Highlights from the Washington Lodging Association Convention
This month, my fellow contributors and I rolled out the latest edition of the Washington State Hospitality Law Manual at the Washington Lodging Association’s Annual Convention at the Tulalip Resort Casino & Spa. We presented new topics that had not been covered in the last edition (published in 1999), such as social media and recent liquor law changes. Apparently, our presentation touched a chord among hoteliers and restaurateurs attending the Convention.
Jim Spady of client Dick’s Drive-In Restaurants, Saul Spady and Carrie Shaw kicked off the seminars by sharing their experiences employing social media to market to their followers, particularly in opening a new restaurant in Edmonds. Our legal panel followed with a presentation of legal issues implicated by social media. Immediately following, there was spirited discussion in the hotel lobby about the pros and cons of regulating social media. Our advice to the hospitality industry is to monitor social media for intellectual property infringement, as it is common for people to use trademarks and other intellectual property from hotels, restaurants and retailers for their own purposes, which could potentially tarnish a brand and/or image. Operators that use social media must also be aware of privacy laws that implicate collection of data about customers and others interacting on their sites. Further, employers should be aware that there have been several recent cases and laws passed concerning an employer’s ability (or rather, inability) to control an employee’s use of social media.
Liquor Law Changes
Following the legal issues presentation, our friend Gerry Adams, of Clothier & Head, led a panel of experts, including Arnold Shain, Howard Cohen and Craig Schaffer, through a discussion of food and beverage profitability. Hotel general managers expressed frustration with the inability to obtain spirits from distributors, and are seriously considering taking advantage of the law that allows hotels to sell spirits at retail. There was some confusion as to the differential tax rates charged for on-premises versus off-premises consumption. When purchasing spirits for on-premises consumption, hotels must pay the spirits taxes as follows:
- Sprits sales tax at the rate of 13.7% of the purchase price; and
- Spirits liter tax at the rate of $2.4408 per liter.
Hotels selling spirits by the drink on-premises must collect and remit retail sales tax and pay retailing business and occupation (“B&O”) tax on those sales. With respect to off-premises consumption, Hotel retail stores selling spirits at retail sales locations must collect and remit the spirits taxes on their sales of spirits in the original container to the general public as follows:
- Sprits sales tax at the rate of 20.5% of the selling price; and
- Spirits liter tax at the rate of $3.7708 per liter.
The state retail B&O tax applies to sales of spirits in their original container at retail store locations. However, the general retail sales tax does not apply on such sales. In addition, hoteliers should be aware of the 24 liter per day limit currently imposed by the Liquor Control Board. As this limit was not in the original initiative privatizing liquor sales, the Washington Restaurant Association and Costco have initiated litigation to overturn this limit, among other things. We will keep you informed as to the result of this court case.
If you have any questions about these issues, please contact any member of our Retail, Hotel & Restaurant team.