IRS and Two U.S. Senators Question Involvement of Hotel REITs in Negotiating Collective Bargaining Agreements

Real Estate Investment Trusts (REITs) that invest in hotels frequently require, in any management agreement with a hotel management company that operates a hotel, some opportunity to participate in negotiations with any union that represents the management company’s employees at the hotel.  This year, two U.S. Senators and the U.S. Internal Revenue Service made a coordinated effort to challenge this practice.   In this article, I discuss this challenge and the underlying sections of the Internal Revenue Code governing REITs that hold “qualifying lodging facilities.”

–Bob Lannan