Hotel Business Review Archives

The facts of the Turnberry Case are more like something we’d see in a James Bond movie than in real life. But then again, fact is stranger than fiction. In real life can a hotel manager be ousted from a hotel without notice and cure - even with a carefully crafted hotel management agreement in place?

Sometimes, despite a considerable investment of time and resources, an hotelier isn’t able to find an American worker to fill the position. In that event, hoteliers are not limited to the pool of US workers who do not meet the minimum requirements for the job; they may consider hiring a foreign national. One way to do this is by sponsoring a foreign national for permanent residence through a process called Labor Certification. Once an hotelier is able to obtain Labor Certification, she may sponsor a foreign national for permanent residence; this means the right person for the job will become eligible for a green card.

In this economic environment, hotel owners and managers alike are doing all they can to ensure that their hotel is profitable. The structure of the Incentive Fee is a key element to aligning the interests of the hotel owner and the hotel manager. Does the Incentive Fee structure get what it is intended to incentivize? This article delves into the various ways that Incentive Fees can be calculated to incentivize the manger to be fiscally responsible and to reward the owner for taking the financial risk of developing and owning the hotel - and in turn increases the bottom line for both parties.

While seemingly unimportant, those pesky one-pagers known as the “Form I-9” that all employers are required to complete for new hires can be the source of significant liability. In fiscal year 2010, ICE agents recovered penalties of $6.9 million from businesses, criminally charged nearly 200 business owners and managers with immigration violations, and conducted more than 2,000 compliance audits of employer-prepared I-9 work eligibility forms.

United States immigration laws provide ample opportunities for American businesspersons to thrive despite current economic conditions. Specifically, the Immigration and Nationality Act's (INA) EB-5 program allows foreign investors to funnel their resources into local business projects in exchange for visas. Notably, the hospitality industry has achieved unprecedented success from EB-5's attractive provisions, with its latest projects largely funded by millions in foreign capital. As a result, hotel and resort owners are strongly encouraged to visit their local regional centers and take advantage of the laundry list of opportunities still available to market to overseas investors.

I wrote in this publication a few years ago about the importance of managing public relations in connection with major hospitality disputes. As a law firm that often represents owners, developers, investors and managers in high-stakes legal matters, we recognize the importance of being advocates not only in the courtroom - but in the court of public opinion as well. Given the interest in that previous article, I am writing this follow-up to underscore why hospitality professionals or their representatives must not only be familiar with the process of working with the news media; they should embrace it. The news media, after all, is a gateway to customers, employees, investors, analysts and legislators - all of whom have the ability to affect your business.

Beginning with Arizona’s controversial SB 1070 law, more and more states have begun proposing new legislation to try to close the gap in a broken system.  If you’re a hotel manager or owner and have tried to procure a visa for a foreign-born employee, you may know how badly this country needs to update its outdated immigration laws. In our current system, individuals without a bachelor’s degree in a specialty occupation field will face much difficulty qualifying for a work-based visa.  If you operate a seasonal business like a ski lodge, some visas may suit your needs just fine but other hoteliers may find themselves out of luck.

Few industries can boast the worldliness of the hospitality industry. As hotels and lodges seek out tourist hubs and travel spots worldwide, the industry has largely trended toward international expansion. Today Americans can travel to any corner of the globe and find a hotel brand that they know and trust. Just as the industry's patrons are traveling now more than ever, employees, too, are increasingly being transferred from one overseas location to another. When certain requirements are met, employees from the international office of one company can be transferred to a domestic office with relative ease courtesy of the L-1 intra-company transfer visa.

In this tough economic environment, we are seeing people "cutting corners" and pinching pennies everywhere we go – whether it’s the consumer looking for the best deal, the hotel operator doing everything in its power to maximize the value of every dollar in the annual budget, or the licensor taking steps to decrease its risk by capping its liability to a specific dollar amount. While it’s admirable to get the most bang for your buck and reduce your risk of liability, can a licensor really get away with capping its trademark liability, when it has all the control over trademark issues? This article explains the basics of the licensor/licensee relationship and the types of indemnification provisions typically found in license agreements.

As the hospitality industry continues to emerge from the economic recession, there is little doubt that this year will bring both opportunities and unexpected challenges. Last year, we witnessed the opening of a number of new hotels and resorts worldwide, including a dozen new hotels in New York City alone. Many new management deals were also announced in 2010. On the other hand, the recent recession has left us with a considerable number of disputes between owners and operators. Those controversies serve as a reminder that, in good times and especially in bad, owners and operators need to understand their respective rights and responsibilities in the hotel management agreements they enter into. Because it is better to identify potential problems before they occur, this article briefly explores how owners and hotel operators may address legal and economic issues in hotel management agreements for major development deals.

Chinese Investment in the hospitality sector is increasing as capital needs and investment opportunities in the United States drive the "yearn for yuan." Investment has been through both government-sponsored funds such as Chinese Investment Corp. (CIC), China’s $300 billion sovereign investment wealth fund, as well as private funds and companies. Learn from the lawyer who represents and structured the investments for Shenzhen New World Group, Ltd., one of the largest Chinese investors in the Lodging Industry. Get an inside view as to how these deals are being structured, what Chinese companies are looking for in making an investment, cultural differences to consider in doing business with the Chinese and the forecast for Chinese investment in the lodging industry for 2011.

Around this time last year we told you about the importance of the Employment Eligibility Verification Form I-9, which all employers have been required to keep on file for their employees since 1986. Form I-9 requires that new hires provide specific documents which establish their right to work lawfully in the U.S. to their new employer within three days of hire. Since taking office, President Obama has directed the Immigration and Customs Enforcement agency (ICE) to strictly enforce sanctions against employers who knowingly hire unauthorized workers. That trend continued throughout 2010 and all signs seem to indicate that the same will hold true for 2011. The hotel industry is closely watched as it bears a reputation for being a hotbed of unlawful employment.

As the weather outside turns colder and flakes of snow begin to fall, hoteliers of winter resort destinations may be wondering how to meet their staffing needs. Since it is not always possible to hire only U.S. citizens, human resource personnel may be required to look outside of our borders. One simple solution is the Trade NAFTA (TN) visa which allows our North American neighbors to work legally here with very little effort. This category is similar to the "H-1B Specialty Occupation" nonimmigrant category, except that there is no numerical limit on how many individuals can come here to work, there is no limit on their stay, and generally, the TN category covers a broader range of professional occupations.

Most hotel management agreements contain a "performance test" that gives the Owner of the hotel an option to terminate the management agreement if the Operator fails to achieve one or more financial benchmarks in the operation of the hotel. Many of these performance tests were negotiated under very different economic conditions than prevail today. Given the new reality that prevails in the hotel industry, Owners, Asset Managers and Operators should be reviewing the performance tests in their existing management agreements to determine if it is time for renegotiation. This article explains the components of a typical performance test in a management agreement and recommends areas for examination and negotiation.

When it comes to discussions and legal commentary about hotels and employment law, the focus generally is centered on employer obligations contained in federal law sources. But each state (and local municipality) has something to say too. In this article I explain how hotel employers need to be equally cognizant of the myriad of state-based obligations that exist in each jurisdiction of operation.