Owner, operator, brand: who answers for what
Many hotels are run through layers. One company owns the real estate, often through a single-purpose entity; a second company manages the property under a management agreement; and a third licenses the brand under a franchise agreement. A plaintiff injured on the premises, or a vendor that was not paid, will usually sue as many of these layers as it can identify. Between themselves, the companies have usually allocated responsibility through indemnity clauses, insurance requirements, and additional-insured provisions, but those clauses are not always consistent with each other. Which entity employed the staff involved, and who controlled the area where something happened, often shapes how the defense is divided.
When the owner and the operator fall out
Some of the hardest hospitality lawsuits are between the parties who run the hotel together. Owners may claim that the operator missed performance targets, spent beyond the approved budget, steered business to affiliated properties, or withheld financial information. Operators may answer that the owner failed to fund capital needs or interfered with management decisions. Whether an owner can remove an operator before the term ends, and at what cost, is among the more contested questions in this area, and the answer depends on the agreement and the law that governs it. Many management and franchise agreements require arbitration or a particular forum, along with notice and cure steps that should be followed in order.
Once the complaint is served
Served papers should go to counsel and to the insurer the same day rather than sit in a manager's inbox, because the window to respond can be short. Send formal tenders to any party whose contract obligates it to defend or indemnify you, and keep copies of each tender and response. Preserve the records that hotels overwrite routinely, such as video, key-card data, work orders, and shift schedules. When a hospitality business contacts us, we first identify every entity named, the contract that links each one to the property, and the insurance behind each layer. That map usually tells us who should be leading the defense and where your own exposure actually sits.
