July 13, 2020

Volume X, Number 195

July 13, 2020

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July 10, 2020

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Stand Your Ground: Hotel Owners

Recently we have seen four situations where a hotel owner has taken matters into its own hands to remove the hotel manager from the hotel.  These cases are referred to as the Aviara, Marriott Waikiki, Fairmont Turnberry, and the Eden RockMuch has been already written and discussed about the “midnight raid” strategy where the hotel owner, with a fresh management team and security personnel, enters a hotel property in the dead of night, usually on a weekend, and demands that the brand’s management team and staff leave the premises and turn possession and management of the hotel over to the hotel owner’s new team. 

One conclusion being drawn from the way these cases have unfolded is that the manager that stands its ground and refuses to leave creates a better foundation for the imminent legal fight to come than the manager that departs. This is partially due to the fact that the manager will quickly seek relief in court in the form of injunctive relief, such as a temporary restraining order, to prevent the hotel owner from assuming management until there has been further legal proceedings on the merits of the hotel owner’s claim. 

If the hotel manager has already left the hotel property it will be more difficult for the hotel manager to demonstrate that it will suffer irreparable harm if the hotel owner can assume possession and control in this fashion in the face of an executed hotel management agreement.  This is going to require some further analysis and thought, and should include a training component for the hotel staff who may be the “front line” defenders of the hotel, but there is no doubt that developing a response strategy may be the next training module to be developed.  You can click here for a good recent article on this subject from HotelNewsNow.com.      

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume II, Number 330


About this Author

Nelson Migdal, Greenberg Traurig Law Firm, Washington DC, Real Estate Law Attorney

Nelson F. Migdal is Co-Chair of the Hospitality Practice. He focuses his practice on the acquisition and disposition of hotels, hotel operations and management, franchising, licensing and branding, development and finance, large mixed-use projects, hotel management agreements, licensing agreements, commercial real estate acquisition and sale, and commercial leasing.

He has prepared and reviewed management and franchise agreements, purchase and sale agreements, multiple building covenants, and other documents related to the acquisition, financing...