In with the new owners, out with the old reservations – what are your rights?

Opaque travel sites that let you name your own price can be a great deal for travelers. But if you’re a hotel, you might have some reservations about putting your inventory on Hotwire or Priceline.

Sure, you can sell rooms – lots of rooms — but no one pays the published rate. Kind of hard to make a meaningful profit like that.

So it shouldn’t come as a surprise when a hotel changes owners, that contracts with opaque sites are renegotiated. It is surprising when I hear from readers like Nancy Evans, who says her Priceline reservation at a New Orleans hotel was being canceled after a reported change in ownership.

What are your rights when a hotel cancels your reservation, leaving you room-less? And to what extent is your travel agent (that would be Priceline, in this case) responsible for finding you alternate accommodations?

Back in July, Evans used Priceline’s “Name Your On Price” option to book a hotel in the Big Easy for Jazz Fest 2011. She got a confirmed reservation at the St. Ann Marie Antionette from April 30 to May 3 2011 for $50 a night — a great rate.

Friends of mine that will be attending Jazz Fest in 2011 also received confirmed reservations to the same hotel for those dates — give or take a day — via Priceline and Hotwire.

Last week, individuals that booked via Hotwire were contacted and informed that their reservation had been canceled. The reason provided was that the new owner of the hotel does not want to accept the reservations.

Priceline hasn’t contacted Evans yet, but she made a few inquiries and discovered that the hotel didn’t have any reservations under her name, either.

Evans did a little sleuthing and found what she believes to be the real reason for the dropped reservations. The hotel was actually acquired back in the fall of 2009, and had undergone a renovation and a name change. The owners wanted to turn a new leaf in 2011, and Priceline rooms weren’t part of their plan, she speculates.

I asked Priceline to look into Evans’ reservation. Yesterday, I got some good news from the company:

We’ve been in contact with the hotel and made sure that all Priceline guests with future arrivals at the hotel have valid confirmed reservations. We are also sending confirmation numbers to all of our guests for their records.

Problem solved? Sorta. Evans gets to go to Jazz Fest, but what happens if your hotel decides to not honor your reservation?

If Evans had showed up at the hotel in April, and it had showed her the door, then the property would have had to “walk” her to a comparable property. In other words, the hotel would have had to find her another room at a similar hotel. Evans could have also called Priceline if the hotel refused to help.

I feel bad for the Hotwire customers who were reportedly turned away. Once you have a confirmed reservation that you’ve paid for, a hotel has no business canceling, simply because it doesn’t want any more customers from an opaque travel site. The property can always say “no” to future reservations.

(Photo: Scott/Flickr Creative Commons)

  • Monica

    My company recently changed owners, but part of the deal was that the “new” company still had to honor the pre-existing transactions. In my experience, that is SOP for most businesses. The only thing the new owners should do is change how new reservations under the new name are handled.

    It’s bad business to kick out existing customers. If the customers have a good experience, they could return and purchase rooms at the regular rate in the future.

  • Brooklyn

    And what if there are no comparable rooms to be had, as could easily happen during a big music festival or sports event, like the Olympics? Aren’t hotels required to honor reservations made before the transfer of ownership? I don’t know which government body regulates the industry, but there must be one and it would be useful to find out. I’ve shown up with a printout of an Expedia reservation and found no trace of it in the hotel’s computer, but the hotel has always honored it (even though the desk clerk was amazed at the low rate). If the hotel had been full or if I’d arrived late at night, it would have been a pain, but if I’d called ahead and the hotel had said that it wouldn’t honor the price, I might have had to pay more for the room. We really do need clarity on this issue!

  • Rick

    Contract law provides clarity on this issue. The new owners, in assuming the title of the building, assume all legal obligations of the building. If those obligations are intentionally not transferred, then the former owners are still liable. Ask anyone buying a SuperFund site if they can ignore the ecological regulations that transfer with their purchase.

    Do we need to travel with an attorney? Hard to say-try asking anyone held captive on a tarmac’d plane for 10 hours.

    Carry a copy of your reservation, information to reach your travel agent, and don’t be afraid to call the police, if you suspect a fraud or robbery is taking place.

  • BucksterSF

    @Rick “and don’t be afraid to call the police, if you
    suspect a fraud or robbery is taking place.” I can see the cops
    hanging up on that call. Especially during a festival. It’s a
    contract breach to not honor a reservation, yes. But police do not
    get involved in civil matters. Call and ask them. They will tell
    you as much. So you have to file an action. And the hotel knows
    that no one will do that. Bravo for Priceline for stepping up and
    securing the reservation.

  • BucksterSF

    And I’ve stayed at the St. Ann Marie Antionette in New
    Orleans. They were long in need of a renovation.

  • Carver

    @Rick I am one of the attorneys who frequent this blog.
    BucksterSF is absolutely correct. The cops will be ROTFLMAO at such
    a call. “Contract law provides clarity” Not really, you have to
    know the specifics of the contract. When you book with a hotel,
    there are terms and conditions which may include, under what
    circumstances the hotel may cancel your reservation. It’s made
    further more complex when you book through the loyalty program
    website, i.e. SPG.com, HHONORS.com, etc. and the hotel withdraws
    from the program. The hotel will claim that since they aren’t part
    of the chain, those resevations are void.

  • Karen P

    I’m wondering what would have happened had Nancy gone to
    the hotel during Jazz Fest without doing all this legwork. My guess
    is they would have refused her AND refused to walk her to another
    hotel (why would they walk her, she doesn’t have a reservation with
    them far as they are concerned). She would have been stuck, during
    a very popular festival without a place to stay unless she was
    willing to fork out a lot more cash for another hotel.

  • Carver

    @Chris “if you’re a hotel, you might have some reservations
    about putting your inventory on Hotwire or Priceline. Sure, you can
    sell rooms – lots of rooms — but no one pays the published rate.
    Kind of hard to make a meaningful profit like that”
    =========================== That’s not the business model of either
    Priceline or Hotwire. Hotel owner don’t mind putting inventory on
    hotwire and priceline, as long as that inventory doesn’t 1)cheapen
    the brand strength or 2)cut into inventory that is likely to be
    sold at a higher price. In this case, the owners commissioned a
    renovation and probably believe that the priceline inventory can
    probably be sold at a higher price

  • noah

    “Contract law provides clarity on this issue. The new
    owners, in assuming the title of the building, assume all legal
    obligations of the building.” –Maybe, but certainly not exactly.
    You don’t have a contract with a “buliding” — you have a contract
    with a company that runs a hotel. Was the company sold, or was the
    hotel property sold? If the company was sold, I agree that the new
    owners of the company probably have a contractual obligation to
    honor your reservation. If the hotel property was sold, the
    contract likely does not go with the property to the new owners
    (unless that was part of the deal). In that case, the old owners of
    the hotel are responsible for your reservation. But since they
    don’t own the hotel anymore, you might have to sue them for breach
    of contract.

  • Carver

    @Noah

    This type of arrangement cannot be meaningfully discussed without knowing the specifics. For example, did the new owners do a simple asset purchase of the hotel building, or did they purchase the business.

    If they purchased just the asset, then the liabilities, e.g. reservations, salaries, etc. remain with the former owners. If the new owners purchased the business, which I assume is incorporated, then the new owners inhereit the liabilities.

    Then again, we’d have to see what the contract calls for regarding the hotels ability to cancel reservations.

  • Arizona Road Warrior

    @ Monica – “If the customers have a good experience, they could return and purchase rooms at the regular rate in the future.”
    - – - – - – - -
    It is very unlikely. Most of the customers of Priceline, Hotwire, etc. make their decision on price not brand or loyalty.

    @ Rick – “Contract law provides clarity on this issue. The new owners, in assuming the title of the building, assume all legal obligations of the building.”
    - – - – - – - – -
    We know that the new owner purchased the business but we don’t know if the new owner purchased the building or not. There could be two new owners…one of the business and one of the building. For example, I have stayed at hotels where the building is owned by a real estate trust; the licensee or owner of the hotel brand is one company and the operator of the hotel is another company. My brother purchased a business a few years ago that was located on a site of a former gasoline station (station was torn down in the 70s but the gas tanks are still in the ground) but he didn’t purchased the building and land due to the liabilities of these tanks.

    @ Noah: You are correct.

    @ Carver – “2)cut into inventory that is likely to be sold at a higher price. In this case, the owners commissioned a
    renovation and probably believe that the priceline inventory can probably be sold at a higher price”
    - – - – - – - – - -
    My guesses are 1) the new owner couldn’t believe that the old owner would put rooms on Priceline, Hotwire, etc. during the Jazz Festival and 2) due to the new name, the renovations, etc., believe that the rooms should have been sold at a higher price.

    Several years ago, I was in New Orleans for a business meeting during the Jazz Festival and all of the hotels rooms in the downtown area were sold out and rental cars were fully booked.

  • Steve

    I had a similar experience with a Hampton Inn that built a new building and canceled my existing reservation that had been made at the old facility (re branded with another chain) by sending me a letter that I could rebook. As a gold VIP member with Hilton I was not a happy camper since they wanted to double the cost of my booking. I called HHonors and was told that a franchise cold do what ever they wanted but I received a free night certificate as a result.

    I now stay at Starwood hotels since Hilton can’t be trusted to honor reservations and a hotel that I used 6 to 8 times a year lost a customer.

  • Steve

    I nearly got burned by a similar situation a couple years ago that didn’t even involve a third-party booking site. My wife and I were planning a road trip across the northeast and booked one night at a Super 8 along our route about six months beforehand. A month or so before the trip, I was looking for the motel on Super 8′s website to get directions and couldn’t find it. I called the phone number on my confirmation email and found out that the hotel had been sold, it was now a Comfort Inn, and – here’s the kicker – I didn’t have a reservation there. I called Super 8′s customer service line to complain and was told basically that they didn’t care. At the very least, I felt should have been notified that the hotel was changing ownership and my reservation didn’t exist anymore.

    The situation ended up working out great – I called the Comfort Inn back and they not only had a room, but were willing to honor the price I had been quoted for the Super 8 on my word alone (the difference was substantial – $75 vs. $120). We had a great stay there – comfortable room, friendly staff, everything was good. But the experience did leave me upset with Super 8 and less likely to stay with their chain again (though I realize they’re probably not the only brand that would do the same thing).