What Happens When a Hotel Leaves a Chain Abruptly?

Jul 21, 2019

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It’s not all that unusual for a hotel to leave a major chain and later reopen under a new brand. A notable example is the Aloft Miami Beach. The Miami Beach property opened and operated under the Aloft brand for a few years before it abruptly shut its doors.

It later reopened as The Gates Hotel under the DoubleTree by Hilton brand. Hotels and resorts typically give guests advanced notice. But what happens when a hotel abruptly leaves a major hotel chain almost without warning? One reader found out the hard way.

“This hotel’s affiliation has been removed literally overnight…”

One TPG reader found out the hard way what happens when a hotel is dropped from a major chain. This reader had planned a trip to San Diego, booking a room at the Hyatt House San Diego/Carlsbad using World of Hyatt points.

However, the reader received an email from Hyatt with some unfortunate news. According to the reader, the Hyatt House San Diego/Carlsbad changed affiliation “literally overnight.” With the reader’s hotel no longer a Hyatt property, Hyatt had no other option but to cancel his reservation. While the reader could no longer use World of Hyatt points, the email he received informed the reader that a standard cash rate was still available.

One reader had their reservation canceled after the Hyatt House San Diego/Carlsbad abruptly left the Hyatt portfolio. (Image via Hyatt.com)
One reader had their reservation canceled after the Hyatt House San Diego/Carlsbad abruptly left the Hyatt portfolio. (Image via Hyatt.com)

Ultimately, the reader was able to call Hyatt, cancel his reservation, and have his points redeposited to his World of Hyatt account. However, the reader was still without a room and left to find accommodations elsewhere.

Hotel Reservations are Unregulated in the US

While it may seem as if Hyatt was in the wrong or handled this incident incorrectly, this is not the case. Hotel reservations aren’t regulated in the United States, as One Mile At A Time reports. While hotels have internal policies for when a hotel is unable to honor a reservation, that’s the extent of guest protections. Additionally, these internal policies are just that — internal. They are often unavailable to the public.

Booking a Cash Rate

If you book a hotel operating under a major hotel chain’s brand using cash, the hotel chain through which you booked may continue to honor the reservation even if the property leaves the its portfolio. It’s highly likely, however, that you won’t earn any points or elite nights for this stay.

If this isn’t the case, your room may be canceled and a refund issued. A hotel chain may also work to find an alternative hotel at a similar rate or the rate on which you agreed on at the original property.

Booking with Points

If, like the TPG reader who booked a Hyatt House, you book with points, the hotel chain is not obligated to honor your reservation. Typically, as was the case with the reader, your reservation will be canceled and a refund will be issued. Hotels may work to find an alternative property. However, hotels are not obligated to book guests at other properties. But if a hotel chain’s internal policy (often unavailable to the public) is to ‘walk’ guests to other properties in the area, your award booking may still be honored at an alternative property nearby.

In some cases, hotel chains may issue compensation in the form of points or credit towards a future stay. Again, that’s entirely up to the hotel chain and often handled on a case-by-case basis. Additionally, a chain’s internal policy may entitle a guest to a room at a similar hotel or property nearby.

A double/double room at Aloft Hotel New York Brooklyn. (photo courtesy of the hotel)
A double/double room at Aloft Hotel New York Brooklyn. (Photo courtesy of Marriott Hotels)

There aren’t any laws in the US that regulate hotel reservations. Policies are determined by hotel chains and enforced by hotel management and the hotel chain. That’s bad news if a hotel cannot honor your reservation as it means you may be forced to find a new room without the assistance of the hotel. The good news is that you will be eligible for a refund regardless if you paid using cash or points.

Bottom Line

It’s quite unusual for a hotel to drop its affiliation with a major brand virtually overnight. In the case of the TPG reader who booked the Hyatt House, there’s not much that reader could have done to prevent their reservation from being canceled. The best advice to travelers is to always read the fine print when booking a hotel.

You’re essentially at the mercy of the hotel chain in the event that the room or property you booked is no longer available. If a hotel becomes unaffiliated and you can no longer use points to stay at that property, the hotel chain will likely issue a refund and work to find you alternative accommodations.

If you are concerned that a hotel chain may fail to honor your reservation, our advice is to ensure you’re familiar with a hotel’s policies pertaining to oversold or unavailable rooms.

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Featured image courtesy of Hyatt Hotels

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