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Innkeepers USA trust and certain of its affiliates, as Debtors and Debtors in possession, object to motion of Best Western international, Inc. For ORDER TERMINATING AUTOMATIC STAY 1. List of debtors in these Chapter 11 Cases along with the last four digits of each Debtor's federal tax identification number can be found at www.omnimgt.com. The location of the Debtors' corporate headquarters and the service address for their affiliates is: c / o Inn
Innkeepers USA trust and certain of its affiliates, as Debtors and Debtors in possession, object to motion of Best Western international, Inc. For ORDER TERMINATING AUTOMATIC STAY 1. List of debtors in these Chapter 11 Cases along with the last four digits of each Debtor's federal tax identification number can be found at www.omnimgt.com. The location of the Debtors' corporate headquarters and the service address for their affiliates is: c / o Inn
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Innkeepers USA trust and certain of its affiliates, as Debtors and Debtors in possession, object to motion of Best Western international, Inc. For ORDER TERMINATING AUTOMATIC STAY 1. List of debtors in these Chapter 11 Cases along with the last four digits of each Debtor's federal tax identification number can be found at www.omnimgt.com. The location of the Debtors' corporate headquarters and the service address for their affiliates is: c / o Inn
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Paul M. Basta KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900
and
Anup Sathy, P.C. Marc J. Carmel (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois 60654-3406 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Counsel to the Debtors and Debtors in Possession
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) INNKEEPERS USA TRUST, et al., 1 ) Case No. 10-13800 (SCC) ) Debtors. ) Jointly Administered ) DEBTORS OBJECTION TO MOTION OF BEST WESTERN INTERNATIONAL, INC. FOR ORDER TERMINATING AUTOMATIC STAY 1
Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession (collectively, the Debtors), hereby submit this objection (the Objection) to Best Western International, Inc.s (Best Western) Motion of Best Western International, Inc. for Order
1 The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax identification number can be found by visiting the Debtors restructuring website at www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480.
2 K&E 18102752 Terminating Automatic Stay [Docket No. 655] (the Best Western Motion). In support of this Objection, the Debtors respectfully state as follows: PRELIMINARY STATEMENT The Best Western Motion seeks relief from the automatic stay without demonstrating the requisite cause. The hotel at issue is operating well, the Debtors are paying amounts due under the membership agreement, and the hotel is easily satisfying Best Westerns quality standards (as indicated by recent quality assurance assessments). As already determined by the Court at the November 11 hearing on Best Westerns prior motion, Best Western is no differently situated than other contract counterparties whose contracts may be subject to a prepetition default, and Best Western has not articulated any unique reason why the Debtors should not be able to continue to enjoy the protection of the automatic stay and the opportunity to reorganize provided by the Bankruptcy Code. Consequently, granting the relief requested likely would result in the Debtors other contract counterparties bringing similar motions for relief, which could severely hamper the Debtors ability to reorganize. Finally, as discussed herein, under the current terms of the Debtors cash collateral and debtor-in-possession financing orders and agreements, the ability to use the prepetition lenders cash collateral and to maintain their two debtor-in- possession financing facilities is predicated on the Debtors maintaining the membership agreement. 2 Granting the Best Western Motion and permitting Best Western to terminate the membership agreement would, among other things, paralyze the Debtors business by cutting off financing to maintain operations and complete certain capital expenditures, thereby damaging the value of the Debtors property (potentially irreparably).
2 The Debtors have requested the necessary consents and waivers from the appropriate parties (Lehman ALI Inc. (Lehman) and the lender (a Lehman affiliate) under the Lehman DIP Facility(as defined herein)), which would avoid having the potential resolution of the Best Western Motion jeopardize the Debtors authority to use cash collateral and borrow under the debtor-in-possession financing facilities. To date, Lehman and its affiliate have not agreed to consent and waive their rights.
3 K&E 18102752 Critical to the resolution of the Best Western Motion, Best Western has failed to demonstrate a significant harm that is uniquely different than the harm suffered by the Debtors other contract counterparties, nor has it demonstrated a harm that would justify risking the Debtors restructuring, especially given that the hotel is performing well and the Debtors are current with respect to postpetition financial obligations owed to Best Western. The Best Western Motion, therefore, should be denied. Background 1. In 2007, Debtor Grand Prix Floating Lessee LLC (the Lessee) and Best Western entered into that certain Best Western International, Inc. Membership Application and Agreement (the Membership Agreement) as part of the Debtors operation of the Best Western West Palm Beach Airport Inn in West Palm Beach, Florida (the Property). The Property is collateral under the Debtors prepetition floating rate mortgage loan agreement as well as the debtor-in-possession financing agreement with a Lehman affiliate. 2. Best Western originally was aware of the Debtors non-compliance with certain terms of the Membership Agreement approximately 18 months ago when Best Western sent the Debtors a letter, dated June 16, 2009, a copy of which is attached hereto as Exhibit A. Nearly two months later, on August 12, 2009, according to the Supplemental Affidavit in Support of Motion of Best Western International, Inc.s Motion to Terminate Automatic Stay [Docket No. 722] (the Supplemental Pollack Declaration), the Debtors still allegedly were not in compliance with certain requirements of the Membership Agreement, including certain design guidelines that specify, among other things, particular kinds of fixtures, furniture, and other requirements that must be in place at a hotel that is part of the Best Western network. At that time, Best Western was willing to grant the Debtors an additional eight months to come into
4 K&E 18102752 compliance with such requirements, and the Debtors and Best Western documented this by entering into a conditional extension agreement on August 12, 2009 (the Conditional Extension). Supplemental Pollack Declaration at 6. The Conditional Extension required, among other things, that the Debtors bring the Property into compliance with the design guidelines or receive waivers from Best Western with respect to the design guidelines by April 12, 2010 (eight months later). Id. 7. Best Western did not inspect the Property for compliance with the Conditional Extension until August 25, 2010 (more than four months after the Conditional Extensions deadline), at which time Best Western became aware that the Debtors still were allegedly not in compliance with the design guidelines. Id. at 10. Over two months later, on November 2, 2010, the Best Western Motion was filed. 3
ARGUMENT I. The Automatic Stay Is Fundamental to the Reorganization Process and a Party Seeking Relief Therefrom Must Show Cause. 3. The broad protection of the automatic stay of section 362 of the Bankruptcy Code extends to all matters that may have an effect on a debtors estate and is designed to relieve the financial pressures that drove [the debtors] into bankruptcy. H.R. Rep. No. 95-595, at 340 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6296-97; AP Indus. Inc. v. SN Phelps & Co. (In re AP Indus., Inc.), 117 B.R. 789, 799 (Bankr. S.D.N.Y. 1990). It is designed to give the debtor a breathing spell, an opportunity to rehabilitate its business and to enable the debtor to generate revenue. See id. at 798; Teachers Ins. & Annuity Assn of Am. v. Butler, 803 F.2d 61, 65 (2d
3 By Best Westerns own admission, the automatic stay operates to prevent Best Western from terminating the Membership Agreement. Best Western Motion at 8. And Best Western acknowledged that the Membership Agreement is an executory contract, and the Court just ruled that there was not sufficient cause to compel the Debtors to make a decision on this contract at this time in light of the Bankruptcy Codes general right for debtors to wait until confirmation under section 365. See Hrg. Tr. at 811, In re Innkeepers USA Trust., No. 10-13800 (Bankr. S.D.N.Y. Nov. 11, 2010) (denying Best Westerns motion and stating that I dont believe that anything that [Best Western has] identified is materially different from any of the concerns that any other contract party would have in this Chapter 11 case or, frankly, in any other Chapter 11 case.).
5 K&E 18102752 Cir. 1986). Given the importance of the automatic stay to facilitate successful reorganizations, the United States Supreme Court has recognized that the automatic stay provision of the Bankruptcy Code [is] one of the fundamental debtor protections provided by the bankruptcy laws. Mid-Atlantic Natl Bank v. New Jersey Dept of Envtl. Prot., 474 U.S. 493, 503 (1986). 4. Section 362(d) provides that a party may be entitled to relief from the automatic stay under certain limited circumstances, but only where the party seeking relief demonstrates cause. 11 U.S.C. 362(d), (d)(1). In assessing whether a movant has shown cause for relief from the automatic stay, courts in the Second Circuit consider (to the extent applicable) twelve factors, which are called the Sonnax factors. 4 Here, because the Best Western Motion does not seek relief to pursue external litigation, but rather to terminate valuable property rights of the Debtors pursuant to a prepetition agreement, the relevant factors are: (a) the extent to which relief from the automatic stay would interfere with the bankruptcy case and (b) the impact of the automatic stay on the parties and the balance of harms. Both of these factors favor denying the Best Western Motion. II. Best Western Has Not and Cannot Demonstrate Cause for Which Relief from the Automatic Stay May Be Granted. 5. The Best Western Motion makes no attempt to meet its burden to show cause for relief from the automatic stay under Sonnax, as is required in this circuit. The Best Western Motion does not even present, let alone analyze, the relevant Sonnax factors that the Court must
4 The Sonnax factors are: (1) lack of any connection with or interference with the bankruptcy case; (2) the impact of the stay on the parties and the balance of harms; (3) whether relief would result in a partial or complete resolution of the issues; (4)whether the other proceeding involves the debtor as a fiduciary; (5) whether a specialized tribunal with the necessary expertise has been established to hear the cause of action; (6) whether the debtors insurer has assumed full responsibility for defending it; (7) whether the action primarily involves third parties; (8) whether litigation in another forum would prejudice the interests of other creditors; (9) whether the judgment claim arising from the other action is subject to equitable subordination; (10) whether movants success in the other proceeding would result in a judicial lien avoidable by the debtor; (11) the interests of judicial economy and the expeditious and economical resolution of the litigation; and (12) whether the parties are ready for trial in the other proceeding. See In re Sonnax, 907 F.2d 1280, 1285-86 (2d Cir. 1990).
6 K&E 18102752 consider. Best Westerns approach, however, is not surprising. Given the devastating impact to the Debtors restructuring that would result from termination of the Membership Agreement (as discussed herein) and the relatively minor harm that Best Western may incur if the automatic stay is kept in place (which the Debtors contend does not exist), there is little basis under the applicable Sonnax factors to find cause justifying the relief sought. A. The Property Is Performing Well and the Debtors Are Current with Respect to the Fees Under the Membership Agreement. 6. The Debtors are current with respect to the membership fees owed to Best Western, and the financial performance of the Property has not materially deteriorated since Best Western originally asserted non-compliance with the Membership Agreement, nor has its performance materially deteriorated since the petition date. In fact, since the petition date the Property has scored well on Best Westerns quality assurance assessment, 5 generally improving on the quality assurance assessment scores from the period before the petition date. The Debtors have continued to operate the Property in compliance with all other requirements and standards set forth in the Membership Agreement (e.g., quality and cleanliness assurance standards, trademark licenses, business practices, etc.). B. Best Western Has Not Demonstrated Any Significant, Unique Harm That Justifies Depriving the Debtors of the Protections of the Automatic Stay. 7. Even if the Court denies the Best Western Motion, Best Western will experience no more than minimal harm, which is important given that the appropriate standard requires a balancing of the harms. The Debtors are proceeding expeditiously to restructure their enterprise. During this time, Best Westerns interests are adequately protected given that Best Westerns rights under the Membership Agreement and intellectual property rights are being afforded as
5 A copy of the Debtors most recent Best Western quality assurance assessment is attached hereto as Exhibit B.
7 K&E 18102752 much protection within bankruptcy as they were outside of bankruptcy and such rights are being afforded as much protection as those of any other counterparty to an executory contract with the Debtors. The reasoning of the Best Western Motion would give counterparties to executory contractsmany of which are subject to defaults by debtors at the time of a bankruptcy filing significantly more rights than is contemplated by the Bankruptcy Code and deprive the Debtors of their statutorily-provided breathing space. 6
8. Assuming that Best Western is suffering some harm due to the delay in Best Westerns ability to exercise its contractual preferences (which the Debtors dispute), such delay is not sufficient to establish cause to lift the automatic stay. See, e.g., In re Cardinal Indus., Inc., 116 B.R. 964, 983 (Bankr. S.D. Oh. 1990) (the delay of contractual or state law remedies occurs in virtually every bankruptcy case; thus, if the mere assertion that delay of such a remedy was sufficient to establish cause, the imposition of the stay to protect a debtor would prove meaningless). 9. Any hardship stated by Best Western must be considered in conjunction with the fact that that it allowed the Debtors eight months to address its concerns, then waited another four months after the Conditional Extension deadline even to visit the Property, and then waited an additional two months after that to file the Best Western Motion. Supplemental Pollack Declaration at 6-7. Best Western essentially seeks better protection after the bankruptcy filing than it was content to endure prior to the filing. In re Orlando Coals, Inc., 6 B.R. 721, 725 (Bankr. D.W.Va. 1980) (denying stay motion where creditor willingly tolerated nonpayment
6 Courts in the Second Circuit have agreed that it is the clear policy of the Bankruptcy Code to provide a debtor with breathing space following the filing of a bankruptcy petition, continuing until the confirmation of a plan, in which to assume or reject an executory contract. In re Enron Corp., 279 B.R. 695, 702 (Bankr. S.D.N.Y. 2002).
8 K&E 18102752 noting that where the harm to the creditor is self-inflicted, the Court will not lift the stay based on a finding of greater relative harm). 10. Further, if approved, the Best Western Motion is likely to have an unintended ripple effect in the Debtors chapter 11 cases. The Debtors, obviously, have a large number of executory contracts that are important to the operation of the Debtors business (and many of these are subject to prepetition defaults). Allowing the relief requested would almost certainly cause an avalanche of similar requests by contract counterparties for the automatic stay to be lifted and require the Debtors to defend a multitude of motions like Best Westerns, which would create an unnecessary distraction that could severely damage the Debtors reorganization efforts. C. Granting Relief from the Automatic Stay Would Have a Significant Negative Impact on the Debtors Due to Its Consequences to the Debtors Financing Orders and Agreements. 11. As the Court is aware, following considerable negotiations with their prepetition lenders and their two debtor-in-possession financing lenders and contested hearings, the Court authorized the Debtors to (a) use the cash collateral of their prepetition secured lenders 7 to fund operations and their restructuring and (b) borrow under two DIP financing facilities to finance their property improvement plan obligations and capital expenditures. 8 Both results were significant successes in the Debtors chapter 11 cases and enable the Debtors to preserve the
7 See Final Order Authorizing the Debtors to (i) Use the Adequate Protection Parties Cash Collateral and (ii) Provide Adequate Protection to the Adequate Protection Parties Pursuant to 11 U.S.C. 361, 362, and 363 [Docket No. 402, as amended by Docket No. 539] (the Final Cash Collateral Order). 8 See Final Order Authorizing the Debtors to Obtain Postpetition Senior Secured Super-Priority Debtor-in- Possession Financing from Five Mile Capital II Pooling International LLC Pursuant to 11 U.S.C. 105, 361, 362, 364(c), 364(d) and 364(e) [Docket No. 400] (the Five Mile DIP Order) approving that certain Senior Secured Super-Priority Debtor-in-Possession Credit Agreement among certain of the Debtors and Five Mile Capital II Pooling International LLC as Syndication Agent (the Five Mile DIP Agreement and, as consummated, the Five Mile DIP Facility); Final Order Pursuant to Bankruptcy Code Sections 105, 361, 362, 363, 364 and 507(I) Authorizing Floating Rate Debtors to Obtain Postpetition Financing and (II) Granting Liens and Super-Priority Claims [Docket No. 385, as amended by Docket No. 432] (the Lehman DIP Order) approving that certain Senior Secured Super Priority Debtor-in-Possession Loan Agreement between certain of the Debtors and Solar Finance Inc. as Lender (the Lehman DIP Agreement and, as consummated together with the Five Mile DIP Agreement, the DIP Facilities).
9 K&E 18102752 value of their assets and undertake a restructuring process that the Debtors believe will maximize the value of the Debtors estates and maintain the Debtors business as a going-concern. 12. In the event that the Best Western Motion is granted and Best Western is permitted to terminate the Debtors membership agreement, however, an event of default would occur under the Lehman DIP Agreement. 9 A default under the Lehman DIP Agreement would trigger a termination event under the Final Cash Collateral Order (applicable to Lehmans cash collateral and to all of the Debtors other prepetition lenders cash collateral if Lehman terminates the Debtors use of cash collateral) 10 and may result in a cross-default under the Five Mile DIP Agreement. 11 Because of these defaults, the lenders under the DIP Facilities could declare all of the Debtors obligations under the DIP Facilities due and payable, and, as a result, all of the Debtors prepetition lenders potentially could terminate the use of their cash collateral (even if Lehman had not terminated the Debtors use of cash collateral). 12
9 See, e.g., Lehman DIP Agreement at section 8.1(a)(v)(G) (providing that an event of default shall occur if any Franchisor terminates any Franchise Agreement (or otherwise has the right to so terminate such Franchise Agreement and has taken affirmative steps in such regard (including but not limited to proper delivery of notice of intent to terminate)) upon any Property.); Lehman DIP Agreement at section 8.1(a)(xxii) (providing that an event of default shall occur if Borrower/Operating Lessee terminates or cancels or allows to expire any Franchise Agreement or operates any Individual Property under the name of any hotel chair or system other than the hotel chain or system under which such Individual Property is operated as of the Closing Date, without Lenders prior written consent.). 10 See, e.g., Final Cash Collateral Order at paragraph 10(a)(ix) (providing that a termination event shall occur [w]ith respect to such Tranche of Debt, one or more franchisors have terminated franchise agreements relating to hotels owned by the Debtors under such Tranche of Debt); Final Cash Collateral Order at paragraph 10(a)(xvii) (providing that a termination event shall occur, applicable to all lenders, if the Fixed Rate Lender or the Floating Rate Lenders shall have terminated the applicable Debtors use of Cash Collateral.). 11 See, e.g., Five Mile DIP Agreement at section 6.1(f) (providing that an Event of Default shall occur if there shall occur any default by any Borrower or Affiliate of Borrower under an Affiliate DIP Financing, unless waived in writing by the other party to such Affiliate DIP Financing). 12 See Final Cash Collateral Order at paragraph 10(a)(xi) (providing that a termination event shall occur, applicable to all lenders, if There shall have occurred and be continuing one or more events of default under the Fixed Rate PIP DIP or the Floating Rate PIP DIP that, individually or in the aggregate, cause or permit the lenders thereunder to cause the obligations under the Fixed Rate PIP DIP or the Floating Rate PIP DIP, as the case may be, to become immediately due and payable.).
10 K&E 18102752 13. The ultimate result could be a return of the Debtors to the position they were in as of the petition date (with no authority to use cash, no prospects for satisfying their property improvement plan obligations and other capital expenditures, and a long distance from a confirmable, value-maximizing plan). As mentioned above, the Debtors have attempted to secure the waivers and consents necessary to avoid this outcome, but have been unsuccessful. Consequently, there is no doubt that granting the relief requested in the Best Western Motion would interfere with the Debtors chapter 11 cases and that the harm that the Debtors would experience far exceeds the relatively minor hurt that Best Western may continue to bear, if any, if the automatic stay is preserved and the Debtors are allowed to pursue their restructuring strategy. D. Best Westerns Arguments Regarding the Debtors Ability to Assume the Membership Agreement are Legally and Factually Misguided. 14. Best Western cites only one case, In re Commonwealth Mortgage, 148 B.R. 4 (Bankr. D. Conn. 1992), supporting its contention that Best Western is entitled to the requested relief because the Debtors cannot assume or assign the Best Western Membership Agreement. See Best Western Motion at 21. But because the facts of that case bear no relation to the facts here, that courts conclusion there is not applicable. In Commonwealth Mortgage, the court granted a state housing authority relief from the automatic stay to exercise its contractual right to unilaterally terminate at any time. But, the Commonwealth Mortgage court reached its conclusion specifically because there was no value to the estate in retaining any interest in the Servicing Agreement. Commonwealth Mortgage, 148 B.R. at 7. Thus, lifting the automatic stay had no negative impact on that debtors efforts to reorganize. In the Debtors case, however, the benefit to the Debtors estates from retaining the Debtors interest in the Membership Agreement is incalculably large, to the extent that the entire restructuring
11 K&E 18102752 effectively depends on not terminating the Membership Agreement (and preserving the Debtors access to cash collateral and the DIP Facilities) until the Debtors can complete their plan process (or receive appropriate consents and waivers). As a result, the decision in Commonwealth Mortgage does not support the relief sought and instead highlights the important reasons for denying the Best Western Motion. 15. Further, Best Westerns reliance on Commonwealth Mortgage is premised on Best Westerns assertion that the Debtors cannot assume the Membership Agreement. 13 This is a false premise. 14 Regardless, when the Debtors chapter 11 cases progress to a point where they are making a decision whether to assume or reject the Membership Agreement, Best Western will retain all of its rights to dispute the Debtors ability to assume the Membership Agreement or cure certain defaults.
13 Notably, Best Westerns Amended Motion for Order Limiting Time Within Which Debtor Must Assume or Reject Executory Contract [Docket No. 219], which was denied by the Court on November 18, 2010 [Docket No. 720], was premised on the idea that the Debtors determine whether they wanted to assume the Membership Agreement. 14 First, contrary to assertions made in paragraphs 21-26 of the Best Western Motion, the Debtors are able to assume the Membership Agreement, even if the Debtors may arguably not be entitled to assign the Membership Agreement to a third party under applicable law without the consent of Best Western. The Court should follow well-reasoned cases in this district that have adopted the actual test approach, which provides that whether or not applicable law precludes assignment to a third party does not affect whether the debtor can assume it. See In re Adelphia Commncn Corp., 359 B.R. 65, 72 (Bankr. S.D.N.Y. 2007) (Gerber, J.); In re Footstar Inc., 323 B.R. 566, 573 (Bankr. S.D.N.Y. 2005) (Hardin, J.). Second, the Debtors submit that they can assume the Membership Agreement, despite the prepetition defaults, pursuant to section 365(b)(1) by (a) complying with any non-fulfilled (or non-waived) requirements of the Conditional Extension, (b) compensating, or providing adequate assurance that the Debtors will compensate, Best Western for any pecuniary loss relating to the Debtors non-compliance with the Conditional Extension and Membership Agreement, and (c) providing adequate assurance of the Debtors future performance under the Membership Agreement. The Conditional Extension only provides that the Membership Agreement may be canceled automatically upon verification of non-compliance with any of the conditions. Conditional Extension at 1 (emphasis added). Because Best Western took no steps to verify the Debtors compliance with the terms of the Conditional Extension until after the petition date and did not actually terminate the Membership Agreement, the Debtors still had the ability, as of the petition date, to comply with all terms of the Conditional Extension and maintain the Membership Agreement. Since, as of the petition date, the Membership Agreement was executory and subject to the cure rights and terms of the Conditional Extension, section 365(d)(2) extends such cure period to any time prior to confirmation of a plan of reorganization. See In re Masterworks, Inc., 100 B.R. 149, 151-2 (Bankr. D. Conn. 1989) (where right to cure a default existed as of the petition date, section 365(d)(2) extends the period to cure the default until confirmation regardless of whatever date such right originally was set to expire); see also In re St. Casimir Development Corp., 358 B.R. 24, 43-44 (Bankr. S.D.N.Y. 2007) (agreeing with Masterworks interpretation of section 365(d)(2) in context of a bankruptcy filing before a cure period had expired).
12 K&E 18102752 CONCLUSION For the reasons discussed herein, the Debtors respectfully request that the Court deny the Best Western Motion. New York, New York /s/ Paul M. Basta Dated: December 10, 2010 James H.M. Sprayregen, P.C. Paul M. Basta KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900
and
Anup Sathy, P.C. Marc J. Carmel (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois 60654-3406 Telephone: (312) 862-2000 Facsimile: (312) 862-2200
Counsel to the Debtors and Debtors in Possession
K&E 18102752 Exhibit A
Best Westerns June 16, 2009 Letter 03/31/2010 15:21 5515552319 June 16, 2009 Mr. Marc Winer Island Hospitality Management, Inc. 50 Cocoanut Row, Suite 200 Palm Beach, FL 33480-4027 RE: Best Western West Palm Beach Airport West Palm Beach, FL MemberNo: 10357 Dear Mr. Winer: INNKEEPERS EXPRESS PAGE 01/21 fllla g) Best Western International, Inc. 6?.01 North 24th Parkway Phoenix, t>Z 85016 USA T ~ l 602.967.4200 R!iiservatlons 1-SOO. WESTERN or bestwestem.com The Board of Directors has grounds to cancel your Best Western membership because the June 11, 2009 assessment reports indicates a Guest Rooms/Public Areas Quality Assurance Assessment score ofless than 800 points was attained. This is the second substandard score attained within the past 18 months. Additionally, the property's customer care complaint ratio is .08148 and is currently perfonning in the bottom 40 percent of the entire Best Western system. Note: This rating is based on reports dated May, 2009. The current status of the property's ratings will be provided at the time of the Board review. The Board will take official action at an upcoming meeting to either cancel your membership or grant a conditional extension of your membership. Best Western will conduct a mandatory design inspection of the property before the Board meets and will charge a non-refundable $2,500.00 on your next monthly billing. If your membership is cancelled, your fees and dues for the remainder of the fiscal year wlll become due immediately. (See Article II, Section 5 (B) of the Best Western Bylaws). You are entitled to request a personal Hearing before the Board during which you may use up to 30 minutes to make a presentation showing cause why your membership should not be cancelled and to present contrary evidence if you think the Board's information is incorrect or unfounded. (See Article II, Section 8 ofthe Best Western Bylaws and Chapters XI and XII of the Rules & Regulations.) If you want to come to Phoenix for a Hearing you must request the Hearing in writing by certified or express mail received by Best Western within IS days of the date of this letter. The Hearing request should be sent to my attention at 6201 N. 24 11 ' Parkway, Phoenix, Arizona 85016. To help ensure that the Directors have maximum time to review your situation, we recommend that you submit a detailed corrective action plan with your Hearing request. You may still submit additional written and/or digital material up to three days before the Hearing. In additi.on, Rule 1200.5 Band C describe information that must be submitted to Best Western at least three days before the Hearing. It is not necessary for you to come to Phoenix for a Bearing in order for you to present material to the Board for its consideration. You may submit material to the Board without a Bearing. The Board will consider the material if it is received at least three days before it meets. THE WORLD'S LARGEST HOTEL CHAIN'" 03/31/2010 16:21 5515552319 Best Western West Palm Beach Airport West Palm Beach, FL MemberNo: 10357 June 16, 2009 Page 2 of3 I NNI<EEPERS PAGE 02/21 Generally, presentations to the Board, whether written, digital or oral, include (i) an explanation of why the member believes the grounds for cancellation are invalid or incorrect, (ii) short term and long terms action plans for correcting deficiencies, (iii) details about ownership involvement and management of the property, and key staffing, and (iv) any other information the member would like the Board to consider. Corrective action plans generally describe actions being taken to correct deficiencies, including any planned renovation of the property. Renovation plans should be properly supported by such things as building plans, color boards, signed purchase orders, financing information and timeframes for commencement and completion. The Board will consider these things when determining if it should cancel your membership or grant a conditional extension. If you want to use Best Western's design services prior to the Board of Directors reviewing your membership, please read the enclosed Important Notice describing those services. The Board will review the material you provide even if you do not request a Hearing. The Board may also consider other information it considers relevant such as your quality, customer care and payment history with Best Western, and the sufficiency of and financial and management commitment to your corrective action plan. If you are granted a conditional extension of your membership, the tenus of the extension will require action beyond simply correcting the current deficiencies. You will also be required to do such things as pay an extension administration fee; score at least 875 points on your next three assessments; meet accelerated deadlines for design compliance (current and enhanced standards) and brand identity compliance; meet accelerated deadlines for installing a Best Western compliant twoway interface and SpeedLinks high speed internet access; and ensure that you and your staff attend meetings such as the Best Western Annual Convention, District Meetings and General Manager and Voting Member training. This is a very serious matter. If your membership is cancelled you wi.ll no longer be able to operate as a Best Western or use its marks and logos. The Board has the sole discretion to cancel your membership. You should consider contacting your Best Western District Manager to discuss this. I have enclosed a copy of your most recent assessment and a CD containing assessment photographs to help you plan your course of action. If you come to Phoenix, it is recommended that you also schedule an appointment prior to the hearing with our Design Department, here in Phoenix, to discuss the property's current design requirements. Please contact Mr. Steve Willian1s, Director, Design Department, at (602) 957- 5526, should you decide to meet with a Design Representative. 03/31/2010 15:21 5515552319 Best Western West Palm Beach Airport West Palm Beach, FL Member No: 10357 June 16, 2009 Page 3 of3 INNKEEPERS lf you have any questions, please call me at (602) 957-5835 or send an e-mail to cheryl.pollack@bestwestem.com. CP/mac Enclosures cc; Best Westem Governor (4-11) Lehman Brothers lnc. PAGE 03/21 03/31/2010 16:21 5515552319 I NNI<EEPERS PAGE 04/21 Summary Report North American Quality Assurance Assessment Assessment Date: 6/11/2D091:01:09PM Property Number: 10357 Property Name: BIW West Palm Seach Airport City, State/Province: Weol Palm Beaoh, FLORIDA Room (Unit) Count: 135 Regional Ser'Yice Manager: Kathi Schilling I Brand Standards lao 1940 I Pt Loss Score Guest Room Public Areas Assessment Clean Maint Capital U_l)_date Missinq PI Loss Score Guest Rooms 84 18 66 0 0 168 Guest Bathrooms 26 45 39 0 0 110 Public Areas 0 5 0 0 0 5 Totals 110 68 105 0 0 283 717 GRPA Area With Marginal Point Loss Added 717 Supplemental Facilities Facilltv Name Clean Maint Capital Update Missing Pt Loss Score Restaurant/Breakfast Room 6reakrast 0 ~ 5 0 N/A 0 25 975 Bar/Lounoe Not Aoollcablo 0 0 0 N/A 0 0 0 Swimmlna Pool/Leisure/Sea Outdoor 0 25 0 N/A 0 25 975 Other Courtesy Van 0 0 0 N/A 0 0 1000 Nnn" Not Aoolioabto 0 0 lo N!A 0 _Q_ 0 Non" Not Aooticable 0 lo lo N/A 0 lo 0 Averages 0.00 16.67 0.00 0 0.00 0 983.33 Staff Perfo!'mance Au_essmentSummanL Attitude Comoetence Pt L o s ~ score Hotel 0 0 0 1000 Suoolemental Facilities N/A N/A N/A N/A Brand ldentitv Assessment Summarv Pt Loss score Brand ldentltv Cateaorv One 0 1000 Brand ldentitv Cateaorv Two 0 1000 I Locking Devices Guest Satisfaction Value Guest Satisfaction Survo:>v Score 9.14 Customer Care Ratio .08 03/31/2010 15:21 5515552319 INNKEEPERS North American Property Update Best Western North American Quality Assurance System Prop.#: Property Name: 10357 B/W West Palm Beach Airport Advance Notice to Property: 24 Hour Notice Person Notlticd: Aleshia Time Notified: Assessment Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling Name of Sr. Person (and title) on Site Assessment? Mark Quintero Emnil Address of Sr .. Person from Site Assessment mquintero@ihcorp.com Voting Member Present for Assessment: No Nnme of General Manager: John Wiseman Proof of GM E&T Departmental certification'/ No Started April 17, 2009 What is the renewal date for the E&T Certification for the current GM? 6/1112009 Not yet attended Amount of points currently aquired by GM for E&T recertification? 0 Name of Housekeeping Manager: Maria Proof of Housekeeping i\Ianagcr E&T Departmental ccrtilic:nion'! No :\'a me of Maintenance :\lanagcr: Maria Rios Name of I CARE Program Champion: Steven Jairam Proof of I Care Champion E&T Dcpnrtmcntal Yes PAGE 05/21 03/31/2010 16:21 5515552319 I NNI<EEPER5 North American Property Update Best Western North American Quality Assurance System Prop.#: Property N:1mc: 10357 B/W West Palm Beach Airport Name of all Front Desk employees? Asscssrneut Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling Proof of Front Desk Employees E&T Departmental certification'? No Names of Participants & Position Titles: John Wiseman GM Steten Jairam AGM Maria E.r:eculite housekeeper Mark Quimero Regional Director q{'Opcrations Islam/ Hospitality Improvements at Property: parking lot sealed tmd striped all new parking stops Stained all walhvays and corrected damaged 'weas All new t11b crout ReplciCed 47 fit!/ length mirrors 7 new vanities All carpet cleaned by professiOiwl comp,my Upgraded all landscaping Replaced damctged ceiling tiles in lobby All new handicap signs cmd poles Repairs to sign facing on blw I'Oad sign Plnnncd Improvements at Property: Work in Progress: Guest Score 9.14 JVeh survtn:v 7.67 ll'ith 213 respo11ses Co111ment nml Slll"l'oys 9.63 willt 665 l'e.l'pr>!t.\'es Customer Care Ratio .08 Design Progress l!pdntc: PAGE 05/21 2 03/31/2010 15:21 5515552319 INNKEEPERS PAGE 07/21 Nortb American Property Update Best Western North American Quality Assurance System Prop.#: Property Name: Room Count: 10357 Bf\N West Palm Beach Airport Room cmmt remai11s 1mclnmged m 135 Housekeeping status of all rooms assessed: Assessment Dnte: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling Thr:fol!olring rooms assessed as mca!tl and clecm:310 330 323 201 210 247 242 140 114 117 Rooms that Bedding was Assessed: Beds were turned down cmd c1ssessed in t/u.tfo!loll'illg guest rooms: 310 330 323 201 210 247 242 /40 J/4 117 General Comments: Consider correcting all issues identified during the assessment, not just items noted on today's report. Use today's assessment as a training tool and discuss the results at your next departmental meeting. Continue with planned improvements, and follow a appropriate capital budget action plan. Reassessed Rooms Ontoday's assessment no rooms were identified jar additio,wl IW1sscssment during the next QA visit. Response Visit Status Not Required h this a critical care program visit? No GRPA Marginal Calls Overview Please provide a detailed explanation if GRPA score is 100 points hif,!;hCr or lower than the previous assessment. - Major revenue recommendations hy Rncnue that heing followed by the property: 3 03/31/2010 16:21 5515552319 I NNI<EEPERS North American GUEST ROOMS QA Assessment Report Best Western North American Quality Assurance System Prop.#: 10357 Assessment Date: 6/11/2009 1:01:09 PM Property Name: B/W West Palm Beach Airport Assessor: Kathi Schilling DESCRIPTION ROOM# I COMMENTS Bed Coyerinr.:s. Linens, and Pillows Clean Sheet stained and hair on blcmket 32 J Hairs on blanket and sheet 201 hair on sheet 144 114 Replace Holes in spread 330 117 Goodt Clean Dra\\'er has large slai!l 117 I,igl!ts, Ligblin2, Lnmll Shades Replace Lamp shctde damaged 310 Lamp base had{v worn 144 Seating Repair Sofa arm has hole I 14 Clwir legs sczrffed and wom 117 Windows, Coverings, frames, Clean Sheer stained 144 Rep/ace Drape backing damaged 111 Total Guest Bedroom Point Loss Poim L(1.1s 4 X 18 ; 2 X 15 = 1 X 6 = 2 X 12 = 2 X 9 "' 1 X 6 = 1 X 12 = PAGE 08/21 72 30 6 24 18 6 12 168 03/31/2010 16:21 5515552319 I NNI<EEPERS North American GUEST BATHROOM OA Assessment Report Best Western North American Quality Assurance System Prop.#: 10357 ,\ssessn1errt Dntc: 6/11/2009 1:01:09 PM Property Name: B/W West Palm Beach Airport Assessor: Kathi Schilling DESCRIPTION ROOM#ICOMMNTS ,\ccessorJes, Anchor Bolt Covers. Supplies. Miscellaneous Clean Hair on ice Chrome fAll Bath Vanitv Chrome !temsl Clean Sink drain ring has build up J.t 7 l!lb drain has substance stopper and drai11ring 144 Replace Sink and tub drain ring tamished ,mdi or piued 310114 Floor (Carpet. Vinyl, Tile, etc.) Clean Moderate Toilet grout stained 323 Repair Toilet caulking cracki11g 201 Mirro( Repair Toilet Seat. Bowl. Tank Replace Vaoity. Cougter. Wasb Basin Toilet cattlking and discolored I 44 Full length mirror on door desilvering I 14 toili!t lank cover crcrcked 330 Repair Wash basin several scratches I 17 Total Guest Bathroom Point Loss X 2 "' 2 X 6 = 2 X 12 = 1 X 12 ::: 2 X 12 "' X 9 X 15 = 1 X 12 ::: PAGE 09/21 2 12 24 12 24 9 15 12 llO 03/31/2010 16:21 5515552319 INNKEEPERS North American PUBLIC AREAS QA Assessment Report Best Western North American Quality Assurance System Prop.#: 10357 Assessment Date: 6/11/20091:01:09 PM Property Name: Bf\N West Palm Beach Airport Assessor: Kathi Schilling DESCRIPTION ROO,\ I# I COMMENTS Pol Ill Losl' Walkways. Stairways. Patjos Including Li'htjng, Accessories Repair Jlre bo.res rusty Total Public Areas Point loss PAGE 10/21 5 5 03/31/2010 15:21 5515552319 INNKEEPERS PAGE 11/21 N.A. Supplemental Facilities Restaurant/Breakfast Room QA Report Best Western North American Quality Assurance System Prop.#: Property Nmne of Facility: Dt:SCRIPTION 10357 BNV West Palm Beach Airport Breakfast Ceilings. Vents, Walls, Partitions. fences Repair W"/1 scuffed Total Restaurant/Breakfast Room Point Loss Assessment Date: 6/11/2009 1:01:09 PM Assessor; Kathi Schilling Point 25 25 03/31/2010 16:21 5515552319 I NNI<EEPERS North American Supplemental Facilities Bar/Lounge OA Report Best Western North American Quality Assurance System Prop.#: 1 0357 Property :-<a me: BIW West Palm Beach Airport :"'ame or facility: Unknown Assessment Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling PAGE 12/21 DESCRIPTION P11i11l Lo.s T o t ~ I Bar/Lounge Point Loss 0 2 03/31/2010 15:21 5515552319 INNKEEPERS PAGE 13/21 North American Supplemental Facilities Pool/Leisure/Spa OA Report Best Western North American Quality Assurance System Prop.#: 10357 Property Name: 8/W West Palm Beach Airport N11me of Facility: DESCRIPTION Seating Repair Outdoor lozmge chair showing some wear Total Pooi/Leisu rc/Spa Facility Point Loss Assessment D!Hc: 6/11/20091:01:09 PM Assessor: Kathi Schilling Poi11/ L(!SS 25 25 3 03/31/2010 16:21 5515552319 I NNI<EEPERS North American Supplemental Facilties- Other Best Western North American Quality Assurance System Prop.#: Property N:tme: :\fame of y,,ciJity: DESCRlPTJON 10357 8/W West Palm Beach Airport Courtesy \';m Total Other Point Loss Assessmeut Date: 6/11/2009 1:01:09 PM A s s ~ s s o r : Kethi Schilling PAGE 14/21 0 4 03/31/2010 15:21 5515552319 INNKEEPERS North American Supplemental Facilties ~ 0 Best Western North American Quality Assurance System Prop.#: 10357 Property Name: 8/W West Palm Beach Airport Name of Facility: Unknown Assessment Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling PAGE 15/21 DESCRIPTION Poi/11 LtiSS Totnl 0 Point Loss 0 5 03/31/2010 16:21 5515552319 INNKEEPERS North American Supplemental Facilties- 0 Best Western North American Quality Assurance System Prop.#: 10357 Property Name: 8/W West Palm Beach Airport Name of facility: Unknown Assessment Dute: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling PAGE 15/21 DESCRIPTfON Point LtJss T o t > ~ l 0 Point Loss 0 6 03/31/2010 16:21 5515552319 INNKEEPERS North American Hotel Staff Performance QA Assessment Report Best Western North American Quality Assurance System Prop.#: 10357 Property l'lnme: BfW West Palm Beach Airport DESCRIPTION Total Hotel Staff Performance Point Loss Assessment Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling Point L o ~ s 0 PAGE 17/21 Calls 03/31/2010 16:21 5515552319 INNKEEPERS North American Brand Standards QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Nnme: 10357 8/W West Palm Beach Airport Assessment Dutc: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling PAGE 18/21 DESCRIPTION ROOM# I COMMENTS Paim Lass Criticgl Brand Standards High Speed Internet Access Tilfal Critical Bra11J Standards Poilllloss Guest Ronms Bedding is appropriate size for bed Total Guest Rooms P1Jint Loss Total Minimum Standards Point Loss On 6/11/09 Tested High speed @12:56 pm download 1456, upload 1461. On May 3, 2009 changed plan with IBAHN to all free service. Marginal old tents in room advertising 2 options. Remove ASAP .. High speed tech support is listed in the guest directory Bedspread too long touching floor 323 0 0 60 60 60 03/31/2010 15:21 5515552319 INNKEEPERS North American Brand Identity QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property 10357 BM/ West Palm Beach Airport Assessment Date: 611112009 1:01.:09 PM Assessor: Kathi Schilling PAGE 19/21 DESCRIPTION ROOM #/COMMENTS Palm Lei.>.< One Issues Advertising (Print Media), airport duratrans, billboards, brochures, courtesy vehicles, distorted logos, exterior signs, flags, highway logo panels, post cards, rack cards, sales folders, old logo visible Tt!la! Catl/gory 011e /ssltes Poi11t Loss Category Two Issues Murginal. Remol'e non comp/iam logos prior to next assessment. The logo on room map is on yellow paper, Logo 011 papa john advel'/ising is distorted. Points will be deducted on next assessment if not corrected. Logo on Guest Directory is reversed to be corrected upon replacement. All Best Western logos must include the Logo on gur?stroom map does not . have a registered trademark. Total Cftlegory Two Issues Prl/111 Loss Tit is item has been printed since requirement date. Correct prior to next assessment to avoid point loss. 0 0 () 0 03/31/2010 15:21 5515552319 INNKEEPERS North American Locking Device OkAssessment Report Best Western North American Quality Assurance System Prop.#: 10357 Properly Name: BfW West Palm Beach Airport Assessment Date: 6/11/2009 1:01:09 PM Assessor: Kathi Schilling PAGE 20/21 If any entrance door locks are inoperable, the guest room shall be placed "OUT OF SERVICE" and not rented until the lock is repaired. Any locking device or door that is non complying is to be corrected within 30 days from the report (assessment) date. New members and conditional applicants must comply prior to operating as a Best Western. Failure to advise Member Operations Support within this time frame to indicate compliance with Best Western's requirements will result in action which could affect your membership with Best Western. For a complete listing of Best Western's locking device and door requirements, refer to Best Western's Rules and Regulations, Chapter VII, sections 700.25 through 700.32. DESCRIPTION Nmt-G!mpf if11tl This Property Complies With All Locking Device Requirements Compliant 03/31/2010 16:21 5515552319 I NNI<EEPERS PAGE 21/21 IIEAHING I!NCLOSURE IMPORTANT NOTICE If you wish to seck Design assistance prior to the hearing you must choose one or more of the following Design options. I) Complete Design requirements using Best Western's Design Service Department. A contract is created to begin exploration of the scope of work to address Design deficiencies. Upon n:ccipt of a signed contract, a non-refundable processing fcc of US $850.00 will be billed to your account. This fee will be applied to a maximum of the tirst ten hours of services. Upon determination of estimated Design hours needed to accomplish scope of work, and if you choose to proceed with Design Services, you would be required to sign a contract and prepay lil'!y percent (50%) of the estimated Design hours required to complete the project. This fee is refundable less the value of any services rendered if the membership is terminated. 2) Complete Design requirements using an "outside design service". If you choose to usc an outside Design service, all FF&E proposals must be reviewed and approved by Best Western Design. Ikst Western Design will only perform these services (such having the FF&E D<;:signcr and/or Architect review, approve and monitor FF&E submittals) upon receipt of a request to do so. At that time your account will be billed in the amount of US $850.00 which is a processing fee for this review and service. I r you choose to pun:hase a Best Western Design gucstroom and/or public space package .. your account will be billed US $850.00 to compensate Best Western Supply f'(lr l 0 hours of time for processing u collection of nu:asurcmcnts/quantitics or product etc. Additional design hours may be billed if any customization is rcqucstcJ or necessary. Unless noted otherwise in this Pt,licy, th.: fees flu these Dl,sign nrc non-ncgoti<Jblc ond notHd"tmdJblc. Please contnct the lkst Western Department to request 11hich tlption }\lll 11ish to select at this time. L:pon receipt of your request we 11ill autlwrizc tllc !lest \Vcstcm ,.\c- counting Deportment to charge your account fbr these sen ices. l'kasc t1C1lc one or all nptinns will be rcqltircd Jcpcnding on the swp..: of your nccJs if a cont.li- tional cxtcnsiott is approved. lk.st ... !t.t'll lntl.'l'n;nlonullnc 620 I N 21th Park'"'Y i\Z 85016 Best Design S<.:l'viccs l'llunc: Fa.x: (io:l-957S'J7.9
K&E 18102752 Exhibit B
Debtors August 25, 2010 Quality Assurance Assessment Assessment Date: Property Number: Property Name: City, State/Province: Room (Unit) Count: Regional Service Manager: North American Quality Assurance Assessment Summary Report Pt Loss Score Brand Standards Requirements Guest Room - Public Areas Assessment Guest Rooms Guest Bathrooms Public Areas Clean Maint Capital Update Missing Pt Loss Score Totals GRPA Area With Marginal Point Loss Added Supplemental Facilities Restaurant/Breakfast Room Bar/Lounge Swimming Pool/Leisure/Spa Facility Name Clean Maint Capital Update Missing Pt Loss Score Averages Staff Performance Assessment Summary Hotel Supplemental Facilities Attitude Competence Pt Loss Score Brand Identity Assessment Summary Brand Identity Category One Brand Identity Category Two Pt Loss Score Comply Locking Devices Guest Satisfaction Guest Satisfaction Survey Score Customer Care Ratio Value 8/25/2010 12:00:25 PM 10357 B/W West Palm Beach Airport West Palm Beach, FLORIDA 135 Leonard Cardile, CHA 0 1000 Brand Standards Amenities 0 1000 0 18 24 0 0 42 0 6 33 0 0 39 0 10 10 0 0 20 0 34 67 0 0 101 899 899 breakfast area 0 25 0 N/A 0 25 975 Not Applicable 0 0 0 N/A 0 0 0 outdoor 0 0 0 N/A 0 0 1000 None Not Applicable 0 0 0 N/A 0 0 0 None Not Applicable 0 0 0 N/A 0 0 0 None Not Applicable 0 0 0 N/A 0 0 0 0.00 12.50 0.00 0 0.00 0 987.50 0 0 0 1000 N/A N/A N/A N/A 0 1000 0 1000 Yes 8.42 .04444 1 North American Property Update Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA Advance Notice to Property: 24 Hour Notice Person Notified: Dee, FD Time Notified: .9am Name of Sr. Person (and title) on Site Assessment? Jacquie Edman,GM Email Address of Sr. Person from Site Assessment 10357@hotel.bestwestern.com Voting Member Present for Assessment: Yes Name of General Manager: Jacquie Edman Has the GM changed since the last assessment? No - same GM in place. What is the GM's most recent certification date? 3/22/2010 What is the renewal date for the E&T Certification for the current GM? 3/22/2013 Amount of points currently aquired by GM for E&T recertification? 3 Name of I CARE Program Champion: Jacquie Edman,GM Proof of I Care Champion E&T Departmental certification? Yes Name of Front Office Manager. Aleshia Palmer Names of front desk staff. Engrid, Jacquie, Ana Dee, Aleshia, Allan 1 North American Property Update Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA Proof of all Front Desk staff E&T Departmental certification? Yes Names of Participants & Position Titles: . Jacquie Edman- General Manager Management Company RepresentativeJohn Marques- VP Operations Marc Winer- Voting Member Kamal Ahmed- Regional Director Of Operations Recent Improvements at Property: . add and installed new pillows in guest rooms installed new one cup coffee makers in all rooms Planned Improvements at Property: . install new bedding replace bedspreads, replace all TV to flat screen Work in Progress: . The work in progress rules were explained and today there is no work in progress. Guest Satisfaction Score 8.42 Customer Care Ratio .04444 Design Progress Update: . The current design report was updated and photos were submitted. Room Count: . Room count remains unchanged at135 Housekeeping status of all rooms assessed: ., The following rooms were assessed as vacant and clean:124,135,145,203,211,241,248,303, 319,338 2 North American Property Update Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA Rooms that Bedding was Assessed: , Beds were viewed, turned down and assessed in the following guest rooms:241,248,303,319,338 General Comments: Consider correcting all issues identified during the assessment, not just items noted on today's report. Use today's assessment as a training tool and discuss the results at your next departmental meeting. Continue with planned improvements, and follow a appropriate capital budget action plan. The Hotel Staff Performance Report used today will be replaced on December 1, 2010 with the Service Evaluation Report. An unofficial practice Service Evaluation Report was left at the property today on which your property would have lost points if conditions today exist after December 1. 2010. Use the practice report as a guide to train your staff to comply with the requirement.An unofficial practice Service Evaluation Report was left at the property today. This will become effective December 1, 2010. Reassessed Rooms , On today's assessment no rooms were identified for additional reassessment during the next official QA visit. Rapid Response Visit Status Not Required Is this a critical care program visit? No Marginal Point Total - GRPA Area Only 0 GRPA Marginal Calls Overview , Please provide a detailed explanation if today's GRPA score is 100 points higher or lower than the previous assessment. . Major revenue recommendations by Revenue Manager that are being followed by the property: . 33 North American GUEST ROOMS QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Case Goods Repair - Minor burn in night stand laminate top-241 1 X 3 = 3 Repair - Moderate worn area on edge of case goods, 135 1 X 6 = 6 Doors, Frames and Hardware Repair paint peeling on door surface, 203 1 X 9 = 9 Kitchen Area (Equipment) - All Replace dent in microwave , 338 1 X 12 = 12 Lights, Lighting, Lamp Shades Replace holes in lamp shade, 303 1 X 12 = 12 Total Guest Bedroom Point Loss 42 11 North American GUEST BATHROOM QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Accessories, Anchor Bolt Covers, Supplies, Miscellaneous Replace ice tray has knife marks in surface , 303 1 X 6 = 6 Ceilings Repair - Moderate crack in ceiling, 135 1 X 6 = 6 Chrome 2 (Towel bars, tissue covers, escutcheons plates near toilets, shower rods, etc) Replace pitted , rust , drain ring, 211, 248 2 X 6 = 12 Vanity, Counter, Wash Basin Replace discolored damaged vanity surface, 145 1 X 15 = 15 Total Guest Bathroom Point Loss 39 11 North American PUBLIC AREAS QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Lobby (Accessories, Front Desk, Fixtures, Furnishings, Lighting, Ceilings, Doors, Flooring, Walls, Window Coverings, Vents, Odor) Repair spotted tiles in lobby 5 Parking Lot, Trash Areas, Delivery, Other Equip/Service Areas, Parking Lot Lighting Replace damaged car stops 10 Signage (Exterior BW logoed property signs) Repair crack in seam on BW sign at end of road 5 Total Public Areas Point Loss 20 11 N.A. Supplemental Facilities Restaurant/Breakfast Room QA Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA Name of Facility: breakfast area DESCRIPTION Point Loss Seating Repair 25 worn edges on upholstery and wood edge are wearing Total Restaurant/Breakfast Room Point Loss 25 1 North American Supplemental Facilities Pool/Leisure/Spa QA Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA Name of Facility: outdoor DESCRIPTION Point Loss Total Pool/Leisure/Spa Facility Point Loss 0 2 North American Hotel Staff Performance QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION Point Loss Calls Total Hotel Staff Performance Point Loss 0 11 Brand Standards Requirements QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Public Areas High Speed Internet Access HSIA Provider - iBahnHSIA Download Speed - 1077 kbpsHSIA Upload Speed - 763 kbps 0 Total Public Areas Point Loss 0 Total Brand Standards Requirements Point Loss 0 1 North American Brand Identity QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Total Category One Issues Point Loss 0 Total Category Two Issues Point Loss 0 11 North American Locking Device QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA If any entrance door locks are inoperable, the guest room shall be placed "OUT OF SERVICE" and not rented until the lock is repaired. Any locking device or door that is non complying is to be corrected within 30 days from the report (assessment) date. New members and conditional applicants must comply prior to operating as a Best Western. Failure to advise Member Operations Support within this time frame to indicate compliance with Best Western's requirements will result in action which could affect your membership with Best Western. For a complete listing of Best Western's locking device and door requirements, refer to Best Western's Rules and Regulations, Chapter VII, sections 700.25 through 700.32. DESCRIPTION Non-Compliant This Property Complies With All Locking Device Requirements Compliant 1 Green Lodging Profile Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA 1. Has the hotel formed an Environmental Committee that is responsible for developing an Environmental Green Plan for energy, water, and solid waste use? No 2. Hotels environmental performance is monitored for the electric, gas, water, and waste usage information on a monthly and annual basis? No 3. Has property replaced incandescent lamps with compact fluorescent lamps wherever No 4. Property has installed digital thermostats in guestrooms and throughout the hotel? No 5. Property has implement a towel and/or linen reuse program? Yes 6. Property has installed 2.5-gallons per minute showerheads or less in all guestroom baths and any employee shower areas? Yes 7. Property has installed 1.6-gallon toilets in all guestrooms? No 8. Property has implemented a recycling programincluding public spacesto the full extent available in your municipality; document your effort? No 9. Property has implemented a recycling program for hazardous materials found in fluorescent bulbs, batteries, and lighting ballasts through licensed service providers? No 10. Property will purchase Energy Star labeled appliances and equipment? No 11. Property is using office paper products that have 20% or more post consumer recycled content? No 12. Does this property comply with all 11 AH&LA requirements? No 13. Is this property currently utilizing the Energy Star Portfolio Manager? No 1 Green Lodging Profile Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA 14. Property is currently working with an approved State, National or International Eco-Labeling program No 15. List State program 22 Brand Standards Amenities QA Assessment Report Best Western North American Quality Assurance System Prop.#: Property Name: Assessment Date: Assessor: 10357 B/W West Palm Beach Airport 8/25/2010 12:00:25 PM Leonard Cardile, CHA DESCRIPTION ROOM # / COMMENTS Point Loss Total Brand Standards Amenities Point Loss 0