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Hotel Lawyers -- featured subjects and articles
Meet the Money® 2014

ADA defense and compliance

EB-5 financing

Workouts, bankruptcies & receiverships

Hotel Management Agreements

Hotel Franchise & License Agreements

Hotel industry trends

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:

10 December 2020
Click to see our category-killer experience with hotels. See also our distressed loan credentials and The Lenders Handbook for Troubled Hotels. And click here for the latest blog articles on loan modifications, workouts, bankruptcies and receiverships, and outlooks and trends.

Most of the receiverships in the United States are state court receiverships. But lenders seeking the relief and protection of receiverships are giving new consideration to filing in federal court.
Our partner Nick De Lancie took the lead in putting together this summary of some key factors in making this choice today.

Time for a new look at
Federal vs. State Receiverships

Many state courts are closed or backlogged

Due to the Covid-19 crisis, getting receivers appointed in many state courts may be difficult. Some state courts are effectively closed, others are backlogged, and still others have temporary restrictions on receivership or foreclosures proceedings that push receivership applications even further down the stack.

Federal courts are generally open and working. Federal courts, however, have generally been proceeding with their cases in a more-or-less normal fashion. Even though federal courts do not have the quick receivership hearings that some states permit in ordinary times, federal receiverships, which are not commonly used by secured creditors, can be a very useful remedy for defaulted loans. This is particularly true even when state courts are fully “open for business” where the borrower’s operations and the creditor’s collateral are located in multiple states.

Similarities to state receiverships. Federal receiverships are similar to traditional state court receiverships but they have nationwide scope and may avoid many of the problems that arise from seeking and using multiple receivers, each from a court in a different state. They are historically recognized by federal law and are recognized and governed by the Federal Rules of Civil Procedure. CONTINUE READING →

Published on:

1 December 2020

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

Following our ADA Website Litigation Update in June, federal courts have begun to signal the end of a series of nearly 500 ADA lawsuits filed by one plaintiff against several hotels concerning accessibility descriptions on hotel reservation websites. Martin Orlick, Chair of JMBM’s ADA Compliance & Defense Group, gives an overview of these cases and explains why a recent ruling by a Maryland judge has proved that they are defensible.

While this ruling demonstrates that courts are beginning to push back against serial plaintiffs, it is important for hotels to understand what the ADA requires during the online reservations process.

Federal Judges Deal Further Blows to Debra Laufer’s Nationwide ADA Lawsuits Against the Hospitality Industry: ADA Lawsuits Are Defensible
by
Martin Orlick, Chair, JMBM’s ADA Compliance & Defense Group

On June 8, 2020, we reported on the opinions of a New York federal judge that 30 of Debra Laufer’s Complaints had no place in federal court. Since then, in other jurisdictions, federal judges have dealt further blows to Ms. Laufer’s campaign of lawsuits alleging that hotels and online travel agencies’ (OTA) websites violate the Americans with Disabilities Act (ADA) under 28 C.F.R. § 36.302(e)(1) by failing to identify the accessibility features of their hotels. On November 10, 2020 in Deborah Laufer v. Ft. Meade Hospitality, Civ. 8:20-cv-1974, a Maryland judge dismissed Ms. Laufer’s Complaint for lack of Article III standing.

Debra Laufer has filed nearly 500 lawsuits against hotels in Florida, Georgia, Maryland, New Jersey, New York, Illinois, Texas and other states. Until recently, hotel defendants found it easier and cheaper to settle, thereby encouraging more lawsuits. But a recent federal court decision may signal the end of these serial ADA lawsuits filed by Ms. Laufer.

Ms. Laufer is a self-described “tester” who reviews hotel websites to determine whether these “places of public accommodation” and their websites are in compliance with the ADA. The plaintiff, physically disabled, resides in Florida and requires assistive devices, often including a wheelchair if available. When allegedly visiting hotels, she requires disability accommodations. Online reservations can be made directly through the hotel’s website or at booking.com, priceline.com, expedia.com and other booking websites. Laufer alleges she visited these websites to test whether they meet the requirements by providing disability information about the hotel accommodations. If the websites do not provide sufficient information, she files litigation through the same lawyers.
CONTINUE READING →

Published on:

19 November 2020

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

Published on:

10 November 2020

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

Published on:

23 October 2020

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

Published on:

15 September 2020

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

Published on:

17 July 2020

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

Published on:

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 →

Published on:

01 July 2020

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

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 →

Published on:

30 June 2020

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