JurisdictionUnited States
Publication year2021

§ 4.02 Marketing of Hotel and Resort Services

Successful travel litigation against a hotel or resort outside the forum state may depend upon the manner in which the hotel or resort marketed its services to the general public.91 The concept of marketing is important for at least two reasons. First, in order for the court to have jurisdiction, the foreign hotel or resort must be transacting some business within the forum. The level of activity necessary to support in personam jurisdiction will depend on the local forum's long arm statute.92 Second, if the hotel or resort is not subject to local jurisdiction, then domestic entities such as airlines,93 cruise lines,94 tour operators,95 travel agents,96 Internet travel sellers97 and sponsoring organizations98 must be found which are liable for the traveler's injuries. The way in which hotel or resort services are marketed and sold to the traveler may mean the difference between no recovery and an appropriate recover for injuries sustained.

[1] Direct Sale

Hotels, resorts, casinos and theme parks deal directly with the traveling public in marketing and selling travel services through 80099 reservation phone numbers and the Internet.100 Because most courts will not recognize toll free arrangements made by telephone or on the Internet as sufficient grounds for the assertion of local long arm statutes,101 it is important for the traveler to obtain hotel or resort services through tour operators, travel agents, Internet travel sellers or local agents, and hotel representatives within a state that will provide an acceptable forum should subsequent litigation become necessary. The activities of these entities may help in establishing jurisdiction over the out-of-state hotel. The Web has given guests a platform from which to air complaints regarding all aspects of hotel facilities and services.102

[2] Franchises

Instead of direct ownership of out-of-state-hotels, well-known hotel and resort chains may operate through a franchise system.103 The franchise agreement will provide for the franchisee to use the hotel trademark, and have use of a world-wide reservations system. Such agreements generally require the franchisee to use standardized building designs, food preparation, and security systems. The nature of the franchise agreement and the manner in which the franchisor supervises and monitors the actions of the franchisee will have a direct bearing on whether the franchisor may be held liable for the torts of the franchise.104 In addition, the activities of the franchisor may provide a sufficient basis for asserting jurisdiction over the foreign franchisee hotel.105

[3] Associations, Independent Contractors and Representatives

Smaller foreign hotels may band together and form non-profit, incorporated associations. These associations may conduct national advertising and solicit business from local travel agents. Such an association may contract with a local independent contractor for the promotion of the association's services. In addition, the independent contractor may accept and confirm reservations on behalf of the association's members.106

Alternatively, a local independent contractor or exclusive sales representative may represent a number of foreign hotels. Typically, the name of the hotel will appear in the local telephone directory. At the receiving end of the line will be the independent contractor.107

Very large hotel/resort systems such as Club Med may create a variety of buffer organizations. For example, in Sankaran v. Club Mediterranée, S.A.,108 a guest claimed she was abandoned during reef snorkeling and suffered injuries when she and others were "forced to swim and walk over the reef because a Club Med employee had left them) on the reef." The Club Med defendants were described as follows. "Club Mediterranée, S.A. ('CMSA'), a publicly held French corporation, owns Club Med, Inc. ('Inc.'). Inc., a Cayman Islands corporation, wholly owns Club Med Holding, N.V. ('Holding'). Holding, a Netherlands Antilles corporation, wholly owns Club Med Finance, B.V. ('Finance'). Finance, a Netherlands corporation, wholly owns Club Med Sales, Inc. ('CMS'), a Delaware corporation with its principal place of business in New York, which in turn wholly owns Club Med Management Services, Inc. ('CMMS'), a New York corporation. Finance also owns Société d'Investissements Touristiques des Iles ('SITI'), which is the majority owner of Société Hoteliere de Chablais ('SHC'), owner of the Guadeloupe facility where plaintiff's injuries allegedly occurred." Such a complex structure may make it difficult for injured guests to obtain jurisdiction and otherwise litigate their claims against liable and viable defendants.109

Although associations and independent contractors may distribute the brochures of individual hotels to the general public, it is not uncommon for these entities to create and distribute their own brochures which duplicate or add to the promises in the hotel's brochures. Under these circumstances, if jurisdiction cannot be obtained over the foreign hotel, the association or independent contractor may be liable for the defaults of the hotel or resort either as sponsor or on the theory of negligent misrepresentation or special warranty theory.

[4] Tour Operators

Tour operators110 buy large blocks of hotel accommodations and package these services with round trip air transportation and ground transportation to create package or charter tours. The tour operator will then create and distribute a brochure describing a tour featuring air transportation, hotel accommodations and so forth. The involvement of a local tour operator may provide an additional basis for asserting jurisdiction over the foreign hotel. In addition, depending on the promises made in the tour operator's brochure, the tour operator may be liable for the defaults of the hotel as well as its own defaults.

Reported decisions arising from contractual disputes between tour operators, hotels, resorts and other suppliers provide insight into the multifaceted business relationships between these entities.111

[5] Sponsoring Organizations

Alumni, professional and veteran organizations, as well as book clubs promote and sponsor member travel.112 The actual travel arrangements, however, are made by a tour operator or travel agent.113 The sponsoring organization lends its name or trademark to the package tour and provides its membership list to the travel agent. The involvement of sponsors may provide an additional basis for jurisdiction over a foreign hotel. One court has held such sponsors liable for supplier defaults on a breach of surety theory.114

[6] Resort Time Shares and Hotel Condominiums

A volatile combination of the hotel and resort business with the business of hustling real estate has evolved over recent years. Instead of just selling use of a room on a daily basis, more modern marketing techniques encourage consumers to buy a week or two of perpetual use of a hotel room. This concept known as resort time sharing115 has mushroomed into a billion dollar business which satisfies a desire to own real estate and a desire to travel. In addition, hotels have turned themselves into condominiums.116

[7] Travel Agents

There are some tens of thousands of travel agents117 and pseudo travel agents118 in the United States. Unlike tour operators or independent representatives or franchisers, there is typically no contractual agreement between retail travel agents and hotels. Travel agents represent travelers and in some states are considered fiduciaries.119 The travel agent may distribute brochures describing the hotel or a package tour in which the hotel is featured, may also refer to Computer Reservations Systems (CRS) for hotel information or to make reservations and may have its own Internet website such as Cheap Tickets, Expedia, One Travel, Travelocity, TravelNow and Orbitz.120 The power to accept and confirm hotel reservations, however, is rarely within the power of the travel agent. In essence, travel agents will solicit business for a hotel but will not have the power to enter into "contract formation." The states differ on whether solicitation of business through retail travel agents without more is sufficient to support in personam jurisdiction over a foreign hotel.121 If jurisdiction cannot be obtained over a foreign hotel, then under appropriate circumstances, the travel agent may be held responsible for some dereliction of duty.122

[8] Computer Reservations Systems

For many years airlines have relied on computer reservations systems (CRS) located in travel agencies as a means of marketing air transportation services to the general public. Notwithstanding the advantages of this type of marketing it was not until 1991 that a system was developed to market hotel rooms and rental car services through computer terminals in travel agencies. Misinformation generated by a hotel computer reservations system may be actionable as against the CRS vendor as well as the hotel.

[9] Internet Websites

Consumer use of the Internet to make travel arrangements has risen dramatically,123 and has generated new consumer concerns.124 While consumers remain cautious about the reliability of information, the prospect of hidden fees and insecure credit card transactions, travel shopping on the Web is increasing,125 particularly as travel suppliers, e.g., hotels and air carriers, online travel companies (OTCs), like Cheap Tickets, Expedia, One Travel, Travelocity, TravelNow and Orbitz, and others126 offer exclusive fares on their own websites with 24 hour accessibility and retailers continue to develop creative ways to sell travel services, e.g., Priceline,127 Travelzoo,128 Travelot129 and Site59's "last-minute-air-plus-land-packages."130 Booking engines pro- liferate131 and travel auctions are gaining in popularity.132 iPads and apps are increasingly more important in the marketing of travel services.133 Hotels have...

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