Source: Robin Roth, Senior Contracts Editor
E-Specs: November 29, 2005

Did you know that the individual reservation that a guest has at a hotel is a contract? A mutually binding contract is formed when the hotel accepts the reservation. The hotel is in breach of contract if it overbooks and "walks" the guest. A walked guest is then entitled to financial compensation because under contract law the non-breaching party must be made "whole." The hotel's legal obligation may extend only to compensating the guest for added out-of-pocket expenses, but hotels are willing to go further to avoid a lawsuit and to maintain good will.

A Dishonored Reservations clause should be a part of every contract and is generally well accepted by the hotels. It should apply to accepted, not just confirmed reservations and require the hotel to pay for a room at a comparable hotel for each day the hotel cannot provide a room. The hotel should also provide daily round-trip transportation and two complimentary five-minute phone calls. Upon return, the hotel should provide a note of apology and make every attempt to upgrade the guest. The hotel should also give the group credit for any room nights and room revenue from walked reservations.

If a walk situation is looming:

• Ask the hotel to relocate other groups or individuals first.
• Mark the list of the group attendees with a special "Do Not Walk" protection for any VIPs or other attendees who should not be relocated.

If a walk situation cannot be prevented:

• If it is known in advance that the situation will require relocating a large number of guests, ask that the hotel pre-walk some guests. This allows people to know before they arrive in town that they should arrive at the new hotel.
• If a smaller number of guests are to be walked, encourage the hotel to ask guests to "self select" early in the day. For some groups, simply having their first night paid for at an alternate location is enough incentive, like volunteering to be bumped by an airline. For other groups, the hotel may need to offer an additional incentive to the guests. By allowing people to volunteer to be relocated, and doing it early in the day, the late night challenges involved with a tight room situation are avoided.

When all is said and done the best walk clause to include in your contract is one that discourages the hotel from walking your participants in the first place.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)