Hotel chains have afforded flexibility in cancelling even prepaid bookings for individual guests. However they’re generally excluding group bookings. Individuals and companies with events are usually being told they’re still on the hook – and at best can reschedule their event.
This is true even when the hotel is closed over the dates of the event, even where they aren’t providing service like meals that are contracted for if they’re open, and even where it is against government orders in the local jurisdiction (such as where a hotel is located in a city with a ‘shelter in place’ order).
I’ve dealt with several hotel contracts under these circumstances. For instance, one Las Vegas hotel that will be closed said they wouldn’t refund deposits and even insisted on receiving subsequent payments. They said though the hotel was closed, the contract said deposits were non-refundable, and since the event could be rescheduled all remaining deposits were still due.
- Force majeure is clear that we pay only for services actually rendered by the property prior to termination.
- Since the hotel is not performing its obligations under the contract, it cannot keep funds meant to pay for those services.
- While force majeure excuses Caesars Entertainment from damages related to its non-performance, it does not excuse damages for failing to refund money provided up front in exchange for those services.
- A force majeure clause effectively makes the contract void, as though it had not happened, restoring both parties to the positions they held prior to its execution.
I insisted on immediate refund of deposits, and they agreed.
- They rented 621 rooms for 10 nights
- There wasn’t just a force majeure clause in the contract – it specifically cited disease outbreak.
- The school is out of session. New York is under lockdown.
- The hotel itself is closed to guests.
Credit: Eden Roc
The hotel can’t perform its obligations under the contract even if the school showed up. Nonetheless, according to the suit, the hotel demanded that the event go on “with whomever was foolhardy enough to travel from New York to Miami Beach” or be rescheduled (but was unwilling to push it out to the same time next year). Instead of a refund, they demanded an additional $1.2 million to cover their expected revenue under the agreement.
By the way, this school has booked two annual trips twice in the past with the luxury property. This was the first year of a three year contract which it will now seek to break. I’m not sure the hotel’s position is even to its own advantage, though of course like so many it’s not thinking about what’s right or in their long-term interest, they’re looking to survive to worry about the long-term when it comes.
The property is quite familiar with lawsuits, ending its 50 year deal with Marriott that began in 2005 after only 8 years (Marriott prevailed but the hotel is now a Nobu), and getting into fisticuffs with the Fountainbleau next door.
However the Eden Roc experience seems to be more the norm than the exception. Hotels have money and they do not want to give any back, at least when it comes to group business.