
  • Construction
  • Corporate governance
  • Cybersecurity
  • Data privacy
  • Development
  • Equity & joint ventures
  • Expert witness
  • Fiduciary duty
  • Financing
  • Foreign investment
  • Franchise & licensing
  • Hotel-specific contracts
  • Labor & employment
  • Land use & environmental
  • Leasing
  • Litigation
  • Management agreements
  • Mergers & Acquisitions
  • Opportunity Zone
  • Proposition 65
  • Purchase & sale
  • Shareholder disputes
  • Tax
  • Trademark & copyright
  • Trusts and estates
  • Union negotiations
  • Union prevention
  • Vacation ownership
  • Workouts, bankruptcies & receiverships
“Exceeding $87 billion in hotel transactions involving 3,900 properties is a new milestone, and one I am proud to announce,” said Butler. “I am grateful to all of our wonderful hospitality clients who have shown us their trust and confidence over the years and continue to provide us with challenging and meaningful work.”

About JMBM’s Global Hospitality Group
JMBM’s Global Hospitality Group is the premier hospitality practice in a full-service law firm and the most experienced legal and advisory team in the industry. The Group publishes the Hotel Law Blog and hosts the annual Meet the Money® National Hotel Finance & Investment Conference (May 6-9, 2019 in Los Angeles). For more information visit www.HotelLawyer.com.

Contact:

Jim Butler
jbutler@jmbm.com
+1 310-201-3526

Published on:

12 February 2019

Recently, my partner, Guy Maisnik, and I spoke about hotel retail mixed-use development with Kelsi Maree Borland of GlobeSt.com. Her article, Why Retail Owners Are Partnering With Hotels ran with the subtitle, With retail evolving to be more experience-driven, retail owners are finding the benefits of adding boutique hotels to shopping centers.

Retailers adding hotels to the mix is nothing new – but they may be more motivated than ever. The Hotel Law Blog has been covering hotel mixed-use projects — where the hotel provides the catalyst for social activity at shopping centers, office complexes, and residential buildings — since 2009. At that time, retail sales were suffering due to the Great Recession.

From GlobeSt.com:

“The Great Recession taught retailers that the old mantra was dead”, says Maisnik. “’If you build it, they will come’ may work in the movies but not for increasing retail sales. There were just too many stores and they were boring, outmoded and couldn’t attract shoppers. The drivers for adding hotels to retail projects have not changed in the last 10 years but the force of the drivers and their impact has increased tremendously. Failure to adopt and grow to meet consumers’ desires can be the death knell for retailers.”

Add to this the spectacular growth of online sales, which accounted for 19.1% of total retail sales in 2018, and it is no wonder that brick-and-mortar retailers are hurting. Some, like Sears and JC Penney are scrambling for survival.

From GlobeSt.com:

“To survive the challenges from online retailing, brick and mortar retail will need to create exciting environments for consumers, where art, music, events, convenience and lifestyle provide a magnet for consumers. Properly done, hotels can be an important part of creating this magic, but hotels provide new levels of complexity in mixed-use projects with their own unique norms, customs, and players.” Jim Butler

What retail properties are good candidates for a hotel, and what should owners interested in including a hotel look for?

To create a great mixed-use project, each component of the project must be strong and must be tested against the fundamentals for that type of real estate use. Just as retail developers go through their checklists to determine what will make a great retail center, if there is to be a hotel, office, entertainment, or residential component, each piece of the puzzle must be tested against its own unique criteria for success. This is particularly true for hotels which need demand, and require a rigorous feasibility analysis. CONTINUE READING →

Published on:

Chinese-Photo-1-2

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 →

Published on:

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
by
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 →

Published on:

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.

2017 Top Ten LIIC Survey Results

  1. 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.
  2. 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.
  3. 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.
  4. 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).
  5. 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.
  6. 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.
  7. 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.
  8. 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”.
  9. 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.
  10. 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.

CONTINUE READING →

Published on:

 

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 →

Published on:

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.

The Sipple family suggests donations to the Lustgarten Foundation for Pancreatic Cancer Research in lieu of flowers.

Sipple 2

CONTINUE READING →

Published on:

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 →

Published on:

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

by
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.

For companies with operations in California, that issue was highlighted on December 6, 2012, when the California Attorney General filed a lawsuit against Delta Airlines for failing to include a privacy policy with a smartphone application. The lawsuit, the first of its kind, alleges that Delta violated California law requiring online services to “conspicuously post its privacy policy” by failing to include such a policy with its “Fly Delta” mobile application.

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.

In the case of an online service, “conspicuously posting” a privacy policy requires that the policy be “reasonably accessible…for consumers of the online service.”

CONTINUE READING →

Published on:

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
by
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.

CONTINUE READING →