Duff on Hospitality Law

For those readers and followers unable to attend last month’s AHIA Fall Meeting in Los Angeles, we have posted below our PowerPoint presentation, “On-Line Distribution: Overview, Issues and Tips.” A huge thanks to AHIA for hosting us last month. 

If you have any questions regarding the presentation or distribution generally, please let Ruth or me know.

Hunting for a top-rated hotel or searching for the perfect dim sum restaurant? Chances are you will turn to sites such as Yelp, Citysearch or TripAdvisor to guide you through the mass of options most locations have to offer. As the Huffington Post recently noted, “In an increasingly tech-reliant world, most of us do not step foot in a restaurant or buy anything online without doing at least a modicum of Internet research.”

Hoteliers and restaurateurs have long known that positive online reviews equal greater occupancy rates, increased bookings, and greater revenue for their businesses: An influential 2011 Harvard Business School (HBS) study found that “a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenue” for restaurants, while researchers at Cornell found that a one-star swing in a hotel's online ratings on travel sites equate to a 11% sway in room rates.

So how trust-worthy are those 4-star online reviews? Turns out, unsurprisingly, caveat emptor.

A 2013 HBS report estimates that the number of fraudulent reviews on Yelp rose from 5% in 2006 to 20% in 2013.

Thank you to Benjamin Lambiotte, technology and transportation attorney at Garvey Schubert Barer, for providing our readers with the latest and greatest on mobile payment technology and its uses in the travel and tourism industry.  - Greg

Digital Signage Part III:  Potential Legal Issues

The proverb asserting that the more things change, the more they stay the same, always seems true when one thinks about potential legal issues from new technologies.

Digital signs are still signs, and placement of signs – especially billboards – has long been an issue receiving the attention of local governments. If those signs are emitting light and displaying motion, there may be even greater concern about their placement and their potential nuisance value. The Federal Highway Administration allowed digital billboards in 2007, concluding that they did not pose a danger to drivers. However, the FHWA has been studying the research and working on a report, which is anticipated this year, focusing on whether or not electronic billboards can be a dangerous distraction for drivers because they are so much more dramatic than conventional billboards. Furthermore, as digital signs proliferate, they will likely be scrutinized more closely under federal, state and local historic preservation and environmental impact laws.

Digital Signage Part II:  Some Examples

The size, weight, quality, cost and durability of video monitors limited their use for quite some time. However, the existence of large, light-weight, high-resolution, low cost monitors that can endure considerable abuse has been instrumental in the explosive growth of digital signs.

Other factors have fueled the growth as well.

Quick Service Restaurants (also known as fast food) are under increasing pressure to provide nutritional information about the food they sell.  Regulations are in place that require posting of this factual consumer information. It is expensive and time-consuming to print, revise and reprint this information on paper. If a QSR establishment cannot change its menu until it is able to post current nutritional information, then that menu may not change very often or in any substantial ways. Digital menu boards can be controlled from a centralized location, and can be updated very quickly, if, for example, the menu changes, or if the food content or portion size of a dish is changed. At the same time, the sign can be used to quickly promote an entree, or make some last minute special offer, all designed to promote sales.

Digital Signage Part 1:  What is a Digital Sign?

According to the humorist Robert Benchley “There are two kinds of people in the world: those who divide the world into two kinds of people, and those who don’t.” Borrowing from Mr. Benchley, there are two kinds of people in the world – those who know about digital signage and those who don’t. Today, the latter is probably the larger group, but the former is a fast growing group. Because digital signs have already started to impact every organization and location where people gather, there is good reason to join the group of those who know about digital signage.

What comes to mind in response to the word “sign”? Something along the side of a road that conveys meaningful information?  Something you look for along that road when you are low on gas? Something to let you know that you have arrived at your destination without running out of gas? The word “open” in glowing neon light at that destination? 

Many signs have remained unchanged for decades. However, because of a variety of technological advances, such as digital signal transmission, high-speed high-volume broadband, flat-screen displays, QR codes and near field communications (transmitting information wirelessly over very short distances such as by touching smartphones) the concept of a sign has changed dramatically over the past decade. What once was static can now be dynamic and can take many very different forms.

A common term for modern signs is “digital sign” or “digital signage.” There is no single recognized definition of this term right now. However, a digital sign is something you know when you see it because it is different from what you are used to seeing. The Digital Place-based Advertising Association has adopted the following definition:  “a display device that has the ability to display dynamic advertising and replaced static billboards and posters.” Note the use of the term “display device” to suggest some piece of hardware. Note the use of the term “dynamic” contrasted with “static”. Given the highly specialized mission of this particular association, note also the reference to advertising; however, there is no reason why a digital sign cannot convey non-advertising messages as well.

The Federal Communications Commission announced on February 20, 2013, that it intends to propose new rules to govern the next generation of Wi-Fi technology. This is an important development for convention centers, large hotel/conference facilities, airports and any other facility that struggles with Wi-Fi congestion because of the insatiable appetite of high-volume wireless users. The FCC’s proposal will include making spectrum available in the 5 GHz band for ultra-high-speed, high-capacity Wi-Fi known as “Gigabit Wi-Fi”.

Travel industry and technology experts gathered at the Four Seasons Seattle this past Wednesday to participate in the region’s first conference devoted exclusively to the intersection of hospitality, travel and tourism with technology. The TNT Travel & Technology Conference was hosted by the Hospitality, Travel & Tourism practice group at Garvey Schubert Barer and local angel investment/opportunity facilitator and industry connector Zino Society. I conducted an informal interview of participants and attendees, which I selected randomly via a complex, proprietary algorithm (red wine vs. white wine; preference for mushroom quiches over Vietnamese spring rolls, cocktail napkin or no cocktail napkin) and 100% of respondents indicated the event was an unqualified success.

Garvey owner and chair of the firm’s E-Commerce and Technology practice, Scott Warner, and Hospitality, Travel & Tourism Practice chair, Greg Duff, each hosted a panel of experts—Scott, a group of expert technologists and Greg, a group of expert users. The former consisted of representatives from Expedia, Microsoft, Intelity, Sabre Hospitality, Google, Concur Technologies, Urbanspoon, Tnooz and Ascension Software and the latter of panelists from Evergreen Finance Consulting, Virtuoso, Alaska Airlines, Benchmark Hospitality, American Casino & Entertainment Properties, Mandarin Oriental and Holland America Line. See the linked Conference Program for a more detailed description of the panels and each of the panelists.

Do you feature ATMs in your hotel, restaurant or conference center? If yes, you may be an unwitting target for ATM fee notice lawsuits. Here’s why: 

The Electronic Funds Transfer Act (EFTA) contains a provision requiring owners of ATMs to provide adequate notice to consumers about fees charged for using ATMs not owned by the consumers’ own bank. The EFTA states that you must notify these consumers twice regarding such fees:

1. You must post an external notice on the body of the ATM “in a prominent and conspicuous location” stating what the exact fee imposed will be for performing a transaction on the ATM, and
2. There must be a second notice on the screen, or by paper issued from the machine, which advises the user that they can avoid paying the fee and terminate the transaction before the consumer is irrevocably committed to completing the transaction.

Don’t have both notices? Then your ATM is not in compliance with the EFTA and if you own or operate the machine, you could face penalties for damages incurred by the ATM customer plus a statutory penalty of up to $1000. Worse, if a case is brought against you as a class action, you could be liable for up to $500,000 or 1% of your net worth—whichever is smaller—plus costs and reasonable attorney fees. That adds up to a significant potential recovery, which is why there are lawsuits being filed across the country as we type.

While the majority of hotel owners and operators rely on well-established cable companies and suppliers of in-room entertainment systems, this post serves as an important reminder of the need to ensure that these traditional providers of video programming do everything necessary to comply with the many laws and regulations that apply to the provision of video programming.

In the parlance of the Federal Communications Commission (FCC), a hotel that makes multiple channels of video programming available to its guests and customers is called a “non-cable multichannel video programming distributor” or “MVPD.” Typically, a non-cable MVPD does not cross a public right-of-way to deliver video programming.

While this type of video system may not meet the definition of a cable television system under the FCC’s rules, it is nonetheless subject to many of the same restrictions and requirements as a cable television operator. In fact, the FCC just recently issued a formal citation to a hotel located in Orange County, California, for violating the FCC’s rules. In addition, the FCC issued a Public Notice reminding all non-cable MVPDs of their obligations under the FCC’s rules.

• • The first obligation is to file a Notification on FCC Form 321 that the operator intends to operate on frequencies between 108 and 137 MHz and between 225 and 400 MHz – frequencies that correspond with cable channels 14-16, 25-53 and 98-99.  These frequencies are also used for aeronautical communications.
  • Because these systems have the potential to cause harmful interference to aeronautical communications, with potentially life-threatening results, the second obligation is to measure the systems on a regular basis to ensure that there is no excess “signal leakage.”  If there is, then the non-cable MVPD must suspend operations and fix the problem.  The most common cause for such “signal leakage” tends to be operators who seek to improve the signal within their facilities by “over-powering” the system or fail to properly maintain their systems (e.g. bare wires).
  • Except for certain small systems, operators must file with the FCC annual measurement reports (on Form 320).  In addition, operators must retain, for a period of two years, logs showing the date and location of each leakage source, the date of repair, and the probable cause of the leakage.