September 18, 2012 What to do when a Hotel Deflags.
Hilton, Sheraton, Marriott and all the other Hotel brands are just that, Hotel brands known in the business as “flags.” (see the company flag on the pole outside hotel, get it) Flagged hotels operate under a franchise agreement with the brand. For example, the Hilton you stayed at last night isn’t owned by Hilton, but by a developer who pays Hilton to use the Hilton flag. Hotels are moved into and out of flags by both the property owners and the brand for a variety of reasons. Today the Paris Arc De Triomphe Hilton abruptly deflagged themselves. Essentially, there was court battle in France between the hotel and Hilton over the Hotel. Now I am not privy to the details, but it appears to be over the fact that the Hotel thought itself better than the Hilton brand and more in line with luxury brands such as Waldorf=Astoria and Conrad (the luxury Hilton brands). Hilton lost the court battle and the end result of which talks between the hotel and Hilton broke down and the hotel abruptly deflagged this morning. The hotel has decided to not honor award stays and that has left some guests in the lurch as the other Hilton property is well outside the center of the city. The guests are mad at Hilton when they should be made at the Hotel, here’s why.
The fundamental difference between a hotel award and a travel (plane) award is a reservation versus a ticket. If an airline cancels a flight, the ticketing carrier still has an obligation to get you to the destination. With hotels there is no ticket just a reservation that can be canceled by either property. When the hotel deflags they are no longer obligated to honor that reservation as they no longer have an agreement with the flag. They can choose to accept the money that the flag would pay them or not. As the payments from the Flag to the Hotel can be exceedingly low, there is little incentive for the hotel to honor the reservations. Unfortunately there is little the guest can do when that happens. Generally, the flag will arrange for the guest at another location but like this case it isn’t always enough.
It would be better for the hotel flags to require that hotels, even when they deflag, to honor the reservations already made and to put that requirement in the franchise agreement. However, as it seems universal across brands it is unlikely that this will happen.
Go forth and conquer,