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Posts from March 2013.

Last week, Harold McCombs, leader of Garvey Schubert Barer’s Washington D.C.-based Telecommunications Practice Group, provided the first installment of his 3-part series on digital signage, its use in the hospitality and travel industries and the legal issues most often associated with it.  This week, Harold offers his second installment . . .

Digital Signage Part II:  Some Examples

The size, weight, quality, cost and durability of video monitors limited their use for quite some time.  However, the existence of large, light-weight, high-resolution, low cost monitors that can endure considerable abuse has been instrumental in the explosive growth of digital signs. 

Other factors have fueled the growth as well.

Quick Service Restaurants (also known as fast food) are under increasing pressure to provide nutritional information about the food they sell.  Regulations are in place that require posting of this factual consumer information.  It is expensive and time-consuming to print, revise and reprint this information on paper.  If a QSR establishment cannot change its menu until it is able to post current nutritional information, then that menu may not change very often or in any substantial ways.   Digital menu boards can be controlled from a centralized location, and can be updated very quickly, if, for example, the menu changes, or if the food content or portion size of a dish is changed.  At the same time, the sign can be used to quickly promote an entree, or make some last minute special offer, all designed to promote sales. 

Victoria Slade, a member of Garvey Schubert Barer’s Labor and Employment Group, brings us an important update on her previous posts regarding employers’ social media policies.

The rash of NLRB guidance and new protections for employee social media activity discussed in my previous posts may make employers shy about taking corrective action based on an employee’s social media postings.  While employers should always be careful in these situations, however, the mere fact that something is posted online does not make it “protected.”  Recent examples in the news are a great reminder that where a posting is vulgar, offensive, or airs a petty grievance without implicating employees’ rights to discuss the terms and conditions of employment, the employer can and in many cases should discipline the employee.  Where a posting is less offensive, however, the employer should tread carefully, as unpopular personnel decisions can also draw serious scrutiny.

Harold McCombs, leader of Garvey Schubert Barer’s Washington D.C.-based Telecommunications Practice Group, has been talking about digital signs and their growing use in the hospitality and travel industries (particularly, hotels and meeting facilities) for some time.  Much has been written about digital signs over the past several months and now there is even a conference dedicated to their use.  Given the growing use of digital signs in hospitality and the multitude of issues associated with their use, I asked Harold to provide us a primer on digital signs and the legal issues most often associated with them.  The following is Harold’s first installment of a 3-part blog series.  Thank you Harold.

Digital Signage Part 1:  What is a Digital Sign?

According to the humorist Robert Benchley “There are two kinds of people in the world:  those who divide the world into two kinds of people, and those who don’t.”   Borrowing from Mr. Benchley, there are two kinds of people in the world – those who know about digital signage and those who don’t.  Today, the latter is probably the larger group, but the former is a fast growing group.  Because digital signs have already started to impact every organization and location where people gather, there is good reason to join the group of those who know about digital signage. 

What comes to mind in response to the word “sign”?  Something along the side of a road that conveys meaningful information?  Something you look for along that road when you are low on gas?  Something to let you know that you have arrived at your destination without running out of gas?  The word “open” in glowing neon light at that destination?  

Many signs have remained unchanged for decades.  However, because of a variety of technological advances, such as digital signal transmission, high-speed high-volume broadband, flat-screen displays, QR codes and near field communications (transmitting information wirelessly over very short distances such as by touching smartphones) the concept of a sign has changed dramatically over the past decade.   What once was static can now be dynamic and can take many very different forms.

A common term for modern signs is “digital sign” or “digital signage.”  There is no single recognized definition of this term right now.  However, a digital sign is something you know when you see it because it is different from what you are used to seeing.  The Digital Place-based Advertising Association has adopted the following definition:  “a display device that has the ability to display dynamic advertising and replaced static billboards and posters.”  Note the use of the term “display device” to suggest some piece of hardware.  Note the use of the term “dynamic” contrasted with “static”.   Given the highly specialized mission of this particular association, note also the reference to advertising; however, there is no reason why a digital sign cannot convey non-advertising messages as well.

Several clients have lately been asking about notices they've received that look like this. If they come from the Eastern District court in New York, they’re legitimate, and if you are a merchant who accepted Visa or MasterCard or both between January 1, 2004 and November 28, 2012, you are a probably a member of the class and should have received one too. If you didn't, the lawsuit and proposed settlement are discussed in detail here. Take a look; the settlement could affect your legal rights.  You have until May 28, 2013 to exclude yourself from the settlement (opt-out) or object to its terms; the final hearing on the proposed settlement will be September 12, 2013. Assuming the court approves the settlement, with or without changes that may occur as the result of objections, claim forms will be issued after that date to class members and a claim deadline will be set.

The Hospitality Group hosted events in Seattle and Portland March 11 and 12, to discuss the comeback of hotel and hospitality-related development.  More than 140 attendees ranging from construction industry representatives to flag representatives and investment bankers participated in the discussions.  One panel about Construction and Transactional Development highlighted the return of bricks and mortar to the hospitality conversation. 

In both cities, there are grounds for optimism in 2013 given the plans for new rooms - 3,000 in Seattle and 1,000 in Portland.  Also, speakers noted that there is unfulfilled demand for hotels like the InterContinental Hotel Group product in downtown Portland.  In addition, creative construction ideas are afoot in the hospitality sector.  While new builds may occur in Portland, areas like Seattle, San Francisco, and Los Angeles are making headway with adaptive re-use.  For example, in Los Angeles, vacant office buildings are available and developers are finding these buildings can be converted into hotels in a cost effective manner.  This kind of redevelopment in neighborhoods close to tourist amenities represents an exciting economic development opportunity in areas that no longer successfully serve office uses.

Garvey Schubert’s Julia Holden-Davis warned about some of the contract risks associated with hospitality related construction and present market conditions:

  • Given labor and material demands, adequately screening potential contractors and subcontractors for both technical and financial competence is key;
  • Financial terms and active oversight are important to ensure that lower tiers are paid. 
  • Risk transference clauses are only as good as the other party’s financial ability to address those risks.  Because of this, considering appropriate insurance and bonding requirements can be important for the long term success of a project, and the comparative up front cost to the potential risk can be minimal.
  • The risk of hidden conditions should be considered, especially when it comes to adaptive re-use.  These hidden conditions can significantly change design parameters, increase construction costs, and delay completion of the work.  Early analysis, as well as risk-shifting provisions, can be key factors in addressing these concerns. 
  • The extent of renovation or alteration work can also lead to additional requirements under ADA, local permitting ordinances, and building codes.  It is important to understand these implications, plan appropriately, and comply with the applicable requirements. 

When you are ready to move forward with a development, it is important to draft your contracts with particularity about which party will be required to shoulder the particular risk.  Most importantly, when you are ready to move forward consider ways to “lock in” pricing as construction costs have already increased by 2.6% over 2012 construction costs, and an escalation to 5% is expected by the end of the year. 

If you would like to know more about the forum, please contact me, Greg Duff, or Julia Holden-Davis.

“Out of the valley – Toward the peak” summarizes PKF Consulting USA’s predictions as offered by Chris Kraus, at the annual Northwest Hospitality Forums in Seattle, Washington and Portland, Oregon hosted by Garvey Schubert Barer’s Hospitality, Travel & Tourism Practice Group and program sponsors, CBRE Hotels, Premier Capital Associations, LLC, and PKF Consulting USA. The forums are designed for hotel owners, developers, investors and operators as well as hospitality industry service providers, consultants and lenders. 

One suspects that most Forum attendees liked what they heard about the status of Northwest economy generally from economists Mathew Gardner of Gardner Economics, and Mark McMullen, State Economist and Director of the Oregon Office of Economic Analysis, and in particular the Northwest Hospitality Report from Chris Kraus.  The linked chart offers Chris’s analysis regarding the hospitality industry’s place in the market cycle, and shows Seattle ahead of the curve. 

Our Portland, Oregon partner, Joy Ellis, updates us on the very latest news about Portland's Earned Sick Leave Policy.   Thank you Joy.

The ordinance will take effect January 1, 2014, as follows:

Portland's City Council voted in a unanimous decision Wednesday to pass an Earned Sick Leave Policy, and in doing so became the fourth city in the nation to mandate private employers offer sick leave. Portland's new policy will allow employees to earn one hour of leave for every 30 hours worked, up to 40 hours of sick leave per year. Workers need to work at least 240 hours per year to qualify. The law requiring paid sick leave applies to businesses that employ at least six workers, while smaller employers must provide unpaid time off. Seattle, San Francisco and Washington, D.C., all have sick leave measures, and a similar measure is set to go before City Council members in Philadelphia today. New York City will hold a hearing on paid sick leave on March 22. So far, Connecticut is the only state to pass a similar law, but sick leave bills have been introduced in a handful of states, including Washington and Oregon. 

If you have questions about the new paid sick leave ordinance, or any Oregon employment law issue, please contact me.

 

Over the past 2 days, MPI hosted its annual Cascadia Educational Conference in Portland, Oregon. I had the pleasure of participating at this year's event, presenting on group sales issues and privacy.  Copies of my presentations are available here: Group Sales Contracts: Interesting Case Studies and The Rising Significance of Guest Information.

Congratulations to MPI for another terrific event.  I look forward to hopefully seeing everyone at next year’s Conference.

 

 

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Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.

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