When advising clients on their acquisitions of hotels, we focus on setting the right terms, managing assets efficiently, financing and refinancing opportunistically, establishing joint ventures, or selling on favorable terms.

As long-term management agreements can affect the value of properties and the ability to market and finance hotels, we also guide clients in negotiating these critical contracts. When asset management issues arise between hotel owners and managers, such as the treatment of rebates and allowances or centralized services chargebacks, our attorneys help clients navigate these matters and develop workable solutions.

Financing issues in hotel transactions raise significant complexities. We have negotiated the placement of corporate debt and the issuance of mortgage-backed securities, and we have structured international financing and traditional property-level secured debt. Our attorneys understand how to work with owners, lenders, and management companies to get deals done while addressing all parties’ concerns in a timely, cost-effective fashion.

With one of the most active hotel bankruptcy and restructuring practices in the country, our attorneys help clients negotiate new franchise agreements and sell financially distressed hotels. We represent all the major Commercial Mortgage-Backed Securities (CMBS) special servicers in foreclosure proceedings, deed-in-lieu of foreclosure transactions, and loan modifications.

When hotel disputes arise, our clients call upon us to assess litigation positions and to pursue legal action. We have helped clients large and small involved in hotel bankruptcies and reorganizations in both state and federal courts throughout the country, including before the U.S. Supreme Court.

The severity of the COVID-19 pandemic and its impact on domestic and international travel will likely result in long-term negative repercussions for the U.S. travel industry. As a result of travel bans, stay-at-home orders, and social distancing guidelines, Americans have shown a reluctance to fly due to a fear that air travel carries an increased risk of exposure to coronavirus.

Hotels are finding themselves adversely affected by this downturn in travel and the cancellations of flights, events, and tours. Such exigent circumstances also require that hotel owners engage in meaningful discussions with various stakeholders, including lenders, investors, managers, and franchisors, in order to address the financial impacts of COVID-19.

Due to the downturn in travel, many hospitality companies have explored and continue to evaluate government programs set out in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), such as the Paycheck Protection Program (PPP) and the Main Street Lending Program. However, there have been several updates to the rules originally laid out in the CARES Act. Hotel and lodging companies should carefully review the provisions, including eligibility, loan proceeds, and documentation requirements, and stay up to date on further changes to these programs.

Hotel owners and operators should consider the following:

• How much of the company’s occupancy and revenue are derived from tourism, particularly international tourism?
• What emergency financing or rescue capital may be available for company operations and liquidity needs in the short and long term?
• What losses related to COVID-19 may be covered by company insurance policies?
• What issues should be considered with employees working remotely and in the workplace?
• What loan modifications or financing provisions may be advantageous?
• What rights does the company have under its management agreement to consider?
• What opportunities may exist in order to acquire new assets or businesses in a capital markets-constrained environment?

Our attorneys are here to help hotel owners and operators seeking advice on these and other related issues.