Managing a Major Hotel Lawsuit: How Electronic Discovery Can Make - or Break - Your Case

By William A. Brewer III Managing Partner, Bickel & Brewer | January 06, 2010

Explosive Growth of Electronic Information - The Challenge

Information today is shared at the speed of light - in volumes never before imagined. A recent study from the University of California at Berkely estimates that worldwide e-mail generates about 400,000 terabytes of new information each year (more than 40,000 times the amount of information found in the entire print collection of the U.S. Library of Congress) and that instant messaging generates 5 billion messages per day. This communication explosion requires that hospitality companies, and their lawyers, focus their attention on developing efficient data management policies and procedures.

Although electronic data can be easier to search than paper documents, the sheer volume alone is often overwhelming. Separating business from personal communications can be extremely difficult. Even more daunting is the task of distinguishing relevant communication from non-relevant. In hospitality litigation, those challenges can result in enormous discovery burdens and related costs. Companies must rethink their approach to data storage, retention, classification, and retrieval.

Consequences of Poor Data Management

The recent demise of companies such as Enron, Worldcom and Global Crossing has put the spotlight on electronic communications and related document discovery. In the wake of these corporate scandals, the Sarbanes-Oxley Act of 2002 established new rules for corporate governance. Provisions of these rules apply, to some degree, to all publicly-traded companies, including those that make-up the hospitality industry.

One of the provisions of the Sarbanes-Oxley Act is Title VIII-Corporate and Criminal Fraud Accountability, in which Section 802 adds United States Code SS1519 and SS1520. These codes speak to the destruction, alteration or falsification of records in federal investigations and bankruptcy, and to the destruction of corporate audit records, respectively. The failure to comply with these codes can include fines, imprisonment, or both.

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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.