Hotel & Motel Management - May 5, 2008 - (Page 8)

8 Legally Speaking IN THE details Know overbooking rules Deﬁnition of “guaranteed” Damages can be costly Don’t break promises By Karen Morris H&MM Columnist H&MM May 5, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Overbook? Don’t overlook a donnybrook A lthough he is famous for his trademark bellow, “You’re ﬁred!,” Donald Trump’s corporation failed to terminate several underperforming employees at the Taj Mahal in Atlantic City. The result was a legal brawl that began with overbooking. The plaintiff, Onyx Acceptance Corp., planned to reward several com- panies that referred a lot of business. To that end, Onyx hosted a banquet and overnight stay at Trump’s Taj. Onyx’s party planner sought and received guaranteed rooms for the event. Onyx prepaid the full cost of the party and rooms, which was just shy of $30,000. It turns out Trump employees regularly overbook the ho- tel by 10 percent to compensate for a historical no-show rate of about 20 to 25 percent. On the day of the party, some execs arrived in the late afternoon, were assigned rooms and were not advised of any problems with their reserved block. Onyx guests who arrived later were told the hotel was full. No alternatives or solutions were offered, and some angry guests went home. Meanwhile, some guests quadrupled up in rooms and arrived at the party quite late, and no doubt crabby. Conversation at the tables focused on what had gone wrong—not what Onyx had envisioned. Finally, the g.m. offered to arrange accommodations at other hotels, including a Days Inn. The hotel proposed that guests pay for their own taxis to and from the reassigned hotels and submit receipts for reimbursement. After further unpleasantries, the guests eventually were offered free transportation. The next day, the Taj Mahal presented Onyx with an additional bill of $11,822 for food and drinks. This was never paid. In the resulting lawsuit, Onyx claimed the Taj Mahal violated a New Jersey consumer fraud statute. It outlaws false promises and misrepresentations in connection with business transactions including the rental of hotel rooms. The Trump corporation denied liability based on its interpretation of the term “guaranteed.” It claimed it meant that the hotel promised to hold only “the reservation, not the room.” The company denied any duty to assign rooms prior to arrival. At the trial, Onyx called a hospitality expert who testiﬁed that “guaranteed,” as used when a guest prepays for a hotel room, means the hotel takes the room out of inventory. Not surprisingly, the court determined the hotel violated the statute. The judge determined Onyx’s damages to be the $30,000 it prepaid. The hotel argued that the loss was signiﬁcantly less, noting that the banquet was held and some of the reserved rooms were provided. The court rejected this defense, enabling Onyx to collect treble damages of about $90,000. hmm@questex.com Karen Morris is a lawyer, municipal judge and Distinguished Professor at Monroe Community College in Rochester, N.Y., where she teaches hospitality law. Contact her at kmorris222@yahoo.com. CIRCLE NO. 120 http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.hunterhotels.net http://www.hunterhotels.net http://www.hunterhotels.net http://www.hunterhotels.net

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Hotel & Motel Management - May 5, 2008 Contents Pipeline Favors Established Companies 3 Palms Debuts in Upscale Tier Guests Want Reward Options Perspective Legally Speaking Marketing Matters Consultant’s Corner On Finance What Women Want Maintenance Doctor Trends & Stats Special Report: Top Hotel Brokers Design: Tune Into Music Programs Hot Products: PTACs On the Block: Silver Lining in Bleak Hotel Sales Market Events Transactions Supplier News Consumer Insight: The Importance of Creature Comforts When Traveling Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - May 5, 2008

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