New Jersey legislation threatens hotel industry: franchise model and jobs at risk AHLA

Thursday, March 7, 2024

Representatives from the American Hotel & Lodging Association (AHLA), along with hoteliers and other partners in the hospitality industry, convened with over 25 legislators in Trenton, New Jersey, on Monday to express their concerns over proposed legislation in the state. They warned that the bills, known as A3495 and S2336, pose a significant threat to the hospitality sector, potentially leading to hotel closures and the loss of thousands of jobs in New Jersey.

These bills would significantly alter the hotel industry’s franchise framework, complicating the enforcement of standards for quality, service, and safety—elements that are crucial for maintaining guest trust. Furthermore, the proposed legislation could disrupt and possibly end the loyalty programs offered by many hotel brands, which are popular among consumers.

During their discussions with New Jersey’s state senators and assembly members, representatives from the hotel industry committed to opposing A3495 and S2336. They argue these bills unfairly target hotels by inserting governmental oversight into commercial relationships, threatening the businesses of hoteliers and the jobs of thousands of employees. The New Jersey Assembly Committee on Financial Institutions and Insurance approved A3495 on February 22, with the bill now awaiting further action from the Assembly. Both A3495 and its Senate counterpart, S2336, aim to impose strict limitations on hotels’ ability to uphold their brand standards regarding quality, service, and safety.

“Our message to lawmakers is simple: If A3495 and S2336 become law, they will destroy New Jersey’s hotel industry. By limiting hoteliers’ ability to enforce the quality, service, and safety standards that guests have come to trust, the bills will make it impossible for most brand-name hotels to do business in the Garden State, driving hotels elsewhere and destroying thousands of jobs,” said AHLA Interim President & CEO Kevin Carey. “Last month – with only two hours’ notice – a handful of New Jersey lawmakers rammed this destructive legislation through committee. New Jersey residents and potential tourists deserve better, and we’re calling on lawmakers to have a transparent debate about the extreme negative effects these bills would have on the state’s economy and its hoteliers.”

Specifically, the legislation would require individual negotiations for each property regarding brand improvements such as Wi-Fi, mobile check-in, and breakfast offerings, potentially diluting brand consistency. It would allow hotel owners to substitute brand-mandated products with “comparable” ones, which could weaken brand standards and lead to legal disputes over product comparability. Additionally, the bills would permit the use of hotels’ federally registered trademarks on these comparable products, potentially devaluing these trademarks and eroding consumer trust. Lastly, the legislation threatens to dismantle the loyalty points systems used by many hotel brands to reward returning customers, potentially forcing the discontinuation of these programs in New Jersey.

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