Hospitality and Leisure -

Hospitality and Leisure

Sutherland lawyers represent hotel and resort developers, owners, operators, franchisors, franchisees and lenders in projects throughout the United States and around the world. Our experience covers multiple practice areas and enables us to deal with a broad array of issues and projects across the hospitality industry.

Troubled Hotel Projects

Today’s challenging environment demands that legal counsel be able to structure agreements that minimize the risks and provide a path for seeing a project through difficult times. Sutherland attorneys from a number of practice areas, including real estate, finance, bankruptcy and litigation, have substantial experience with distressed hotel projects. Our experience includes:

Foreclosures, deeds in lieu of foreclosure, and other court receivership actions.
Representation of lenders in the sale of loans and real estate owned (REO) properties acquired by foreclosure or in deed in lieu of foreclosure.
Negotiation of out-of-court consensual restructurings.
Purchase and sale transactions in state insolvency proceedings and federal bankruptcy cases.
Real estate and Uniform Commercial Code (UCC) liquidations.

We also document both domestic and cross-border workout arrangements; advise creditors of troubled projects; counsel hotel lenders, their borrowers, managers and investors; and represent special servicers and providers of debt, mezzanine, and equity capital with respect to non-performing securitized hotel loans, collateralized debt obligations (CDOs), and collateralized loan obligations (CLOs).

Workouts, Restructures and Bankruptcies

Sutherland attorneys advise hospitality clients in connection with hotel workouts, bankruptcy and restructuring. We also have extensive hands-on experience with bankruptcy proceedings, state court receivership actions, foreclosures, and insurance company conservatorships. We seek to understand and implement clients’ objectives and to efficiently integrate with clients and other consultants to achieve desired results.

Hotel Development

Partnerships and Joint Ventures. Sutherland attorneys structure partnerships and joint ventures to meet the business goals of owners, developers and operators of a wide variety of hotel and resort properties. We have the experience to ensure compliance with the complicated tax rules that govern the allocation of partnership profits and losses while also being certain that the economic bargain struck by the parties is properly documented and preserved.

We recently organized joint ventures for the development of major projects costing in excess of $1 billion dollars, including joint ventures for development and ownership of hotel and resort properties, such as the InterContinental San Diego, the InterContinental San Francisco (Moscone West), the Royal Palm Crowne Plaza in Miami Beach, and the InterContinental Cayo Largo Resort in Puerto Rico. We also recently represented a major life insurance and financial services company in a programmatic joint venture with a major private development group to construct destination hotels in core markets as stand-alone projects of the venture or as co-investments with other parties.

Tax Structuring. Sutherland has long been known as one of the leading tax law firms in the United States. More than 80 of our attorneys focus on tax law and the structuring of tax-sensitive transactions. Our tax experience is valuable in hotel and resort development since we are often able to provide immediate advice on what deal structures are possible. In addition, we frequently alert clients to tax issues involved in equipment leasing, equity participation financing, ground leases and the uniform capitalization rules for self-constructed property.

Hotel and Resort Construction. We represent hotel developers in connection with construction contracts and construction management agreements. Our experience in this arena includes agreements for the InterContinental San Francisco (Moscone West), the Royal Palm Crowne Plaza in Miami Beach and the InterContinental Cayo Largo Resort in Puerto Rico. We have also negotiated architectural contracts, interior design agreements and agreements for the renovation and procurement of furniture, fixtures and equipment for major hotel projects, such as the Westin Diplomat Resort and Country Club in Hollywood, Florida; the Mark Hopkins InterContinental in San Francisco; and the InterContinental Chicago.

Mixed-Use Development. We represent a number of developers, owners and operators of mixed-use hotel projects, particularly in the resort and convention contexts. Recent engagements include Santa Barbara Plantation in the development of a 350-room Hyatt golf and mixed-use resort in Curacao, Kiawah Development Partners in the planned development of a luxury mixed-use resort in St. Kitts, and Cap Cana, S.A., in its development of a major multi-hotel, mixed-use resort in the Dominican Republic.

Hotel Finance

We represent developers, investors and public/private partnerships in the financing of hotels, resorts and convention facilities. On the lender side, we have represented several major players, such as Teachers Insurance and Annuity Association of America, Metropolitan Life Insurance Company, Wachovia Bank, CapMark Services, SunTrust Mortgage Company, John Hancock Mutual Life Insurance Company, Colonial Bank, UBS Realty Investors, The Travelers Insurance Company, and Capmark Finance Inc. Our experience enables us to deal with special hotel industry concerns that often delay financing transactions. From many complex financings, we have amassed a knowledge base of forms and solutions to expedite issues that arise regarding:

Loan Documentation. Loans secured by hotels require special terms and conditions, especially those relating to the lender’s security interest in accounts, personalty and proceeds from operations.
Management Agreements. The terms of hotel management agreements are important to lenders for two basic reasons. First, prudent underwriting requires a comprehensive review of the rights and obligations of the owner and the hotel manager with respect to hotel operations. Second, the lender must consider the possibility that it may become the owner.
Tri-Party, Inter-Creditor and Cooperation Agreements. Hotel financing transactions frequently involve several parties, including the owner, the hotel operator and holders of subordinate or priority debt instruments, as well as the construction lender, if a construction loan is in place. Thus, it is common to negotiate extensive agreements governing the rights of the various parties in the event of a foreclosure, the occurrence of defaults under the management agreement, or the exercise of remedies by one of several competing lenders.

Management and Franchise Agreements

In representing both owners and operators in the negotiation of management and/or franchise agreements, our experience enables us to anticipate the styles, preferences and requirements of the leading hotel chains. Our attorneys are among the country’s most experienced in managing the legal and business issues in franchise and management agreements, including agreements involving brands such as Baccarat Hotels & Residences, Candlewood Suites, Doubletree, Four Seasons, Hampton Inns, Hilton, Hyatt, InterContinental, Marriott, Mandarin Oriental, “1” Hotels & Residences, Ritz-Carlton, Sheraton, Westin, and Wyndham.

Hotel Acquisitions and Dispositions

We have substantial experience representing buyers and sellers of hotels and resorts in U.S. markets and abroad. Recent representations include representing a major pension fund in the sale of its hotel portfolio to Starwood, and InterContinental Hotels Group in its acquisitions and dispositions of the former Ritz-Carlton on Central Park South, the Crowne Plaza at the United Nations, and the InterContinental San Juan Resort and Casino in Isla Verde, Puerto Rico.

Litigation

Our experience enables Sutherland clients to avoid the most common disputes in the industry and resolve disagreements when they do arise. On behalf of developers, owners and operators of hotel properties, we draft agreements that prevent problems and protect their interests in areas that include:

Construction Disputes. Our attorneys are experienced in resolving construction disputes through mediation, arbitration and litigation.
Owner/Operator Disputes. We are regularly called on to resolve disputes between owners and operators of hotels. The disputes often involve performance issues under management contracts and whether the owner has a right to terminate. In connection with the termination of the management contract for a major resort hotel, we successfully represented the right of an owner to oust an operator through nonviolent, self-help remedies.
Tax Controversies. We are nationally recognized for our work in tax litigation. While we seek to avoid litigation of tax controversies unless there is no other means of adequately protecting our clients' interests, our lawyers are experienced in every facet of tax litigation, from trials in the U.S. Tax Court, district courts or the Court of Federal Claims to arguments before the U.S. Supreme Court. Our experience includes corporate, tax accounting, international and insurance tax cases, as well as cases involving individuals and tax-exempt organizations.
Franchise Litigation. We have one of the nation's premier practices in franchise litigation, with a focus on many industries.

Energy and Environmental Issues

The hospitality industry is increasingly focusing on energy and environmental issues inherent in the design, development and operations phases of a project. More than 60 of our attorneys work with energy industry clients in domestic and international business transactions and litigation, including clients involved in hotel and resort development and operation.