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As of Nov. 15, 2018, the State Department is adding 16 hotels owned by the Cuban military to the Cuba Restricted List (CRL). As discussed in the November 2017 GT Alert, U.S. Implements President Trump’s Cuba Policy, the Department of State published the CRL, identifying certain entities and sub-entities that are “under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services.” Except as otherwise authorized, no U.S.…
This is the time of year when the branded hotel operating companies that sell franchises (Franchisors) start to use the new 2018 forms of franchise agreements. As the hospitality industry has continued to consolidate, it should come as no surprise that some of the larger brands have modified their treatment of things such as group services contributions, marketing costs, and other expenses that apply across the brand or group of brands and impact every hotel…
It’s long been said that a successful brand understands its audience. This has been true of hotels, as the major internationally-branded hotel operating companies have developed and continue to develop various brands to service and cater to a wide array of guests and their specific preferences and assumed preferences. These hotels often have a variety of brands, and each brand is intended to target a particular type of customer (for example, a business traveler, the…
A sensitivity remaining from the recent “Great Recession” is that hotel owners are making a concerted effort to ensure that their hotel and all components of it are profitable.  This is something that is aspired to but not assured in a hotel management agreement.  To this end, many owners seek assistance in negotiating third party management agreements for their lodging and food and beverage services.  Typically, the compensation to the manager is split into two…
Hotel Management magazine recently noted that at the end of the day, it is the hotel management company that is really playing host to the guests as it executes the requirements of the brand and the desires of the owner.  But how does the hotel management company do this for the owner from the lawyer’s view?  The relationship of hotel owner and hotel manager is governed and memorialized in the hotel management agreement.  Hotel management…
STR is making changes to the highly regarded and widely used STAR Report.  Those of us who spend time drafting, reviewing, negotiating, and understanding hotel management agreements know that an important element of a management agreement is the Performance Test, and that a critical element of the typical two pronged performance test is the RevPAR threshold as compared to the hotel’s competitive set.  The guidelines that will go into effect on Jan. 1, 2017, are…
A jury’s decision to award sportscaster Erin Andrews $55 million as a result of a hotel’s failure to reasonably safeguard her privacy, safety and security is a forceful and important reminder to hotel owners and operators: A guest’s privacy and safety are paramount.  Certainly this jury saw it that way, and other juries might reach the same conclusion.  Not only should hotels and professional hotel operators have proper policies in place to protect the safety,…
Owners of strong, unique independent hotels are finding that they can gain many of the advantages of an affiliation with a branded hotel management company without entering into a management contract and relinquishing control of the hotel.  This is indeed the case and much has been written about the many collections of hotels now available in the marketplace, but the benefits should be approached with a clear head and a keen eye because at the…
The number of hotels, particularly limited service hotels, operating under franchise agreements has exploded in recent years, and this trend is expected to continue in the near term.  Franchise agreements, including those in the hospitality industry, are personal contracts for the benefit of the named franchisee only, and are further limited by the franchisee’s ownership structure as of the effective date of the franchise agreement. From this point of beginning, it is logical that the…
According to a recent interview with a large hospitality real estate investment trust, hotel owners now prefer franchise relationships over brand management of their hotels.  This is what we are seeing as well.  All of the large international branded hotel operating companies have added a large number of hotels and guest rooms to their portfolios in 2014, with the majority of this growth through franchising rather than management in any location where the hotel company,…