The Washington State Hospitality Law Manual, Third Edition

SUMMARY OF CHAPTERS OF THE WASHINGTON STATE HOSPITALITY LAW MANUAL, THIRD EDITION

 

 

 

 

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INTRODUCTION TO THE
WASHINGTON HOSPITALITY LAW MANUAL, THIRD EDITION

Historical Underpinnings of Hospitality Law

The foundations of hospitality law began in England during the Middle Ages.  The English common law, as it developed over several hundred years, imposed duties on the innkeeper that were strictly construed against the innkeeper and in favor of the guest of the inn.

During the Middle Ages, an innkeeper was considered to be part of a “lowly profession”.  A quote from W.C. Firebaugh’s The Inns of the Middle Ages (Chicago: P. Covici, 1924, p. 12) states:

[I]n the eyes of the law, the innkeeper, the panderer, and others of like standing were on the same footing … .  [I]innkeepers were not admitted to military service, nor did they form a guild, as did other tradesmen.  In past ages, the tavern and innkeeper have been guide, philosopher, and friend to all the evil reprobates in his neighborhood.  His establishment was a sanctuary and base of operation for every cut-purse who stalked his quarry along the trade routes or in the rear guard of marching legions.  He was their fence, and his commission was always paid.

In the Middle Ages, the typical “inn” consisted of one large room where meals were eaten, and at night the tables were moved to make way for the guests’ beds.  If an inn became successful, additional rooms were added to offer sleeping rooms for the guests, separate and apart from the eating and drinking rooms.

The primary aim of English common law, as it developed over time, was to protect the guest and ensure that he was provided food, drink, shelter, and security.  These services came to be considered “public services.”  “Innkeeping” thus became a “public business” or “public calling” regulated by the King of England.

The early development of common law imposed certain duties on the innkeeper that still have legal significance today.  These duties were based on the following principals:

• Public Service.  The innkeeper has a public duty to supply food, drink, safety and shelter to traveler(s).  The innkeeper is to serve the traveling public.  The inn itself is a “Public House.”
• Duty to Receive Guests.  The innkeeper has a duty to receive all guests who properly apply for admission to the inn.
• Duty to Provide Services and Facilities.  The facility itself must be in good repair, and the staff of the innkeeper must be trained to provide proper services and protection to the traveling public.
• Duty to Charge in a Reasonable Manner.  An innkeeper may not charge unreasonable fees for services and accommodations in order to exclude unwanted guests.
• Duty to Not discriminate.   An innkeeper has a duty to the general public, and must serve the public without discrimination.
• Duty to Receive Strangers.  An innkeeper has the duty to admit a stranger as a guest, but a person who is not a guest has no right to remain against the objection of the innkeeper.
• Duty to Protect Property of the Guest.  An innkeeper is liable as an “insurer” for the loss of a guest’s property brought to the inn.

The Development of Hospitality Law in Washington

Washington’s hospitality law evolved from these early, basic common law duties.   Washington was admitted as a state in 1890, and in the 1905 Legislative Session the legislature passed laws governing the rights and duties of the innkeeper.

These early laws softened some of the English common law duties of the innkeeper, particularly the duty to act as an “insurer” of guest property.  See PART I, Chapter 6.  Since the time this early legislation was enacted, the Washington courts have handed down only a handful of reported decisions that apply the legislation and the English common law principles that predate it.

Beginning in the 1960s, however, legislators, courts and regulators made up for lost time.   Modern laws impacting the hospitality industry have burgeoned at the federal, state, and local levels.  Hotels in Washington are now subject to numerous statutes governing a multitude of subjects never considered by the common law.  Federal and Washington courts and administrative agencies have further defined and refined the dictates of statutory law as it applies to the hospitality industry.

Basic Legal Framework for Understanding “Applicable Law”

This Manual discusses different levels of statutory law, regulations, and court-made law.  To understand this “applicable law,” it is helpful to be aware of the basic legal framework within which this law is created and becomes “applicable” to hotels in Washington.

Law in the United States has two distinct sources:  federal law and state law.  Both federal and state law impact hotels in Washington.

Federal law is primarily based on federal statutes and the United States Constitution.  Under the Constitution, the federal government has “limited” powers and jurisdiction.  For example, Congress can only pass laws that are of the kind specifically permitted by the Constitution.  Jurisdiction over all other legal matters is reserved for the states.  Over the years, the Constitutional underpinnings of federal power have been interpreted by the Supreme Court to allow quite expansive federal legislation.  Many federal laws are based on Congress’s Constitutional authority to pass laws that affect “interstate commerce.”  Early in our country’s history, not much “interstate commerce” existed.  In modern times, however, virtually all commerce is “interstate” in some respect.  Accordingly, federal law can and does impact a wide variety of activities that occur in the operation of a hotel.

The courts in the federal court system, under the leadership of the United States Supreme Court, decide primarily “federal questions”—i.e., questions and issues arising under federal statutes, including the United States Constitution.  The federal courts are divided into thirteen “circuits” nationwide.  Each circuit includes the federal courts sitting in several states. For example, Oregon and Washington are both part of the Ninth Circuit Court of Appeals.  As cases are decided across the nation, each circuit’s Court of Appeals establishes federal law, or “case law” precedents within that particular circuit.  When a circuit’s Court of Appeals reviews an issue, the court may look to another circuit for guidance.  But it is not obligated to follow what another circuit has decided.  Each circuit follows its own precedents and the precedents established by the Supreme Court of the United States.

Washington State, like all states in the U.S., has “general jurisdiction” over all matters.  The Washington legislature can enact any kind of legislation, with two primary exceptions:  a state cannot enact legislation that is contrary to the United States Consitution (including the Bill of Rights); and a state cannot enact legislation that either contradicts properly enacted federal statutes or that legislates a subject that is completely “preempted” by extensive federal legislation on that subject.

Washington courts, similarly, are courts of general jurisdiction.  They can hear and resolve any dispute on any matter, including cases arising under common law (such as the court-made law on torts) and under statutes.  Thus, Washington has its own court system that develops its own case law and creates judicial precedents on hospitality law and other issues.  In Washington, a case may be appealed to the Washington State Court of Appeals or the Washington Supreme Court.  If a federal question is involved, then the case can be transferred from a state court to a federal court or, if the case is allowed to go all the way to the Washington Supreme Court, a litigant can request review by the United States Supreme Court.

Just as federal “circuits” are independent of one another, our state courts are independent of other state jurisdictions.  Accordingly, an Oregon state court decision involving a hospitality law issue is not binding on a Washington state court looking at the same issue.  However, a Washington court may find an Oregon case “persuasive” in its consideration of a Washington matter, and so the Oregon decision may influence in the Washington court’s determination of an matter.

Statutory References in this Manual

In this Manual, “RCW” refers to the Revised Code of Washington—the volumes in which Washington statutory law is found.   All laws passed by the Washington State Legislature are available online at http://apps.leg.wa.gov/rcw/default.aspx.

The Washington statutes often authorize the executive branch of our state government (e.g., the Department of Revenue) to promulgate rules and regulations that supplement the statutes.  These rules and regulations are contained in the Washington Administrative Code, cited in this manual as the “WAC.”  This code is also available online at http://apps.leg.wa.gov/wac.

Federal statues are found in the United States Code, cited in this Manual as “U.S.C.” Federal rules and regulations are found in the Code of Federal Regulations (CFR).  These federal statutes and regulations are not as easy to find online as the Washington codes, but they are available in local law libraries.

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PART I : THE INNKEEPER AND ITS GUEST

Chapter 1 : And Its Right To Refuse Guests

Download PDF: Part 1 Chapter 1 Washington Hospitality Law Manual

Summaries and Conclusions

• The innkeeper’s public duty to receive guests is subject to federal and state laws on freedom from discrimination.
• A hotel is a “place of public accommodation” under the federal Civil Rights Act of 1964 and, as such, may not discriminate against any person on the grounds of race, color, religion or national origin.
• The Washington Law Against Discrimination defines a civil right to include freedom from discrimination because of race, creed, color, national origin, sex, honorably discharged veteran or military status, sexual orientation, or the presence of any sensory, mental, or physical disability or the use of a trained dog guide or service animal by a person with a disability.  It also prevents discrimination by hotels on the basis of status as a mother breastfeeding her child.
•         Hotel management in Washington State should have written policies and procedures as well as training programs for all front desk personnel that emphasize the hotel’s duty to provide services and accommodations without unlawful discrimination.
• Under Washington law, supervisors and managers of hotels may be sued as individuals and be individually liable for damages for violation of Washington’s Law Against Discrimination.
• A hotel cannot discriminate against guests by charging excessive rates for accommodations on a discriminatory basis.
• RCW 49.60.215 expressly provides that hotel management may refuse to provide accommodations to an individual whose behavior or actions would constitute a risk to property or other persons.
• A hotel may refuse service or accommodation if:
  • The person is under the influence of alcohol, is under the influence or in possession of illegal drugs, or is creating a public nuisance.
  • The person has previously defrauded the inn or engaged in disruptive or disorderly behavior.
  • The person has a contagious disease.
  • The person is bringing property to the hotel that is dangerous to others or in violation of the law.
  • The person is unwilling or unable to pay for hotel services.
  • The hotel has no accommodations to offer a person.
  • Noncompliance with reasonable rules.
  • The person requesting accommodation is exhibiting violent behavior.
  • The person requesting accommodation refuses to complete a registration form.
• Hotels should make sure that the hotel’s policies are part of the contract with the guest by incorporating an obligation to comply with the policies in the hotel’s electronic and other methods of confirming reservations and the contract with the guest.
• A hotel may refuse to provide accommodations to a minor under the theory that, under Washington law, a minor has no capacity to enter into a contract for accommodation or services.  It is a prudent practice for hotel management to require the parent’s signature on the hotel registration card or credit card slip which makes the parent liable for the actions of a minor.
• Hotels should consider adoption of policies for prom and graduation parties.
• Document in writing the reasons for refusing to provide accommodations to any individual, and consult experienced counsel when issues and questions arise.

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Chapter 2 : Guest Reservations

Download PDF: Part 1 Chapter 2 Washington Hospitality Law Manual

Summaries and Conclusions

• Washington’s contract law controls the form and effect of a hotel’s contract with its guest.
• Hotels should make sure their physical and electronic reservation procedures create a clear written contract with terms that disclose and include the hotel’s hold-over, conduct, and other policies.
• A hotel and a guest each have rights and remedies in the event the other breaches a contract for accommodations and services.
• The practice of overbooking by a hotel could subject it to a charge of an unfair or deceptive act or practice in violation of Washington’s Consumer Protection Act.
• Catering, banquet and convention contracts are subject to Washington’s contract law.  These agreements should be carefully reviewed by a hotel’s legal counsel.
• Gift cards/certificates issued after July 1, 2004, usually can’t have expiration dates, and you usually can’t assess dormancy or service fees, but you no longer are required to report and remit revenues when the holder doesn’t redeem them.

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Chapter 3 : The Innkeeper’s Right To Evict A Guest, Tenant, Patron Or Others

Download PDF: Part 1 Chapter 3 Washington Hospitality Law Manual

Summaries and Conclusions

• Washington’s Landlord Tenant Act does not normally apply to hotels.  Care must be taken, however, to establish the contract with the guest so that breaches of the contract are clear and steps can then be taken to evict the guest.

• The hotel/guest relationship is essentially a contract relationship.  If the contract’s terms are not clear, or if it is not clear whether those terms have been violated, then the removal of the guest will be problematic and can even create liability.
• Hotels should establish relationships with local law enforcement supervisors so that the role of the police is understood before they are needed.  Washington’s criminal trespass statute is important when discussing police enforcement.
• After a guest is duly registered, he or she may normally may be evicted for:
  • Violation of hotel regulations.
  • Nonpayment of charges.
  • Overstaying the reserved period of time.
  • Illness.
• A hotel, when evicting a guest for policy infractions, should use the utmost caution to avoid any question of liability with regard to the civil rights of an individual.
• Practical solutions and notifications normally avoid problems arising from overstaying guests.
• An innkeeper must take reasonable steps to care for a patron, once there is knowledge of the patron’s illness.  This includes the duty to take reasonable steps to turn the sick patron over to a physician.
• A hotel may remove a person who is not a guest or patron in order to ensure the privacy and peaceful residence of its guests.

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Chapter 4 : Guest Rights To Privacy

Download PDF: Part 1 Chapter 4 Washington Hospitality Law Manual

Summary and Conclusions

• A hotel has a right to keep unwanted and unregistered third parties from interfering with the privacy of its registered guests.
• The right of privacy empowers any hotel to remove any unregistered guest from the premises and to refuse to provide any information about a hotel’s guest.
• Hotel management is cautioned against allowing police officials to conduct a search of a guest’s room without a lawful search warrant or without the consent of the guest.
• Hotel management has the right to refuse random viewing of a guest registry by law enforcement.
• While you always want to cooperate with local law enforcement officials, a hotel desk clerk should always insist that police obtain a valid search warrant before they enter a guest’s room.  Under Washington law, your desk clerk must now be informed by police that he/she need not consent to a warrantless search of a room.
• Violation of the rights of privacy could permit an aggrieved party to seek damages.
• Federal agents and governmental entities have the right to obtain guest information without a warrant under the Patriot Act.  See PART III, Section 8.1.

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Chapter 5 : The Innkeeper’s Duty to Protect Guests from Injury

Summaries and Conclusions

• In today’s society, it is fair to assume that a lawsuit may be brought against a hotel by a guest seeking damages for any type of injury incurred on a hotel’s premises and on the public areas surrounding a hotel.
• Although not an insurer of a guest’s safety, an innkeeper owes a duty to its guests or third parties to exercise care to protect them from injury at the hands of a fellow guest or third parties.  The duty to exercise reasonable care normally extends only to dangers which are within hotel management’s actual knowledge or which are foreseeable.
• Cases and lessons:
  • Hotel rooms:
    • Room access through sliding doors must be secured.
    • Adequate doors and locks can prevent an unauthorized intrusion.
  • Common areas:
    • A hotel must establish procedures and policies to secure common areas and to deter criminal activity.
    • If prior events demonstrate that a hotel property is vulnerable to criminal activity, it is imperative for the safety and security of guests that safeguards be in place and warnings be posted.
    • The lack of secure, common areas may be a breach of a hotel’s duty to protect guests from foreseeable events which cause injury.
    • The utilization of security personnel must include clear instructions as to what do to in the event of an emergency.
    • If a hotel allows dogs on the premises, the hotel should consider adopting rules for dog control. Otherwise, a hotel may be liable for injuries caused by the dogs.
  • Employee training:
    • Employees must be trained to respond to emergency situations.
    • Employees should also be trained to respond with sensitivity to injured guests.
  • Hotel entrance and parking:
    • Some cases have expanded the scope of hotel management’s duty to provide guest security to public property adjacent to a hotel’s premises.
    • A hotel has the duty to anticipate certain conditions on the premises, including entrances and parking lots, and to correct them before they become dangerous and harmful.
• Hotel management can be held liable for injuries caused to guests that result from faulty room access control.  A hotel should ensure that keys and access cards do not compromise guest safety.
• Under the doctrine of respondeat superior, a hotel may be held liable for the acts of its employees acting within the course of their employment.  To avoid actions for the tort of invasion of privacy, hotels should inspect every room and make sure no peepholes or “spy cams” are present.
• A hotel has an implied agreement with its guests to provide a decent, peaceful and safe environment.  Guests or other patrons not abiding by hotel regulations need to be confronted and/or ejected so as to reduce the likelihood of injury and liability.
• A violation of Washington’s fire safety laws and regulations is negligence “per se.”
• Exculpatory language alone does not absolve a hotel management’s liability to its guests.
• Hotels should take advantage of loss prevention resources provided by insurance carriers and brokers.
• Some security measures to consider include, among others, conducting background checks,  developing good relations with local police, ensuring adequate lighting in parking lots and other common areas, and eliminating landscaping that may attract vandalism and crime.
• The hotel should have a reputable registered agent to prevent served court papers from falling through the cracks.  When a claim is made, hotel management should notify the carrier promptly, coordinate with the hotel’s regular counsel, and make sure that a timely appearance is made in the court action.

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Chapter 6 : The Innkeeper’s Liability for Guest Property

Summaries and Conclusions

• RCW 19.48 provides very beneficial limitations on a hotel’s liability for personal property that is lost, stolen or damaged.
• RCW 19.48.030 provides a “safe harbor” for valuables if the hotel makes a safe available and gives certain specified notices.  Hotels should follow all the requirements of the statute and take advantage of the limitations of liability.
• RCW 19.48.070 establishes additional limits for the loss of personal property as well as procedures for unclaimed property of a guest.
• Hotel operators should be aware of USPS regulations around handling guests’ mail delivered to the hotel.
• RCW 63.29 provides for the treatment of certain items left at the hotel, such as money, gift certificates, unused airline tickets, and the like.
• A hotel may assume varying degrees of liability to a guest for the use of parking facilities.
• Proper training and procedures for handling personal property can reduce claims and liability and help satisfy the hotel’s burden of proof when a claim arises.

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Chapter 7 : The Innkeeper’s Liability for Loss of Property of Persons Other Than Guests

Summary and Conclusions

• Any time a hotel employee receives a person’s personal property, the hotel assumes a degree of liability. Liability can arise in situations such as holding non-guests’ property in check rooms.
• RCW 19.48.070 limits recovery by a non-guest who sues the hotel for negligence.
• The hotel’s storage of vehicles belonging to guests or other persons potentially creates more open-ended liability.  Policies and procedures, such as a claim check form and procedure, can help reduce claims.

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Chapter 8 : Frauds Committed Against Innkeepers

Summary and Conclusions

• Hotel management should be familiar with Washington’s criminal statutes in RCW 9A to deter criminal activities and to be aware of measures that can demonstrate proof of a crime.
• Hotel management should meet with local prosecutors and law enforcement officials periodically to discuss and confirm the identification of any stolen property and the criminal prosecution procedures that are being employed.
• Credit card fraud appears in two ways:  An individual may forge a signature to a stolen credit card or sign a credit card without permission of the owner.  Washington law provides for criminal sanctions for these crimes under RCW 9A.56.160.
• Hotel management should be familiar with Washington law regarding bad checks and the legal procedures for collection of a dishonored check. RCW 9A.56.060; RCW 62A.3-515.
• Washington law provides criminal sanctions and civil remedies regarding individuals guilty of defrauding the hotel via the “skip,” i.e., a person who has departed a hotel room with baggage without paying. RCW 19.48.110; RCW 4.24.230.
• Hotel management should be familiar with Washington’s lien statute premise (RCW 60.64 and RCW 60.66) and its procedures relative to the action of a hotel to hold a lien on a guest’s personal property.
• Hotels should consider adoption of an effective loss prevention program to curtail the theft of hotel’s property.
• Action by a hotel to detain a guest for investigation of a wrongdoing is controlled by statute.  The issues of potential liability for “false arrest” and discrimination must be considered by a hotel when attempting to detain a guest.
• Hotel management and innkeepers need to implement effective crime prevention programs to curtail prostitution, drug activity, and other criminal behavior.

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Chapter 9 : Consumer Protection Laws Affecting Innkeepers

Summary and Conclusions

• The Federal Consumer Credit Protection Act addresses the legal procedures for handling credit card and credit account billing errors.
• Washington law does not require a hotel to post room rates.
• Washington’s Truth-in-Menu laws provide patrons an avenue for bringing suit for misleading advertising or mislabeling of food products.
• Washington’s no-smoking law (RCW 70.160) sets forth necessary requirements, which must be adhered to by a hotel regarding smoking in public places and places of employment.

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Chapter 10 :  Deceased Guests

Summary and Conclusions

• A hotel should establish a formal procedure in case of a death on the premises.
• The procedure should address (at least) the following:
  • Call 911 and contact the local County Coroner—in virtually every case, the Coroner will initially assume jurisdiction until the next of kin is notified.
  • In most cases, it is advisable to preserve and protect the scene from contamination (“don’t touch anything”) until law enforcement authorities determine that the area is not a crime scene under investigation.
  • Upon arrival of law enforcement authorities or the County Coroner, establish a duplicate list of personal effects.
  • Determine who is the decedent’s next of kin.  Do not release the name of the deceased.
  • Before releasing the decedent’s property, obtain a tax waiver under RCW 83.100.120.

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Chapter 11: Hotel Rules, Policies, and Procedures

Summary and Conclusions

• Have appropriate rules and policies for guests, and make sure they are a part of the contract between the hotel and the guest.
• Apply rules and policies to guests and other patrons consistently and without discrimination.
• Draw on brand manuals for appropriate rules, policies and procedures.  Supplement them with knowledge gained from the chapters in this Manual.
• Detailed crisis management plans are essential to reduce damages, protect the hotel’s reputation, and save lives.  Prepare them, practice them, and modify them as the risks change.

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PART II:  THE INNKEEPER AND ITS EMPLOYEES

 

Chapter 1 : Wage And Hour Laws Applicable To Employees

Summary and Conclusions

• Under the Federal Labor Standards Act (FLSA) employers must comply with applicable state or local law if that statute is more favorable to employees.
• Most hotel employees in Washington State are covered by the FLSA and its implementing regulations.  However, hotel management may have to comply with both Federal and State laws and regulations with respect to particular employees.
• FLSA sets forth standards concerning minimum wages, equal pay, overtime pay for work over 40 hours during a work week, record keeping and restricts child labor.  The FLSA is administered by the U.S. Department of Labor’s Wage and Hour Division.
• Washington’s minimum wage and hour laws are set forth in RCW 49.46; 49.48; and 49.52, et seq.  Its implementing regulations are found in WAC 296-128-001, et seq.  Washington statutes cover employees that are not covered by the FLSA.  Washington’s wage and hour laws are enforced by the Department of Labor and Industries Employment Standards Division.
• Hotel management should be familiar with the exemptions under the FLSA and Washington’s wage and hour laws.  It may be that certain hotel employees may be exempt from the minimum wage, overtime and/or recordkeeping requirements of these laws.  Exempt status should be carefully evaluated in consultation with legal counsel.
• Washington’s minimum wage law is often more favorable to employees, and so any employees covered by Washington’s law must be paid our state’s minimum wage.
• The FLSA does not regulate how many hours a non-minor employee can work.  It does regulate which hours must be paid at the regular rate or at overtime an overtime rate.  FLSA is on a work week basis, and in general provides that hours in excess of 40 hours in a work week must be compensated at time and one-half the employee’s regular rate, which can include amounts paid in addition to the employee’s hourly rate, such as shift differentials and certain bonuses.
• Hotel management must be familiar with which activities are considered “hours worked” for which an employee must be paid and which must be counted for purposes of determining overtime due.
• State and federal law restrict the employment of minors in terms of working hours and the types of position and duties a minor may perform.  Hotel management in Washington State should be familiar with the provisions of both federal and Washington State law as it relates to employment of minors.
•   Minors working in the hospitality industry cannot work as bellhops, maids, or in a service operation unless accompanied by a responsible adult.  All minors are prohibited from working in any place where intoxicating liquor is served in the same room.
• Hotel management frequently will hire independent contractors or entertainers and therefore should be familiar with the state and federal regulations that determine whether a worker is deemed an independent contractor or an employee.
•   Hotel management should be familiar with the criminal exposure imposed by RCW 49.52 regarding the improper withholding or handling of wage payments.

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Chapter 2 : FICA and FUTA Taxes, Meals and Lodging, Uniforms, Student Employees, Recordkeeping and Tip Credit, Reporting and Pooling

Summary and Conclusions

• Under Federal law payment of minimum wages and overtime may be satisfied by such non-cash items as housing and meals (unless excluded under an applicable union contract).  Washington State law does not recognize these credits.  Under Washington law, hotels that are subject to both Federal and State law must pay employees the state minimum hourly wage, even though a lesser wage could be paid under the Federal Act because of credits for tips, board and lodging allowed under FLSA.
• Under State law, if a hotel requires an employee to wear a uniform, the hotel must provide the apparel and cleaning free of charge to the employee.  Hotel management needs to be familiar with the provisions of the so called “Black and White” wearing apparel law, RCW 49.12.450, which allows some standard dress to be excluded from the definition of “uniform.”
• When employing a student learner at a wage rate lower than the minimum wage, a hotel must obtain a certificate from the Department of Labor and Industries.
• Both the FLSA and State law mandate that hotel management keep certain records if their employees are covered by Federal or State wage and hour rules.
• Federal law recognizes tip credit; however, the Federal law is not preemptive. Therefore, a hotel subject to Federal law must satisfy whichever standard—state or federal—provides the greatest benefit to an employee.  Under State law, Washington does not allow tips to be a credit by the employer as a part of the minimum wage, nor are tips part of the regular hourly rate on which overtime is computed.
• “Tip-back agreements” are illegal in Washington.  Hotel management is advised to carefully review “tip pooling” and “tip-back agreements” with legal counsel for compliance with federal and state wage and hour laws.

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Chapter 3 : Laws Against Discrimination in Employment

Summary and Conclusions

• Hotel employers must comply with all applicable federal, state and local laws relating to employment discrimination and harassment.
• Generally, those laws prohibit discrimination and harassment on the basis of an applicant’s or employee’s race, color, sex, sexual orientation, national origin, religion, age, citizenship status, military service obligations, genetic information, marital status and disability.  Some local ordinances add sexual orientation, gender identity, and political ideology among others to the list of protected characteristics.
• In addition to the prohibitions on discrimination and harassment, federal and state laws require an employer to reasonably accommodate an applicant’s or employee’s sincerely held religious beliefs to the extent they conflict with a requirement of employment (unless the employer can prove an undue hardship) and a qualified applicant’s or employee’s disability (unless the employer can prove an undue hardship).  Hospitality employers should take care to identify these situation and comply with these stringent requirements.
• Under the laws prohibiting disability discrimination there are very specific prohibitions and requirements related to medical inquiries and physical exams of applicants and employees, and the maintenance of medical records for employees, among other things.  Hotel management should be familiar with the requirements of the Americans with Disabilities Act and the Washington law on employment of persons with handicaps and consult with legal counsel to discuss compliance with these laws.
• Hotels that have contracts with the federal government should be familiar with the requirements of the various Executive Orders which may require the hotel to maintain affirmative action plans.
• Hotel management must take seriously the issue of sexual and other forms of harassment.  Prudent employers will establish and enforce a no-harassment policy, which defines harassment, includes a complaint procedure and provides for discipline in the event of a violation of the policy.  Supervisors and managers should be trained to recognize violations of the policy and on how to respond to complaints of harassment.
• Establish good human resources practices to include:  a legal and effective hiring process (applications, reference checks, background checks and interviews), property-wide and departmental policies and procedures, a policy for handling complaints, a meaningful performance management program (with annual evaluations and follow up), a disciplinary procedure that aims to correct performance and behavior problems, a legally defensible discharge procedure and supervisory training on how to implement these best practices.

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Chapter 4 : Employment Testing

Summary and Conclusions

• The Federal Employment Polygraph Protection Act prohibits most private employers from requiring, requesting, causing or suggesting that any employee or applicant submit to a lie detector test.
• Under the Federal Act an employer may request, but may not require, an employee to submit to a lie detector test as part of an investigation of work place theft or other incident that causes economic loss to the employer’s business.  There are, however, significant restrictions and requirements for such testing.
• Washington law makes it unlawful “to require, directly or indirectly, that any employee or prospective employee make or be subjected to any lie detector test as a condition of employment.”
• Drug and alcohol testing of employees must be conducted in compliance with federal and state law.  In addition, issues related to the treatment of alcoholics and recovering drug addicts under the Americans with Disabilities Act should be carefully reviewed with legal counsel.

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Chapter 5 : Employee Termination

Summary and Conclusions

• Hotel management needs to ensure that the decision to terminate an employee and the manner in which the termination is carried out can be defended if challenged.
• Washington State is an “at will” state.  In other words, unless an employee is otherwise protected by law or contract, the hotel may terminate an employee with or without reason and with or without notice.
• Hotels should train their management to properly investigate and handle disciplinary actions and terminations.
• The key to successfully defending a wrongful termination case is a collection and maintenance of records documenting the reasons and facts supporting a termination.
• Under Washington law, employees have access to their personnel files on an annual basis.
• It is advisable to conduct exit interviews in writing to elicit employee responses to the termination and collect company property.
• Terminated employees should be assured that all accrued benefits will be delivered.
• Written releases should be considered with terminated employees when their is likelihood of a claim being filed.  You should obtain the advice of legal counsel when utilizing a written release of claims — especially when the employee is over the age of 40.
• Always:
  • Investigate carefully before making the decision to terminate an employee;
  • Maintain your employee personnel files;
  • Make sure the disciplinary actions are consistent within the hotel; and
  • Always follow your internal policies and procedures on discipline and discharge.
  • Be familiar with and follow all laws governing the employment relationship.

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PART 3: GENERAL INNKEEPER OPERATION

 

Chapter 1 : Licensing And Regulation Of Hotels

Summary and Conclusions

• RCW 70.62, et seq., governs state regulation of transient accommodations in Washington State.  This statute and its implementing regulations are administered by the Washington State Department of Health, specifically, the secretary of the Washington State Department of Health.
• Under RCW 19.48.020, hotels must keep and maintain guest registers and preserve the records for a minimum of one year.  Law enforcement officers with a valid warrant, attorneys with a valid subpoena, and other officers of the court may examine a hotel’s register under certain circumstances.  It is advisable to seek advice and direction of legal counsel before permitting the examination.
• Hotels in Washington State must secure an annual operating license from the Facilities and Services Licensing Division of the Washington State Department of Health.  A hotel is required to pay a fee for its annual license and inspection of the premises.  The fee schedule is set forth in WAC 246-360-990.
• Pursuant to RCW 70.62.250, the Department of Health has the power and authority to enter and inspect at any reasonable time, any transient accommodation and to make such investigations as are reasonably necessary to carry out the provisions.  Currently, the Department does not have the authority to enter a rented room, whether or not the guest is present or consents to the entry.
• The State Department of Health, pursuant to RCW 70.62.270, has the authority to suspend or revoke licenses upon the failure or refusal of the person operating the transient accommodation to comply with the provisions of this law or any rules and regulations adopted by the Department.
• Hotels in Washington State are subject to county and municipal regulations with regard to annual business license requirements.  Hotel management must also comply with the requirements of county public health rules and regulations.

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Chapter 2 : Public Health And Safety Requirements

Summary and Conclusions

• Hotels in Washington State have numerous obligations to the general public because of federal, state, and local statutes enacted to protect the public’s safety and health, such as a state’s building and fire code, sanitation codes, and health laws.  Hotels are also subject to various state laws and administrative rules and regulations concerning the preparation and service of food, laws regarding contagious diseases, and laws regulating hotel water supplies, sewage systems, signage, and swimming pool operations.
• All new construction activities involving hotels in Washington State are subject to RCW 70.62, which regulates transient accommodations in Washington state; RCW 19.27, which is the state building code; and, all applicable city and county building codes and ordinances.
• Violation of Washington’s laws and regulations may be conclusive with respect to a hotel’s liability for a claim of negligence, rather than requiring the aggrieved individual to prove that the hotel violated the common law duty of reasonable care.
• The federal Food, Drug and Cosmetic Act (21 U.S.C. § 331, et seq.) is intended to safeguard the consumer from adulterated food.  Hotel management should also be familiar with WAC 246-360-160 relative to food and beverage services; WAC 246-215 relative to State Board of Health Standards for food service, sanitation, and local ordinances; WAC 246-217 relative to State Board of Health Standards for food and beverage service workers permits; and WAC 246-217 relative to State Board of Health Standards for food workers. In addition, city and county regulations may be different and thus, hotel management should be familiar with those regulations in effect in their community.
• Hotel management must exercise care and prudence in purchasing, preparing, and serving food to guests and patrons.  If a claimant can show that unwholesome food was served and illness or injury resulted, then liability will likely result.
• WAC 246-360 establishes the Washington State Board of Health minimum health and sanitation requirements for transient accommodations in order to protect and promote the health and welfare of individuals using such accommodations.  These administrative regulations establish uniform, statewide standards for maintenance and operation, including light, heat, ventilation, cleanliness, and sanitation.
• The provisions of RCW 70.90, et seq., govern the safety, sanitation, and water quality for “water recreation facilities” in Washington.  Hotel management should be familiar with WAC 246-260, which implements regulations for swimming pools, wading pools, spray pools, spas, or the like.
• RCW 69.06.030 forbids the hiring of any person afflicted with any contagious disease to work in or about any place where unwrapped or unpackaged food and/or products are prepared or sold.
• Washington does not have laws regarding aid to choking victims.  Accordingly, hotel management should work closely with their legal counsel before establishing and implementing any policies for choking emergencies.  Washington does have a “good Samaritan” law for those rendering emergency assistance, but the statute does not protect against gross negligence.  As a result, proper training should be given to any personnel expected to provide any assistance beyond that which is obvious and safe.
• The regulation of off-premise and on-premise signage in Washington State is found primarily in county and city zoning ordinances.  Specifically, these sign codes govern the size, height, spacing, and location of signage on hotel properties.
• Washington State’s Scenic Vistas Act regulates signage located on the federal interstate highway system, the Federal Aid Primary Highway System, and the State Scenic Highway System.  These statutes, in part, provide for hotels to place their business signs or logos on “motorist information signs” in order to provide the traveling public with specific information as to food or lodging.  This type of signage is subject to specific regulation and limitations and it is advised that hotel management contact the nearest office of the State Department of Transportation in order to qualify for advertising on these “motorist information signs”.

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Chapter 3 : Fire Safety Laws

Summary and Conclusions

• Hotels in Washington State are subject to a multitude of federal, state, and local laws, codes, and regulations relating to fire safety.  Fire safety requirements are found in building codes, fire codes, licensing laws, public assembly laws, labor laws, occupational health and safety laws, as well as the so-called general business laws of the state.
• Hotels in Washington State should work closely with their legal counsel and local fire officials to ensure that each property complies with federal, state, and local fire laws and codes in effect.
• Pursuant to the authority set forth in RCW 70.62.290 and WAC 212-12-010, cities and counties enforce uniform building and fire safety codes and standards within all transient accommodations in Washington State.
• Hotel management, when planning a new construction or major remodeling, should work closely with local building officials to ensure compliance with applicable building codes.  See WAC 51-50, which adopts the 2009 edition of the International Building Code and the International Fire Code Standards as administered by local officials having jurisdiction (usually the local fire department).
• The International Building Code and International Fire Code Standards are, in theory, compatible even though conflicts may arise as to their enforcement between state and local jurisdictions.
• OSHA requires all employers to have a written emergency action plan covering certain conditions related to fire hazards and emergency procedures.  The employer is also required to train the individual persons with duties in the plan and to review the plan with the employees at the time the plan is implemented, when the employees’ duties under the plan change, and whenever the plan itself changes.
• The Washington Supreme Court decision in the Herberg case is a striking example of the importance of compliance, the liability that can result from failing to do so, and the ineffectiveness of excuses.  The hotel’s owner was found negligent per se, and the owner’s liability extended to all members of the public likely to be injured, not just to hotel guests.  The court also found that when the State Fire Marshall finds any fire hazard “dangerous to the safety of the building premises or to the public,” he must order such condition remedied.
• Hotel owners and management should work closely with legal counsel and with local and state fire officials for a thorough understanding of all applicable standards and for compliance with them.

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Chapter 4 : Occupational Safety And Health Act (OSHA)

Summary and Conclusions

• The purpose of the Occupational Safety and Health Act of 1970 (29 U.S.C. § 651, et seq.) is “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources ….”  The Act states the duty of each employer is to furnish a “place of employment which is free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”
• Washington State’s program is known as the Washington Industrial Safety and Health Act (WISHA) (RCW 49.17, et seq.)  and has been approved by the federal OSHA.  It is administered by the Washington State Department of Labor and Industries.
• Because WISHA has been approved by its federal counterpart (OSHA), most hotels in Washington State are subject to WISHA and the standards and procedures established by its implementing regulations.
• Hotel management must inspect the premises to ensure compliance with WISHA regulations and to alleviate any hazardous condition that may develop.  If any potential hazards to employees exist, posters, labels, or signs must warn them of this potential danger.  Hotel management must establish or update any procedure required by WISHA and must also communicate this to employees.
• It is the responsibility of hotel management to establish and supervise:
  • A safe and healthful environment;
  • An accident preventing program as is required by WISHA standards; and
  • Training programs to improve the skill and competency of all employees.
• WISHA requires employers to post a notice, furnished by WISHA, that informs all employees of their protections and obligations under the act and directs them to their employer or to the nearest office of the Department of Labor and Industries for assistance.
• WISHA authorizes a representative of the Washington State Department of Labor and Industries to enter “without delay” at all reasonable times and inspect any place of employment and to privately question an employer, owner, operator, or agent, or employee.
• A WISHA investigator must possess a valid search warrant obtained by probable cause. Hotel management may contest a warrant by refusing admittance to a compliance officer and immediately seek to “quash” the warrant on the grounds of lack of probable cause or for procedural irregularities.
• Hotel management, with the advice and guidance of its legal counsel, should have in place, policies and procedures, for dealing with WISHA compliance officers.
• Hotel management has certain rights of appeal of a citation, and/or an assessed penalty, with the Washington State Department of Labor and Industries.
• An employee has the right to refuse to work when the employee has reasonable grounds to believe that he/she will be risking serious injury or death due to a hazardous condition at the work place.
• Hotel management must develop a formal accident prevention program, tailored to the needs of the particular property and to the type(s) of hazards involved.  This program should, among other elements, include an established safety and health committee, for the purpose of developing and implementing a total safety program.

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Chapter 5 : Antitrust Laws and the Operation and Marketing of Hotels

Summary and Conclusions

• The antitrust laws are intended to promote market competition by regulating anti-competitive conduct.  They prohibit such things as price fixing among competitors and bid rigging.
• The antitrust laws are broad and leave room for interpretation.  Federal and state investigations and actions can be brought, and private lawsuits can also be maintained.   Additionally, the stakes involved can be very high and can even threaten to break a company.  As a result of all of these attributes, the antitrust laws can result in complex, drawn-out, and contentious and very expensive investigations and litigation.
• Hotel management should decline to discuss or make agreements with competitors on matters that might increase rates for the hotel, force down prices for suppliers, or otherwise have anti-competitive consequences.
• Employees of a hotel management company that manages a separately owned hotel in the same market should treat the other hotel as a competing hotel.  For example, discussions about pricing and bidding should not occur between these hotels.
• When two management companies manage different hotels in the same market, but the hotels are owned by the same owner, legal analysis is needed before the management companies share competitive information or cooperate on pricing and bidding.
• “Call around” practices have been attacked by at least one attorney general in another state.  These practices are not safe and can subject a hotel to investigation, litigation, and fines.
• OTAs and chains are under attack for agreeing to maintain prices and keeping smaller OTAs and others from offering lower prices.  Hotel managers should keep abreast of these developments and evaluate the impact on, for example, their contract negotiations with OTAs.
• Because of the risks involved when antitrust laws are arguably triggered, hotel management should be very sensitive to any activity that may even begin to approach the feel of price fixing, price manipulation, bid rigging, or other anticompetitive behavior.  When these concerns are raised in any way, legal counsel should be consulted.

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Chapter 6 : Washington Law Relating To Alcoholic Beverages

Summary and Conclusions

• The Washington State Liquor Control Board (LCB), under the provisions of Title 66 of RCW, governs the issuance of licenses to and review of all establishments serving, manufacturing, or distributing alcoholic beverages in Washington State.
• Hotels seeking a liquor license may contact the Business License Services division of the Department of Licensing (BLS), which issues Master Business Licenses and coordinates the issuance of special liquor endorsements by the Liquor Control Board.
• The LCB will not issue a license until such time as a thorough and complete investigation of the site, floor plan, financial interest, and criminal record of the applicant has been completed.  In addition, Washington law requires that the filing of an application include posting a notification on the premises for public review and notification to local officials and entities.
• To apply for a hotel license, the establishment must commence as a hotel and may not offer rooms to its guests on an hourly basis.  All on-premise alcoholic beverage service must be done by an alcohol server as defined in RCW 66.20.300 and must comply with RCW 66.20.310.  All employers, owners, and managers must have a Mandatory Alcohol Server Training (MAST) permit if they pour or serve alcohol. RCW 66.20.310; WAC 314-17-030.
• As part of I-1183, private retail locations for liquor sales are required to have a minimum of 10,000 square feet of enclosed retail space, with certain exceptions.  I-1183 also amended the hotel licensee provisions to allow the licensee the right to sell “spirits” in bottles at retails sales locations within the hotel premises (as noted above).  The 10,000 square foot limit doesn’t apply to hotel license holders.
• An innkeeper who furnishes alcohol to its patrons is potentially liable for the actions of the guest and any resulting injuries to third parties when the guest becomes intoxicated on the premises.   A server of alcohol is liable for the patrons acts that are “reasonably foreseeable” when it neglects its duty to protect the public from a patron who is “apparently under the influence” of alcohol.
• Washington State courts have based commercial host liability on the premise that “servers” of alcohol have a special relationship with their customers and a duty to protect the public from dangers caused by their patrons’ level of intoxication.
• There is no “dram shop” law in Washington, but there are statutory penalties for serving patrons who are “apparently under the influence” or who are under age.  If a hotel violates these statutes and injury results, “per se” negligence liability can result.
• I-1183 requires the LCB to adopt a “responsible vendor program.”  The LCB has done so, and it provides an additional opportunity for training and for reduced sanctions for license violations.  In any event, continuous training of hotel staff is well-advised, given the inherent risks in serving alcoholic beverages.
• Liquor Control Board must be strictly adhered to.  The consequences of failing to do so can include the loss of liquor license and severe civil and criminal penalties and liability.  The law relating to alcoholic beverages is complex, and it is advised that hotels work closely with their legal counsel to assure compliance with these laws.

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Chapter 7 : Americans With Disabilities Act —Title III

Summary and Conclusions

• The ADA’s objective, with respect to hotels (and other public accommodations), is to ensure that persons with disabilities have the opportunity to experience the full and equal enjoyment of the goods, services, facilities, privileges, and advantages of your hotel.
• The ADA was first enacted in 1990.  The 1991 Standards applied before March 15, 2012.  The new 2010 Standards took effect on March 15, 2012
• The ADA applies to hotels, but not to facilities that are, essentially, traditional bed and breakfast-style lodgings.  The ADA now also applies to condo hotels and extended-stay lodging.
• The ADA can be enforced by the DOJ.  Additionally, private parties, individually or in class actions, can also sue to enforce the ADA.  “Drive-by” lawsuits can be brought by activists and others.  Legal strategies can be employed to reduce the costs of these sometimes frivolous lawsuits.
• When a new facility is built, it must comply with the ADA regulations then in place.  When a facility is altered, the altered portions of a building must comply, and there are also obligations to make compliant the “path of travel” to the altered area.
• Hotels must affirmatively remove barriers from existing facilities when the removal is “readily achievable.”   This application of this concept is factually intensive and many considerations apply.
• There is an ADA “safe harbor” from the barrier removal obligation and its attendant “readily achievable” test.  If new construction or alterations occurred before March 15, 2012, and the work complies with either the 1991 Standards or the 2010 Standards, then there is no obligation to remove any barriers in those buildings or areas of alteration.  However, there is no safe harbor for facilities that are addressed for the first time by the 2010 Standards, such as swimming pools.
• As a result of confusion and lobbying efforts, the “fixed lift” requirement for swimming pools has been postponed until January 2, 2013.
• Managers of separately owned condo hotel units do not have to force the unit owner to comply with new requirements.
• Service animals now include only dogs and, with some limitations, miniature horses.  The ADA has very specific directions that govern, for example, what inquiries can be made about service animals and the extent to which they must be accommodated.
• The ADA generally requires that hotels make “reasonable modifications” to their usual ways of doing things when serving people with disabilities.  The 2010 Standards specifically address reservation procedures.
• The 2010 Standards require that hotels provide auxiliary aids and services whenever necessary to ensure effective communication with people with disabilities and technology.
• The ADA and the regulations implementing it are extensive and specific.  This Chapter addresses some of the aspects that apply in a unique way to hotels.  The treatment, however, is not exhaustive.
• When the Washington State regulations exceed the requirements of the federal regulations, the state standard must be followed.  When the federal standards exceed the Washington State regulatory requirements, the federal requirements must be followed.
• Washington statutes and regulations set forth state requirements regarding handicap discrimination in public accommodations.  The statutes also cover service dogs and miniature horses.  In addition to these laws and regulations, WAC 51-50 deals with public accommodations as part of the state’s adoption of the 2009 edition of the International Building Code.  WAC 51-40-1103 is a new regulation relating to requirements for the number of accessible rooms and roll in showers and accessible rooms for persons with hearing impairments.

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Chapter 8: USA Patriot Act

Summary and Conclusions

• The USA Patriot Act was passed in October 2011 as a response to the terrorist attacks on September 11, 2001. The law expands the federal government’s ability to monitor and deter terrorist acts and prevent money laundering (and other financial crimes) in the United States.
• The Patriot Act affects the hotel industry as it expands the federal government’s access to private records. This may include the use of emergency search warrants for hotel rooms, obtaining, without a warrant, guest information, registration records, and electronic transactions of guests.
• Hotels should be cautious when advancing money, exchanging currency, or cashing traveler’s checks for guests and should consider eliminating the service to avoid being considered a Money Service Business (MSB).
• A hotel, like all U.S. persons, is generally prohibited from dealing with SDNs.  By requiring a valid ID and a major credit card, the hotel can likely “piggyback” on the financial industry and avoid the need to verify that its guests are not SDNs.
• The Patriot Acts grants immunity to hotels that provide voluntary registration information to a government entity when the hotel reasonably believes that an emergency involving immediate danger of death or serious injury exists.  On the other hand, harboring a person that is known to have committed, or is about to commit, an offense of terrorism creates criminal liability.
• If a hotel is contacted by or suspects it has transacted with a listed person, or if a hotel reasonably believes that an emergency involving immediate danger of death or serious physical injury to any person justifies such disclosure, contact with a governmental entity or OFAC (ofac_feedback@do.treas.gov; 1-800-540-6322) is recommended.
• Certain provisions of the Patriot Act must be periodically renewed and review should be made to ensure compliance with applicable provisions.

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Chapter 9 : Use and Protection of Music, Television Signals, and other Work

Summary and Conclusions

• The Copyright Act of 1976 prohibits any public performance or display of copyrighted music unless an exemption under the Act applies or the hotel is licensed to do so by the copyright owner or an organization representing the owner.
• A “public performance or display” includes a hotel’s use of ambient music, “on-hold” telephone music, music performed by a live signer or a DJ, and music that emanates from televisions.
• For the most part, there are three Music Organizations that have been formed to protect  copyright owners and collect revenue for the music being performed:  ASCAP, BMI, and SESAC.  Once a hotel enters into an appropriate agreement with such a Music Organization, the hotel has the authority to perform the copyrighted music in that organization’s portfolio.
• The liability for violating the Act is substantial.
• Ambient music can be licensed from one of several ambient music providers.
• Jukeboxes are not exempt—a JLO license is required, or the use of the jukebox must be permitted under other licenses held by the hotel.
• If a hotel has more than one television on display in any one room (including screens imbedded in cardio equipment), then the hotel needs to consider whether licenses from all three Music Organizations will be required.
• Any unauthorized interception of cable television broadcasts by use of a “satellite signal” receivers and the subsequent transmission of the broadcast to guest rooms, violates § 605 of the Communications Act of 1934.  In addition, any unauthorized interception, decoding, and re-transmission of a copyrighted broadcast may also result in a copyright infringement under the Copyright Act of 1976.
• Hotels should work closely with Internet Service Providers and network administrators to ensure that reasonable steps are taken to prevent misuse of hotel-provided Internet Access, and to block the dissemination of copyrighted material over the hotel’s network.  Check with your ISP and network administrators to ensure proper measures are taken.

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Chapter 10 : New Media and Hotel Marketing—Hotel Websites, Use of Images, Social Media, OTAs and Online Review Sites

Summary and Conclusions

• The hotel’s website is a tool that continues to change and grow in importance.  Several provisions should be included in your website to place the website on sound legal footing.
• Make sure that you have authority to use all of the images and materials published on your website and otherwise.  When contracting with vendors that produce your images, make sure that a written agreement stipulates your ownership rights.  Also, make sure that the persons who are captured in the images have authorized the commercial use of them and that they are of proper age to provide the consent.
• If a hotel fails to obtain proper permission to use the images, then the copyright owner has significant rights against the hotel under the Copyright Act of 1976.
• Social media creates additional risks to a hotel’s intellectual property.  It is valuable to monitor social media platforms to ensure the hotel’s intellectual property is not being misused.
• Hotels must ensure that they protect private data collected from guests.  Have a policy that covers guest data and follow that policy.
• Advertising through social media must be truthful and accurate.
• To protect the hotel and its reputation, hotels should have a social networking policy for employees.  The policy should include, among other things, that the employer has the right to access cell phones, computers and other devises supported by the hotel, that anything viewable on a public page may be accessed by the employer, and that employee activities on social media must adhere to the company’s code of conduct.
• The advent of online travel agent websites adds a layer of complexity to the traditional contractual relationship between an innkeeper and its guest.  Review all online travel agreements closely and make sure that your duties with respect to each guest are clear.
• Online travel agencies often demand favorable treatment with regard to room availability and pricing.  Hotels should familiarize themselves with each online travel agency’s requirements and be sure that their obligations do not conflict.
• Nearly all sophisticated commercial contracts contain indemnity clauses, which may limit the liability of online travel agencies and/or require the hotel to defend the online travel agency from claims asserted by guests who use the service.  These provisions are governed by state law, and their enforceability may vary depending on the “choice of law” provision in each agreement.
• Hotels should be aware that online travel agreements may require the hotel to list the online travel agency as an additional insured, which may increase premium costs.
• Hotels should review their online travel agreement carefully and ensure strict compliance with the reservation booking logistics required of them.  Do not rely solely on in-house or proprietary third-party software—there may be additional duties imposed, and it is the hotel’s responsibility to ensure compliance.
• Hotels should also consider how the OTA’s antitrust problems may impact the negotiations of OTA agreements.
• Online review sites have changed the landscape of hotel marketing and business.
• When faced with defamatory posts, hotels can bring suit.  However, there are significant limitations on the practical effectiveness of lawsuits in this context.  Hotels should use the review site’s procedures for handling defamatory posts, should respond to legitimate customer concerns, and should build online reputation management into a daily routine.

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Chapter 11 : Room Taxation In Washington State

Summary and Conclusions

• Under the authority of RCW 82.08.020, the state sales tax is imposed on the sale of all lodging, because it is considered a “sale at retail.”
• Any sale of lodging for a period of thirty or more days is considered non-transient  and therefore exempt from retail sales tax.  The guest must agree up front to stay for a period of thirty continuous days or more.  This rule can apply to contracts for crew rooms.
• There are two kinds of room taxes in Washington State.  First, a city or county can essentially claim a part of the state sales tax.  This shared portion of the state sales tax is often called the “basic” hotel tax.  Second, there are add-on excise taxes that are specific to certain local jurisdictions.  These are often referred to as “special” hotel taxes.
• The “basic” hotel tax does not impact the final bill paid by each guest.  “Special” hotel taxes are taxes that are added on by a city or county, and so they do impact the final bill paid by each guest.
• Hotels must pay a B&O tax on gross business income.  Two different classifications (Retailing” and “service and other activities”) typically apply to hotel operations.
• In many hotels, a management company employs the on-site personnel.  If so, then, under current law, the payment of the hotel payroll from funds by the hotel owner likely triggers a B&O tax against the management company.
• Tourism Promotion Area legislation allows counties and cities to establish TPAs within their jurisdictions to levy special assessments to fund tourism promotion.  TPAs provide considerable funding for tourism promotion at a time when the State of Washington has terminated its tourism office and provides no funding for tourism promotion.

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Chapter 12 : Hotel Ownership Matters—an Overview

Summary and Conclusions.

• In larger hotels, the hotel’s ownership and contractual structures can be complex and involve several constituents.  These structures and the context they create can affect how hotel management and its performance are viewed.
• The branded HMA creates a relationship that is rather unique to the hospitality industry.  The branded manager owns the brand under which the hotel operates.  This creates a natural tension between the Owner and the Branded Manager.  The tension plays out in the terms of the typical HMA and the parties’ performance under those terms.
• The Non-branded Manager does not own a brand recognized by the hotel’s guests.  Usually, the Owner has franchised a brand from a Franchisor, and the Non-branded Manager manages the hotel under that franchised brand.  This relieves some of the tension between the Owner and the Manager, though some tension does remain.  The non-branded HMA reflect this different context.  The terms of the non-branded HMA are usually more favorable and flexible for the Owner because the hotel’s identity is not as closely intertwined with the Non-branded Manager.
• The Franchise Agreement is very detailed and requires the hotel to be operated in accordance with Brand Standards that are set forth in detailed and confidential manuals.  Like the relationship between the Owner and the Branded Manager, the relationship between the Owner and the Franchise creates tension because the enhancement of the brand’s value and the enhancement of the property’s value are not always the same thing.  The terms of the Franchise Agreement reflect this context.
• An Owner sometimes engages an Asset Manager when the Owner does not have sufficient hotel expertise in-house.  It is common for institutional investors to engage Asset Managers.  An Asset Manager helps the Owner navigate the issues arising from the fact that the interests of the Branded Manager and the Franchisor are not always aligned with the Owner’s interests.
• Hotel equity ownership can be complex.  It can involve a primary Equity Investor (such as a life insurance company, a REIT, or a private equity fund), a Sliver Interest Holder, a Promote, and Mezzanine Financing.  The financial interests of the Equity Investors are reflected, typically, in a Waterfall described in the LLC Agreement that governs the Owner’s internal operation.
• Usually, a hotel acquisition is financed with Secured Debt Financing, which gives the Secured Lender the right to foreclose on the hotel in the event of a default.
• Between 2003 and 2008, much of the industry (roughly one in three hotels in the nation) took financing from the REMIC world.  These loans seemed like normal loans, and few Owners “looked under the hood” to find out how REMICs might behave in times of trouble.  The hotel industry has had to learn about the REMIC world, and this learning process is continuing.
• The Secured Lender’s and the Manager’s rights, as against each other, are usually set forth in an SNDA.  The SNDA’s terms typically give the Secured Lender the right to terminate the HMA upon foreclosure, while protecting the Manager from unfair risks, such as the risk of being targeted by hotel creditors or the risk of nonpayment of the Manager’s fees.

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