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1. The ADA Compliance and Defense Guide — free download

2. Hotel Lawyer on HMAs: “The shrinking terms of hotel management agreements”

3. Hotel Financing 2015: JMBM’s “preferred” EB-5 construction financing program for top developers and projects

4. The “new breed” of condominium hotels — Key to financing new hotel development? Selling condo hotels as “securities” under new SEC Rule 506(c) . .

5. Los Angeles is the new magnet for real estate investment

6. FAQs on “service animal” requirements of the ADA. What every hotelier needs to know. Why Uber was sued over service animals.

7. Why this may be the time to buy or sell a hotel management company

8. Hotel development & EB-5 financing: Why you don’t want to form your own regional center

9. Hotel Liability for Guest Information — What you need to know and how to avoid liability.

10. Hotel Franchise Lawyer: 8 things to negotiate in your next franchise agreement

11. Hotel Lawyer: The 5 questions every owner should ask before selecting a hotel brand

12. Hotel Franchise Lawyer: Hotel Franchise Agreements and the 5 biggest mistakes a hotel owner can make

13. Hotel Lawyer with insights on "How to get a great hotel operator"

14. The importance of Comfort Letters in financing franchised hotels

15. Hotel Lawyer: Something everyone buying or building a golf course should know . . .

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This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

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19 November 2020

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Click here for the latest articles on the coronavirus.

Hotel Lawyer: Is the hotel industry on the verge of salvation, or precipice of despair?

We are less than a week from Thanksgiving and a lot of new data has been released in the past few days, with important implications for the hotel industry and the economy. Some highlights discussed below are:

  • An American Hotel & Lodging Association survey taken November 10-13, 2020, provides a grim short-term forecast for the hotel industry, saying 71% report they can last only 6 months more, and 34% can last only 1 to 3 more months.
  • A City National Bank (CNB) report provides a November 18 update that new COVID vaccines now claim 90% or higher effectiveness; they might become available in December and be widely available by spring 2021.
  • The same CNB report projects short-term pain (rising COVID cases, deaths and hospitalizations) a decrease in consumer activity, and contraction for the economy (driven by COVID) – but projects a strong economic recovery starting with the second half of 2021.
  • CNB Report warns that its projected recovery in for the economy and markets is “unconditionally dependent on [the COVID] vaccine ending the pandemic.”

The AHLA Survey

The American Hotel & Lodging Association (AHLA) issued a press release on November 19, 2020 with the results of a survey taken November 10-13, 2020 with 1,200 respondents. The survey indicates widespread hotel closures and failures unless there is significant federal economic relief to survive the devastating loss of travel and tourism.

  • 71% of hotels report they will only be able to last 6 more months at current projected business, and 34% say they can last only 1 to 3 months longer.
  • 82% of hotel owners say they cannot obtain additional debt relief from their lenders beyond the end of the year.
  • 59% of hotels says they are in danger of foreclosure by their lenders due to COVID-19.
  • 52% say they will close without additional federal assistance, and 98% would apply for and use another round of Payroll Protection Program (PPP) loans.

CONTINUE READING →

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10 November 2020

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Click here for the latest articles on Data Technology, Privacy & Security.

On November 3rd, Californians voted to approve Proposition 24 which amends the California Consumer Privacy Act to include expanded consumer rights and greater privacy protections.

The California Privacy Rights and Enforcement Act – which also establishes an enforcement agency to guarantee strict compliance – places additional obligations on businesses to ensure that consumer data is transparent and secure. Given the scope of the Act and the short timeframe for compliance, hotels should immediately start looking at their data profiles and security to avoid running afoul of the new rules.

Bob Braun, senior member of JMBM’s Global Hospitality Group® and Co-Chair of the Firm’s Cybersecurity & Privacy Group, explains the major provisions of the Act and discusses the challenges hotels face as they look to address its requirements.

New Challenges for Hotels:
The New California Privacy Rights and Enforcement Act of 2020
by
Bob Braun, Hotel Lawyer

Many races and initiatives that California voters considered on November 3 are still undecided, but Proposition 24, the California Privacy Rights Act of 2020 (the “CPRA”) isn’t one of them.  The California electorate approved Proposition 24 by a comfortable margin – 56% of Californians voted in favor.

Like its predecessor the California Consumer Privacy Act of 2018 (the “CCPA”), the impact of the CPRA won’t be felt immediately.  It goes into effect on January 1, 2023, and many of its provisions are unclear and will require study.  But hotel companies with a presence in California will need to consider its requirements, and given the scope of the law, addressing its requirements early will be essential.

New Sheriff in Town

Perhaps the most significant development in the CPRA is the establishment of a new agency, the California Privacy Protection Agency, dedicated to handling enforcement and compliance with privacy regulations.  This makes California the first state with an agency focused solely on enforcing privacy laws.  This new agency will replace the California Attorney General in interpreting and enforcing the CCPA.  The ultimate impact of the agency will develop as its members are selected and interpret its mandate, but it is clear from the CPRA that it has broad authority to bring civil and criminal actions.

Select Key Provisions

The CPRA is an extension and modification of the CCPA.  It adds a number of new definitions and provisions that, in some cases, extend the scope of the CCPA and, in other cases, clarify the requirements of the CCPA.  The result is that hotel companies that already comply with the CCPA will need to revisit their policies and procedures to ensure compliance with the CPRA, and any firms that have not yet considered CCPA compliance have a steep learning curve.  Key provisions include: CONTINUE READING →

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23 October 2020

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Click here for the latest articles on Hotel Management Agreements and Hotel Franchise & License Agreements, and download our HMA & Franchise Agreement Handbook (3rd ed).

One of the biggest mistakes owners and developers continue to make is negotiating a “nonbinding” term sheet on various hotel arrangements, such as hotel franchise and hotel management agreements. This can be a costly misstep for the reasons Bob Braun points out in this article on a classic but perennial problem.

First Things First – The Letter of Intent in Hotel Agreements
by
Bob Braun, Hotel Lawyer

Love at First Sight?

How hotel developers and owners, on one hand, and hotel brands, on the other, meet and agree to brand a hotel or resort property is a complicated process. Sometimes developers or owners seek out a brand, and sometimes a brand will approach a potential owner. Either way, the developer/owner meets with a development executive from the brand, and the two parties see if they have enough in common to talk seriously about a long-term relationship. During those early stages, each is trying to demonstrate its resources, seriousness, and commitment to a long-term relationship of 20 years or more. They trade pro forma financials, introduce key personnel, and in pre-Covid days, wine and dine each other. Brands will research the background and business history of their potential franchisee, and owners will seek out other owners for references and their real-life experiences. Owners will study the performance of brands throughout the world, especially where the project is in a foreign locale. The process resembles a mating dance: owners are courting brands, and brands are courting owners. And most typically, owners declare the seriousness of their intentions with an application fee – a very large application fee.

At that point, the brand and owner negotiate and enter into a non-binding letter of intent. The letter of intent makes it clear – the terms in the letter are nothing more than a good faith statement of the desire to move forward and discuss the details. Owners negotiate the basic terms in the letter of intent, and after seeing that the letter is, by its terms, not binding, they sign it, believing that they and the lawyers will have another chance to revisit those issues that might concern them.

Reality Sets In

Unfortunately, brands and managers don’t take that position. They believe that while the letter of intent may state that it is “not binding,” the terms in the letter are not subject to meaningful negotiation once it is signed. More than that, they take the position that if a business or legal term is important to the owner, it must be in the “non-binding” letter of intent; otherwise, the brand will revert to their standard terms and conditions. As becomes painfully clear as the parties negotiate a franchise or management agreement with the brand, there are relatively few points open for negotiation, but if overlooked in the preliminary discussions, it may be impossible to reclaim them no matter how important. CONTINUE READING →

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15 September 2020

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Click here for the latest articles on the coronavirus.

Boutiques may be adapting faster than other hotel sectors, but still hurting

The theme of the Boutique Lifestyle Leaders Association’s (BLLA) upcoming Boutique Lifestyle Digital Summit is “Dare to Adapt” and there are some compelling arguments as to why the boutique space may be able to adapt to the current economic crisis faster than other sectors in the hotel industry.

“Boutiques can pivot easily,” said Frances Kiradjian, Founder and CEO of the BLLA. “They can make decisions quickly without checking in with brands.”

Take cleaning, an area of great to concern to guests in the current COVID-19 environment. As new information and cleaning methods come to light, boutiques can implement them quickly. As Kiradjian said, “By design, some boutiques have a smaller footprint and fewer rooms, smaller elevators, smaller public spaces, and dedicated staff members who care about delivering a customized experience for each guest.”

Guy Maisnik, Vice Chair of JMBM’s Global Hospitality Group, who will moderate the panel “Protecting Your Assets Amid a Pandemic” at the BLLA’s Digital Summit, agrees that boutiques have great flexibility, and being nimble and able to change quickly is critical in this market.

“For one thing, many hotels have gone toward smaller guest rooms and larger indoor communal public spaces,” he said. “Obviously, such configuration does not work in this environment.”

CONTINUE READING →

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17 July 2020

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Click here for the latest articles on Hotel Management Agreements and Hotel Franchise & License Agreements, and download our HMA & Franchise Agreement Handbook.

Franchise and Management Disputes in the Time of Covid
by
Robert Braun

If you are reading this, you are almost certainly in the hospitality industry, and you are most likely in a financial and emotional distress. During trying times, hotel owners rely more than ever on their brands and managers – the professionals that owners engage to protect the multi-million dollar investments that they have made in building, maintaining and upgrading properties. Owners rely on brands to drive occupancy and revenue, and on managers to make the most effective and efficient use of those revenues to drive the bottom-line revenues that allow owners to cover debt service, insurance and other expenses, and provide a return – without which no thinking investor would finance a hotel.

At the same time, the Covid-19 pandemic has driven hotel occupancy and rates fallen to levels that were previously unimaginable. Brands and managers are not to blame for the pandemic, but this is the time when they must stand up and work with owners to preserve their assets and prepare for the eventual – and lengthy – return to normal, whatever that normal may be.

Unfortunately, in many cases, brands and managers have not always met the challenge. Many brands and managers have simply submitted, without explanations, edicts regarding closing or reducing operations, demanding funds, and reduced responsiveness. Hotel companies have, across the board, furloughed or laid off large portions of their workforce, making it difficult to obtain the guidance and support owners need. CONTINUE READING →

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13 July 2020

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Click to see our category-killer experience with hotels. See also our distressed loan credentials. And click here for the latest blog articles on loan modifications, workouts, bankruptcies and receiverships, and here for The Lenders Handbook for Troubled Hotels.

Meet the Money® Online: CMBS Special Servicing FAQs

It’s estimated that 20 percent of hotels in the U.S. have debt held in commercial mortgage-backed securities (CMBS). Among these hospitality industry borrowers are hotel owners needing financial relief due to the COVID-19 pandemic, many of whom are unfamiliar with working with master servicers and special servicers in the complex world of CMBS.

Unfortunately, there is much misinformation circulating in the business media about how special servicers work with borrowers needing debt relief.

On July 8, 2020, we addressed the myths and realities of working with CNBS special servicers in our Meet the Money® Online virtual roundtable, “CMBS Special Servicing FAQs.” The panel, moderated by JMBM’s Global Hospitality Group® Chair Jim Butler, featured CMBS experts including:

  • Andrew Hundertmark, CEO, Argentic Services Company
  • Curt Spaugh, Director, SitusAMC, Special Servicing Division
  • Lindsey Wright, Senior Managing Director, Greystone Special Servicing
  • Thomas J. Biafore, Partner, Kilpatrick Townsend
  • Robert B. Kaplan, Partner, Jeffer Mangels Butler & Mitchell

Frequently Asked Questions about CMBS Special Servicing for distressed hotel and retail projects

Roundtable Topics discussed include: CONTINUE READING →

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01 July 2020

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Meet the Money® Online: Hotels and Information Security
Protecting Guests and the Bottom Line

Last week, speakers from Manhattan Hospitality Advisors, Tiered Communication Services Inc. and Willis Towers Watson joined Bob Braun of JMBM’s Global Hospitality Group® for the second in a series of Meet the Money Online webinars.

If you missed “Hotels & Information Security – Protecting Guests and the Bottom Line,” you can watch the full webinar here.

You can also find the presentations made by our expert panelists on the Resource Center page:

Where Technology and Security Meet in Hotels

Jonathan Adam, co-founder and Chief Technology Officer, Tiered Communication Services, Inc., covers the primary elements required for information security, and how a secure hotel network should be designed. Meet the Money® Online June 2020.

Best Practices and Imperatives for Information Security

Bob Braun, co-chair of JMBM’s Cybersecurity and Privacy Group, and senior member of JMBM’s Global Hospitality Group® discusses why information security is so difficult to achieve, the importance of documentation, and why verifying third parties is critical. Meet the Money® Online June 2020.

Cyber Security – A Must in Today’s Viral World

Jack Westergom, Managing Director and Founder of Manhattan Hospitality Advisors explains why hotels are frequent targets of cyber crime, areas in which hotels can be proactive, and why you shouldn’t count on your brand for protection. Meet the Money® Online June 2020.

Cyber Insurance in the Hospitality Industry

Heather Wilkinson, SVP, FINEX E&O/Cyber, Willis Towers Watson, discusses why hotels need to determine their specific exposure, the importance of understanding what your cyber insurance actually covers, and the 5 main cyber threats that hotels are facing today. Meet the Money® Online June 2020.

 

While we weren’t able to gather in person for the 30th year of Meet the Money®, the national hotel investment and finance conference, we are continuing to provide the industry with research analysis and insight through Meet the Money Online. Join us on July 8, 2020 for the next in this series of informative webinars, the CMBS Special Servicing FAQs Virtual Roundtable. CONTINUE READING →

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30 June 2020

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Click here for the latest articles on ADA Compliance and Defense.

As ADA lawsuits continue target hotels, it is critical that hotel owners understand what the ADA requires during the online reservations process. Stuart Tubis of JMBM’s ADA Compliance & Defense Group, explains below.

 

ADA Requires Hotels To Describe
Accessibility Features On Website
by
Stuart Tubis, JMBM’s ADA Compliance & Defense Group

Many hotels are not aware that the ADA imposes several requirements during the reservations process, including posting descriptions of the hotel’s physical accessibility features on its online reservations system.  Starting around early 2018, serial ADA plaintiffs have filed significantly more lawsuits against hotels regarding this issue.

In addition to the many physical accessibility requirements at places of lodging (hotels), such as accessible parking and accessible guest rooms, the ADA also requires places of lodging to take certain actions during the reservations process to help individuals with disabilities obtain an accessible guest room.  Specifically, places of lodging are required to do the following:

  • Ensure individuals can reserve accessible guest rooms in the same manner and time as other guests;
  • Provide descriptions of accessible features of the hotel and guest rooms as part of any reservations process (such as website booking);
  • Ensure that the hotel’s accessible guest rooms are held for individuals with disabilities and not rented out to those not requesting an accessible room (unless all non-disabled rooms have been booked); and
  • Once reserved, ensure that the accessible guest room is hard booked and not rented to anyone else.

These requirements derive from 28 C.F.R. § 36.302(e)(1), which is provided in full below.

CONTINUE READING →

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29 June 2020

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Click here for the latest articles on ADA Compliance and Defense.

ADA website cases continue to be filed against hotels nationwide, but some courts are pushing back against serial plaintiffs. My partner, Marty Orlick, shares the news below from a website case filed in the Northern District of New York.

ADA Website Litigation Update — Serial Plaintiff Gets No “Lucky Charm”
from New York Federal Judge
by
Martin Orlick, Chair, JMBM’s ADA Compliance & Defense Group

In a case indicating that courts may be weary of serial plaintiffs filing multiple cookie-cutter lawsuits, a United States District Judge in the Northern District of New York has ordered a plaintiff to show that she has standing to bring ADA hotel website accessibility lawsuits to federal court.

The disabled plaintiff, who resides in Florida, has filed 29 nearly identical ADA website cases in the Northern District of New York seeking injunctive relief, damages, and attorneys’ fees. In this specific case, Deborah Laufer v. 1110 Western Albany LLC and Ryan LLC, the plaintiff sought an unopposed default judgement when the defendant failed to respond to the complaint.

The Court, however, determined the plaintiff failed to establish Article III standing to bring the lawsuit and refused to enter the default judgment.

Achieving Article III standing in federal court

To have standing to seek injunctive relief in federal court, plaintiffs must establish they have sustained (or are in immediate danger of sustaining) a direct injury as the result of the alleged wrongdoing, and that the injury is concrete and particularized, not hypothetical or speculative.

In this case, the plaintiff claimed injury due to the alleged lack of information on a hotel’s website about accommodations for disabled guests, as is required under the ADA’s 28 C.F.R. Section 36.302(e).

But Hon. Brenda K. Sannes, of the United States District Court of the Northern District of New York states in an Order dated May 8, 2020:

“There appears to be a serious question as to whether Plaintiff has established standing, in this, or any of her other cases, and thus whether the Court has subject matter jurisdiction over these actions. See, e.g. Laufer v. Laxmi & Sons LLC, 1:19-cv-01501 (BKS/L) (Dkt. No. 15, at 7. May 6, 2020). (“There are no facts in the Complaint or Plaintiff’s affidavit indicating that she has ever traveled to Rensselaer, New York, or anywhere in New York, or that she has any reason to travel anywhere in New York or any reason to seek lodging anywhere in New York.”)

The Judge has ordered the Plaintiff to file briefs in 29 actions, addressing whether she has standing, and to specifically reference the legal issues and case law discussed in the Memorandum-Decision and Order the Court entered in Laufer v. Laxmi & Sons, LLC.

What does this mean for hotels?

The 29 lawsuits filed by the plaintiff in the Northern District of New York, are among the more than 235 nearly identical lawsuits she has filed nationally.
CONTINUE READING →

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25 June 2020

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Meet the Money® Online: CMBS Special Servicing FAQs
for CMBS borrowers, investors and holders

A virtual roundtable of current perspectives, challenges and opportunities for hotel and retail projects

JMBM’s Global Hospitality Group® is excited to announce that next up in our Meet the Money® Online series is a virtual roundtable discussion among some of the top experts in the complex world of CMBS. If you are a CMBS borrower, investor or holder – or are involved in properties affected by CMBS – you will not want to miss this important conversation.

The online event will take place on Wednesday, July 8, 2020 at 10:30 AM PDT / 1:30 PM EDT. Register now.

Join our experts online for this 1-hour event which will answer the questions most frequently asked of CMBS special servicers and will also cover important considerations that CMBS holders, borrowers and investors often miss, including:

  • What are special servicers seeing now after the first wave of COVID-19 relief requests? How are forbearance requests being handled?
  • Which loans have larger underlying issues that will require a more complicated and protracted workout?
  • What are the critical appraisal and valuation issues today? What does stabilized value look like, and what assumptions are going to be used?
  • What are the most important effects of Pooling and Servicing Agreements? What do the documents say (or don’t say)?
  • What inconsistencies are showing up and where are they coming from?
  • What are the red flags for loan modifications (or purchase/sale) that could affect the all-important CMBS tax structure?
  • What impact does securitization structure—REMIC, Grantor Trust, CLR/QRS—have on workouts?
  • Can a “special purpose entity” file bankruptcy with independent directors and other bankruptcy remote features in loan documents or corporate structure?
  • Can a hotel be considered “single asset real estate” (or SARE) for streamlined bankruptcy purposes, and why do creditors care?
  • What should we anticipate moving forward?

The program will be moderated by Jim Butler, Chair of JMBM’s Global Hospitality Group®, a founding partner of JMBM, and one of the top hotel lawyers in the world. Devoting 100% of his practice to hospitality, Jim is author of www.HotelLawBlog.com and chairman of JMBM’s Global Hospitality Group® which focuses on representing hotel owners, developers, and capital providers. CONTINUE READING →

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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