Duff on Hospitality Law

Tomorrow, Floyd “Money” Mayweather and Saúl “Canelo” Álvarez (“El Canelo”) will fight a much-anticipated title bout at the MGM Grand in Las Vegas, bringing in what Showtime certainly hopes will be record-breaking pay-per-view revenues.

Today, after a week of difficult negotiations with huge telecommunications companies on behalf of my hotel clients, a week of wondering what to write for this blog, and a challenging sparring session on Wednesday, it occurred to me to write a bit about boxing. A lot of people hate lawyers and a lot of people think boxing is a violent, brutish sport that should be shunned in a civilized society. I’m a lawyer and I box. Full disclosure: I'm taking boxing lessons at Cappy’s Boxing Gym in Seattle, and the gym is a client of the firm. The thoughts in this post are my own and not our client’s. Finally, and for the record, I have never punched anyone or anything at work. I promise.

To Pay or Not to Pay?

As the school year begins again, it is a great time for hoteliers to think about their unpaid internship programs. Unpaid internships can be great symbiotic relationships. College students or individuals trying out new fields are willing to work for free in exchange for real-life work experience and something to add to their resumes. However before accepting free labor, employers must be aware of the potential consequences of this relationship and take steps to ensure their internship program complies with the law.

The U.S. General Services Administration (GSA) has released its Fiscal Year 2014 per diem rates. While the standard continental U.S. per diem is up to $83, per diem rates in the Northwest have largely remained unchanged. For more information on the new rates, visit the U.S. General Services Administration website.

The U.K.'s Office of Fair Trade (OFT) is currently evaluating and accepting public comments on whether formal commitments proposed by Booking.com B.V. (Booking.com), Expedia Inc (Expedia) and InterContinental Hotels Group plc (IHG) sufficiently address its competition concerns regarding the online offering of room only hotel accommodations by Online Travel Agents. The OFT is soliciting feedback on whether the proposed commitments offer an immediate and effective means of injecting meaningful competition into the online bookings.

Read full Press Release and Notice

What these commitments will mean for pricing parity in the future remains to be seen. Stay tuned for more updates in the weeks ahead.

Please welcome new author and GSB attorney, Julia Holden-Davis, to the Duff on Hospitality blog! She has over 15 years of experience in the legal aspects of design and construction and works out of our new office in Anchorage, Alaska. Welcome, Julia, and thank you for today’s recommendations on selecting an appropriate contractor. – Greg 

Selecting the “right” contractor is one of several key steps in ensuring a hotel project has a strong likelihood of success. At times, the selection of the contractor might seem obvious – for example, a developer entering a new geographical market might bring with it a contractor with whom it already has extensive experience in other markets. However, contractor selection should consider a broader number of criteria, tailored to the particular needs of the project, to maximize the likelihood of success.

1) Pick the right people to make the selection

Consider first with whom to place the responsibility of making the selection, recognizing that within the typical hotel ownership and management structure, not to mention other project participants such as an architect or designer, not everyone has the same priorities, experience, or end goals. For example, one person (e.g. franchisor) might care the most for the aesthetic-related capabilities of a contractor. Another might prioritize timely performance (e.g. operator), yet another lowest cost (e.g. owner/developer). An outside architect may have a relationship (be it good or bad) with certain contractors. Selecting an individual or a team who understands the needs of the facility, the critical points, and the overall goals can lead to a much better evaluation process – and ultimately, identification of the most suitable contractor.

2) Consider industry dialogue

Consider discussing the project or portions of the project with a variety of contractors or other industry professionals before actually evaluating or selecting a contractor. The information gleaned in early discussions can play a significant role in defining realistic expectations, developing innovative ideas, selecting new products, and improving the overall quality of the project. For example, a franchised property whose intended aesthetic is cutting edge, top of the line, with new and fresh ideas may want to carefully consider the use of new materials which may not yet have a proven service record. Similarly, contractors with a depth of building experience with the chosen brand may have good suggestions to the design, phasing, or to other aspects of the project that could improve the overall quality or decrease the time or cost of construction.

In December 2012, the U.S. Department of Justice (DOJ) settled a case with Lesley University, requiring Lesley University to take significant, comprehensive measures to accommodate the needs of students with serious food allergies. Details on the settlement can be found here. DOJ took the position that food allergies may constitute a disability under the ADA, and that the many steps required in the settlement were mandated by the ADA’s requirement that public accommodations make reasonable modifications to their policies, practices, and procedures that are necessary to ensure that individuals with disabilities have access to their goods and services.

However, the ADA does not require a public accommodation to engage in any measures that would “fundamentally alter the nature of the goods, services, facilities, privileges, advantages, or accommodations” offered.  Perhaps Lesley University could have relied on that defense if it had litigated, rather than settled with DOJ, but it is impossible to predict what the outcome would have been and no one can blame Lesley University for declining to find out.

The DOJ – Lesley University settlement has had many of us worrying that restaurants are already or will soon be in DOJ’s sights for examination of allergy-free items and allergen-free facilities. While we are still concerned about the potential impacts of the DOJ - Lesley University settlement, we have not yet seen evidence of increased investigations by the DOJ. Even more encouraging, a technical assistance document released by the DOJ after the settlement with Lesley University gives some hope that DOJ is taking a reasonable approach that is consistent with the ADA. The technical assistance document confirms that “a restaurant may have to take some reasonable steps to accommodate individuals with” food allergies, such as “omitting or substituting certain ingredients upon request if the restaurant normally does this for other customers.” However, DOJ confirmed that the ADA does not require restaurants to change their menus to offer gluten or allergen-free foods. DOJ also emphasized that Lesley University’s situation was unique because it involved mandatory meal plans.

We will continue to monitor this issue along with other ADA public accommodation issues, but for the moment we wanted to pass along some good news on this issue.

Please contact me if you have any questions.

Published in Northwest Meetings + Events  Magazine, summer 2013.

HOSPITALITY ATTORNEY GREG DUFF has noticed a paradigm shift in the sales contracts his clients send him. The founder of Garvey Schubert Barer's national Hospitality, Travel & Tourism practice, he says, "Either the contracts have more terms or conditions than I have seen in the past, or those terms that have been somewhat common in the past have been revised to be more difficult." Duff shared the pros and cons of some of the newer provisions he's seeing...

Pleas contact me if you have any questions regarding venue or sales contracts.

In the recent decision, Friends of Hood River v. City of Hood River, the Oregon Land Use Board of Appeals (LUBA) remanded the City of Hood River’s decision to grant a conditional use and preliminary site approval for, among other things, a 45,000 square foot, four story, 88 room hotel on the waterfront near the mouth of the Hood River. LUBA’s decision was based on the City’s failure to find compliance with its comprehensive plan.

LUBA determined that a finding of compliance with the City’s comprehensive plan was required under state law regardless of whether the local code only requires consistency with the plan. Here, LUBA found that the City’s decision did not analyze whether flooding policies, strategies, and standards found in the plan constitute mandatory standards that the application must meet. If so, the City will have to identify whether the standards are satisfied.

LUBA explained that, in practice, the language of comprehensive plans and land use regulations rarely rule the plan out as a potential source of approval criteria for permit decisions. Although LUBA recognized that comprehensive plan policies will constitute approval criteria if they are expressed in mandatory terms, it qualified this hard line approach with citation to its precedent. A project proponent cannot rely solely on the code language when it applies for land use approval, but must also consider those applicable elements of the comprehensive plan.

In addition, LUBA found the City had erred procedurally when it refused to allow Friends of Hood River, an Oregon group preserving public access and recreation in Nichols Basin, to respond to new evidence submitted by the applicant after the initial public hearing. LUBA determined that information the Friends may submit could shed light on whether the comprehensive plan policies regarding flooding are mandatory standards. When it comes to public process, applicants should expect appeals by members of the public who feel they did not have the full opportunity to comment on an application.

The practical lesson here is that land use applications require extensive due diligence early in the process to identify and address all potential state and local approval criteria, and that public participation is sacrosanct in Oregon land use decision making.  Welcome to hotel development in the great Northwest. Please contact Greg Duff if you have questions or need assistance to obtain entitlements for your next hotel development.

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

Jared Van Kirk is a member of Garvey Schubert Barer’s Labor and Employment group and previous blog contributor. Jared has been following City Council discussions surrounding the newly enacted Job Assistance Bill for some time. Thank you, Jared, for this timely and very important update for all hospitality industry employers in Seattle.  – Greg