Duff on Hospitality Law

We all know the importance of appearance and design in the hospitality industry. We also know the importance and priority of saving money. Garvey Schubert Barer's client, V*Starr Interiors, founded and led by another inspirational client Venus Williams, was kind enough to put together a guest blog post on staying in budget through re-purposing. V*Starr Interiors' experience ranges throughout the US, and the team’s portfolio includes hospitality, educational facilities, public/amenity spaces, clubhouses and fitness centers. Their hospitality portfolio includes a full renovation of the presidential suites, executive suites, and club lounge at Intercontinental Hotel- Downtown Miami, Florida. Today’s post is from V*Starr Project Designer, Ariana Ranieri. We look forward to several more design-oriented posts from V*Starr in the months ahead. – Greg

B u d g e t  |  WAYS TO STAY IN BUDGET THROUGH RE-PURPOSING THE STAGNANT ELEMENTS Working within a budget is something that ultimately controls a project. However, approaching the design in a more resourceful manner can enable the dollar to go further. When deciding which elements to maintain or re-purpose, think about the space from multiple perspectives. Here are some important aspects to consider:

1)  Versatility | Look at the atmosphere and determine which style are you aiming to achieve. If you want to move from a traditional setting to a contemporary setting, assess your current surroundings and see what you can salvage. Can the room’s trim work be painted or re-finished? Then look at the furniture in the room. When it comes to furnishings be sure to carefully examine each piece. You may find a style that is classic throughout time and could possibly be re-upholstered or re-finished. You may also find furniture with a neutral shade that will marry into any color palette. For example: An old sofa with great form will look much livelier once it is paired up with new pillows. Save money by taking note of the current paint color as some neutral shades can be spruced up with the addition of an accent wall.

2)  Condition | How is the condition of the current components in the room? Think about legs, arms, finish, and filling. Also, how long has the piece been in the space and does it stand the test of time? How durable is the piece within a short period of time? If there is a component that seems to be problematic you’ll want to make sure that any reworking will not compromise the item. Let’s say you have a historic Dining Buffet with a great body but worn legs. Changing out the legs and hardware may give it a fresher look at half the cost of a new Dining Buffet. Lastly, inspect the existing plumbing fixtures and appliances and determine if there’s another fixture that could be more cost effective.

Several clients have lately been asking about notices they've received that look like this. If they come from the Eastern District court in New York, they’re legitimate, and if you are a merchant who accepted Visa or MasterCard or both between January 1, 2004 and November 28, 2012, you are a probably a member of the class and should have received one too. If you didn't, the lawsuit and proposed settlement are discussed in detail here. Take a look; the settlement could affect your legal rights. You have until May 28, 2013 to exclude yourself from the settlement (opt-out) or object to its terms; the final hearing on the proposed settlement will be September 12, 2013. Assuming the court approves the settlement, with or without changes that may occur as the result of objections, claim forms will be issued after that date to class members and a claim deadline will be set.

Our Portland, Oregon partner, Joy Ellis, updates us on what's "bugging" the hospitality industry. Thank you Joy.

It’s no secret that bed bugs are a stubborn and growing problem for the hospitality industry. All it takes to jeopardize a hotel’s reputation is one TripAdvisor or Yelp review that mentions bed bugs. And with travel on the rise, these unwanted hitchhikers keep showing up everywhere.

The success of our hospitality practice through the years has relied on the skills and experience of a number of industry consultants and advisors. John Hutson of the Seattle office of Navigant Consulting is one of those advisors. John is an Associate Director in Navigant's Dispute, Investigation & Economics practice. John has a deep specialization in the hospitality industry and regularly speaks on hospitality damage valuation issues across the country. In light of John's upcoming business interruption presentation at the Hospitality Law Conference, we asked John to provide an update on damage valuation in the industry. In his post, John discusses how insurance companies are attempting to redefine and reinterpret “suspension of operations” for hospitality firms. Thank you John for your many contributions.

First-time contributor and resident litigation expert, Don Scaramastra, has offered to update the status of the much discussed class-action involving online distributors and certain hotel operators, and to discuss antitrust laws related to online distribution. Thank you Don for this informative piece.

On December 11, 2012, the federal Panel on Multi-District Litigation ordered the consolidation of class-action lawsuits alleging that online travel agents and certain hotel chains conspired to impose a resale price maintenance scheme that fixed the retail price for hotel room reservations in violation of federal and state antitrust laws. The MDL Panel ordered these lawsuits to proceed in the U.S. District Court for the Northern District of Texas. Since last summer, over 20 such lawsuits have been filed. This outcome appears to be good news for the defendants, all of whom advocated for the transfer and consolidation of these cases to that district.

You might be wondering what these lawsuits are all about, what “resale price maintenance” (or “RPM”) is, and what the antitrust laws have to say about it.

RPM is the practice in which a seller and buyer at one link in a distribution chain agree on the minimum price that the buyer may turn around and resell the product.

RPM has something of a storied history in antitrust law. Under federal antitrust laws, RPM was deemed unlawful just over a century ago. But in the 1930s, Congress enacted a partial “fair trade” exemption from liability. Four decades later, Congress repealed the exemption, returning RPM to its former illegal status. And finally, five years ago, in Leegin Creative Leather Products v. PSKS, Inc., the Supreme Court declared that not all RPM agreements were illegal, only those that imposed an “unreasonable” restraint on trade. And that is where things stand today.

In May 2012, we blogged that the Hospitality Industry is on the road to recovery and Metro, Portland’s regional governing body, was once again considering an Oregon Convention Center (OCC) hotel. On September 13, 2012, Metro approved a proposal by local developers to construct a Hyatt Regency Hotel. The full development team consists of Mortenson Development, Mortenson Construction, Hyatt Hotels Corporation, ESG Architects, Ankrom Moisan Architects, Piper Jaffray & Co., Jones Lang LaSalle Hotels and Star Terra LLC/Schlesinger Companies.

The Mortenson team proposed four development options, two options for the StarTerra, LLC property (directly north of the OCC) and two options for the PDC-owned site (directly east of the OCC). For each site, Mortenson proposed two different development programs achieving approximately 600 rooms. The development program options include: 1) a 600-room Hyatt Regency or 2) a combination 420+/-room Hyatt Regency and 181-room Hyatt Place. Metro favored the Mortenson team because this team has extensive hotel development and financing experience. Further, Metro recognized that Hyatt currently does not have a strong presence in the Portland market and a Hyatt Regency hotel could serve national convention clients at the convention center as well as introduce new corporate Hyatt-based group business in Portland.

Portland received another sign that the local hospitality industry may be on its way to a full recovery late last month. On April 26, Metro, Portland’s regional planning entity, voted to issue again a request for proposal (RFP) on a large hotel project that was brought to a halt in 2008 due to the economic downturn. The earlier incarnation of the project asked for responses to a 2004 RFP for the project, available here, that called for 800 rooms. 

The April 26^th vote brings back to life a plan to develop a large headquarters hotel project that will serve as the designated hotel space for the Oregon Convention Center (albeit slightly smaller in scale than what had been considered in 2008), that will provide an additional 500 rooms for group visitors to the Rose City. Local revenue generated by attracting large conventions is big business for the hospitality industry and the region. Metro estimates that national events at the Oregon Convention Center, such as the Specialty Coffee Association of America’s Convention that took place earlier this year in April and the 2012 World Brewing Congress scheduled for August of this year, result in millions of additional dollars flooding area businesses over just one weekend.

Our newest post comes from my Portland, Oregon colleague and partner, Joy Ellis. For those of you who have not met Joy, Joy serves as the Portland Chair of our Hospitality, Travel and Tourism Practice Group. She also has over 15 years of legal experience in the areas of commercial litigation, employment litigation and employment-related advice, and brings us important news on the latest chapter of ongoing litigation between online travel companies and the many jurisdictions that have sought to collect allegedly unpaid or underpaid lodging taxes. This latest installment involves our own City of Portland. Thank you Joy for this important update.

Across the country, online travel companies (“OTCs”) are involved in litigation with local officials over the tax on hotel rooms. City officials argue that online travel sites shortchange the cities on their local hotel taxes. The OTCs disagree.

Here’s the crux of the issue: let’s say a guest books a hotel room through an OTC’s website. The traveler booking the room pays an amount to the OTC, part of which goes to the hotel and part of which is kept by the OTC as a facilitation and service fee. The fee attributable to the hotel includes the often severely discounted ("net" or "merchant") room rate agreed upon between the OTC and the hotel, plus the hotel tax owed on that discounted rate. City officials want the hotel tax to be based on the entire ("retail") amount paid by the traveler to the OTC. The OTCs argue that local lodging tax on hotel rooms should be remitted based on the actual amount a hotel receives for a room rather than the total amount that a guest pays the OTC for a room.

Days 2 and 3 at this year's ALIS conference were filled with numerous highlights, including a very well attended presentation (or should I say, political commentary) in the Nokia Theater by "the Donald" himself, Mr. Donald Trump. Days 2 and 3 were also filled with hundreds of meetings by conference attendees in nearly every hallway and corner of the hosts JW Marriott and Ritz Carlton.

While optimism continued to be the theme most often heard in the meetings I attended, the optimism was far from unbridled. With so many unknowns remaining in the world (e.g. European debt crises, continued high unemployment, the upcoming presidential election), nearly everyone recognized that the many signs pointing to an industry rebound could quickly change.

Room Key, a brand new player in the on-line hospitality market, launched in beta on January 11, 2012 to some excitement and some hard questions. Room Key is a joint venture among six U.S.-based hotel chains—Choice Hotels International, Hilton Worldwide, Hyatt Hotels*, InterContinental Hotels, Marriott International* and Wyndham Hotel Group—that allows users to search for available rooms at almost all of the chains’ global properties, or about 23,000 rooms total. More Kayak than Expedia, users search the Room Key site for inventory and are then redirected to the individual property (or chain’s) home site to complete booking. The idea is to drive traffic to the hotel websites and away from on-line travel agencies (OTAs) like Expedia, Priceline, and Travelocity. And, of course, to provide a customized, personable hotel booking experience to the user--and who better to do that then a group of hoteliers--says CEO John Davis.