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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:

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 →

Published on:

29 September 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.

Impending eruption of government and private litigation over Resort Fees (mandatory service fees). Big shaking again. Is this the big one?

Two significant developments may signal an eruption of government and private claims over Resort Fees — (1) publication of the FTC 2017 Report and (2) commencement of proceedings regarding Resort Fees by a national task force of Attorneys General for 46 states plus the District of Columbia. This article focuses on the FTC Report. The next article will discuss the national task force.

The FTC issues its 2017 Report on Resort Fees

In January 2017, the FTC’s Bureau of Economics published a 44-page report entitled “Economic Analysis of Hotel Resort Fees” (the “FTC 2017 Report” or the “Report”).

The Report sets forth an aggressive regulatory position suggesting that it is a deceptive and misleading practice to advertise hotel rates without including Resort Fees, unless the total price (with Resort Fees) is the first and most prominently displayed price (in position and font characteristics) so consumers can easily comparison shop. It is not enough to disclose Resort Fees after the “room only” price even if this disclosure is made prior to booking a room. However, once the all-inclusive price has been disclosed, it is permissible to give a breakout of the total price into Resort Fee and other components.

The Report finds that “separating mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers by increasing the search costs and cognitive costs of finding and choosing hotel accommodations.” The Report also finds that this drip pricing approach is unlikely to result in any benefits to offset the harm to consumers. Apparently, the Report’s authors find that the harm to consumers who may incur greater search costs and/or make incompletely informed decisions (and pay more for a room) justifies damages or enforcement actions under section 5 of the FTC Act.

Some highlights from the FTC 2017 Report

Here are some bullet point highlights extracted from the Report. CONTINUE READING →

Published on:

25 September 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.

Impending eruption of government and private litigation over Resort Fees (mandatory service fees) 

There were earthquakes and tremblors for at least 17 years before Pompeii was destroyed in the catastrophic eruption of Mount Vesuvius in 79 AD.  The past is prelude.

What are Resort Fees?

We define “Resort Fees” as any mandatory fees or surcharges to hotel guests that are not included in the stated price of the room. These Resort Fees are usually described as covering a bundle of services, facilities or amenities, but the key element is that these charges are not optional and do not depend upon whether a guest actually uses of any of bundle’s benefits.

The FTC has described Resort Fees as part of one subset of a bigger problem involving two pricing practices: partitioned pricing and drip pricing. According to the FTC’s January 2017 Economic Analysis of Hotel Resort Fees, “Partitioned pricing involves dividing the price into multiple components without disclosing the total. Drip pricing is the practice of advertising only part of the product’s price upfront and revealing additional charges later as consumers go through the buying process.”

What is the Resort Fee issue?

The government is on a mission to eliminate the practice of hotels charging their guests undisclosed Resort Fees, and is going after hotels for massive fines and penalties.

The first warning signs of an explosion of litigation over Resort Fees go back some 17 years to about the year 2000, when Resort Fees began to gain popularity with hotels and started a wave of consumer complaints about mandatory surcharges or other fees automatically added to a guest’s hotel bill. Although mandatory service fees may have different names, the most popular name for them is Resort Fees.

We are accustomed to seeing litigation trends take form quickly, and there is reason to believe that a new pressure is gathering critical force on the Resort Fees issue. We will discuss this serious threat of litigation in detail later. CONTINUE READING →

Published on:

22 December 2014

Click here for the latest articles on Hotel Management Agreements.

A version of this article first appeared in Hotel Business Review in December 2014, and this article is reprinted with permission from www.hotelexecutive.com.

 

The shrinking terms of hotel management agreements

Better bargaining position for hotel owners on HMAs

by

Jim Butler and Mark S. Adams | Hotel Lawyers

The relationship between hotel owners and managers continues to evolve. Hotel management agreements historically were long-term. Fifty to sixty year terms were common. However, in the last few years, hotel owners have successfully negotiated shorter contract durations and other more favorable terms, even from the largest and most sought-after major brands. This trend is likely to continue and expand as brands realize that hotel owners have the power to terminate so-called no cut, long-term hotel management agreements, despite contrary provisions in the contract which courts now routinely ignore as a matter of public policy.

The Separation Of Hotel Ownership From Hotel Operations

Trade, pilgrimage, conquest, and adventure have been the driving forces of travel since ancient times. For more than 5,000 years, accommodations for these travelers were provided by inns or monasteries. These lodging facilities were typically owned and operated by the same persons. That ownership pattern still exists today, particularly among mom-and-pop operations or small chains, but more and more, there is a separation of hotel ownership and hotel management.

This trend first gained traction when Kemmons Wilson started the first hotel franchising of Holiday Inns in the 1950s, and picked up momentum in the next couple of decades when hotel operators decided to move hotel real estate off their balance sheets with sale-leaseback transactions, and when hotel investors bought hotels and elected to lease their hotels to professional hotel operators. The separation of ownership and management continued and became the prevalent structure as hotel management agreements were developed in the 1970s and proliferated in the 1980s, 1990s and 2000s, particularly for larger, higher-end hotel properties.

But in the last ten or 15 years the franchise model has become the dominant one, at least by number of branded rooms, and particularly for the rapidly expanded extended stay and select service segments of the industry. Under this model, ownership is separate from branding, and usually a professional (unbranded) hotel management company is a surrogate for the brand.

Ultimately, the separation of ownership and management brought about by this evolution meant that the traditional hotel companies focused more on finding more owners of hotel real estate that they could brand and manage, and the owners of hotel real estate (lacking hotel brand or management capacity) focused on collecting rents or looking to their brand and operator to optimize profits. In other words, the concept of a hotel being owned by one entity and operated by another became a preferred model, whether under a hotel lease, hotel management agreement or a franchise.

Since the 1990s, when some estimate that 60% of the hotel rooms in the U.S. were unbranded, more owners have elected to brand their hotels to access the professional management, finaceability, marketing power and resources of the brands. Today, unbranded hotel rooms probably comprise less than 20% of the hotel rooms in the U.S. This massive shift to the brands further reinforced the separation of hotel ownership from hotel branding and management.

The separation has been facilitated by the fact that hotel guests do not particularly care who owns the title to the hotel real estate as long as the hotel’s physical facilities and service levels meet their expectations and are predictable, satisfactory, clean and safe. Branding was one way to provide assurances of consistency and meeting minimum brand standards. In this evolving dynamic, brands focused on operations, brand standards, and system expansion.  They were less capital-constrained because owners now provide the bulk of capital to build and maintain hotel real estate and related facilities.

The Hotel Management Agreement (“HMA”)

The HMA is one of the clearest separations of ownership and operation. A branded HMA with one of the traditional hotel management companies is typically a long-term agreement between the owner and operator under which the operator is delegated virtual control over the operations of the hotel. The principal provisions in an HMA are, as follows: CONTINUE READING →

Published on:

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.

CONTINUE READING →

Published on:

Click here for Simplified Chinese / 简体中文

Click here for Traditional Chinese /繁體中文

Formation of the Chinese Investment Group™

Jeffer Mangels Butler & Mitchell LLP (JMBM) has announced the formation of the JMBM Chinese Investment Group™ to provide legal and business advice for the specialized needs of Chinese investors and Chinese investment in the United States for hotel, real estate, EB-5 and other U.S. investments. We have a dedicated team with great experience for this kind of work.

Here is more information about how this development might help you. Click here to download a PDF of this announcement about the Chinese Investment Group™.

CONTINUE READING →

Published on:

This document is in Traditional Chinese
Click here for English / 英文版

Click here for Simplified Chinese / 简体中文

華人酒店和房地產投資法律顧問團隊™ 是美國傑美百明律師所 JMBM Global Hospitality Group® 中一支致力於酒店和高端房地產專案的專業律師團隊。多年來,律師團隊為華人在美國的投資保駕護航,提供最優質的法律服務。我們律師所已經為客戶累計成交了總額高達870億美元的酒店業務,涉及全球範圍內3900處酒店。我們幫助華人投資者識別、分析、評估酒店和高端房地產機遇。同時,我們也可以為投資者尋求融資管道。我們鄭重承諾:為了保證我們的獨立性,我們絕不從任何開發商收取中間人傭金、獎勵費。

知名 客戶和酒店
美國傑美百明律師所( JMBM ) 與很多知名客戶擁有悠久的合作歷史,例如 Regent Hospitality Group 、 特朗普公司、 迪士尼度假俱樂部、 Hillwood Development (Ross Perot, Jr.) 、美高梅金殿夢幻、達拉斯之城。

我們的銀行客戶包括 中國工商銀行、滙豐銀行、富國銀行、華美銀行、遠東國民銀行、德國北方銀行、瑞典銀行、加利福尼亞聯合銀行。

JMBM也在全球範圍內代表很多酒店開發商和業主,包括美國 W Hotels 以及 麗思卡爾頓(Ritz-Carlton)混合使用專案的最大的開發商和業主。

在過去的 20多年中,我們律師團隊專注于服務酒店業主、投資方、開發方和貸款方。我們經常與主要酒店品牌合作。這其中包括 萬豪、希爾頓、喜來登 等60個品牌。其中不乏高端酒店,例如:四季酒店、東方文華酒店、費爾蒙、麗嘉、麗晶、萬麗、洲際大酒店。

華人投資和 EB-5投資移民簽證專案
我們的律師參與了華人在美國房地產投資以及EB-5投資移民簽證專案等,其中包括:

晶華國際酒店(一家位於臺灣的股份有限公司)收購麗晶大酒店(收購包括其全球範圍內的品牌權和在亞洲、歐洲、中東和加勒比的酒店管理協定)

深圳市新世界集團有限公司收購 喜來登環球酒店

華人投資者投資 W好萊塢酒店(包括特色夜店和Delphine高檔餐館)

我們為美國華人投資者提供的服務
我們為華人投資者提供以下地產服務:

發現和評估酒店和高端房地產的投資商機

盡職調查

買賣交易的洽談

債務和股權融資

獲得政府批准和許可

稅務規劃

在獲得物業後,我們將在以下幾個方面為客戶提供服務:

商務合同和租賃協定的起草與審閱

雇傭和工作力事宜

法律和稅務事宜

在酒店投資領域,我們提供以下服務:

幫您聯繫高端酒店品牌(萬豪國際、希爾頓、喜達屋、洲際酒店、凱悅、麗晶、半島、四季酒店等等)

幫您取得市場最佳的合同條款(例如酒店冠名權和管理協定)

融資來源、施工經理人、運營者、品牌和專業顧問

我們為尋求 EB-5融資的客戶提供以下服務

EB-5專案實行可能性和盡職調查

政府獎勵,例如:新市場抵免所得稅、再開發代理集資

EB-5區域中心

確定目標雇傭區域

創業要求

確保州和當地政府對專案的支援

涉及向 EB-5投資人出售有限合夥利益企業的聯邦證券法

EB-5投資專案的結構化事宜

EB-5投資專案市場合同的協商

EB-5貸方和其他貸方之間貸款(以及中間債權人協定)

華人酒店和房地產投資法律顧問集團 ™律師
我們律師所的鄧威律師可以講漢語。 華人酒店和房地產投資法律顧問集團™的律師及其聯繫資訊如下:

姓名 電子郵件信箱 專線
Mark S. Adams MarkAdams@jmbm.com +1 (949) 623-7230
Robert E. Braun RBraun@jmbm.com +1 (310) 785-5331
Jim Butler JButler@jmbm.com +1 (310) 201-3526
Wei Deng WDeng@jmbm.com +1 (310) 785-5371
Guy Maisnik MGM@jmbm.com +1 (310) 201-3588
Ben Reznik BMR@jmbm.com +1 (310) 201-3572
David A. Sudeck DSudeck@jmbm.com +1 (310) 201-3518

關於美國傑美百明律師所( JMBM )

美國傑美百明律師所 ( JMBM ) 為您提供最高品質的法律服務。詳細資訊請參考www.jmbm.com

關於 JMBM Global Hospitality Group®

JMBM Global Hospitality Group® 已經為客戶累計成交了總額高達 870億美元的酒店業務,涉及全球範圍內3900處酒店。歡迎訪問www.HotelLawBlog.com或聯繫全球頂尖酒店律師Jim Butler ,電話 +1 (310) 201-3526 電子郵件jbutler@jmbm.com。

 

Published on:

This document is in Simplified Chinese
Click here for English / 英文版

Click here for Traditional Chinese /繁體中文

华人酒店和房地产投资法律顾问团队™ 是美国杰美百明律师所JMBM Global Hospitality Group® 中一支致力于酒店和高端房地产项目的专业律师团队。多年来,律师团队为华人在美国的投资保驾护航,提供最优质的法律服务。我们律师所已经为客户累计成交了总额高达870亿美元的酒店业务,涉及全球范围内3900处酒店。我们帮助华人投资者识别、分析、评估酒店和高端房地产机遇。同时,我们也可以为投资者寻求融资渠道。我们郑重承诺:为了保证我们的独立性,我们绝不从任何开发商收取中间人佣金、奖励费。

知名客户和酒店
美国杰美百明律师所(JMBM很多知名客户悠久的合作历史,例如Regent Hospitality Group特朗普公司、迪士尼度假俱乐部、Hillwood Development (Ross Perot, Jr.)、美高梅金殿梦幻、达拉斯之城。

我们的银行客户包括 中国工商银行、汇丰银行、富国银行、华美银行、远东国民银行、德国北方银行、瑞典银行、加利福尼亚联合银行。

JMBM也在全球范围内代表很多酒店开发商和业主,包括美国W Hotels 以及 丽思卡尔顿Ritz-Carlton混合使用项目的最大的开发商和业主。

在过去的20多年中,我们律师团队专注于服务酒店业主、投资方、开发方和贷款方。我们经常与主要酒店品牌合作。这其中包括 万豪、希尔顿、喜来登 等60个品牌。其中不乏高端酒店,例如:四季酒店、东方文华酒店、费尔蒙、丽嘉、丽晶、万丽、洲际大酒店。


华人投资和EB-5投资移民签证项目
我们的律师参与了华人在美国房地产投资以及
EB-5投资移民签证项目等,其中包括:

  • 晶华国际酒店(一家位于台湾的股份有限公司)收购丽晶大酒店(收购包括其全球范围内的品牌权和在亚洲、欧洲、中东和加勒比的酒店管理协议)

  • 深圳市新世界集团有限公司收购 喜来登环球酒店

  • 华人投资者投资W好莱坞酒店(包括特色夜店和Delphine 高档餐馆)

我们为美国华人投资者提供的服务
我们为华人投资者提供以下地产服务:

  • 发现和评估酒店和高端房地产的投资商机

  • 尽职调查

  • 买卖交易的洽谈

  • 债务和股权融资

  • 获得政府批准和许可

  • 税务规划

在获得物业后,我们将在以下几个方面为客户提供服务:

  • 商务合同和租赁协议的起草与审阅

  • 雇佣和劳动力事宜

  • 法律和税务事宜

在酒店投资领域,我们提供以下服务:

  • 帮您联系高端酒店品牌(万豪国际、希尔顿、喜达屋、洲际酒店、凯悦、丽晶、半岛、四季酒店等等)

  • 帮您取得市场最佳的合同条款(例如酒店冠名权和管理协议)

  • 融资来源、施工经理人、运营者、品牌和专业顾问

我们为寻求EB-5融资的客户提供以下服务

  • EB-5项目实行可能性和尽职调查

  • 政府奖励,例如:新市场抵免所得税、再开发代理集资

  • EB-5区域中心

  • 确定目标雇佣区域

  • 创业要求

  • 确保州和当地政府对项目的支持

  • 涉及向EB-5投资人出售有限合伙利益企业的联邦证券法

  • EB-5投资项目的结构化事宜

  • EB-5投资项目市场合同的协商

  • EB-5贷方和其他贷方之间贷款(以及中间债权人协议)

华人酒店和房地产投资法律顾问集团™ 律师
我们律师所的邓威律师可以讲汉语。华人酒店和房地产投资法律顾问集团™ 的律师及其联系信息如下:

 

姓名 电子邮件 电话
Mark S. Adams MarkAdams@jmbm.com +1 (949) 623-7230
Robert E. Braun RBraun@jmbm.com +1 (310) 785-5331
Jim Butler JButler@jmbm.com +1 (310) 201-3526
Wei Deng WDeng@jmbm.com +1 (310) 785-5371
Guy Maisnik MGM@jmbm.com +1 (310) 201-3588
Ben Reznik BMR@jmbm.com +1 (310) 201-3572
David A. Sudeck DSudeck@jmbm.com +1 (310) 201-3518

关于美国杰美百明律师所JMBM

美国杰美百明律师所JMBM为您提供最高质量的法律服务。详细信息请参考www.jmbm.com

关于JMBM Global Hospitality Group®

JMBM Global Hospitality Group® 已经为客户累计成交了总额高达870亿美元的酒店业务,涉及全球范围内3900处酒店。欢迎访问www.HotelLawBlog.com联系全球顶尖酒店律师Jim Butler,电话+1 (310) 201-3526 电子邮件jbutler@jmbm.com