Recognizing a Case For Lawsuits Over Bad Hotel Publicity

By Steven D. Weber Founder, Weber Law, P.A. | June 10, 2018

Eventually every hospitality player is the subject of a negative news story, webpage, or some other source.  Such negative publicity may be the result of a disaster, an unfortunate occurrence, and possibly entirely of no fault of the hospitality industry player.  Evaluating how to respond to such events and circumstances is critical.  Maybe negative publicity cannot be entirely avoided, but are there circumstances when negative publicity is actionable such that any damage can be compensated for? 

Due to the internet, negative publicity may never be erased and may continue harming a hospitality brand for years to come.  Hospitality players - and all other business entities - need to understand their options when confronted with such circumstances. 

There are millions of stories in the news and on review sites about hospitality industry players.  Some of these stories or reviews take on a life of their own and can hurt a brand.  Claims may exist, like business defamation, disparagement, or tortious interference that may allow a hospitality brand to hold the maker of certain statements accountable for them.  Such claims may exist in the hospitality industry context.

In a federal case from California, Monterey Plaza Hotel v. Hotel Employees Local 483, the court recited allegations that one of the defendants filed unfair labor practice charges against the plaintiff.  In a newscast about the labor dispute, another of the defendants allegedly said that certain firings were illegal.  The plaintiff filed a complaint alleging a single cause of action for defamation against certain defendants alleging that the statement on the newcast "that the federal government had found that the firings were illegal was false and exposed plaintiff to 'hatred, contempt, and ridicule.'"  The plaintiff appealed from a lower court decision granting the defendants' motion to strike plaintiff's defamation complaint. 

On appeal, the appellate court sustained the striking of the defamation complaint.  The court reasoned that while the statement at issue could have been construed as false, the plaintiff had not met its burden of pleading a claim because the "plaintiff has failed to establish a prima facie case of slander in its pleadings and supporting declarations that defendants made a false statement with malice."  The court stated that "considering the broadcast as a whole, a viewer could not have reasonably understood [the defendant's] statement to mean that there had been a final determination that plaintiff had illegally fired the two employees."

In another case,  Hotel Saint George Assocs. v. Morgenstern, which was considered by a New York federal court, the plaintiff "alleged in its complaint that defendants have publicly and falsely accused plaintiff of failing to maintain adequate security at the Hotel and that defendants had worked to create a perception that there has been an increase in crime in and around the Hotel."  The plaintiff "alleged that these false accusations have resulted in damages reasonably believed to be in excess of seven million dollars."  Among other claims, the plaintiff asserted a defamation claim. 

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Coming up in October 2018...

Revenue Management: Getting it Right

Revenue Management has evolved into an indispensable area of hotel operations, chiefly responsible for setting forecasting and pricing strategies. Because the profession is relatively new to the hotel and hospitality industries, a clear-cut definition of what exactly Hotel Revenue Management is has only recently emerged - Selling the Right Room to the Right Client at the Right Moment at the Right Price on the Right Distribution Channel with the best commission efficiency. Though the profession can be summed up in a single sentence, that doesn't mean it's easy. In fact, it's an incredibly complicated and complex endeavor, relying on mountains of data from a wide range of sources that must be analyzed and interpreted in order to formulate concrete pricing strategies. To accomplish this, Revenue Managers rely on an array of sophisticated technology systems and software tools that generate a multitude of reports that are central to effective decision-making. As valuable as these current technology systems are, much of the information that's collected is based on past historical trends and performance. What's new is the coming of big, data-driven, predictive software and analytics, which is likely to be a game-changer for Revenue Managers. The software has the capacity to analyze all the relevant data and predict occupancy levels and room rates, maximizing hotel profitability in the process. Another new trend that some larger hotel chains are embracing is an emphasis on Booking Direct. For Revenue Managers, this is another new channel with its own sales and costs that have to be figured into the mix. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.