Hotel Law: A Labor Crisis and Cyber Security

According to a recent study, the hospitality industry accounted for 2.9 trillion dollars in sales and in the U.S. alone, was responsible for 1 in 9 jobs. In an industry of that scope and dimension, legal issues touch every aspect of a hotel's operation, and legal services are required in order to conform to all prevailing laws and regulations. Though not all hotels face the same issues, there are some industry-wide subjects that are of concern more broadly. One of those matters is the issue of immigration and how it affects the ability of hotels to recruit qualified employees. The hotel industry is currently facing a labor crisis; the U.S. Labor Department estimates that there are 600,000 unfilled jobs in the industry. Part of the problem contributing to this labor shortage is the lack of H2B visas for low-skilled workers, combined with the difficulty in obtaining J-1 visas for temporary workers. Because comprehensive immigration reform is not being addressed politically, hotel managers expect things are going to get worse before they get better. Corporate cyber security is another major legal issue the industry must address. Hotels are under enormous pressure in this area given the large volume of customer financial transactions they handle daily. Recently, a federal court ruled that the Federal Trade Commission had the power to regulate corporate cyber security, so it is incumbent on hotels to establish data security programs in order to prevent data breaches. The lack of such programs could cause hotels to face legal threats from government agencies, class action lawsuits, and damage to their brand image if a data breach should occur. These are just two of the critical issues that the December issue of Hotel Business Review will examine in the area of hotel law.

This week's Top Pick...

Zoe Connolly

The U.S. hotel industry has experienced 10 years of unprecedented growth. While not as strong as previous years, 2019 was still a healthy year. However, economists and experts agree it may be time to tighten our belts and prepare for a slowdown. Economic indicators that analysts commonly use to make predictions are mixed, making it difficult to predict the exact timing or the severity of a downturn. The Hospitality industry will be impacted as always by a slowing economy. Experienced Hospitality professionals know they can minimize economic disruption to a Hotel in difficult times by developing a foundation of reliable group business… Read on...

Trending articles this week...

Robert Lannan

Some of the worst news a hotel owner can receive is that guestrooms or other facilities within the hotel are noticeably contaminated by excessive mold growth. This article, written by an industrial hygienist and an attorney, explores the physical dangers and legal liability caused by excessive mold growth in hotels, means of preventing this problem, and steps hotel owners and operators should take to minimize damage and liability upon discovery of excessive mold growth. READ MORE

Gregory A. Hearing

The U.S. unemployment rate is at a near record low yet the hospitality industry is facing a massive labor shortage. There are many incentives which hospitality industry employers can offer their employees to maintain their current workforce but taking a lax approach to employee discipline should not be one of them. Engaging in disparate disciplinary treatment likely will result in the filing of employment lawsuits or labor grievances which otherwise may have been avoidable. Lodging industry professionals should ensure that their management team consistently administers disciplinary policies and procedures in an evenhanded manner and provide training which identifies and explains the consequences of disparate discipline. READ MORE

Banks Brown

The push and pull of music licensing in the hotel industry has always been somewhat emotional. Because it is a devilish task to determine the value of music to the industry, it is easy for the hotels to conclude they pay too much and easy for the licensing companies to conclude that they, and the artists they represent, are entitled to more. Over the years, the hotel industry and the music industry have gradually gotten accustomed to each other and some of the companies in the industries involved have truly understood how they can help each other. This article is an attempt to explain what is going on. READ MORE

Mark Melodia

The hospitality sector relies heavily on service providers and supply chains. Cybersecurity risk management and data privacy considerations are increasingly a critical factor in those relationships, both to deter poor vendor practices as well as to mitigate exposure in the event of a cyber incident. This article explains how cybersecurity is a risk management function that can be applied to all aspects of a vendor relationship, along with overarching practices for such relationships. The article focuses on cybersecurity considerations in vendor contracts and offers a practical "cybersecurity checklist" that can be used to vet contracts and ensure that cybersecurity and related considerations are being tended to. READ MORE

Library Archives

Christine Samsel

Navigating through Paid Time Off (PTO) benefits for multi-jurisdictional employers can be challenging. Christine Samsel of Brownstein Hyatt Farber Schreck provides a summary of several key issues to consider, from combining different types of PTO into a single category to different states' handling of PTO as a vested wage entitlement or a contract matter between employers and employees, and the impact that has on PTO policies. She also dissects the interplay of PTO and paid sick leave laws, and outlines some of the pitfalls of a recent trend - unlimited PTO policies. READ MORE

Stacy Kula

The obscure maze of alcohol licensing becomes even more confusing as the hotelier encounters different state laws. Because states are vested with the authority to create their own alcohol laws, there is often no uniformity in laws from state to state. As hoteliers build their portfolio in new territories, it can be difficult to remember what law applies. This article does not teach the laws of any state, rather it identifies the legal issues that hoteliers face when making application for an alcohol license in the various states. It is these questions that create the foundation of understanding of the specific state alcohol regimes for the hotelier. READ MORE

John Farley

One of the world's largest hotel chains experienced a massive cyberattack in which a hacker exploited their lack of adequate IT security controls, exposing the private data and travel details of nearly 500 million people. Security threats can come from a number of touch points, such as hotel Wi-Fi, credit card reservations/sales, loyalty programs, guest services and interconnections with vendors. Adding to such vulnerabilities is a labor shortage. The U.S. Department of Labor estimates the hotel industry will experience a 600,000-worker shortfall. Couple this with the dearth of qualified cyber security professionals, and you see an industry at a peak point of stress. READ MORE

Michael B. Newman

With the constant flow of hotel acquisitions and investments, global conglomerates, private equity funds, and venture capitalists regularly find themselves navigating alcohol beverage laws and regulations enacted from a bygone era and drafted in response to societal abuses and evils at that time. Alcohol beverage tied-house laws serve to prevent manufacturers and distributors from holding interests in or exercising control over retailers and prevent cross-ownership or investment in different tiers in the alcohol beverage industry. While some may question their relevancy today, "tied-house laws" separating the three tiers of the industry remain a legal hurdle to acquisitions of, or investments in, hotel businesses to be reckoned with. READ MORE

Coming up in January 2020...

Mobile Technology: Meeting Tech Expectations

What once seemed futuristic is now the norm, owing to the escalating developments in mobile technology, and hotels must continue to innovate in order to meet guest expectations. In a recent study from Mower, 65 percent of guests said they would gladly pay more for a hotel that provides the mobile technology they deem essential. The same study shows that 44 percent of travelers are more likely to book a smart hotel, and nearly 7 in 10 want to use smart devices provided by the hotel. And how do guests wish to use all this technology? A majority expressed a desire for mobile check-in and check-out, and mobile payment options. They also want to be able to stream content from their phone to the TV; to make service requests of the hotel staff; to control in-room lighting, temperature and sound; to order food and beverages; and to request a wake-up call - all from their mobile device. Guests also expressed preferences for robust wi-fi and convenient device charging ports throughout the hotel. They also appreciate the use of hotel branded apps which allow a guest to book a room, access loyalty programs, receive discounts and rewards, and even use the app to choose the room, floor and view they prefer. Some hotel apps also allow a customer to track their charges throughout their stay, rather than waiting to receive a bill at the end. Finally, mobile tech lounges are popping up more frequently in some hotels. These lounges offer guests the opportunity to perform tasks like airline check-ins or access to local info guides, but they also provide a place where guests can comfortably get some work done outside their room. The January Hotel Business Review will report on what some hotels are doing to meet their customers' expectations in the mobile technology space.