Hospitality Law Chapter 3

Guests and Other Patrons Who qualifies as a Guest For a person to qualify as a guest, the visit must be for the primary purpose for which an inn operates – rental of rooms suitable for overnight stay. Generally, people are not guests unless they require overnight accommodations. People who register at the hotel for rooms are guests. People in the hotel for some other reason do not qualify. E.g. a patron of a hotel shop who is not otherwise a guest of the hotel does not become a guest merely by shopping in the hotel. Nor is a passerby who enters the hotel lobby to use the phone, a guest. A person who comes to the hotel for the sole purpose of attending a banquet or reception but does not register for a room is not a guest. A person attending a seminar at a hotel but not registering for a room is not a guest. Intent of Parties The innkeeper-guest relationship is a contractual one. Guest status can arise once the intention is formulated, even before the contract is entered. Thus, a transient becomes a guest upon entering a hotel intending to procure overnight accommodation where the inkeeper has a room available. It is not essential that the guest be registered. Registration While registration clearly evidences intent on both the guest’s and inkeeper’s part to develop a relationship, registration is not essential for the relationship to exist. Delivery of Property A person who intends to register but hasn’t yet done so becomes a guest by delivering luggage to a hotel employee. In such a case, the soon to be guest evidences an intent to become a guest by giving possession to the hotel employees. The hotel’s intent is evidenced by its acceptance of the luggage. The responsibility of the innkeeper starts at the moment of the delivery and acceptance of the suitcase. Checking Out The status of guest is not instantaneously terminated upon check-out but rather continuous for a reasonable period of time while the guest remains on hotel premises. Termination of a Guest-Innkeeper Relationship The innkeeper-guest relationship ends when any of the following occurs: 1. the contracted time for the room has elapsed and it is not extended 2. the bill is not paid when due 3. due notice is given to vacate the hotel 4. the bill has been paid Guests are allowed a reasonable time after vacating the room to remove their luggage and check out of the hotel, during which they continue to qualify as guests. The length of this period depends on the facts of each case. Landlord-Tennant Relationship A person who rents a room at a hotel on a long-term basis may have the legal status of a tenant rather than a guest. The Landlord’s responsibilities to a tenant differ from those owed to a guest. To be a guest the person must be a transient, that is, his stay at the inn is temporary. If the person is staying on a permanent basis, he is a tenant. Whether a hotel patron is a tenant or a guest is determined from a number of factors including: the terms of the contract between the parties the extent of control or supervision of the patron’s room maintained by the proprietor (more supervision retained the more likely a guest) the rental rate interval (the longer the interval the more likely a tenant) length of occupancy (the longer, the more likely a tenant) incidental service offered (housekeeping services) whether room has cooking facilities the kind of furnishings in the room and who owns them None of these factors alone determines the legal relationship; the more the circumstances resemble a landlord-tenant relationship, the less likely an innkeeper-guest relationship exists. Lease: contract granting use or occupation of property during a specified period in exchange for a specified rent. It is a written agreement under which a property owner allows a tenant to use the property for a specified period of time and rent. A tenant cannot be evicted without a court proceeding. Due to the relative longevity of a tenant’s occupancy of an apartment, a tenant is considered by law to have a greater interest in the apartment than a guest has in a hotel room. The greater interest prevents a hotel/landlord from evicting the tenant without a court order. The law provides a summary proceeding for this purpose that enables the landlord to obtain the eviction order within a few weeks. Covenants: an agreement, contract, or written promise between two individuals that frequently constitutes a pledge to do or refrain from doing something. Protecting Patrons Property Risks to Property in the Hotel Hotel theft is a problem the hospitality industry has not fully solved. This put at risk the safety of guests’ property while at the property. Numerous strategies have been developed to stem the increase of hotel thefts, these include: increasing the number of security personnel; hiring trained professionals; warning guests to lock their room and put their valuable in the hotel safe; installing closed-circuit television to monitor hallways; installing electronic lock devices that are changed for each guest using the room; instituting tighter security checks on employees; and in small hotels, installing electronic lobby doors that can be opened only by the desk clerk when a guest is recognized. 1. Keys and Locks: these offer limited security. Handling of keys can contribute to the rate of hotel thefts. Anyone given a key can easily have it duplicated. A guest can check out of a hotel and not return the key, permitting it to fall into the wrong hands. A thief is often willing to pay a good price for guaranteed easy-entrance to hotel rooms. To avoid these problems hotel should not print the name and address of the hotel or the room number on the key. A good alternative is to use electronic punch-cards with the magnetic stripes that allow the hotel to change the key every time a new guest occupies the room. 2. Guests’ Insurance: this does not protect a hotel. If a traveler whose property disappears has insurance coverage and recovers the loss from the insurance company, the hotel is not relieved from liability. Normally the insurance policy provides that the insurance company can sue the hotel to recover the money paid to the guest. 3. Absolute Liability for Guests’ Good: in prior times and according to common law, hotel keepers were liable for any loss of guests’ property occurring on hotel premises. If the property was stolen or otherwise disappeared from the hotel the innkeeper was liable to reimburse the guest. Exception to Absolute Liability Rule: 1. the loss was attributed to an act of God 2. The loss was caused by an act of the public enemy (in time of war) 3. The loss was precipitated by the guest 4. Prima Facie Liability Rule – Minority View: a modification to the common law rule that adds the following provision: hotel keepers are liable for property loss only if the loss occurs through their negligence; if the innkeeper can prove that the loss resulted from some other cause, the innkeeper is not liable. Legislative Limitations to the Absolute Liability Rule As hotels grew in size and the number of travelers increased, the difficulty of safeguarding property increased. Current law recognizes that absolute liability is unnecessarily burdensome to modern-day hotels. Statutes have been adopted to limit hotel keepers’ liability for guests property losses, provided the hotels follow specific procedures. These statutes limit the innkeepers responsibility for guests’ property provided the hotel strictly abides by certain prerequisites: 1. The hotel must provide safes for the safe-keeping of guests’ property. 2. The hotel must post notices announcing the availability of the safes. 3. The hotel must post notices announcing that the hotel’s liability is limited. 4. The maximum recovery allowed to a guest for stolen or lost property is prescribed by statues and is usually less than the value of the missing property. Providing a Safe: innkeepers are required to provide a proper safe for guests’ valuables. To gain the protection of the limiting statutes the hotel safe must be available for guest to deposit their valuables at the time they wish to deposit them. Safes are normally provided in each guest room, or deposit boxes are located in a central location usually in the vicinity of the front desk. Providing Notice of Availability of Safe: limiting statutes require posting of one kind or another. Posting means displaying a sign that calls the guests’ attention to the available of a safe and the fact that, by law, the hotel’s liability for valuable is limited. Failure by a hotel to comply strictly with the posting requirements will result in loss of the limited liability. Posting Notice of Hotel’s Limited Liability: it is not enough for a hotel to post conspicuously the availability of a safe. The posted notice should also inform guests that the hotels liability is limited. Otherwise, guests are led to conclude erroneously that if valuables are deposited according to the notice the guest will be protected for the full value of the deposited items. What property belongs in a safe: Jewels Ornaments Bank notes Bonds Negotiable securities Precious stones Limited Liability for Other Property Clothes and Other Personal Property: the typical limiting statute restricts a hotel’s liability for damage or loss of a guest’s wearing apparel and other personal property such as camera to a specified maximum. Door Locks and Window Fastenings: hotels seeking to benefit from limited liability must maintain suitable locks and bolts on doors and fastening on windows. These devices help deter in-room thefts. Baggage Room: most states restrict a hotel’s liability for loss or damage caused to guests’ property while stored in a baggage or storage room. The hotels liability will be limited to a specified maximum amount. Merchandise Samples: a distinction is recognized between property brought to the hotel for personal use and property brought for commercial purposes. Many limiting liability statues provide the innkeepers have no liability for damage to or loss of merchandise samples unless the innkeeper receives written notice and acknowledges in writing that a guest has such property and its value. Property in Transit: most states have limiting statutes that restrict a hotel’s liability for guests’ property while in transit. Property Not Covered by Limiting Liability Statutes: the limiting liability statutes do not cover all property that might be stolen or lost in or around a hotel. These statutes apply only to property of hotel guests; they do not cover property of non-guest such as a coat brought to a restaurant by a patron. They do not include cars of guests. Fire: laws have been passed in most States limiting or eliminating the hotel’s liability for damage caused by fire where the fire was not the result of the hotel’s negligence. If however a fire is caused by the hotel’s failure to exercise reasonable care, the hotel will be fully liable for the resulting loss. Extension of Liability In a few circumstances the hotel will not be entitled to the full benefit of limited liability provided by statute. 1. Disclosure of Value: a hotel can enlarge its liability for goods placed in a safe if the guest has disclosed the value of the goods to the innkeeper and the innkeeper has agreed in writing to assume liability for a greater amount that the statute requires. 2. Estoppel: Loss of Limited Liability: preclude a person from claiming a right or benefit because that person made a false representation to a person who relied on the statement to his detriment. Hotel’s Negligence: statutes do not protect an innkeeper in situations where the loss of the guests property is due to the hotel’s negligence. Liability during check in and check out Check in When guests first enter a hotel and have not yet completed the registration process, they have not had time to access the safe. Check out When they are packing and preparing to check out, they will likely remove their valuable form the hotel safe. Bailment: a transfer of possession of personal property from one person to another, with the understanding that the property will be returned. The person giving possession of the property is the bailor and the person receiving the possession is the bailee. Eg. a guest leaves a shirt with room service for ironing. The elements of a bailment are: 1. Personal property: involves only moveable, tangible objects 2. Delivery of possession: possession of the personal property must be transferred to the bailee 3. Acceptance of possession by the bailee: the bailee must knowingly accept possession of the bailed property 4. Bailment agreement: a agreement, expressed or implied by the bailee to return the bailed good to the bailor must exist Effect of Bailment on Liability If no bailment exists, neither does liability; however if a bailment does exists the bailee is not automatically liable. A bailee is liable only if it fails to exercise the amount of care required by law in tending to the bailed goods. Rights of Innkeepers 1. Right to exclude non-guests: persons entering a hotel who are not guests and do not intend to become one are required to leave the premises if asked. A restaurateur can ask a person to leave who is not interested in eating or drinking but rather just lingering, loitering, or otherwise hanging out. A person who has been requested to leave and fails to do so after being given a reasonable opportunity, thereby becomes a trespasser. 2. Refusing a Guest Lodging: a hotel cannot refuse accommodation to anyone seeking it. However lodging can be refused if a hotel has no vacancies; if the person is a criminal, intoxicated, disorderly, unclean, or suffering from a contagious disease; if the person has firearms, explosives, or pets; and if the person is unable to pay. 3. Selecting Accommodations for a guest: the determination of what room will be assigned a guest has always been the innkeepers prerogative. 4. Changing a Guest’s Accommodation: it is not a good policy to change a room or move a guest’s possessions without permission. If a room change is necessary a good approach would be to ask the guest to move; if he refuses, alert him before the transfer occurs. 5. Evicting a Guest: an innkeeper has the right to evict a guest on the following grounds: Failure to Pay the Hotel Bill Overstaying Persons of Ill Repute Intoxication and Disorderly Conduct Disorderly Conduct Contagiously Ill Guests Breaking House Rules Persons Not Registered Persons Without Baggage Business Competitors (soliciting) Guests’ Rights Right to Occupy Assigned Room: a guest assigned a room in a hotel has the right to occupy the room without disruption from the innkeeper. Right to Privacy in Guest Room: a guest has the right to occupy the room without invasion by the innkeeper or any other unauthorized person. Exceptions Protection Against Illegal Searches A guest’s right to privacy in the guest room occasionally conflicts with the police’s interest in searching a hotel room as part of a criminal investigation. Report of Illegal Activity by the Innkeeper: in the course of entering the guest’s room legally, if an employee finds evidence of illegal activity, the hotel should report the illegal activity to the police. Consent to Search /Search Warrant: if a guest voluntarily agrees to permit the police to enter the guestroom and search it, the police are free to do so without a warrant. However, the police cannot legally search the room on the strength of permission given by the manager; instead the police must obtain a search warrant. Termination of Occupancy on Privacy Rights: if the guest’s right to exclusive use of the room ends, the right to occupy the room reverts from the guest to the innkeeper who is entitled to enter the room, remove any remaining property, and prepare it for the next guest. Disturbing the Peace: if a condition in a guest’s room is disturbing to other guests, a hotel employee has the right to enter the room. Emergency Situation: an innkeeper is permitted to admit police into a guest’s room where reasonable grounds exist to believe that the guest is in distress and in need of assistance. Search of Items Mislaid by Guest: the hotel can conduct a reasonable search to determine the owner. A little on Occupiers Liability An occupier of premises owes a duty to take reasonable care in all the circumstances of the case to see that each guest entering on the premises and the property brought on the premises are reasonably safe while on the premises. The duty created applies in respect of: (a) the condition of the premises; (b) activities on the premises; and (c) the conduct of third parties on the premises. Employers Liability Employers’ liability for workplace accidents and ill-health arises from the common law ‘duty of care’. In civil proceedings for damages arising out of a workplace accident resulting in injury or ill health to an employee, an employer must show that they discharged this duty. This can be done by showing that all safety regulations and rules were in place and adhered to and that the employer did ‘everything reasonably practicable’ to ensure the safety, health and welfare of the employee(s) concerned. For an employee to prove that the employer was negligent there must be:  a duty of care between the parties;  failure by the employer to observe the required standard of care;  reasonably foreseeable damage suffered by the employee. The Rule of Rylands vs. Fletcher: a rule laid down known as the rule of ‘Strict Liability’. Under this rule the defendant is liable for the harm even though it is unintentional and also without any negligence on the part of the defendant. In Rylands vs. Fletcher, the defendant got a reservoir constructed, through independent contractors, over his land for providing water to his mill. There were old disused shafts under the site of the reservoir, which the contractors failed to observe and so did not block them. When the water was filled in the reservoir, it burst through the shafts and flooded the plaintiff’s coal mines on the adjoining land. The defendants did not know of the shafts and had not been negligent although the independent contractors had been. Even though the defendants had not been negligent, they were held liable on the basis of the rule laid down in this case. The rule is: If a person brings on his land anything which is likely to do mischief if it escapes, he will be answerable for the damage caused by its escape though he had not been negligent. The rule is applicable not only when there has been collection of water, it applies to gas, electricity, vibration, yew trees, sewages, explosives, noxious fumes and rusty wire. Strict Liability: imposes liability from an ultra hazardous activity upon those who engage in it. If applicable the defendant will be liable even though he violated no duty and did nothing wrong. Nuisance: Anything that annoys or disturbs unreasonably one’s right to enjoy one’s property, or violates the public health, safety, or decency of others. Attractive Nuisance: a potentially dangerous object or condition of exception interest to young people, such as a swimming poor, a large empty box, or a snow pile suitable for sliding accumulated by a plow. If an attractive nuisance exists on the property, the owner or occupier is required to exercise reasonable care to protect a child from associated risk. Example, a hotel with a pool would be advised to install a tall, locked fence to prevent children from using the pool when it is closed or un-attended. A restaurant that purchased a new refrigerator should discard the box only after removing all tracks and other sharp items and flattening it. Laws Relating to Hospitality Industry Discrimination was a practice quite prevalent in the hospitality industry before the passage of the Civil Rights Act of 1964. Today, many laws prohibit discrimination. The common law prohibits inkeepers from refusing accommodations to anyone who seeks them, unless certain exceptions apply. The Civil Rights Act of 1964 prevents hotels, restaurants and gas stations and places of entertainment engaged in interstate commerce from discriminating on the basis of race, color, religion, or national origin. State Civil Rights laws fill in the gaps by preventing discrimination within the state in a large class of facilities on the grounds of not just race, color, religion and national origin, but also sex, marital status and disability. The Americans with Disabilities Act prohibits discrimination on the basis of disability and requires various accommodations for disabled patrons. Liquor Licenses To obtain a license to sell alcohol an applicant (restaurant or hotel) should prove that he/she has not abused liquor in the past, whether as a consumer, a seller or otherwise; has not been convicted of a felony and is of good character and fitness. A liquor license may be revoked or suspended if the licensee violates the liquor law. Sales are prohibited to people under the age of 21; visibly intoxicated persons; and habitual drunkards. Sale to anyone on this prohibited list may result in civil liability for resulting injuries and (particularly in the case of serving a young person) criminal liability for which penalties include jail and a fine. A Few Types of Liquor Licenses Club and Catering Club Liquor License: establishments must operate for the good of the club membership. The sale of alcoholic beverages must be secondary to the actual reason for the club's existence. Private clubs are forbidden to sell alcoholic beverages for take-out purposes. Distributor Liquor License: concern neighborhood beer distributors. Sales are for off-premises consumption only and these sales must be made in original containers. These generally are very large operations which maintain large amounts of beer products and usually sell only to other smaller licensees and not to the public Eating Place Liquor License: the primary purpose of this licensed establishment is the regular preparation and service of food. Licensees may not sell any single, open container of alcoholic beverage for consumption outside the establishment. Restaurant Liquor License: The primary purpose of the licensed establishment is to habitually and principally provide food service to the public. The service of liquor, wine or beer products is secondary. Licensees may not sell any single, open container of alcoholic beverage for consumption outside the establishment. Hotel Liquor License: operate the dining and alcohol service areas in the same manner as a Restaurant licensee. In addition, licensed establishment must have permanent bedrooms for public use, a separate dining room(s) and a separate kitchen. Mandatory sleeping accommodations and a kitchen on the premises are the differences between the Restaurant Liquor and Hotel Liquor licenses. Dram Shop Act: laws which impose liability on a restaurant or bar for certain injuries resulting from illegal sales of alcohol - that is, sale of alcohol to visibly intoxicated persons or minors who subsequently cause death or injury to third-parties (those not having a relationship to the bar), as a result of alcohol-related car crashes and other accidents. The objective of these laws is to discourage proprietors from selling alcohol illegally and to afford compensation to victims whose injuries emanate from the unlawful sale of alcohol. An occasional license may be granted to sell liquor by retail at a public entertainment or show, festivity or meeting or other gathering for a period of time not exceeding 7 days; or to a licensed person to open or close licensed premises before or after permitted hours on any specified day. Insurance Coverage A licensee can purchase insurance to cover dram shop liability. This insurance is called liquor liability insurance or dram shop insurance. The cost is based on factors including: the volume of alcohol sold, the nature of the establishment, hours it is open and the geographic area. Liquor Liability Insurance: is business insurance that protects a business against loss or damages claimed as a result of a patron of a business becoming intoxicated and injuring themselves or others. Workers Compensation insurance: Insurance that covers medical and rehabilitation costs and lost wages for employees injured at work; required by law. Tax Laws Relating to the Hospitality Industry Businesses providing accommodation, restaurant and other services in the hospitality industry are liable under the Income Tax Act to file income tax returns and pay income tax where assessable income (income which the comptroller is authorized assess for the payment of income tax) is higher than his chargeable income. Employees of these businesses are also liable to pay income tax where their wages or salaries are above 18, 000.00 (in Dominica) during an income year. The income of hotels is exempt from paying tax if the hotel is under construction or extensions are being made to its rooms. However an exemption should not exceed 10 years. A business providing hospitality services is required to pay value added tax to the comptroller of Inland Revenue on services sold by them once they make a yearly income of 60,000.00 and over. The vat has replaced sales tax, consumption tax and hotel occupancy tax. Hospitality businesses are also required to pay social security employer contributions in respect of their employees. Failure to do so could result in legal action against the business.