Advertising May Allow Out-of State Businesses to be sued in California for Violating its Unfair Competition Law

By Gordon Endow
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The following is a follow-up to an article that was previously published in volume 1, Issue 1 of Gordon & Rees' Hospitality Newsletter. view article...

Nevada Hotels and Casinos should note the California Supreme Court held recently in Snowney v. Harrah's Entertainment Inc., Daily Journal DAR 6517 (June 6, 2005), that businesses that advertise in California-by means of billboards, print ads, and ads aired on California radio and television-can be sued in the state's courts. This decision has far-reaching implications, particularly in the travel and entertainment industries. Any out-of-California businesses in the hospitality industry that solicit customers within California may be affected.

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Despite Lack of Long-Term Data, Developers Favor Hybrid Projects

Reprinted with permission of Rick Swig, president of RSBA & Associates

As the price of hotel real estate and new construction is skyrocketing, developers and operators are looking to non-traditional structures of mixed-use residential and hotels or condo-hotels to demonstrate the viability of a purchase or a new development. This is pioneering territory, as new operating and legal structures must be tested, while research and operating history on these operations are slim. Furthermore, there is little information related to the depth of consumer interest for these new investments. These issues are investigated in the attached article, "Despite Lack of Long-Term Data, Developers Favor Hybrid Projects", from the May 2005 issue of Real Estate Forum.

'05 Supply Side Forecast for Top 25 Lodging Markets Will Be Virtually Even With Cyclical Lows Established in '04. Supply Growth Will Remain Benign Late Into the Decade.

Reprinted with permission of Lodging Econometrics

PORTSMOUTH, NH - In its latest quarterly Supply Side analysis Lodging Econometrics (LE), the Industry Authority for Hotel Real Estate, has slightly lowered its Supply Side Forecast for '05 in the 25 leading lodging markets. As of the close of 1Q 05, LE now forecasts just 127 hotels/16,630 rooms to open this year in the Top 25 Markets - practically identical numbers to those of '04, when 125 hotels/16,352 rooms were added and a cyclical low for new openings was established. LE had originally forecasted that 140 hotels having 18,061 rooms would open in '05.

"This is good news for the industry," said Patrick Ford, President. "While total new guestroom openings industry-wide will increase to 70,251 rooms in '05 from 58,062 in '04, having such insignificant new supply in the 25 leading lodging markets for two years in a row bodes well for the industry's continued recovery, which is being substantially lead by these important markets."

Stay Abreast of Changes in the Development Pipeline in Markets Where You Have Lodging Real Estate Interests

Reprinted with permission of Lodging Econometrics

In 1Q 05, 445 new hotel projects with 63,005 rooms were announced into the Construction Pipeline - the largest number of new project announcements in 16 quarters! The total Construction Pipeline has now grown to 2,388 projects having 322,177 rooms.

There are also 308 hotels with 44,789 rooms being reflagged, and an additional 220 significant projects with a total of 70,691 rooms under renovation.

New franchise agreements are being signed across the country at an accelerated pace that's expected to last for the next few years.

The Norwegian Cruise Line fights claims that Title III of the ADA applies to foreign-flag cruise ships in United States waters.

The Supreme Court of the United States held in Spector v. Norwegian Cruise Line Ltd., 125 S. Ct. 2169 (June 6, 2005) that the ADA is altogether inapplicable to foreign vessels.

Justice Kennedy announced the judgment stating that previous Supreme Court cases "hold that a clear statement of congressional intent is necessary before a general statutory requirement can interfere with matters that concern a foreign-flag vessel's internal affairs and operations, as contrasted with statutory requirements that concern the security and well-being of United States citizens or territory. While the clear statement rule could limit Title III's application to foreign-flag cruise ships in some instances, when it requires removal of physical barriers, it would appear the rule is inapplicable to many other duties Title III might impose."

• The San Francisco Convention & Visitors Bureau (SFCVB) has appointed Rick Swig, president of RSBA & Associates, as chairman for the fiscal year 2005/2006.

Recent Decision Regarding Tied-House Rules.

In Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Board, 128 Cal. App. 4th 1195 (April 29, 2005), the Department of Alcoholic Beverage Control suspended the license of an alcoholic beverage supplier for violating California's Business and Professions Code and the California Code of Regulations by paying an event promoter for co-sponsorship of a race sponsored by an alcoholic beverage retailer, and for the placement of advertising for the supplier's product on the retailer's premises.

The Department also concluded that the administrative rule, which permits alcoholic beverage suppliers to sponsor contests, races, tournaments, and similar activities held by "bona fide amateur or professional organizations established for the encouragement and promotion of the activities involved", did not exempt the supplier from the coverage of the statutes, commonly known as the tied-house restrictions.