Top Five Hazards of Economy-driven Employment Decisions

By Michael C. Schmidt Partner, Cozen O'Connor | August 07, 2010

Times are tough. Employers in the hotel and hospitality industries are not immune from the impact that the weakened economy has on their personnel issues. In order to minimize the legal tsunami that can result from economy-driven employment decisions that are made, it is critical for hotel and hospitality employers to take appropriate steps to minimize potential legal exposure.

1) The Trade Secret and Unfair Competition Dilemma

Hotel management and other key employees may leave in increasing numbers during an economic downturn, either voluntarily or involuntarily. Among the critical issues to be addressed is the fear that such former employees might unfairly compete or disclose trade secrets to the outside world, such as programs in development or hotel expansion forecasts. Employers should consider whether to seek the enforcement of non-compete and non-disclosure agreements, or, alternatively, whether to request that employees who remain with the company sign such agreements. On the flip side, in the event an individual who is hired has recently left another hotel, a prospective employer should determine whether the new hire is subject to any restrictive covenants with his or her former employer, and perhaps ask the new hire to certify in writing that no restrictions exist.

In many states, restraints on an employee's ability to compete remain disfavored except in certain circumstances when enforcement would prevent unfair competition. In a smaller group of states, restrictive covenants are statutorily prohibited. Before determining whether to bind an employee to a restrictive covenant, or to seek the enforcement of an already-existing agreement, an employer should:

  • understand that restrictions generally will not be enforced against an employee involuntarily terminated without cause;
  • make sure that all trade secrets are treated as such internally;
  • tailor any restrictions to the particular position of the employee, demonstrating that a business need exists which justifies restrictions being placed on that particular position, rather than using a boilerplate agreement for clerical employees and senior hotel executives alike;
  • include time and geographic restrictions that are reasonable and necessary to the hotel industry based on competitive concerns; and
  • consider "safeguards" such as additional severance to be paid during the restriction period.

2) The Medical Leave Dilemma

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.