Roundhill Hospitality Market Offerings

Roundhill Hospitality provides litigation support (both arbitration and expert testimony) on a variety of matters within the context of the hospitality industry including: operational matters, owner / operator relationships, management and franchise agreement issues, franchising, market analysis and valuation.

Read below for excerpts from the article, Alternative Dispute Resolution in Hospitality, written by Roger S. Cline. To read the complete article, click here and download the printable pdf file.

ALTERNATIVE DISPUTE RESOLUTION IN HOSPITALITY
by Roger S. Cline

Introduction

Because of the significant and rising costs involved in civil litigation, many business organizations are turning increasingly to Alternative Dispute Resolution (“ADR”) as the preferred way of settling conflicts that arise either from contractual agreements or in operations. ADR has become popular because of its focus on fair and reasonable outcomes that are arrived at expeditiously, at less cost than through litigation and in a more cordial, less confrontational atmosphere. Best practice legal departments in well-managed business organizations understand the economic and non-economic benefits of effective conflict management through ADR. And while hospitality may have been slower to embrace the concept than other industries, it is surely now time to bring this important process to bear on the growing burden of litigation on the industry.

Effective risk management calls for the resolution of issues before they become full-fledged disputes. An ADR plan that provides for issue review, mediation and arbitration brings not only financial and economic benefits but also intangible ones including the preservation and improvement of important business relationships.

In order to benefit from an ADR plan, organizations need to agree upon the forum, the procedures to be used and the so-called “providers” who will administer the process before entering into contracts. But even if such a plan is not memorialized in a contract, this should not prevent parties to a relationship from agreeing to a defined ADR process in order to resolve a dispute.

Alternative approaches to ADR may be viewed from the perspective of the increasing use of time and commitment to the outcome, from the preemptive (Issue Review Boards, to the facilitated (mediation) and on to the final and binding (arbitration). There are thus three principal approaches to ADR:

1) The Issue Review Board – (an informal forum that recommends non-binding solutions to issues before they become disputes)

2) Mediation – (a facilitative or evaluative process to resolve disputes with agreement reached by the parties and enforceable through arbitration or litigation)

3) Arbitration – (the final, binding and enforceable resolution of disputes, although occasionally arbitration may be defined as non-binding, with the prior agreement of the parties)

With the increasing popularity of ADR in all areas of business, it was inevitable that the hospitality industry would take note of its advantages. With the escalating costs associated with litigation, organizations involved in the hospitality sector are increasingly recognizing that disputes that arise between parties may be reasonably, fairly and economically resolved through ADR. Hotel management and franchise agreements for example, have frequently included arbitration and mediation provisions but they generally have referred to standard rules and used third-party providers with little background in the industry.

Arbitrators and mediators have thus been brought into hospitality dispute resolution with little understanding of the history and dynamics of the sector. And while neutrality has generally been assured, there has been frustration associated with the frequent lack of understanding of the issues involved on the part of the key players in the process – the arbitrators and mediators.

Currently, Roundhill Hospitality’s preferred vendor relationship for the provision of support services in ADR is the Institute of Conflict Management (ICM). We are, however, prepared to serve with other major providers in the ADR field where the circumstances dictate or are appropriate, including organizations such as the American Arbitration Association (AAA), JAMS and the International Chamber of Commerce. Some existing contractual agreements within the hospitality industry for example, provide for the application of AAA or JAMS rules under which we would serve.

Neutrality and Experience

The clear advantage of using our ADR services is to bring not only neutrality and independence to the process, but to ensure that industry experience and understanding is applied when reviewing facts, analysis and testimony and in arriving at findings and conclusions, solutions and awards. We abide by strict professional standards of independence that have been well established and recognized by the hospitality industry for many years. It is thus independence, industry knowledge and professional expertise that is brought to the ADR process and makes a Roundhill solution to ADR more desirable than any other.

Arbitration in Hospitality

Arbitration is a well-established form of dispute resolution that provides the parties with a final and legally binding decision. The decision is enforceable by a court of law typically after only a very limited review and may not be appealed except under very limited circumstances. Occasionally, the parties may agree to a non-binding arbitration but this is the exception rather than the rule.

Mediation in Hospitality

Like arbitration, mediation is conducted in private but involves a neutral who assists the parties to a dispute in reaching their own settlement. While mediation is mostly a voluntary process, it can be mandated by a court of law or provided for in a written contract between the parties. It is a relatively straightforward process where the parties may represent themselves or use advocates. In a mediation, the dispute may involve two or more parties. The neutral may either facilitate the process of the parties reaching their agreement or be called upon to evaluate the argument and evidence and advise on a resolution.

Issue Review Boards (IRB) in Hospitality

An Issue Review Board is ideally suited to those on-going business relationships where there is a need to quickly resolve issues before they become disputes. Used historically in the construction industry where time-sensitive projects must move forward promptly and where delays for dispute resolution can have significant economic impacts, the IRB also has application in operational environments. Within the hospitality industry, IRBs may be used for example not only for development projects but also with owner/operator issues that might arise out of a management agreement.

Cornell University’s Survey on the use of ADR

In a comprehensive study of the use of ADR in American industry, Lipsky and Seeber surveyed the corporate counsel of the 1000 largest U.S. Corporations and found that the vast majority of corporations had used one or more ADR procedures in recent years. A total of 88 percent of the 606 respondents had used mediation and 79 percent, arbitration. Most respondents furthermore indicated that the use of ADR would grow significantly in the future. Over 84 percent said they are likely or very likely to use mediation in the future, while 69 percent said the same about their future use of arbitration.

What’s Your ADR?

For many in the hospitality industry, ADR has been all about revenue. But these three letters clearly have more to offer the business than income. Alternative Dispute Resolution can in fact save a great deal of money. It will not always produce the desired outcome for one party or the other but it will frequently provide the opportunity to preserve the relationship and will generally produce a fair and reasonable outcome. For those with an involvement in the hospitality industry, qualified and experienced arbitrators and mediators can help resolve disputes, save money and preserve relationships – not a bad line-up for those who thought ADR could only mean average daily rate!

To learn more about Roger S. Cline, click here to read his full biography. For more information about Roundhill Hospitality's Litigation Support Practice, please contact us.