By: Charles Menges & Joseph McMenamin
McGuire Woods
(804) 775-1000

Pandemic remains a serious threat to the hospitality industry. A report just released by Trust for America’s Health indicates that, if a pandemic occurs, the industries hardest hit will be tourism and transportation, with 80 and 67% drops in demand, respectively, over a three-month period. The Congressional Budget Office, among others, projects a pandemic-related drop in GDP between 4.25 and 6%. In general, states are expected to lose money in proportion to their dependence upon entertainment and tourism. Nevada, for example, whose economy depends on those industries for 17.6% of its revenues, is expected to experience the largest losses – some $9.0 billion, or 8.08% of its GDP. Hence, the hospitality industry should be astute to take steps that may help it survive the hit.
In an earlier publication, “Pandemics: The Legal Issues for the Hospitality Industry,” we suggested that stockpiling Tamiflu (oseltamivir), considered by many the most effective anti-influenza preparation currently available, may be of doubtful value. We noted that a physician might not be willing to write prescriptions necessary to create an anti-viral stockpile and that improper use of the drug could potentially aggravate pandemic-related problems. Those remain legitimate concerns.

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By: Lance Witcher & Josef Glynias
Blackwell Sanders
(314) 345-6000

On May 25, 2007, President George W. Bush signed into law the Fair Minimum Wage Act of 2007 (the “FMWA”), which will raise the minimum wage in three increments to $7.25 over three years. The FMWA, however, will have no impact on the federal minimum wage for tipped employees of $2.13/hour. Nevertheless, many states have increased the minimum wage for tipped employees.

Thirty-four states already require that tipped employees receive a rate higher than the $2.13 hourly minimum wage that will remain the same when the FMWA takes effect on July 24, 2007. With the FMWA’s silence as to tipped employees, more states are likely to follow suit in increasing the minimum wage of tipped employees.

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Alvarez & Marsal
Chuck Bedsole
Managing Director, Dallas
(214) 438-1014

In response to myriad challenges presented by the rise in lodging-driven projects, Alvarez & Marsal has formed a dedicated Hospitality Asset Management Services ("HAMS") team. Our HAMS professionals bring significant hands-on experience in the areas of finance, operations and marketing, as well as extensive market knowlege and expertise working on a variety of property types such as hotels, hotel condominiums, timeshares, fractionals, residential condos and related amenities.

By implementing a professional HAMS program, developers and owners will:

• Achieve increased profits from operations
• Maintain desired level of service at a lower cost
• Identify areas of potential liability and reduce risk
• Establish a central, independent and objective point of review and communication
• Align the interests of project participants
• Develop optimal acquisition and disposition strategies, as well as ownership and capitalization structures
• Maximize the long-term value of their property

Read more about Alvarez & Marsal's HAMS Team