City regulations governing business signage have a big impact on hotel construction, remodeling, and general operations. 

A case recently came before the United States Supreme Court which had the potential to affect a city’s ability to regulate commercial signage such as billboards. Many hotel operators advertise their property to the public through signage located on their property or through signage located off-site along bustling highways and roads. Last week, the U.S. Supreme Court issued its ruling on the case entitled City of Austin, Texas v. Reagan National Advertising of Texas, LLC. The Court in its ruling addressed a challenge to a City of Austin ordinance which regulated certain aspects of commercial signage such as billboards.

THLA tracks changes in the law that could affect hotel operations. Advertising signage, whether on-premises or off-premises, can be especially beneficial to operators when it is competitively priced and convenient. However, when cities issue burdensome regulations on the construction and use of billboards, operators may lose out on the benefits associated with that type of advertising.

The challenged City of Austin ordinance in Reagan threatened to do just that.

Reagan National Advertising and Lamar Advertising own billboards in Austin and throughout Texas. In 2017, Reagan and Lamar applied for permits to convert some of their existing billboards to digital billboards.

The City of Austin denied these applications, citing a local ordinance that prohibited existing off-premises billboards from being converted to digital billboards. The ordinance only allowed for the digitization of billboards located on the premises of a business being advertised, known as “on-premises signage.” Reagan and Lamar sued the City of Austin, arguing that the ordinance violated the First Amendment.

Under the First Amendment, federal, state, and local governments may not regulate the speech of private citizens or businesses if the regulation discriminates based on subject matter or viewpoints (e.g., a city ordinance prohibiting advertisements of cigarettes or alcoholic beverages). In other words, if regulation of speech is “content-based” then it is likely unlawful under the First Amendment. However, a city may regulate the time, place, and manner of speech under the First Amendment. For instance, a local government may regulate the size, placement, and quantity of billboards in its city.

In Reagan, Reagan and Lamar argued that the ordinance’s differing treatment of on-premises signs and off-premises signs constituted an unlawful content-based regulation. Specifically, Reagan and Lamar argued that the distinction in the Austin ordinance prohibiting the digitalization of off-premises signs, and allowing the digitalization of on-premises signs, was content-based because a city official would have to “read the sign” to determine if the ordinance applied.

The Supreme Court rejected this argument and ruled that the Austin ordinance was content-neutral, concluding that the ordinance was a reasonable regulation of the time, place, and manner in which billboards may be utilized.

Cities in Texas continue to have the power to regulate how a hotel operator advertises its property. If you have any issues or questions about signage regulations in your city, don’t hesitate to reach out to our legal team at THLA.