The Hotel Shut-Down Option: Not A "One Size Fits All" Solution, Part II

Lynn K. Cadwalader is a Partner in our San Francisco office.
James M. "Jim" Norman is a Partner in our Fort Lauderdale office.

In Part I of our July 30, 2009 Alert, Shutting Down the Hotel or Resort Until the Good Times Roll: Is It Really an Option?, we raised some practical and legal challenges to consider in assessing the option of "mothballing" (suspending) hotel operations for a period of time while awaiting economic recovery as a way of reducing hotel operational and carrying costs.

Who knew that our idea would provoke such discussion within the industry? Discussion is always good, when well thought out and backed by solid facts. We have taken the opportunity in Part II of our alert series to dig into the mothball concept in more detail and consider the interests of the primary stakeholders in a temporary (or partial) hotel shut-down and the key provisions to consider under the various operative agreements.