Duff on Hospitality Law

Some employees in SeaTac, Washington will ring in the new year with a minimum wage increase to $15 dollars an hour, and other benefits including paid sick and safe leave. The new law takes effect on January 1, 2014. Following a judge’s recent ruling, the changes will not apply to employees within the Seattle-Tacoma International Airport. If, however, you’re in the hospitality and/or transportation industry operating outside of the airport, and satisfy certain size requirements (for instance, hotels are generally covered if they include 100 or more guest rooms AND are staffed by 30 or more workers), you need to prepare for changes under the new law.

More information to come. You can contact Greg Duff with any questions.

New York State Attorney General, Eric Schneiderman, has made waves in recent months by subpoenaing the popular “apartment-sharing” website AirBNB for information on more than 15,000 of the website’s hosts in New York City. The subpoenas were issued as part of Schneiderman’s campaign to enforce a 2010 New York law that took effect last year, clamping down on “illegal hotels” across the state. With the backing of tech trade groups and civil liberties organizations, AirBNB has now mounted a high-profile defense against these subpoenas. Meanwhile, other destination cities around the globe are taking steps to follow New York’s lead.

For those of you who attended, or even those of you who did not attend, below are the slides from today's sales presentation in Portland. Feel free to contact me if you have any questions.

For those readers and followers unable to attend last month’s AHIA Fall Meeting in Los Angeles, we have posted below our PowerPoint presentation, “On-Line Distribution: Overview, Issues and Tips.” A huge thanks to AHIA for hosting us last month. 

If you have any questions regarding the presentation or distribution generally, please let Ruth or me know.

Hunting for a top-rated hotel or searching for the perfect dim sum restaurant? Chances are you will turn to sites such as Yelp, Citysearch or TripAdvisor to guide you through the mass of options most locations have to offer. As the Huffington Post recently noted, “In an increasingly tech-reliant world, most of us do not step foot in a restaurant or buy anything online without doing at least a modicum of Internet research.”

Hoteliers and restaurateurs have long known that positive online reviews equal greater occupancy rates, increased bookings, and greater revenue for their businesses: An influential 2011 Harvard Business School (HBS) study found that “a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenue” for restaurants, while researchers at Cornell found that a one-star swing in a hotel's online ratings on travel sites equate to a 11% sway in room rates.

So how trust-worthy are those 4-star online reviews? Turns out, unsurprisingly, caveat emptor.

A 2013 HBS report estimates that the number of fraudulent reviews on Yelp rose from 5% in 2006 to 20% in 2013.

I'm pleased to introduce guest author Katie Nguyen, a CPA from local accounting firm, Clark Nuber. Katie specializes in state and local taxes for the hospitality industry and has offered to share her experience and knowledge with the Duff on Hospitality readers. Welcome, Katie, and thank you for today's post on some important tax incentives available to Washington's owners and operators. - Greg 

I’d imagine that every hotel and restaurant owner/operator is interested to know how to save money on his or her state taxes (while still following all of the applicable laws and rules, of course). As a former Washington Department of Revenue auditor, I've seen many exemptions, credits, and preferential tax rates go unused – primarily because businesses just didn't know that they existed! This post provides a brief explanation of some Washington tax incentives (both old and new) that the hotel and restaurant industry should be taking full advantage of.

Sales/Use Tax Exemption for Items Imparting Flavor or Supporting Food

The Washington legislature recently enacted a measure providing a retail sales and use tax exemption on purchases by restaurants of the following two types of items:

• • Items used to impart flavor to foods that are completely or substantially consumed by combustion during the cooking process. Such items could include charcoal, charcoal briquettes, wood chips, grape vines, and the like.
  • Items comprised entirely of wood that support the food during the cooking process. Such items could include wood planks, etc.

This exemption expires July 1, 2017.

Commute Trip Reduction Credit

Also recently passed by the state legislation was a bill extending the life of the Commute Trip Reduction B&O tax credit. This credit is a great incentive for those taxpayers who help subsidize the cost of employee public transportation, carpooling, or non-motorized commuting. For each employee, the credit is capped at $60 or 50% of the transportation cost paid (whichever is lower) annually. Be sure to submit your application to the Department of Revenue by January 31, 2014 to get your 2013 credit!

The Office of Federal Contract Compliance Programs (OFCCP) enforces regulations aimed at federal government contractors, with a specific eye towards preventing both intentional and unintentional employment discrimination based on any protected class (e.g. race, sex, or disability). Many employers think that the OFCCP has no interest in them because they do no business with the federal government. If only it were that easy. Many clients have called after receiving notice that they now are considered a federal contractor because of a service that was purchased by a previously unknown federal government group.

It is important to be aware of your status as a federal contractor because you may need to comply with complex affirmative action practices, including for hiring, and you may need to keep detailed records of your efforts to comply. In addition, OFCCP rules have been changing lately. The new rules expand the affirmative action, non-discrimination, and related record keeping obligations for contractors regarding covered veterans and individuals with disabilities. So, even if you thought you were doing it right – you may need to make changes.

As fast food workers across the country stage walkouts in a push for a $15 hourly wage and the Obama administration renews its call to boost the federal minimum wage, states on the left coast have already embraced employee-friendly increases.

Oregon, the state with the second-highest minimum wage in the country, announced last week that it will raise its minimum wage to $9.10 in 2014. It’s in good company: Oregon’s neighbor to the north just announced that Washington will raise its state minimum wage to $9.32 (the highest in the nation), and Oregon’s neighbor to the south just enacted a law that will hike California’s minimum wage to $10 per hour over the next three years in one dollar increments – from $8 to $9 on July 1, 2014, then to $10 on January 1, 2016.

I’m happy to see my quote in the recent Bloomberg article showcasing examples of private equity firms taking advantage of the rising hotel market. It’s an article worth reading!

Blackstone Seeks IPOs as Hotel Sales Climb: Real Estate

“In a nine-inning game, we’re probably in the sixth inning,” said Greg Duff, chairman of the Hospitality, Travel & Tourism practice of Seattle-based law firm Garvey Schubert Barer.“ On many levels and in many different markets in terms of occupancy, we have met or exceeded where we were pre-recession.”

The Seattle Office of Civil Rights has recently issued proposed rules to implement the Job Assistance Ordinance, which limits the consideration of criminal history information in hiring and employment decisions within the City of Seattle. See my previous post on the topic HERE. The Office of Civil Rights is seeking public comment on these proposed rules.