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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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Meet the Money® 2014

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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.

Published on:

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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

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

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 →

Published on:

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29 June 2020

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

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22 June 2020

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

Speakers from Manhattan Hospitality Advisors, Tiered Communication Services Inc. and Willis Towers Watson will join Bob Braun of JMBM’s Global Hospitality Group® for this informative online program.

Please join us this week, on Thursday, June 25, 2020, when Meet the Money® Online addresses an issue of critical importance to the hospitality industry: information security.

As privacy laws demand companies do more to protect customer and employee data – and cyber hackers become more sophisticated – making sure your hotel’s information is secure has never been more important.

This free webinar will take place on Thursday, June 25 at 10:30 AM PDT / 1:30 PM EDT. Register Now.

Join our panel of cybersecurity experts and hospitality veterans for a 1-hour webinar to discuss:

  • What personal information hotels collect and how they use it
  • The role of hotel owners, operators and brands in guest information
  • Technology aspects of information collection, use and protection
  • Insurance issues – how to mitigate risk and cost using insurance
  • Legal obligations and compliance

This discussion will be moderated by Robert E. Braun, partner and co-chair of the Cybersecurity and Privacy Group at Jeffer Mangels Butler & Mitchell LLP who works with companies on their data technology, privacy and security matters. Bob is also a senior member of JMBM’s Global Hospitality Group® and has more than 20 years of experience in representing hotel owners and developers in hotel management and franchise agreements, condo hotel securities issues and many transactional matters, including entity formation, financing, and joint ventures.

Our speakers include:

  • Jonathan Adam, Co-Founder and Chief Technology Officer, Tiered Communication Services, Inc.Jonathan Adam is a founding member and CTO of Tiered Communication Services, Inc. With 17 years of hotel experience, he pairs high end development projects with extremely secure advanced technology systems for an unsurpassed guest user experience, driving amazing rates of return to owners. He holds multiple technology patents, and co-founded the ySuite Incubator in Austin and PracTECHal Solutions headquartered in Las Vegas. The ySuite team owns and operates multiple hotels in the Austin area, and utilizing the TCS technology infrastructure, they generate significant amounts of high margin add-on revenue through new hospitality revenue channels.
  • Jack Westergom, Managing Director and Founder, Manhattan Hospitality AdvisorsJack Westergom is Managing Director and Founder of Manhattan Hospitality Advisors. Jack is a veteran hotelier whose background includes asset management, hotel/resort operations, international marketing, investment relations and real estate development including many of the top 25 hotels and resorts in the world. Manhattan Hospitality Advisors has provided oversight on over $18 billion of hospitality assets around the world and has helped hotels to successfully navigate through four real estate downturns.
  • Heather Wilkinson, SVP, FINEX E&O/Cyber, Wills Towers WatsonHeather Wilkinson is SVP in the FINEX Cyber & E&O practice for Willis Towers Watson with over fourteen years of experience in the cyber insurance industry. Heather is a founding member of the Willis Towers Watson E&O and Cyber Broker Team; she joined the organization in 2006 and has been instrumental in placing some of the largest towers of E&O and Cyber insurance placements in the world. She is uniquely qualified to handle Cyber and Professional Liability issues and placements and is based in Los Angeles.

There is no fee for this program.

REGISTER NOW CONTINUE READING →

Published on:

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26 May 2020

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Meet the Money® Online: State of the Hospitality Industry

More than 1,100 people registered for last week’s Meet the Money Online webinar, “The State of the Hospitality Industry”.

If you weren’t one of them and would like to watch the full hour-long webinar, you can find it here, on the Resource Center page of HotelLawyer.com.

Also on the Resource Center page you can find the thought-provoking presentations made by our expert panelists:

U.S. Hotel Overview
Vail Ross of Senior VP, Global Business Development & Marketing, STR presented noteworthy statistics on the state of the hotel industry and the impact that Covid-19 has had on construction.

U.S. Hotel Outlook: Navigating the Storm
Jamie Lane, Senior Director, Economics & Forecasting, CBRE, examines the economic outlook for the U.S. and what it means for lodging. His presentation includes assumptions, updated CBRE forecasts and differences in recovery timing by chain scale and markets.

State of the Hospitality Industry Today: Hotel Values and Cap Rates
Suzanne Mellen, Senior Managing Director, HVS, reviews how hotels are being valued in this uncertain economic environment and when hotel values will recover to pre-Covid levels.

U.S. Lodging Industry 2020. COVID-19: Shocking Unprecedented Downturn
Daniel Lesser, President & CEO, LW Hospitality Advisors, explores long term sector paradigm shifts and where the lodging industry will go after hitting rock bottom.

We missed gathering in person with all our industry friends for what would have marked the 30th year of Meet the Money® the national hotel investment and finance conference.  However, through Meet the Money Online and the Hotel Law Blog, we will continue to provide the industry with research, analysis and insight, and most importantly our take on “what it all means” as we move forward into economic recovery.

CONTINUE READING →

Published on:

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19 May 2020

 

Click to see our category-killer experience with hotels, and click here for the latest articles on Labor & Employment.

Hotel Lawyer on opening our country back up — California update

As California lawmakers release new guidance on easing stay-at-home restrictions, many employers are wondering how they can safely begin to reopen their businesses. In their latest update, JMBM’s Labor & Employment Group discuss the four phases of reopening and what employers can expect as they implement new workplace requirements. – Jim

California Employers’ Road Map to Reopening the Physical Workplace
by
Marta Fernandez

In only two months, California employers have experienced an unprecedented disruption to business and the adoption and implementation of myriad new laws aimed at remedying the economic effects of COVID-19 and limiting its spread. But even now, as California lawmakers from the Governor to local mayors agree that it is time for California to get back to doing business, there is great uncertainty as to when and how this can safely occur.

The process will obviously be gradual and subject to reversal at any time.  Business operations will eventually return to full capacity, but the workplace will be different for months, if not years, to come as a result of new laws and the nature of the pandemic crisis itself.

When it comes to employee matters, how can an employer best develop a plan to navigate the uncertainty of emergency orders restricting operations, new laws and regulations, and an entirely new business environment?

We suggest that employers work with their professionals to implement their own four phase plan:

  1. Determine when your business can lawfully reopen and to what extent
  2. Assess how the timing of bringing employees back affects the risks and costs associated with reopening your business
  3. Identify any limitations on your discretion to choose which employees to bring back and when
  4. Understand new workplace requirements and create systems to implement them

Read the full alert here for a discussion of all four phases.

Online Resources

CONTINUE READING →

Published on:

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17 May 2020
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.

 

Hotel Lawyer: Increasing Distressed Hotel Loans and Troubled Hotel Assets

Originally published in November 2008 on HotelLawBlog.com, then updated in 2010 for our Lenders Handbook for Troubled Hotels, we have updated this article through May 2020 to assist industry friends in dealing with distressed loans provoked by the COVID-19 crisis. 

How can a “special purpose entity” borrower ever file bankruptcy
if independent directors must approve the filing?
by
Jim Butler, Bob Kaplan, and Nick De Lancie

Since the mid-1990s, lenders on hotels and resorts have generally required their borrowers to transfer the asset being financed into a “single purpose” LLC or other “bankruptcy remote” entity sometimes respectively referred to as an “SPE” and “BRE.” The main feature of an SPE is that it owns only the single asset being mortgaged, is unlikely to become insolvent due to its own activities, and is generally protected from the effects of the insolvency of its affiliates. The main feature of a BRE is that filing bankruptcy is only a remote possibility because of various inherent or contractual legal requirements built into the very entity.

What is a bankruptcy remote entity? Why use one?

A BRE is an entity (usually an SPE) that has a structural layer of protection in its organic documents that makes it more difficult for the entity to seek bankruptcy protection. A number of approaches have been developed to create this “bankruptcy remote” structural layer.

Today, a BRE’s structural protection for the lender typically provides in its organic documents that in order to commence a bankruptcy case, approval must first be obtained from one or more independent directors or the equivalent, depending on the entity. Such a person must be independent of the borrower and is appointed by the lender, or approved by the lender. For simplicity, we will call such persons “independent directors.”

The lender expects that the independent director simply will not approve the entity’s commencement of any bankruptcy case. Thus, without a bankruptcy, the lender would be able to foreclose on the hotel or real estate without the delay and cost of bankruptcy.

Clashing fundamental principles – state corporate governance vs federal bankruptcy relief

At root, each BRE approach or strategy is based on the long-established, fundamental principle that, even though bankruptcy is a federal law matter, the entities in question are created under and governed by state law. Some believe that such corporations, limited liability companies, limited partnerships or other types of “corporate” entities can only be governed by the law of the state in which the corporate entity was organized. Therefore, the organic documents of the entity (adopted pursuant to that state’s law), govern who has the authority to decide that the entity will commence a bankruptcy case.

But this long-established principle of state law controlling corporate governance runs headlong into another long-established, fundamental principle of bankruptcy. The Bankruptcy Code (section 109(a)) expressly authorizes any “person” to file a bankruptcy petition. A person includes any corporation, limited liability company, and general or limited partnership. Waivers or attempts to contractually surrender this right are void as against public policy and, thus, unenforceable. 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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