Hotel Law

Ellen S. Smith, Victor P. Haley

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Hotels are different from other types commercial real estate. They depend not on long-term leases but on highly transient tenants, and they are active businesses dependent on travel and tourism. Representing and advising hotels requires mastery of unique issues and legal concerns.

Hotel Law provides comprehensive guidance for practitioners representing buyers, sellers, borrowers, lenders, franchisees, franchisors, and others in the hotel industry. What protections should a savvy hotel lender seek? What are the key considerations when negotiating a hotel management agreement? What requirements must be met for a hotel to qualify as a franchise under the FTC rule? This practical and insightful book answers these questions and many more. It covers hotel acquisitions and dispositions, hotel financing, management agreements, franchise agreements, troubled hotel projects, and hotel liability.

Going beyond bricks and mortar, Hotel Law addresses all aspects of these complex, going concerns, not just the issues related to real property, furnishings and fixtures. Whether you counsel hotels on an ongoing basis or you are handling just one hotel-related transaction, this book will prepare you for the legal and practical issues that are bound to arise.

Book #00711; looseleaf, one volume, 428 pages; published in 2011; updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-173-6.

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 428
  • ISBN: 978-1-58852-173-6
  • Pub#/SKU#: 711

Author Image
  • Ellen S. Smith
Ellen S. Smith is Counsel in the Real Estate and Hospitality and Leisure Practice Groups at Sutherland Asbill & Brennan LLP and was formerly Senior Attorney at InterContinental Hotels Group in Atlanta. Ms. Smith has extensive hospitality industry experience and regularly works on hotel management, hotel finance and hotel development matters throughout North and Central America, the Caribbean and South America. She has been a speaker at industry conferences on such topics as hotel management agreements, hotel mixed-use projects and Caribbean hotel investment. She also has broad general experience with commercial real estate transactions, with emphasis on institutional investment and development. Ms. Smith received her J.D. from Georgetown University Law Center in 1990 and her B.A. from Sweet Briar College in 1987.

Author Image
  • Victor P. Haley
Victor P. Haley is a Partner in the Real Estate Practice Group at Sutherland Asbill & Brennan LLP and Chairman of the firms Hospitality and Leisure Practice Group. Mr. Haley has represented numerous owners, developers, lenders, managers and franchisors in hotel transactions throughout the United States, Central America and the Caribbean region. He also handles a wide range of other commercial real estate matters, including sales and financings, representation of construction and permanent lenders and developers, syndications, and lease negotiation on behalf of both landlords and tenants. Mr. Haley has extensive experience handling acquisitions and joint ventures in Brazil and throughout Central and South America. He has been a frequent speaker at hospitality industry events on such topics as public/private partnerships, development agreements and hotel finance. Mr. Haley received his J.D. from the University of Virginia School of Law in 1984 and his B.A. from Harvard College in 1980.

Hotel Acquisitions, Dispositions and Purchase and Sale Agree-ments

§ 1.01 Unique Aspects of Hotel Transactions
§ 1.02 Due Diligence and Inspection
[1] Property Information
[2] Financial Information
[3] Labor and Employment Information
[4] Leases, Contracts and Other Commitments
[5] Licenses and Permits
[6] Insurance
[7] Litigation
[8] Books and Records
[9] Hotel Plans
[10] Information Technology Systems
[11] Project Inspection
[12] Hotel Management and Franchise Agreements
§ 1.03 Description of Property Being Purchased
[1]  Real Property
[2] Tangible Personal Property
[3] Intangible Personal Property
§ 1.04 Purchase Price
[1] Allocation
[2] Dispute Resolution
§ 1.05 Cooperation
[1] By Seller
[2] By Manager
§ 1.06 Licenses and Permits
[1] In General
[2] Liquor Licenses
[3] Gaming Licenses
§ 1.07 Employment Issues
[1] Transition of Employment
[2] WARN Act Issues
[3] State Law Requirements
[4] Benefits Issues
§ 1.08 Labor Issues
[1] Union and Collective Bargaining Agreements
[2] Unfunded Pension Liability
§ 1.09 Seller's Representations and Warranties
[1] Customary Provisions
[2] Timing
[3] Purchase As Is
[4] Remedies for Breach
§ 1.10 Covenants
[1] Operation of Hotel During Contract Period
[2] Consumables
[3] Leases, Contracts and Other Commitments
[4] Valuable/Unique Personal Property
§ 1.11 Technology Issues
[1] Information and Systems Proprietary to seller and/or manager
[2] Complexing
§ 1.12 Force Majeure
[1] Generally
[2] Post 9/11 Issues
§ 1.13 Other Legal Issues
[1] Bulk Sales
[2] Hart-Scott-Rodino Act
[3] Local Issues
§ 1.14 Hotel Management Agreements
[1] Assignment of Hotel Management Agreement
[2] Termination of Hotel Management Agreement
[3] Tri-Party Issues
§ 1.15 Hotel Franchise Agreements
[1] Assignment of Hotel Franchise Agreement
[2] Termination of Hotel Franchise Agreement
[3] Application for New Franchise License
[4] Comfort Letter Issues
§ 1.16 Closing Deliverables Particular to Hotel Transactions
§ 1.17 Closing Process
[1] Closing Time
[2] Prorations
[3] Closing Procedure
[4] Post Closing Reconciliation

Hotel Finance

§ 2.01 Introduction
[1] Scope
[2] Unique Aspects of Hotel Loans
§ 2.02 Underwriting Issues Particular to Hotels
[1] Hotel Management Agreements
[2] Hotel Franchise Agreements
[3] Due Diligence
§ 2.03 Terms of Hotel Loan Documents
[1] Collateral
[2] Borrower's Representations, Warranties and Covenants
[3] Reporting Requirements
[4] Default and Remedies
[5] Notice Requirements
§ 2.04 Administration of Hotel Loan
[1] Post-Closing Obligations
[2] Continuations and Renewals
[3] Reports and Inspections
[4] Lender Liability Issues
§ 2.05 FF&E Financing
[1] Structure
[2] Subordination of Hotel Loan to FF&E Financing
§ 2.06 Mezzanine Financing
§ 2.07 Owner's Equity

Hotel Management Agreements

§ 3.01 Introduction
§ 3.02 Nature of a Hotel Management Agreement
[1] Parties
[2]  Additional Parties and Agreements
[3] Topics
[4] Manager's Authority
[5] Obligations of Manager
[6] Obligations of Owner
§ 3.03 Basic Economics
[1] Base Fee
[2] Incentive Fee
[3] System or Chain Fees
[4] Bank Accounts
[5] Flow of Funds
[6] Shortfalls
§ 3.04 Other Financial Issues
[1] Budgets
[2] Reporting Requirements
§ 3.05 Hotel Development Issues
[1] Rights and Responsibilities of Owner and Manager
[2] Non-Operational Services by Manager
§ 3.06 Hotel Operational Issues
[1] Standards
[2] License and Permits
[3] Hotel Employees
[4] Maintenance, Repairs, Renovations and Replacements
[5] Purchasing Services
[6] Operation of Hotels Within Mixed Use Projects
§ 3.07 Termination Rights
[1] Within the Hotel Management Agreement
[2] Under Applicable Law
§ 3.08 Post-Termination Obligations
[1] Cooperation on Change of Management
[2] Transfer of Books and Records
[3] Transfer of Licenses and Permits
[4] Transfer of Employees
[5] Transfer of Contracts
[6] Transfer of Possession and Turnover of Keys
[7] Turnover of Hotel Bank Accounts
[8] De-Flagging of the Property
[9] Final Accounting
§ 3.09 Financing Issues
[1] Generally
[2] Operational Issues
[3] Default Issues
§ 3.10 Assignment Rights
[1] By Owner
[2] By Manager
§ 3.11 Miscellaneous Issues
[1] Term
[2] Non-Compete Covenants
[3] Financial Enhancements by Manager
[4] No Real Property Interest
[5] Dispute Resolution
[6] Insurance and Indemnity
[7] Casualty
[8] Condemnation

Hotel Franchise Agreements

§ 4.01 Introduction
[1] Branding of Hotel Properties
[2] Elements of the Franchise Relationship
[3] Franchise Agreements in the Hotel Context
§ 4.02  Overview of Franchise Agreements
[1] Provision of Substantial Assistance
[2] Common Franchise Name or Trademark
[3] Franchise Fees
[4] Community of Interest
§ 4.03 Overview of Franchise Law
[1] Federal Regulation
[2] State Regulation
[3] Common Law Principles
§ 4.04 Fee Structure of Hotel Franchise Agreements
[1] Initial Fees
[2] Recurring Fees
[3] Other Fees
[4] Franchisor Loans
§ 4.05 Hotel Brand Standards and Property Im-provement Plans
§ 4.06 Operation of the Hotel
[1]  Operating Standards
[2] Management Company and Management Agreement
[3]  Franchisor's Involvement
§ 4.07 Proprietary Rights of Franchisor
[1]  Grant of License to Franchisee
[2]  Covenants of Franchisee
[3] Indemnification by Franchisor
§ 4.08 Hotel Records and Reporting Require-ments
[1] Reporting Standards
[2] Types of Reports
[3] Audit Rights
[4] Non-Financial Information
§ 4.09 Non-Compete Restrictions in Hotel Franchise Agreements
§ 4.10 Assignability of Hotel Franchise Agreements
[1] By Franchisor
[2] By Franchisee
§ 4.11 Termination of Hotel Franchise Agreements
[1] By Franchisee
[2] By Franchisor
[3] Liquidated Damages
[4] Obligations on Termination
[5] Lender Considerations
§ 4.12 Dispute Resolution in Hotel Franchise Agreements
§ 4.13 Franchisor Liability
[1] Franchisor Primary Liability
[2] Franchisor Vicarious Liability
[3] Americans with Disabilities Act

Troubled Hotel Projects

§ 5.01 Introduction
[1] Scope
[2] Special Considerations for Distressed Hotel Proper-ties
§ 5.02 Due Diligence
[1] Cooperation
[2] Crucial Information
§ 5.03 Exercise of Remedies
[1] Deed in Lieu of Foreclosure
[2] Foreclosure
§ 5.04 Post-Foreclosure Ownership Issues
[1] Licenses and Permits
[2] Hotel Vendor Claims
[3] Tort Liability
[4] Reciprocal Easement Obligations
[5] Employee Issues
[6] Taxes
§ 5.05 Alternatives to Foreclosure
[1] Workout or Restructure
[2] Bankruptcy

Hotel Liability Issues

§ 6.01 Introduction
§ 6.02 Common Law Hotel Liability
[1] Origins of Hotel Liability in English Common Law
[2] Definition of Guest of Hotel
[3] Accommodations Which Must be Provided to Guests
[4] Public Duty to Receive Guests
[5] Limited Duty to Receive Non-Guests
[6] General Duty of Care to Protect Guests
[7] Duty to Keep Premises Safe
§ 6.03 Liability for Personal Property of Guests
[1] Duration of Obligation
[2] Luggage and Checked Property
[3] Limitations on Liability
§ 6.04 Contractual Liability
[1] Failure to Honor Reservation
[2] Duties of Hotel Guest
[3] Other Contractual Duties of Hotel Owner
§ 6.05 Liability for Acts of Third Parties
[1] Vicarious Liability for Acts of Employees and Agents
[2] Liability for Criminal Acts
§ 6.06 Specific Liability Issues
[1] Hotel Recreation
[2] Transportation and Shuttle Services
[3] Alcohol
[4] Restaurants and Food Service
[5] Pets
[6] Pests and Vermin
[7] Cleanliness
[8] Communicable Diseases
[9] Privacy
[10] ADA Accommodation Issues
[11] Various State Law Requirements