Hospitality Law

By Jeffrey Miller

Hospitality law has evolved as a specialty within the legal profession in the last several decades. It is also offered as a course on the undergraduate and graduate levels as well as in some law schools. A typical hospitality law course covers the history of hospitality law, the impact of federal and state civil rights laws on the hospitality industry, and an extensive discussion of contract law, including discussions of remedies for overbooking and a guest’s breach of the contract regarding a reservation. Courses today also include discussions of contracts that are entered into on the Internet, which is very common in hotel bookings, as well as negligence, innkeeper rights, guest rights, and employment practices.

Every state and the District of Columbia have enacted statutes to limit innkeepers’ liability. These statutes require that notice be posted for room occupants. Universally, these notices are posted on the backs of hotel room doors so there can be no question that the hotel guest can see and read the statute and liability provisions, if they wish to do so. Nevada has the most pro-innkeeper statutes of any state. The changing nature of the travel industry, including an increase in bookings through the Internet, has caused hospitality law to continue to evolve and include issues such as rented time-shares and hotels that include condominium-like rooms.

Contracts and Reservations
Historically, most hotel arrangements were booked through travel agents. Although Internet bookings today are still primarily through travel agents, many are made directly with the hotel properties through websites that offer general travel arrangements or, in some instances, specifically hotel arrangements. Most consumers merely acknowledge acceptance of the extensive exculpatory language present in website booking programs without giving any thought to what would occur should problems arise. Many lawyers have had clients come to them with Internet hotel booking issues; generally, these consumers have already waived their rights through exculpatory language called “consumer disclosure notices” in the industry.

However, most state consumer protection statutes require full disclosure of taxes and fees when booking through any channel of distribution. Several years ago in Florida, hotels were imposing an energy tax, which was only disclosed by a small sign in the hotel room, adding in some instances $15 per day to the room charge. This was not disclosed on any website or other advertisements. In addition to the lawsuits that were filed, the Florida Attorney General alleged consumer protection violations and ultimately forced the offending hotels to return the illegally collected funds. Had these hotels contacted their in-house or outside counsel prior to implementing the surcharge, they would have been able to avoid any issues by properly implementing and disclosing the surcharge.

The written confirmation of a guest’s reservation, received either by e-mail or snail mail, generally will include the dates of the stay, the rates, and perhaps a category for the accommodations, such as “garden view,” “ocean view,” or “junior suite.” If the guest arrives at the appointed time and there is no room available, industry practice is to “walk” the guest to a similar property; the original hotel picks up any additional expense incurred by the guest as a result of the failure to honor the reservation contract. Issues that arise in such circumstances may include a guest being moved from the four-star hotel in which the reservation was made and a deposit paid to a one-star or two-star hotel because that is the only property with rooms available. If the areas in which the properties are located are significantly different, security issues also arise, particularly if there is less security at the lower-rated property or if the area is not deemed as safe.

Because of the economic climate, many properties have altered their meeting contracts to require non-refundable deposits after a certain date, with or without attrition clauses. Although a hotel generally will take a deposit at the time the contract is signed, the standard agreement will have payments made at certain times leading up to the meeting date. Generally, there will be a master billing for group activities, and each individual will be responsible for his or her own hotel room and miscellaneous charges.

An attrition clause in a hospitality contract allows some “shrinkage” in group size without penalty within a certain time frame, but if totally unchecked, cancellations can be disastrous for a property. I know of an instance where a group canceled its contract for 1,500 “room nights” (i.e., one room for one night). The group also contracted for audio-visual services, golf and tennis tournaments, sightseeing, and several meals, all of which were canceled when the group could not attract enough of its members to attend the meeting owing to the soft economy. In circumstances like this, there are no winners. The hotel’s lawyers will file suit against a group,  but unless the group had travel insurance (they usually do not), there will be little or no funds to pay for the damages incurred by the hotel.

The larger and more established the group, the more negotiating power it will have with the property regarding liability and attrition provisions. However, major groups book four, five, or even ten years into the future, and no one can predict the future economy. Further, there is generally no mention in the hotel contract regarding the ability of the group to get to a certain geographic region. If the airlines reduce or eliminate service to that region, it may be impossible for the group to get its members there—but that would not be the responsibility of the hotel unless there is language in the agreement setting forth some minimum standards with regard to air service to that location. In my experience, it is extremely rare to find that type of language, but it is not uncommon to find anticipated attendance diminished because nonstop air service has been reduced or eliminated to certain locations.

Risk Management
Risk management has become a preeminent concern for any hotel, large or small, because of the unique issues that arise in the field of hospitality law. Typical problems involving risk management are slip-and-fall cases or crimes against guests, including assault and rape, break-ins and theft from the rooms, discriminatory issues involving both employees and guests, and issues of payment and bailments (a transfer of possession of goods or personal property from a person in possession of the property to another with the understanding that the property will be returned).

Hotels and management companies of all sizes have ongoing and continuous training for their employees with regard to risk-management issues and have established written guidelines and procedures addressing almost any circumstance involving risk management. The major hotel chains and management companies have law firms, generally multi-state or international firms, on retainer to provide risk-management assistance and guidance, as needed, on an ongoing and case-by-case basis.

In warm-weather destinations, particularly beach properties, numerous risk-management issues arise with regard to the use of the beach by guests, including whether lifeguards will be on duty, whether they are employees of the hotel, a private service, or the city or county. The issue of water sports, such as parasailing, jet skiing, and related activities, also raises liability issues. Many hotels allow a third-party vendor to offer these services in an independent contractor relationship, but they are not offered directly by the hotel in order to minimize liability issues. In almost every instance, there will be signs indicating that the hotel itself is not offering these types of water sports, but that they are being offered by an independent contractor, and guests engage in these activities at their own risk.

Despite such disclaimers, it is not uncommon to have a hotel or management company involved in litigation regarding injuries or deaths suffered while the guest was involved in those activities.

Some hotels offer lifeguards at their swimming pools. Others use private lifeguard services, and many hotels advise guests to swim at their own risk because there is no lifeguard on duty. Cases of this nature involving injury or death are addressed on an individual basis, including an assessment of what steps, if any, the hotel has taken with regard to risk management, which is normally determined during the discovery phase of the lawsuit.

The issue of liability caused by fire has also led to advancements in risk management. Perhaps one of the worst fires at a resort destination occurred in 1980 at the MGM Grand Hotel in Las Vegas. Dozens of people died, and hundreds were injured. As part of a risk-management program, hotels ensure they have complied with all state and local statutes and building codes with regard to fire protection; often they exceed those standards. Every state requires an emergency evacuation route outlined to the hotel guests. This normally is provided on the back of each hotel room door. Many companies nationwide provide the hotel industry with risk-management services such as on-going inspections to make sure a hotel is state-of-the-art in its fire protection.

Tragically, there have been several recent deaths caused by carbon monoxide poisoning in hotels where the boilers were not properly maintained or serviced. For the hotel owner, there is virtually no defense when a death arises from these circumstances. The key issue will be the amount of damages the jury will award to the survivors and/or heirs. There has been a concerted effort in recent years to make sure that facilities are maintained and carbon monoxide detectors available to prevent tragedies such as the one at a Maryland beach resort in 2006, which resulted in the death of a ten-year-old girl and her father.

In the Internet era, the press rapidly becomes involved in these circumstances. It is essential that the hotel manager gather the senior staff along with legal counsel to determine what occurred, how to address the issues, and how to care for the guests who might have been displaced (or, in less extreme circumstances, inconvenienced). I am familiar with one example in Florida where the senior staff consisted of the director of operations, the public relations advisor, the customer relations supervisor, the general manager, the director of maintenance, and a director of housekeeping, as well as outside counsel, which formed a team to address a carbon monoxide issue. In these circumstances, it is also essential that only one person, preferably the public relations expert, is designated the spokesperson for the hotel to communicate with the press.

Other hotel-related liability issues involve unlit or inadequate lighting in emergency stairways, elevators that are unsafe or not maintained, both indoor and outdoor lights that are out, and rodent problems. Again, the hotel must take security measures to address these types of risks, which clearly are foreseeable in most circumstances. There are also numerous companies that specialize in security for hotel and related properties, with services ranging from a part-time private security guard to a full-time staff of security employees; the latter is more common than the former, but the level of service depends on the size of the property.

Conclusion
Hospitality law will continue to grow as a niche specialty in the future. Law firms need to be able to advise their clients on these types of matters.

 

  • Jeffrey Miller is a partner in the law firm of Lipshultz and Miller, PA located in Columbia, Maryland. He is the principal of the Miller Travel Group, a travel industry consulting firm. He also  teaches a hospitality law course at Florida Atlantic University in  Boca Raton, Florida. His website  is jmillerlaw.com, and he may be reached at jeff@jmillerlaw.com.

    Copyright 2010

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