Q: I have a few questions: Is a hotel reservation a binding contract? Does it make any difference if I don’t make a so-called guaranteed reservation by providing my credit card information? Does it make any difference if the reservation does not state that it is “confirmed”? Does it make any difference if I don’t prepay in full? Even if I have a binding contract, can the hotel overbook and send me to another hotel? Finally, even if I have a binding contract, does the hotel have the right to raise the room rate until I pay in full?
A: These issues received recent publicity when some hotels in the path of the total eclipse tried to dramatically increase their rates even for clients that had reserved months or years in advance. The industry experts quoted in the general media were all of the opinion that a reservation is a binding contract at the rate quoted by the hotel. I agree.
A reservation is a binding contract consisting of mutual promises: the hotel agrees to provide the accommodation at the quoted rate, and the client agrees to pay. Unless the hotel adds conditions at the time that the contract is entered into, the contract is unconditional and does not depend on any of the factors cited in your questions.
Further, the quoted rate becomes part of the contract unless the hotel adds relevant conditions at the time the contract is entered into. For example, the reservation may state that, as in the case of airlines, the rate is not guaranteed until the traveler pays in full, or it may state that the hotel may cancel until the traveler pays in full.
The legal experts that I researched confirm my view. According to Thomas Dickerson’s Travel Law treatise, “A promise by a hotel to deliver a room in the future in return for payment or a promise to pay constitutes a binding contract. The hotel is obligated to deliver the room, and the traveler is obligated to pay for it.”
As a corollary, Dickerson notes that “When a traveler makes a reservation and then cancels, the hotel has a cause of action against the traveler, and the traveler may be subject to a cancellation penalty.” So, because there is a binding contract, both sides could be liable for breach.
In another legal treatise, Hotel Law, by Ellen Smith and Victor Haley, the authors state that, “In addition, if a guest has a confirmed reservation or contract for accommodations at the hotel, the hotel owner may be liable if the hotel does not honor the guest’s confirmed reservation for a room, even if there are no available rooms at the hotel.”
The cases cited by these experts all deal with the hotel’s refusal to honor the reservation at all, not the hotel’s attempt to raise the rate. However, the legal principle is clearly the same: once there is a binding contract, the rate is part of the contract.
To address your other questions: in the absence of conditions disclosed during the booking process, you would still have a binding contract regardless of whether the reservation is guaranteed for late arrival (as long as you arrived before the cutoff time), whether the reservation uses the word “confirmed,” whether you prepaid in full or whether the hotel overbooked.
Of course, the hotel can unilaterally impose all these conditions during the booking process if it wishes, as long as you (or your travel agent) receive actual notice of the conditions during the booking process. If the hotel hides the conditions in fine print that doesn’t come to your attention until the booking is finished, the conditions are probably unenforceable.