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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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03 October 2017
Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

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:

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29 September 2017
Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

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:

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25 September 2017
Click here for the latest articles on Resort Fee Litigation. 

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

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 →

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19 September 2017

As of January 1, 2018 owners of General Partnerships, Limited Partnerships or multi-member Limited Liability Companies may soon find themselves economically liable for the unpaid tax of former partners/members of those entities. JMBM Tax Attorney Jamie Ogden briefly describes the new audit regime, who it affects, and what you need to do to protect yourself from uncertainties.

 
Important tax news for owners of
Partnerships and LLCs
by
Jamie Ogden, Tax Lawyer
On June 13, 2017, the Treasury Department republished Proposed Treasury Regulations regarding the new partnership audit regime enacted as part of the Bipartisan Budget Act of 2015. Generally, the new partnership audit rules will be effective January 1, 2018.

As a result of the new partnership audit regime: (1) individuals and/or entities that were formerly owners of General Partnerships, Limited Partnerships and multi-member Limited Liability Companies (together “Partnerships”) during prior, audited tax years may escape liability for unpaid tax, and correspondingly (2) the existing owners of such Partnership (i.e., the owners of the Partnership at the time of the IRS collection process) will bear the economic burden entirely. Thus, in the absence of properly drafted Partnership and Operating Agreements, any existing owner of a Partnership may be economically liable for the unpaid tax of former partners/members of the Partnership. It is therefore critical that Partnerships and their owners review and modify their existing partnership and operating agreements immediately. CONTINUE READING →

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17 September 2017

EB-5, Mixed-Use Development and Deal Making: See you at the 2017 Lodging Conference

The Lodging Conference is taking place at the Arizona Biltmore in Phoenix, October 30-November 2, 2017, and hotel lawyers from JMBM’s Global Hospitality Group® will be there to visit our friends in the hospitality industry, share our knowledge, learn from the experts (and do some deals!).

At the conference, I will moderate the panel,  Navigating the EB-5 Landscape taking place at 4:00 pm on October 31st. Funding obtained through the EB-5 Immigrant Investor Visa program continues to play a vital role in the capital stack for new hotel development and we will provide up-to-the-minute information on the status of the program, as well as share some great success stories. To get up to speed on what’s happening with EB-5, check out my recent blogs.

Also from our team, JMBM Global Hospitality Group’s  Vice-Chair Guy Maisnik will speak on the panel Structuring Mixed-Use Development on November 1st at 11:30 am. Guy has represented developers and owners of hotel mixed-use properties for decades, and he will share his experience in financing, management agreements, and other critical issues. CONTINUE READING →

Published on:

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07 September 2017
Click here for the latest articles on EB-5 Financing. 

President Trump’s budget deal with Congress includes extension of EB-5 through December 8, 2017

In a message to members of the Public Policy Committee today, the IIUSA confirmed the extension of the EB-5 regional center program as part of the budget deal struck yesterday by President Trump and Congressional leaders.

IIUSA message on EB-5 extension

The IIUSA is one of the leading EB-5 industry trade groups. Here is the text of the message from the IIUSA we received today:

Dear IIUSA Public Policy Committee,

As we are sure you’ve seen in media outlets, there is important news regarding government spending, and in turn, EB-5 reauthorization.

EB-5 Extension thru 12/8 Part of Congress/White House Spending Deal

Yesterday, Congress reached a deal with the White House that, once passed at some point this September, would extend existing funding levels and other program authorizations (such as EB-5) included on the last “continuing resolution” (“CR”) through 12/8/17.

The EB-5 authorization comes in Section 105 text of the deal released yesterday which:

Continues all authorities, requirements, and limitations from 2017 appropriations Acts through the date in section 106. Allows for valid obligations and expenditures during the period of the Continuing Resolution (CR).

Section 106 verifies the date:

Continues appropriations through December 8, 2017, or the enactment of the pertinent appropriations Act.

CONTINUE READING →

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15 August 2017
Click here for the latest articles on EB-5 Financing. 

JMBM’s Global Hospitality Group® and EB-5 Finance Group™ are pleased to announce the publication of The Developer’s EB-5 Handbook for EB-5 Construction Financing, a “must-read” resource for developers who are considering using EB-5 financing to complete or enhance their capital stack for construction projects . This is the much talked-about and often (inappropriately) maligned EB-5 program, also known as the immigrant investment visa program.

While there are many pending developments that could affect the EB-5 program, this is still a good time to learn how the program works and why so many developers have used EB-5 financing as part of the capital stack for their new projects. The Global Hospitality Group has developed an approach to guide clients through the EB-5 process with a minimal amount of financial risk to find and evaluate the reliable players and execute financing with a high degree of confidence.

The Developer’s EB-5 Handbook is written to help developers assess the potential opportunities for EB-5 financing while avoiding potential traps for the unwary. Written by legal and business advisors to top developers with great projects in the United States, the Handbook includes articles addressing the following topics: CONTINUE READING →

Published on:

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06 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published on HotelLawBlog.com on 15 December 2014.

 
What JMBM does for developers with EB-5 financing
by
Jim Butler, Hotel & EB-5 Finance Lawyer
Focus on helping developers

Client confidentiality precludes us from listing clients and projects we have assisted with this program, but suffice it to say that some of the best known names in the business are tapping into this funding source to fill out their capital stack at a favorable cost. And we have helped some of the biggest and highest profile players.

JMBM has closed more than $1.5 billion of EB-5 financing and has sourced more than half of that for our development clients.

We specialize in representing developers and projects that we believe can qualify for “preferred” status. This concept is discussed in great detail in this article: “Development financing: How to win the race for EB-5 capital.”

For developers and projects that qualify for “preferred” status, we provide business and legal advice to guide the developer through the entire capital raising process. This includes validating that the developer can qualify for the favorable financing and actually sourcing the capital.

Here is a more complete list of how we can usually assist: CONTINUE READING →

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04 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published about 3 years ago on HotelLawBlog.com on 30 July 2014.

 
Why you do NOT want to form your own regional center
by
Jim Butler, Hotel & EB-5 Finance Lawyer
How should developers pursue EB-5 financing?

Although the EB-5 immigrant visa program has been around since 1990, the current trend of using it as a source of financing for hotel and other real estate started 20 years later – around 2010. We worked on one of the first hotel EB-5 financings for the W Hotel & Residences in Hollywood, and we have since worked on more than 100 EB-5 projects all over the country. Now, the use of EB-5 financing for construction has gone mainstream. High profile EB-5 financing closings include $450 million for the Century Plaza Los Angeles, $100 million for the Ritz Carlton & JW Marriott in downtown Los Angeles, $150 million for the Waldorf Astoria in Beverly Hills, and $1 billion for the Silverstein project at the World Trade Center in New York City (with a Four Seasons Hotel).

As a growing number of savvy hotel developers hurry to assess the EB-5 financing opportunity, they frequently receive conflicting advice as to the best way to pursue EB-5 financing. Many immigration lawyers and advisors tout the advantages of the developer forming its own regional center – basically to shave a few points off the all-in cost of EB-5 financing.

This advice may work well for the EB-5 advisors (in that they may get $100,000 or more in fees) and for certain hotel developers. But for most of the hotel developers we know, forming a captive regional center is a bad idea. This article should provide a note of caution for developers considering this course.

Based on our extensive experience with financing hotel development from EB-5 funding sources, we believe that the answer for most hotel developers will be to obtain “preferred” status for themselves and their projects – if they can do so – and to tap into the very best established EB-5 funding sources. For more on this approach, see “Development financing: How to win the race for EB-5 capital.”

Restricted capacity in channels for accessing EB-5 capital

As hotel developers compete in a very crowded field seeking the finite amount of EB-5 funding available each fiscal year (because there are only 10,000 visas available per year), there is something of a “race” to gain access to the limited resources for tapping EB-5 capital. CONTINUE READING →

Published on:

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4 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published about 3 years ago on HotelLawBlog.com on 25 July 2014.

The 5 questions every developer
is asking about EB-5 financing
by
Jim Butler, Hotel & EB-5 Finance Lawyer
EB-5 financing has gone mainstream for hotel development

The use of EB-5 financing has exploded over the past 8 years as an important funding source for new development – particularly for hotel developments. It is clearly now part of the “mainstream.” It is used by many institutional players, including government entities such as port authorities, major hotel brands like Marriott and Hilton, and some of America’s most successful and respected companies, such as Great Wolf Resorts, the Related Companies, and Silverstein Properties.

As lawyers who have worked on more than 100 EB-5 projects all over the country, we have noticed that everyone who investigates EB-5 financing wants answers to 5 big questions about the EB-5 financing opportunity for their project. It should come as no surprise that most of our EB-5 projects involve financing for new hotel development, because hotels are the most popular type of project for EB-5 investors, and we have one of the most prominent hotel law practices in the world. However, our team has also successfully used EB-5 financing for a number of non-hotel projects, including hospitals, senior living, restaurants, solar farms, and infrastructure projects.

The 5 questions every hotel developer is asking about EB-5 financing

Our developer clients say their top concerns in pursuing EB-5 financing is to quickly and reliably determine the answers to the following 5 questions below before they spend substantial time and money or forego other opportunities. They don’t want to waste their time on a wild goose chase. We think every developer considering EB-5 financing should be asking the same questions.

  1. Will EB-5 work for me on my project?
  2. How much money can I get?
  3. How much will it cost?
  4. How long will it take?
  5. How can I get certainty of execution?

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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