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December - Hotel Law: Vast and Varied Issues and Concerns
The hotel industry is a vast international enterprise that requires the professional expertise of legal specialists in all kinds of fields. From hotel acquisitions, finance, compliance and labor issues to franchise, management and bankruptcy issues, the practice of hotel law is as varied as the industry itself. Though the subject matter is far-reaching, there are several legal issues which are likely to gain attention in 2016 and beyond. For instance, hotel managers have to be unceasingly vigilant in order to comply with the Fair Labor Standards Act (minimum pay, overtime pay, equal pay, child labor, etc) but currently the issue surrounding "living wage" increases is also gaining traction, especially in the hotel and restaurant sectors. This is a highly contentious issue and no doubt hotel lawyers will continue to press their concerns on behalf of their clients. Another concern pertains to a recent Supreme Court decision which ruled that it is unconstitutional for local police departments to require hotel operators to produce their guest registries on demand. As a result, hotel managers across the country will now have to educate their associates in order to comply with this new ruling. A novel approach to raising investment capital is becoming increasingly popular with developers who are using the EB-5 program (foreign investment in exchange for green cards) and crowd-funding sources to finance business start-ups and expansions. In addition, there are ongoing issues pertaining to the implementation of the Affordable Care Act, and heightened scrutiny surrounding immigration policies. The December issue of Hotel Business Review will examine these and other critical issues pertaining to hotel law and how some companies are adapting to them. Need to subscribe? Click here!
Gregory A. Wald

On July 1, 2016 several federal agencies published regulations that significantly increased, and in some instances doubled, the civil penalties that could be levied against employers for Form I-9 paperwork violations, unauthorized employment of foreign national workers and for other immigration-related violations, including immigration discrimination charges. Due to the implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Public Law 114-74) (“Inflation Adjustment Act”), higher fines and civil penalties have now gone into effect for assessments that occur on or after August 1, 2016. These higher penalties can be applied to violations that occurred after November 2, 2015, the day the President signed the Act into law. READ MORE

Jerome G. Grzeca

Hotels, like other U.S. companies, are struggling to find solutions to staffing shortages. Every month, more than a quarter-million Americans turn 65, which is a trend that has profound workforce and economic consequences in this country. In addition, unemployment rates continue to fall, dropping to 4.9% nationwide in September 2016. These changes, along with other factors like increases in occupancy rates and high labor costs, have resulted in many hotel companies having trouble finding and hiring qualified workers for open positions. Of course, it’s not an option for the rooms not to be cleaned or for the meals not to be prepared and served when employees are hard to find. READ MORE

Arthur Tacchino

The Affordable Care Act (ACA) is likely one of the most confusing pieces of legislation you have to comply with, and the hospitality industry, especially hotels, is more complex than most when it comes to ACA reporting. This year, the stakes are higher as the IRS removes all the safety nets that were in place in 2015. Whether you reported with complete accuracy and auditability for 2015, or the notion of ACA reporting still makes your head spin, there’s a lot to learn from last year’s mishaps and this year’s expectations READ MORE

John Mavros

Employment arbitration agreements commonly include mandatory class action waivers. Class action waivers can be a powerful tool for employers to prevent potentially devastating class action lawsuits. Until several months ago, employers didn’t have to think twice about whether a class waiver was a lawful part of their arbitration agreement. That all changed when Federal Circuit Courts in Lewis v. Epic Systems (7th Circuit) and Morris v. Ernst & Young (9th Circuit) held that class action waivers violate the National Labor Relations Act’s guarantee of collective action and therefore could not be enforced under the Federal Arbitration Act. These decisions have created a circuit split between Federal courts across the country. This article will survey this treacherous legal landscape and share some guidance for employers’ arbitration agreements during these uncertain times. READ MORE

Francesca A. Ippolito-Craven

The Zika virus has created a potential myriad of legal issues that should be considered by hotel owners and operators in the United States and its territories, particularly in light of the fact that the World Health Organization (WHO) has declared that the Zika virus infection and its associated congenital and other neurological disorders continues to be a “public health emergency of international concern.” The U.S. Centers for Disease Control and Prevention (CDC) has also advised that pregnant women should consider postponing non-essential travel to locales that have been zoned areas of active transmission. READ MORE

Justin Thompson

There is no denying the importance of a brand in the context of hotels. Branded hotels make up approximately 70% of the total rooms in the United States hotel system and are predicted to grow to 80% in the next 10 years. The somewhat recent explosion in new brands from existing hotel companies can be seen as significantly contributing to this growth. In the past 35 years, the number of brands has quadrupled. In fact, brand proliferation has become so ubiquitous that the top seven hotel companies now account for 90 different hotel brands. A discussion follows of some of the more salient legal issues that the recent explosion in hotel brands has produced. READ MORE

Tyra Hilliard

More than 15 million Americans, nine million of them adults, have food allergies. While handling special dietary requests is not a new issue for hotels, the practical and legal issues surrounding accommodating dietary restrictions are changing. According to Food Allergy Research & Education (FARE), food allergies are on the rise. Because nearly half of fatal food allergy reactions are caused by food consumed outside the home, it isn’t a far stretch to imagine that a significant number each year may occur in hotels. Eight foods are responsible for 90% of all allergic reactions in the U.S.: milk, eggs, peanuts, tree nuts, wheat, soy, fish, and shellfish. READ MORE

Michael Wildes

An article published in the International Journal of Hospitality Management has declared that “the hospitality industry is facing a major personnel shortage.” The authors provide the following advice to hotel and hospitality managers: “demographic changes … suggest that the hospitality industry should reconsider tactics for recruitment and retention.” The authors’ advice is nothing new - hotel and hospitality managers have long struggled to find and retain suitable staff. In fact, many hotel recruiters wouldn’t be surprised to learn that the aforementioned article wasn’t published this year, this decade, or even in this century – but in 1992. READ MORE

David M. Samuels, Esq.

When it comes to guest privacy, the operational landscape has changed dramatically over the last two years. Historically, “service” has referred to attending to guests’ needs in relation to such things as in-room amenities, quality of sleep, dining and entertainment options, cleanliness, etc. But, the book ends formed by the Supreme Court’s pronouncement in its 2015 Patel decision and the high-profile Erin Andrews matter in 2016, have created an entirely new operational landscape where protecting guest privacy must be an integral element of every hotel’s “service” model. READ MORE

Anne  Alexander

It is no secret in the hospitality industry that a tremendous amount of energy, water and other resources is required to serve guests. However, the industry as a whole has taken steps to become more energy and resource efficient within the last ten years. We are all familiar with the placards found in most hotel rooms today, asking guests to indicate whether they want their sheets and towels changed on a daily basis or whether they will use them again. While hotels historically washed sheets and towels every night even when there was no turnover in the room. READ MORE

Luis J. Gonzalez

Complying with the Fair Labor Standards Act (FLSA) and the Department of Labor’s (DOL) regulations for tipped employees continues to present challenges for hoteliers and others in the hospitality industry. While recent attention has been paid to proper tip pooling practices (employers requiring certain tipped employees to chip in a portion of their tips, which are then divided among a group of employees), equal attention must be given to the FLSA’s mandatory notice provision to tipped employees. A continuing trend in wage and hour lawsuits stems from the employer’s failure to give the tipped employee the required notice. READ MORE

John R. Hunt

Last year, the U.S. Supreme Court issued a decision that placed restrictions on the ability of law enforcement officers to inspect hotel guest registers and other records. Many local laws, which had authorized unlimited police inspections, suddenly were rendered unconstitutional. This article reviews that decision and discusses the developments that have occurred in this area during the past year. Until recently, hotels in many jurisdictions routinely provided the police with access to their guest registers without much concern about the privacy issues that might be involved. After all, numerous cities and towns possessed ordinances that required hotels to collect specific guest information and allowed the police inspect the information upon request. READ MORE

Banks Brown

CDA § 230 is shorthand for Section 230 of the Communications Decency Act, 47 U.S.C. § 230 (2016). It is the law cited by short term rental companies (“STRC”), such as Airbnb, when they argue with city and state governments and in the courts that their businesses are not subject to state and local regulation. It is fair to say that the STRCs are of the opinion that city and state governments are nearly powerless to regulate them in any way whatsoever, absent their consent. READ MORE

William A. Brewer

They’re Coming to the U.S.A. Foreign investors are making headlines as they take ever bigger positions in the U.S. hospitality market. Notably, the structure of the hotel management agreement (HMA) – a complex and often misunderstood instrument – has major legal implications for foreign owners and managers. In this article, we explore the friction between owners and operators whose interests are not always aligned – particularly during periods of economic downturn. Therefore, negotiating a proper HMA is critical to governing the relationship. READ MORE

Theodore C. Max

The FTC’s has stepped up enforcement of social media advertising in the entertainment and fashion industries and this effort is likely to continue and expand to other industries. Advertisers and retailers in the travel tourism and hospitality industry need to be mindful to make sure that if any content is sponsored or any influencer or spokesperson is paid to promote a product or services online, a clear and conspicuous disclosure is required. It is possible that FTC enforcement also may soon target individual influencers and require clear and conspicuous disclosures by them regarding the endorsement of products or services for compensation. READ MORE

Lynn K. Cadwalader

Looking forward to 2017, the EB-5 Immigrant Visa Program will face both challenges and opportunities. Fortunately for the Hospitality Industry, hotels are still ideal projects for EB-5 financing. In this Article, I will discuss some of the major issues and impacts on the EB-5 Immigrant Visa Program anticipated for 2017, and review the benefits to financing hotels through the EB-5 Program. READ MORE

Coming Up In The December Online Hotel Business Review




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Feature Focus
Hotel Law: Issues & Events
There is not a single area of a hotel’s operation that isn’t touched by some aspect of the law. Hotels and management companies employ an army of lawyers to advise and, if necessary, litigate issues which arise in the course of conducting their business. These lawyers typically specialize in specific areas of the law – real estate, construction, development, leasing, liability, franchising, food & beverage, human resources, environmental, insurance, taxes and more. In addition, issues and events can occur within the industry that have a major impact on the whole, and can spur further legal activity. One event which is certain to cause repercussions is Marriott International’s acquisition of Starwood Hotels and Resorts Worldwide. This newly combined company is now the largest hotel company in the world, encompassing 30 hotel brands, 5,500 hotels under management, and 1.1 million hotel rooms worldwide. In the hospitality industry, scale is particularly important – the most profitable companies are those with the most rooms in the most locations. As a result, this mega- transaction is likely to provoke an increase in Mergers & Acquisitions industry-wide. Many experts believe other larger hotel companies will now join forces with smaller operators to avoid being outpaced in the market. Companies that had not previously considered consolidation are now more likely to do so. Another legal issue facing the industry is the regulation of alternative lodging companies such as Airbnb and other firms that offer private, short-term rentals. Cities like San Francisco, Los Angeles and Santa Monica are at the forefront of efforts to legalize and control short-term rentals. However, those cities are finding it’s much easier to adopt regulations on short-term rentals than it is to actually enforce them. The December issue of Hotel Business Review will examine these and other critical issues pertaining to hotel law and how some companies are adapting to them.