The hospitality sector is one of the key drivers of growth among the services sector in India. There is little doubt of the sheer potential this industry holds going forward…. Yet heavy is the head that wears the crown. Faced with stringent government regulations and constantly changing policy related issues, coupled with red tapism and increasing infrastructure costs, the path to profitability is a tough one. Lack of proper trained talent and an increasingly demanding customer further compound these issues. Needless to say the brick and mortar hospitality sector is facing its toughest competition ever from the virtual world of AirBnB’s. The tough balancing act between the Owner and Manager and a stark increase in insolvency and bankruptcy cases are further headwinds the market has to contend with.
Drawing upon our experience of over 16 years within the hospitality sector, ELP’s hospitality sector practice aims to provide a one stop shop for addressing legal and regulatory issues within the hospitality sector.
Our practice includes :
Acquisition of Land
- Due diligence reviews, covering transactional, financial, environmental, tax and compliance related issues.
- Verification of title to the land and drafting and negotiation of sale deeds, lease deeds or development rights agreements or other conveyance deeds
Construction & Development of Hotel
- Drafting, negotiation and execution of documentation including: Construction contracts, architect’s contracts, interior design consultancy contracts and other contracts for the appointment of experts for the development phase
- Equipment supply and other agreements with sub-contractors and vendors.
Structuring of Investment
- Designing and implementing tax efficient structures to identify tax exposures and the most optimal tax structure.
- Risk analysis of project documentation, covering legal, structuring, commercial and tax issues.
- Drafting, negotiation and execution of documentation including joint venture agreements, investment agreements, shareholders’ agreements, private equity documentation and other equity and/or quasi-equity funding documentation.
Operator & Brand Selection
- Drafting, negotiation and execution of documentation including: Hotel management agreements, technical services agreements, franchise agreements, marketing and publicity agreements for the provision of services by brand-owners for development of the hotel; and
- Trademark license agreements for the license of trademarks and service marks by brand-owners.
- Drafting, negotiation and execution of documentation including facility agreements and security documents such as guarantees and documents of charge and lien.
- Assistance in refinancing the project.
- Drafting of resolution plans and assistance in the insolvency process
Finalisation of consultants & service providers
- Drafting, negotiation and execution of documentation with consultants and other entities for provisions of pre-opening and post opening services.
Operation & Maintenance
- Advice on compliance processes under all applicable laws, for example, labour law, corporate law, indirect tax laws and developmental and/or environmental regulations.
- Advice on issues faced in the day-to-day operations of the hotels.
- Assistance in further investments into the hotel.
- Resolution of disputes, either through the conciliation process or through arbitration.
- Structuring of the exit in the most tax efficient manner.
- Drafting, negotiation and execution of documentation including share sale and share purchase agreements.
THE HOSPITALITY INDUSTRY IN INDIA - A GUIDE TO LEGAL ISSUES