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22 January 2014

Hotel Developer Forum in Los Angeles

With hotel development beginning to blossom in many national markets where the cost to buy a hotel substantially exceeds the cost to build one, JMBM’s hotel lawyers recently held a Hotel Developer Forum focused on the City of Los Angeles. The program was moderated by Jim Butler, Ben Reznik and Guy Maisnik. Bud Ovrom and Michael Santana were guest speakers.

Bud Ovrom is the General Manager of the LA Convention Center and is charged with figuring out how to get 4,000 more hotel rooms to support the Convention Center, which is at the heart of the remaking of Downtown Los Angeles. Santana was appointed as the Chief Administrative Officer for the City by former Mayor Antonio Villaraigosa in 2009, and recently agreed to continue in that position at the request of newly elected Mayor Eric Garcetti. Santana is the Budget Chief for Los Angeles and has negotiated all the development incentive deals made by the City since he took office.

There were a number of interesting take aways for the developers attending this gathering. One is that the City of Los Angeles wants to see 4,000 new hotel rooms developed in the downtown area serving the Los Angeles Convention Center — and the City is willing to provide economic incentives to make it happen (up to 50% of the property specific revenues from transient occupancy taxes, sales takes, property taxes and the like).

But these City incentives come with strings attached, which developers will have to weigh against the benefits of the incentives. Read on for the details.

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02 January 2014

Hotel Lawyer: Some lessons for the rising interest in golf.

Golf courses are back in popularity — for play, purchase and sale, and development. Whatever your involvement, you will likely find today’s article by my partner Guy Maisnik to be interesting and helpful in avoiding unnecessary losses.

Some other articles on golf are referenced at the end of this article.

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14 August 2013
Hotel Lawyers on “hotel condo” units as securities (or NOT).

An important decision on when a condo hotel does NOT involve the sale of a “security”

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Jim Butler, Bob Braun and Guy Maisnik
Condo Hotel Lawyers

One of the most significant challenges for developers of a condo hotel project is whether the sale of the condo units constitutes the sale of a “security.” If it does, the principals and sellers of the project will have much greater compliance issues, costs and liabilities, which could make the project unworkable.

We have been advising clients on these issues in connection with more than 100 hotel mixed-use transactions since 2000. The deals usually have a significant residential component (condo hotels, hotel condos, single family homes or home sites, etc.) retail, entertainment and other uses added to a core hotel component. The Ninth Circuit opinion in Salameh v. Tarsadia Hotel (CA-9, No. 11-55479) discussed today provides a significant new level of comfort for all involved in such matters.

In an important decision yesterday (August 13, 2013) written by Judge Ronald M. Gould, a 3-judge panel of the Court of Appeals for the Ninth Circuit upheld the lower federal district court’s dismissal of plaintiff’s lawsuit arising out of their purchase of hotel condominium units at the Hard Rock Hotel San Diego, a “condo-hotel.”

The case was filed as a class action by Tamer Salameh and other named plaintiffs against some of the most respected people in Southern California’s hospitality industry, including Tarsadia Hotel, Tushar Patel, B.U. Patel, Gregory Casserly and other defendants. Notably, Playground Destination Properties, one of the first developers and most esteemed marketing companies for condo hotels, was also named in the action.

Essential to the plaintiffs’ claims was their characterization of their purchase as involving “securities” under the federal securities laws. They said that defendants offered condominium units together with a rental-management program, and doing so, constituted the sale of a “security.” The lower court dismissed the case after giving plaintiffs an opportunity to amend, finding that the amended complaint still did not state facts sufficient to find the existence of a “security.” The lower court also dismissed related common law fraud claims. For background on this issue and its importance, see “Condo Hotel Lawyer: Why does the SEC care about condo hotels?”
If you don’t know what a condo hotel is, or how it fits into hotel mixed-used, we have an entire section of HotelLawyer.com and HotelLawBlog devoted to condo hotels and to mixed-use. Just use the search bar at the top for any subject or click condo hotels or mixed use!

Why is this case important?

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15 March 2013

Great opportunity . . . and danger . . . await shopping center owners who seek to add hotels to their shopping centers, malls and retail centers.

An interesting confluence of factors has ignited a wave of hotel development — adding hotels to shopping centers, malls and retail centers. This trend is already underway and will be headline news for the next couple of years.

There are compelling synergies for both the shopping center and the hotel. These have been thoroughly documented by major players. One major shopping center owner performed a multi-year study on its 200+ properties and found that the right hotel can boost gross sales at shopping centers 20% to 40%. And the associated hotels also get a boost in Revenue Per Available Room (RevPAR) of 30% to 40% over hotels in their competitive set.

If you need more information on the basics — why people are adding hotels to shopping centers and malls — look at the articles posted on www.HotelLawyer.com. From the home page, scroll down and look on the right-hand side for under “Hotel Development” or go to www.hotellaw.jmbm.com/hotel_development.

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8 March 2013

JMBM’s Global Hospitality Group® announces publication of the How to Buy a Hotel Handbook.

The Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP (JMBM) today announced the release of the How to Buy a Hotel Handbook, third in the “We Wrote the Book™” series of handbooks published by the Group’s hotel lawyers.

Jim Butler is the Chairman of JMBM’s Global Hospitality Group®. The How to Buy a Hotel Handbook is based on the experience Jim’s team has gained from more than $87 billion of hotel transactions involving more than 1,300 hotels all over the world. The Handbook provides a detailed overview of the hotel acquisition process, a thorough due diligence checklist, and informative articles that address some of the most important questions that arise when buying or selling a hotel.

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5 March 2013

Hotel Lawyer on adding a hotel to shopping centers and malls.

The ULI program held on February 20, 2013 in JMBM’s Los Angeles offices was a great success. The program title says it all — “Back to the Future: The Renaissance of Hotel-Retail Mixed-Use.”

As one might expect for a ULI event on a timely topic like this, there was a capacity crowd, sharing of the latest “technology” in adding hotels to shopping centers, and a veteran team of presenters.

Jim Butler, Chairman of JMBM’s Global Hospitality Group®, moderated the panel, which included:

  • Guy Maisnik, Partner and Vice Chairman of JMBM’s Global Hospitality Group®
  • Steve Mermell, Assistant City Manager, City of Pasadena
  • Bruce Baltin, Senior Vice President, PKF Consulting
  • Les Melcher, SVP – Business Development, Woodbine Development Corporation

The panel looked at why many shopping center owners and developers are adding hotels to their projects, and commented on some tips and traps along the way. There were some great case studies that the panelists worked on.

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17 February 2013

Hotel Lawyer on buying hotels

Our hotel lawyers spend a big part of their time helping clients identify and vet attractive hotel acquisition targets, and then get them under contract, run a thorough (but fast) due diligence, arrange financing and execute on the purchase. Often there is a lot of follow up work in repositioning the property or cleaning up some old problems.

But one of the perennial questions we hear from people is, “Is this a good time to buy a hotel?”
A little more than 2 years ago, my partner Guy Maisnik wrote an article on this very subject. It was called “So you think you want to buy a hotel?” That article has been one of our best-read pieces on Hotel Law Blog, and similar questions keep bouncing around. So we persuaded Guy to write an update, which continuing improvements in the hotel industry forced him to rename: “NOW is a great time to buy a hotel (and not a bad time to sell)”.

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28 January 2013

We are at the beginning of what looks to be a renaissance of “hotel-retail mixed-use” development. Shopping center developers nationwide are exploring the feasibility of adding a hotels to existing retail properties, while others are already implementing plans that have been in the pipeline. Some are adding hotels to the mix for new ground up development. Fueling this trend is research showing that both retailers and hoteliers make huge gains in revenue when they come together in the “hotel-retail mixed-use” environment.

My partner, Guy Maisnik, and I recently wrote an article on this subject for Hotel Business and it is reprinted below, with permission.

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17 December 2012

A wave of “hotel-retail mixed-use” is coming. It may mark the rebirth of bricks and mortar.

Put on the back burner by the Great Recession, the hotel-retail mixed-use development is back in play. Virtually every major shopping center and mall owner is exploring whether it makes sense to add a hotel component to existing projects, and are checking feasibility for new ones. Some new hotel-retail projects are underway, and many others are in the planning stage.
What’s behind this trend is a simple and powerful driver: The right hotel added to the right project can boost retail sales by 20-40%! And the retail shopping can boost hotel RevPAR by a comparable amount over the competitive set.

My partner, Guy Maisnik, and I were asked by Globe St to write a guest column for their publication on the hotel-retail trend. It is reprinted below, with permission.

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20 October 2012

The hotel lawyers of JMBM’s Global Hospitality Group® frequently attend hospitality industry conferences to stay current on critical issues affecting hotel owners, investors and lenders. My colleagues, Guy Maisnik, Bob Braun and David Sudeck will attend the Boutique Lifestyle Leadership Symposium in Los Angeles next week.

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Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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