Recognizing a Case For Lawsuits Over Bad Hotel Publicity

By Steven D. Weber Managing Partner, Stark Weber PLLC | 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 February 2019...

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.