This article is intended as an overview of major issues that may impact hospitality transactions in Mexico. Of course, each transaction is unique, but these issues are common hurdles foreign investors encounter when doing business in Mexico.
In order to consummate any substantial business transaction, there are inevitably some “challenges” to overcome. Hotel management agreements are no exception: in part because of their complexity, and in part because hotel management agreements typically transfer effective control over valuable assets for several decades, and their terms can easily enhance — or diminish — the value of hotel by a staggering amount. We have often seen hotel values depressed by 50% or more from what the hotel would have been worth without the encumbrance of an onerous, long-term management agreement...
Hotel lawyer on hotel and hotel mixed-use development. Wasn't it only “yesterday” that a few hundred million dollars seemed like a lot of money and made the headlines? After Blackstone's $39 billion purchase of Equity Office Properties deal was topped in deal size by Kohlberg Kravis Roberts’ bid for Texas Pacific Group (TXU) for about $45 billion, it almost seems like everyone yawns at “mere” billion dollar deals, much less something smaller. For example, did you notice any major headlines in the past couple of weeks about Winston Hotels being bought by Wilbur Investment for $850 million, or Apple Hospitality being bought by ING Clarion Partners for $890 million, or Hilton selling its Scandic Hotel chain to a private equity group for about $1.1 billion?
In case you missed it, it has just been announced that former baseball star Reggie Jackson is the mystery developer of a proposed 252 room hotel and conference center in Seaside, California. At this point, Reggie joins a long line of celebrities and athletes jumping on the hotel mixed-use bandwagon we have covered here at www.HotelLawBlog.com.
The Minnesota Lodging Association, in conjunction with the Minnesota Restaurant Association, like many other state associations across the United States hosts an annual event called Hospitality Day at the Capitol. The American Hotel & Lodging Association (AH&LA) has a similar event in Washington, DC called the Legislative Action Summit (LAS). (To learn when the next LAS is visit AHLA.com.) The recent mid-term elections prompted me to reflect back about how my interest in being more active in the political process evolved. Some people define "active in the political process" as voting in major elections while others define it as being a politician or a lobbyist.
You do not need to be seer to see this next stage in the expansion for the Spa Industry. We have witnessed the evolution, originally for the indulgent, now for everyone. Health, attention, presentation, esteem, and, yes, still some indulgence – holistic, if you will. No longer that elite and remote location, Spas have partnered with or been created by hotels and resorts, providing new revenue streams and marketing advantages for Lodging operations. The next transformation is so obvious – Health Care Centers and Hospitals.
Hospitality Lawyer on hotel finance in 2007. We recently featured our annual expert panel talking about "How will you finance your hotel project in 2007?" Today, I am delighted to present the thoughts of Patrick O'Neal, one of the industry's’ real lender icons, whether in workouts or CMBS loan production. Patrick has been a great friend and client for more years that either of us probably care to count, but I have always found Patrick’s thoughts, to be unnervingly candid, full of humor and remarkably “spot on” in terms of their accuracy. PNC Real Estate Finance and the hotel world are very lucky to have him! So what does Patrick have to add to the perspectives we have just enjoyed?
Hospitality Lawyer on international hotel investments. In a number of recent postings on www.HotelLawBlog.com, I have focused on the attractiveness of international hotel investments and some of the big names pouring investment overseas. Some of the hot markets include Mexico, Costa Rica, the Caribbean, Spain, Italy, London, Saudi Arabia, Dubai, China and India. In Why we’re building hotels in India like crazy, I focused entirely on India, an explosive market that has often been overshadowed by opportunities in China. In announcing plans for Starwood Capital to invest a half billion in India alone, Barry Sternlicht says that there is so much demand that he is targeting an average annual return of 20% on investments in India!
Thuggish tactics are nothing new in union organizing, and the high-stakes battles in corporate campaigns often bring out the nastiest maneuvers the unions have in their arsenals. In 2005, UNITE HERE, the Union of Needletrades, Industrial and Textile Employees and the Hotel Employees and Restaurant Employees International Union, unleashed a weapon in an organizing campaign that was so brazen, it makes typical union campaign attacks look tame.
Hospitality Lawyer Baja Mexico. He's done it again if you believe the AP Wire reports. On Saturday, December 9, 2007, the Associated Press reported that, “Donald Trump’s new luxury hotel-condominiums on Mexico’s booming Baja California coast registered about $122 million in sales Friday, potentially heralding a resurgent development boom along the Pacific shoreline, just south of the U.S. border.”
Hello, out there. Anyone home, on deck, at the switch, in charge? Perhaps you are not a reader of the Boston Globe, but they in the past month have taken some sharp shots at our Industry, rousing the public, and basically taking our business into the Public Forum. The message from their editorial pages resonates with outrage and probably echoes, although not so stridently, what is happening throughout other major US cities. The Hotel Industry is under fire, and scrutiny shall not cease with a newly elected Democratic Congress.
We have the benefit of those high powered Consulting Groups, who can slice and dice any demographic for you and provide a suitable Consumer Profile for your Marketing dollars, sometimes resulting in “think tank” gazpacho. And, we dutifully respond with thread count, curved shower rods and flat screens. Hospital rooms are a little more pragmatic. We sure are responsive.
Yesterday, I discussed the record jury verdict against Unite Here in the Sutter Health case where a Superior Court jury in rural Placer County California found Unite Here guilty of “fraud, malice or oppression.” The jury hit the union with a $17.3 million verdict for intentionally and maliciously acting to harm the business of the Sutter Health not-for-profit hospitals and birthing clinics. As usual, I looked to Marta Fernandez, my hotel labor attorney partner, for insight and guidance. Yesterday, she gave us 9 points to think about as to the significance of the case—what it all means. But she save some real gems for today’s short blast. Here they are.
On July 21, 2006, a Superior Court jury in rural Placer County California—where you still expect jurors to know the value of a dollar—found Unite Here guilty of “fraud, malice or oppression.” This time, Unite Here—the union that represents hotel and hospitality workers—was caught red handed in its typical outrageous behavior. And it got slapped … but good...
On October 26, 2006, the California state Court of Appeal ruled that disabled plaintiffs suing for damages under California’s Unruh Civil Rights Act (Unruh Act), must prove intentional discrimination in order to recover the “$4,000 minimum damages per offense” that makes this kind of litigation so lucrative to plaintiffs and their lawyers.
Have you taken notice of the living hotel legend called “John Q”. He’s been on a unique and singular track for 87 years and, if you don’t know who he is, you’re missing one of the great hotelier/ developers of our time.Of course, I’m referring to John Q. Hammons who will receive the prestigious ALIS Lifetime Achievement Award in Los Angeles, January 22-24, 2007. Over his 48 year career he has developed 175 hotel properties in 40 states. But the statistics hide the essence of Mr. Hammons special development techniques. With his senior Vice President Scott Tarwater, Hammons disdains the standard feasibility studies when assessing potential sites for hotel development. Instead, he and Tarwater rely on their own experience, knowledge and intuition.
With the increasing demand for condo hotel building approvals around the country, municipal governments have scrambled to develop zoning ordinances that will allow high quality condo hotel developments, while at the same time preserving the transient occupancy tax (TOT) revenues that are so important to municipal income, assuring an adequate supply of transient hotel rooms for tourists, as well as for business and leisure travelers (to support tourism, and municipal facilities such as convention and conference centers); and controlling additional costs for and burdens on local infrastructure such as schools and city services.
Our recent Condo Hotel Boot Camp packed a full day’s worth of information into four short hours. (For information about purchasing DVDs and printed materials from the Condo Hotel Boot Camp, see page 9.) In the session titled “Where the Rubber Meets the Road,” four industry professionals distilled into their essential components, answers to the important questions: Who Owns What, Who Controls What, Who Pays for What? I am grateful to JMBM clients and friends Brent Howie, President of Provident Management Corporation and Peter Connolly, President of Palladian Development for sharing their expertise. Together, with my partners Catherine Holmes and Guy Maisnik of JMBM, Brent and Peter provided excellent material for this column. Isabelle Claver of PriceWaterhouseCoopers moderated the panel discussion.
In the wake of the recent hurricanes, many hotel and lodging professionals face weeks, if not months, of recovery efforts to restore their business and welcome travelers back into their hotels. During this recovery many questions will arise about how to recover money from insurance carriers and how to ensure that your business is fully restored.
Since the specter of terrorist activity has risen in our collective consciousness--and the images of hurricanes Charley and Frances have swept across out television screens--hotel owners and operators worldwide are blowing the dust off of their disaster plans. Whether the cause is terrorists or hurricane, fire, flood, earthquake, or other disaster, the smart money knows that the best time to deal with an emergency is before it happens.