Question

What determines the obligations owed to a hotel when a person or organization with a hotel reservation cancels the reservation?

Draft a 250 - 300 word discussion explaining the your answer in detail.

Answer 1

When a contract for a room is formed between the guest and the hotel it must satisfy certain elements such as capacity to form legal contract, mutual understanding, consideration, actual consent. The guest makes inquiry bout room price after which negotiations start. Once an offer made by either party is accepted by other party, contract is formed.

When a party cancels the reservation the guest who has made the cancellations is liable to pay full damages to the hotel. However, if there is contract between the guest and the hotel that states that reservation can be cancelled prior to specific number of days before the date of reservation, then the guest is not liable if he cancels before those number of days. When contract is breached the hotel must attempt to mitigate the losses by re-letting the room to other party. If hotel is successful, it cannot charge damages from cancellation party, if unsuccessful hotel has right to recover full damages.

In case large reservations are cancelled for example, by a firm renting large amount of rooms, then the contract decides how the damages will be paid. Some contracts require firm to pay full amount equal to number of rooms multiplied by group rate. Other contracts might require paying less amount by charging for only 2 nights of established group rate even when three nights were agreed.

Thus, the specific contract with the hotel determine the obligation owned by party to a hotel when reservation is cancelled by it.