Hotels and the US constitution's takings clause. Wednesday, 21st October 2009 Source : Vijay Dandapani

Venezuela's thuggish leader, Hugo Chavez earlier this week proudly announced that "he (had) seized the landmark Hilton hotel on Margarita Island because its owners dared to impose conditions on its use by his government to host a summit there last month."

The strongman was affronted by the fact "to hold the conference we had to ask for permission... and the owners tried to impose conditions on the revolutionary government.

No way." While claiming that "the social development side of the tourism and hotel industries in Nueva Esparta state needed to be developed" he was continuing on a well-trodden path.

In the recent past the government checked into the Caracas Hilton and stayed for good while  renamed it the Hotel Alba, a reference to the Venezuelan-led leftist regional alliance Alianza Bolivariana para las Americas (ALBA).

The contrast to the US could not be more stark with the US constitution's takings clause the subject of repeated review over the years by the US supreme court including a forthcoming case compelling the use of a fish ladder for a water storage facility.

The last case involving a hotel was in 2005 where the tiny 62 room San Remo Hotel sought relief from San Francisco's oppressive housing ordinance. The hotel, however, never really got a hearing due to "issue preclusion" per the federal full faith and credit statute that bars litigants from suing in federal court when a suit based on issues that have been resolved in state court.

It is no accident, perhaps, that US companies shy away from ownership in a variety of jurisdictions from Africa to Asia and South America as property rights afford few if any protections.

In a not too dissimilar vein, Jim Norman a lawyer with Holland & Knight wrote a spoof a few months ago in Hotel Motel Management magazine entitled " If the government ran companies". The counterfactual scenario he envisaged included a government run program imaginatively called Hotel Asset Investment and Restructuring Program (HAIR) that got into asset owners and operators' hair via reservation systems run amok and government standards on a variety of issues.

Anyone who has stayed in government "run" hotels in India or this "seven star" Tajik hotel need never imagine what those are.


Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.

www.vijaydandapani.com