Articles Posted in Outlook and Trends

Published on:

08 November 2024

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

As the January 1, 2025, filing deadline for the Corporate Transparency Act (CTA) approaches, hotel owners, developers, and investors should be prepared to meet the new federal requirements for business transparency. Effective January 1, 2024, the CTA requires most U.S. business entities to submit detailed ownership information to FinCEN or face penalties up to $10,000. The article below by JMBM’s Taxation, Trusts & Estates Department outlines key CTA requirements, filing deadlines, and essential steps for compliance.

Corporate Transparency Act:
Upcoming January 1, 2025 Filing Deadline

by

JMBM’s Taxation, Trusts & Estates Department

Overview of the CTA Requirements and Compliance Obligations

The CTA, which became effective January 1, 2024, introduces extensive federal disclosure obligations for all businesses that do not qualify for an exemption, regardless of when formed. These new reporting requirements are stringent and can trigger multiple filings in a single calendar year exposing noncomplying individuals and entities to both civil and criminal penalties. Pursuant to the CTA, the Financial Crimes Enforcement Network (“FinCEN”) is authorized to collect beneficial ownership information (“BOI”) with respect to business entities (referred to as “Reporting Companies”) formed or registered to do business in the U.S. and disclose such BOI to various federal and state agencies (including the IRS).

In this regard, any Reporting Company that does not qualify for an exemption from reporting must comply with these reporting obligations irrespective of whether it existed before or after January 1, 2024. Penalties for noncompliance include fines of up to $10,000 – making early compliance essential for avoiding these penalties. CONTINUE READING →

Published on:

13 May 2024

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

In the article below, Partner Michael H. Strub, Jr., analyzes the complexities surrounding non-compete agreements and the FTC’s recent decision to ban them. With the enforceability of the FTC’s rule facing legal scrutiny, he discusses the likelihood of a cohesive federal approach and its implications for employers nationwide.

Navigating Non-Competes

by

Michael H. Strub, Jr., JMBM’s Litigation Group

The Federal Trade Commission’s rule that would ban non-competition faced legal challenges from the day it was issued. What are the obstacles the rule faces, and what is the likelihood that some form of federal rule will be created?

Before analyzing these questions, it should be noted that state laws on the enforceability of non-competes are, literally, all over the map. In his article, Fifty Ways to Leave Your Employer: Relative Enforcement of Covenants Not to Compete, 13 U. Pa. J. Bus. L., 751, 786 (2011), Norman Bishara ranked the states from 1 to 50 based on their willingness to enforce non-competes and had a separate ranking for each one. Based on his analysis, Florida is the state that has been the friendliest for enforcement, while California is the most hostile.

As Robert McAvoy notes in his article, How Can Federal Actors Compete on Noncompetes?, 126 Dick. L. Rev. 651 (2022), this panoply of laws is complicated by the employer’s efforts to use choice of law provisions to select the law of a friendly state even if the employee is employed in a state where non-competition clauses are invalid. In Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 391 (6th Cir. 2017), for example, the court enforced a non-competition clause under Michigan law against a terminated employee even though the employee worked exclusively in Louisiana, whose law would have prohibited the agreement. CONTINUE READING →

Published on:

9 May 2024
See how JMBM’s Global Hospitality Group® can help you.

The 31st edition of Meet the Money® 2024 national hotel finance and investment conference was held May 6-8 at the Los Angeles Airport Marriott. Some of the insightful presentations included observations on the current economy, insurance and investment advice tailored for hospitality, boutique hotel investment patterns, the Lodging Industry Investment Council’s Top 10, and the state of the hospitality industry in 2024.

To download these free presentations, please go to www.hotellawyer.com, click on the RESOURCE CENTER tab of the website, and then scroll down and select “Hotel Industry Publications.”

Or you can just click here to get the following presentations from the Meet the Money® conference: CONTINUE READING →

Published on:

8 May 2024
See how JMBM’s Global Hospitality Group® can help you.

Today at JMBM’s Meet the Money® national hotel finance conference, The Lodging Industry Investment Council (“LIIC”) released its much-anticipated LIIC Top Ten – the 2024 update of its an annual survey of investment sentiment survey.

LIIC — The lodging industry think tank

The members of LIIC represent the acquisition and disposition control of more than $60  billion in lodging real estate. LIIC members comprise some of the hospitality industry`s most influential investors, lenders, corporate real estate executives, REITs, public hotel companies, brokers, and advisors.

For almost 20 years, LIIC has prepared an annual survey of it members to identify their top concerns and issues affecting hotel investment. This 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.

This year`s survey was compiled by LIIC`s co-chairman, Michael Cahill. Mr. Cahill is president and founder of HREC – Hospitality Real Estate Counselors, a leading national hotel and casino advisory and brokerage firm specializing in lodging property sales, debt refinancing, consulting, and litigation support.

LIIC serves as the leading industry think tank servicing the hospitality business.

 

LIIC Top Ten

This year’s LIIC identified and provided insight on these ten elements affecting hotel investment. They are listed in reverse order of importance to the LIIC members. Click here to download the 2024 LIIC Top Ten full presentation.

  1. Hotel Guestroom Demand
  2. New Hotel Development
  3. Where NOT to Buy a Hotel, and Where to Buy a Hotel
  4. Hotel Buyers Struggling to Find Product
  5. What Do Lodging Investors Want
  6. Impact of Inflation
  7. Impact of Hotel Debt
  8. Hotel Cap Rates and Transactions Market
  9. Greatest Four Threats to Your Hotel Investment
  10. Hotel Property Investment

Overall, the report trended toward cautious optimism, especially for the recovery of corporate travel and lender activity.

You can download the full presentation here.

 

About Meet the Money®

For over 30 years, Meet the Money® has created an energetic environment to forge relationships, negotiate deals, and gain an in-depth understanding of hotel investment and finance. Our national hotel conference attracts heavy hitters and offers an opportunity for productive, one-on-one networking with them.


Picture of Jim Butler

This is Jim Butler, author of www.HotelLawBlog.com and founding partner of JMBM and JMBM’s Global Hospitality Group®. We provide business and legal advice to hotel owners, developers, independent operators, and investors. This advice covers critical hotel issues such as hotel purchase, sale, development, financing, franchise, management, ADA, and IP matters. We also have compelling experience in hotel litigation, union avoidance and union negotiations, and cybersecurity & data privacy.

JMBM’s Global Hospitality Group® has been involved in more than $125 billion of hotel transactions and more than 4,700 hotel properties located around the globe. Contact me at +1-310-201-3526 or jbutler@jmbm.com to discuss how we can help.


How can we help? Brochure Credentials Photo Gallery

 

Published on:

24 April 2024

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

The U.S. Federal Trade Commission’s recent decision to ban non-compete agreements marks a pivotal shift in employment regulations nationwide. This rule not only prohibits new agreements but also retroactively impacts existing ones. From its broad definition of “worker” to its exceptions and impending legal challenges, understanding the nuances of this rule is crucial for employers preparing for compliance. JMBM Partner Michael H. Strub, Jr. explains the implications of this landmark decision.

FTC Announces Rule Banning Non-Competes

by

Michael H. Strub, Jr., JMBM’s Litigation Group

Employers throughout the country should be aware that on April 23, 2024, the U.S. Federal Trade Commission adopted a rule that would generally prohibit non-compete provisions, which prohibit workers from accepting work in a competing business or operating a competing business. Specifically, the rule prohibits employers from entering into new non-compete provisions and acts retroactively to prohibit employers from enforcing existing ones.

The rule defines “worker” broadly, and includes, for example, independent contractors and unpaid workers.  The rule includes an exception in connection with the bona fide sale of a business and allows existing lawsuits to enforce non-compete clauses to continue. The rule also permits enforcement of existing non-compete provisions with senior executives—policy makers whose total compensation is at least $151,164 when annualized—but prohibits new ones.

The rule also requires employers to give notice of the new rule, so there will be yet another piece of paper that must be tacked to the cork board in the company kitchen. CONTINUE READING →

Published on:

26 January 2024

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

Global Hospitality Group® Chairman Jim Butler to receive [CLIC] Lifetime Achievement Award

LOS ANGELES—Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that Jim Butler, a founding partner of JMBM and chairman of the Firm’s Global Hospitality Group®, will receive the Lifetime Achievement Award at the 2024 California Lodging Investment Conference [CLIC].

“Jim was the obvious and unanimous choice to receive the third [CLIC] Lifetime Achievement Award,” said Craig Sullivan, founder/president, [CLIC] in a press release. “Not only did he co-found one of the leading hospitality law firms that has become synonymous with the industry, but he also has worked on thousands of acquisitions, sales, developments, brandings, repositionings and financings throughout his career. He has graciously taken the time to mentor new hospitality professionals, helping to make the industry a better place. For this and so many more reasons, he is the perfect recipient.”

Jim is one of the top hotel lawyers in the world, and he devotes 100% of his practice to hospitality, providing unmatched hotel business experience and practical legal advice.

Jim and his team represent lenders, owners, developers, independent management companies and capital providers on their hotel projects worldwide. The Group brings more than 30 years’ of hotel experience with more than 4,700 hospitality properties located around the globe valued at more than $125 billion. They have worked on more than 2,700 hotel management and franchise agreements and more than 100 hotel mixed-use developments.

“I am honored to accept CLIC’s Lifetime Achievement Award,” said Butler. “I would like to extend my gratitude to the thousands of clients who have trusted the Global Hospitality Group to help them accomplish their goals.” CONTINUE READING →

Published on:

07 December 2023

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

On December 5, 2023, the Los Angeles City Council removed a contentious measure from the March 2024 ballot which would have required hotels in the city to provide accommodation for homeless individuals alongside paying customers. The proposed ordinance, initially sponsored by hospitality worker union UNITE HERE Local 11, was withdrawn at the request of the union following a compromise ordinance.

UNITE HERE Local 11’s original proposal would have compelled hotels to report their vacancies to the city of Los Angeles Housing Department. Individuals or families would then be given a “market rate” voucher for payment at these locations which the hotels would not be able to refuse.

The measure faced sharp criticism from the American Hotel & Lodging Association (AHLA). AHLA President and CEO Chip Rogers accused Unite Here of creating “an atmosphere of dangerous uncertainty for hotel employees, hoteliers and the City of Los Angeles.” He characterized the proposal as a bargaining chip rather than a genuine effort to tackle the homelessness issue. Following the withdrawal of the ballot measure, Rogers expressed gratitude to the LA City Council for brokering a compromise that removed what he called UNITE HERE’s “ridiculous homeless-in-hotels proposal” from consideration. He emphasized the importance of prioritizing the safety and security of hotel employees and guests, urging leaders in LA and other cities to learn from this episode and put safety first in future dealings with Unite Here. CONTINUE READING →

Published on:

07 November 2023

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

In 2021, Congress passed the Corporate Transparency Act in order to combat money laundering and other illegal activities. The CTA goes into effect on January 1, 2024, and requires almost all businesses to file a report with FinCEN identifying their beneficial owners. JMBM’s Taxation, Trusts & Estates Department has written the below article detailing the steps businesses should take to prepare for this new law.

 

Preparing for the Corporate Transparency Act
Disclosure of Beneficial Ownership Information to FINCEN

by JMBM’s Taxation, Trusts & Estates Department

 

New federal disclosure requirements for your businesses and entities will become effective January 1, 2024 – the reporting requirements are burdensome, can be triggered multiple times in a single calendar year and are subject to both civil and criminal liability. Accordingly, you should prepare to comply with the new law now.

Specifically, in 2021, Congress passed the Corporate Transparency Act, which can impact (subject to certain exceptions) essentially all businesses and investment vehicles (including, but not limited to, partnerships, limited liability companies and corporations). The CTA itself aims to combat money laundering, terrorism financing and other illegal activities by requiring entities to disclose information about the individuals who beneficially own and control them to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

In that regard, the CTA authorizes FinCEN to collect beneficial ownership information (“BOI”, as discussed below) and disclose it to various federal and state agencies (including the Internal Revenue Service). Accordingly, if you own or control an entity, then you may be subject to these requirements.

Reporting Requirements

Beginning on January 1, 2024, most U.S. entities will be required to file a report with FinCEN identifying the beneficial owners of such entity (inclusive of driver’s license and/or passport), in addition to (among other things) the reporting entity’s address, jurisdiction and taxpayer identification number (TIN). Reports will be filed electronically through FinCEN’s filing system. CONTINUE READING →

Published on:

25 July 2023

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

Earlier this week, the Global Hospitality Group® co-hosted a breakfast briefing in Los Angeles with CREDE, a leading real estate development and project management firm. The program focused on how hotel owners and developers can reduce their cost of capital and costs of construction while filling in gaps in their capital stack through a few critical construction management techniques and exploitation of both traditional and alternative financing options.

Luigi Major, Managing Director of HVS, opened the program with an economic overview, providing an inspiring update on the state of the industry. His data shows depressed urban markets like San Francisco and San Jose are now enjoying double digit RevPAR growth, and some formerly red-hot leisure markets such as Santa Barbara have softened (-24% RevPAR growth). Business travel continues to get stronger and leisure travel is slowing. Cap rates are rising, but only by 40-90 basis points, which is modest compared to the interest rate environment. Luigi believes this is due to hotels coming into favor as a class of real estate. CONTINUE READING →

Published on:

09 December 2022

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

Last month Los Angeles voters approved Measure ULA, imposing a new tax on all real property sales or transfers over $5 million. This will affect all parties involved in a real property transaction, and it is important to understand the implications of the measure before negotiating on a new project. My colleague David Tabibian, partner in JMBM’s Real Estate Department and Global Hospitality Group®, explains the initiative and its potential impact below.

Measure ULA Approved: New Transfer Tax on All Real Property Sales Over $5 Million in the City of Los Angeles

by
David Tabibian

In an effort to combat the homelessness crisis, Measure ULA (aka the “Homelessness and Housing Solutions Tax”) was recently approved by voters in the City of Los Angeles on November 8, 2022. The measure imposes a very significant increase in transfer taxes on certain real property sales within the City of Los Angeles, which will have far-reaching impacts throughout the real estate market. It is anticipated that the new tax will generate approximately $600 million to $1.1 billion annually in order to fund affordable housing and tenant assistance programs administered by the Los Angeles Housing Department. Given the high cost of this new tax, it is important that buyers, sellers and developers fully understand its implications.

What Does Measure ULA Do?

Although commonly referred to as the “mansion tax,” it is actually much broader in scope since it applies to all real property asset classes, including residential and commercial properties as well as vacant land. In fact, many industry experts anticipate much of the revenue generated from Measure ULA will instead come from sales of apartment buildings and commercial properties as opposed to sales of mansions.

Currently, unless a specific tax exemption applies, all transfers of real property, regardless of value, are subject to a documentary transfer tax from both the City of Los Angeles and the County of Los Angeles at a combined rate of $5.60 per $1,000 of consideration. Simply put, it is a 0.56% tax on the consideration received and is collected at the time of closing.

Under the new measure, however, sales of residential and commercial real property valued at over $5 million but less than $10 million would be subject to an additional transfer tax at the rate of 4%, and sales of real property valued at $10 million or more would instead be subject to an additional tax at the rate of 5.5%. In contrast to the existing documentary transfer tax, the value of the property for purposes of the measure will include the value of any lien or encumbrance remaining on the property when it is sold so that the tax is on the gross value, not just the consideration received. Moreover, the tax would be due regardless of whether it is being sold at a gain or a loss. The thresholds under the measure will be adjusted each year for inflation. Although Measure ULA will become law on January 1, 2023, it applies to property sales occurring on or after April 1, 2023. CONTINUE READING →

Contact Information