Defense Claims Hospitality Expert Lacks Expertise on Hotel Standards

In this rental contract dispute, the plaintiff, the owner of six villa units, sued the defendant, a hotel, for breaching the rental pool agreement. Under the agreement, the defendant offers villa units and receives a percentage of the villa rental revenue after deducting certain expenses.

Zach Barreto

Written by
— Updated on August 3, 2022

Defense Claims Hospitality Expert Lacks Expertise on Hotel Standards

Court: United States District Court for the District of Arizona
Jurisdiction: Federal
Case Name: Conlon Group Ariz., LLC v. CNL Resort Biltmore Real Estate, Inc.
Citation: 2009 U.S. Dist. LEXIS 69299

The plaintiff claimed that the defendant capping villa revenue at 17% violated the rental pool agreement. The plaintiff retained a hospitality expert witness. The expert testified about whether the defendant’s operation of the rental pool contract met industry standards. However, the defendant argued that the expert was unreliable due to the lack of basic qualifications. 

Facts

This case involves a dispute between the hotel and several villa owners over a rental contract. Under the arrangements, the defendant hotel sold the villa units as rental accommodation in addition to the hotel rooms. The hotel earned a share of the villa’s rental income after deducting other costs, including credit card and travel agent charges. The balance of revenue was then distributed equally among the members of the rental pool.

The plaintiff, acting on an individual basis as the owner of six villa units and participant in the rental pool, sued the defendant for the accounting of the rental pool books and records. The plaintiff sought a judgment on the amount found to be due under the rental pool agreement. Furthermore, the plaintiff claimed that the defendant breached the rental pool agreement. According to the plaintiff, the defendant improperly calculated credit card and travel agent charges. Additionally, the plaintiff claimed that the defendant improperly provided complimentary villa units to hotel staff and hotel guests. The trial focused on the defendant’s abuse of discretion in providing complimentary villa rooms to non-employee guests. The parties settled on the other claims. The district court ruled in favor of the defendant.

Then, the plaintiff brought the current lawsuit against the defendant as the agent of the owners of other villas. The second complaint contained the same allegations as those made in the first case. However, the new lawsuit was different from the previous one. This lawsuit included a claim that the defendant’s method of limiting villa income to 17% violated the rental pool deal. The plaintiff demanded damages for the breach of contract dating back to 1995.

The Plaintiff’s Hospitality Expert Witness

The hospitality expert witness had more than 20 years of experience in the hotel industry. He worked as a food and beverage manager for a variety of hotels in New York City. The expert also held senior financial positions at the Four Seasons Hotel. Furthermore, the hospitality expert witness was the chief financial officer for a time-share resort and spa. He also conducted research for a hotel group, which included a review of pooling arrangements. Additionally, the hospitality expert witness has been running his own hotel consulting business since 2001. The expert also worked with hotels in six different states.

The plaintiff hired the hospitality expert to determine whether the hotel’s operation of the rental pool contract met industry standards. Specifically, the expert analyzed the following:

  • The hotel’s accounting method for the rental pool
  • The lack of data documenting the hotel’s 17% policy
  • The hotel’s calculation for credit card and travel agency fees
  • The hotel group price methods
  • The hotel’s practice of free rooms
  • The villa rate practices of the hotel

The defendant hotel then challenged the reliability of the hospitality expert’s opinions.

Discussion

The defendant claimed that the opinions of the hospitality expert witness were inaccurate. According to the defendant, the expert lacked the basic expertise to express his views on industry standards or hotel procedures. The defendant hotel argued that the expert had no formal training in the hospitality industry. Furthermore, the defendant claimed the expert had neither experience in the rental pools nor in the hospitality market in Arizona. The defendant also argued that the hospitality expert had never been an expert. The court noted that each of these arguments was unfounded, as he was clearly qualified, in the light of his extensive hotel experience, to testify as an expert in this case.

Additionally, the court took the view that the expert’s extensive experience in the hotel industry was undoubtedly helpful in understanding the evidence and made his opinions sufficiently reliable to be admissible. The court noted that the Daubert reliability test was “’flexible’, and [its] list of specific factors neither necessarily nor exclusively apply to all experts or in any case,” citing Kumho Tire Co. v. Carmichael.

Ruling

The court denied the defendant’s motion to exclude the testimony of the hospitality expert witness.

Key Takeaways for Experts

This case illustrates the importance of experts having the right qualifications for the case to opine. In this case, the defendant argued that the expert lacked the qualifications to testify about the hotel industry standards. However, the court found that the expert was qualified because of his extensive hotel experience. Having experience that supports not only your testimony but the facts of the case makes it harder for the defense to find you unqualified as an expert.

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