Industry NewsPrincipal–Agent Relationships: Examining a Hotelier’s Liability for the Acts of Its External...

Principal–Agent Relationships: Examining a Hotelier’s Liability for the Acts of Its External Service Providers

Hotel companies sometimes hire independent entities—persons or firms—to provide certain guest services. In most such cases, the laws of agency are in play: the hotel is the principal that empowers someone else (an agent) to act on its behalf and controls the methods used by the agent to carry out delegated tasks.

Whether expressed through contract or implied through actions, the principal’s relationship to the agent creates a fiduciary relationship between the parties that requires the agent to perform assigned tasks prioritizing the best interests of the principal.

In short, the agent’s performance should meet the standards and expectations of the principal—the hotel operator. So long as an agent acts within the scope of the principal’s authority, the principal is legally bound (vicarious liability) by the agent’s acts. If the principal does not exercise control over how the retained firm conducts business, the latter may be an independent contractor. There can be a gray area between the two relationships leading to a court inquiry and a decision by the trier of fact.

Illustrative Case No. 1

An example is the unfortunate case of a prominent coastal hotel that offered day trips by helicopter to a resort destination. When the helicopter crashed, killing a honeymoon couple staying at the hotel, there was liability enough to go around. The helicopter service was in fact an independent contractor, as the hotel exercised no control over how it conducted flights. Still, guests relied upon their hotel to provide a vetted, qualified, FAA-certified helicopter service. In the instance, the helicopter service the hotel chartered did not have the required FAA certification to provide public tours. Even in this case of an apparent independent contractor, the hotel company, a noted franchisor, had liability because its process of selecting and booking the service was found negligent.

Illustrative Case No. 2

Another illustration involves a large seaside resort hotel, branded and managed by a major franchisor, that offered several water features. The resort operation involved multiple subsidiaries and agent firms. The concierge desk was assigned to a subsidiary, and a second subsidiary concierge arranged tours and provided nanny/childcare service. Yet another agent firm ran the check-in kiosk for guests accessing pools, water features, or the beach. The kiosk was delegated the responsibility for authorizing people to use the pools and water features by issuing wristbands. They issued just one type of band, indicating that the wearer was a hotel guest and at least 42 inches tall—the minimum height for safe water slide use. One of the two slides was steep and dropped users into a 9-foot-deep pool. There was no evidence that the principal—hotel management—had published any procedure for the kiosk agent to identify non‑swimmers or to prevent them from using this drop slide.

During a stay, the parent of a young boy was directed to the concierge for nanny service and then referred to the alternate concierge desk—operated by a separate entity—which produced a lady wearing the uniform and name badge of hotel management. This nanny watched the boy for three hours. Another day, the mother hired the same nanny, who took the son and a friend to the pool area. All three wore wristbands provided by the kiosk agent.

The boys played in the regular pools and, unmonitored by the nanny, went down the drop slide without incident. When they later returned to the drop slide platform, the safety officer remembered that they had previously gone down the slide. This time, however, one boy did not emerge from the deep pool at the bottom.

Without realizing it, the mother had been dealing with not one hotel company, but four separate entities. In sworn testimony, she stated her belief that she was always interacting with, and relying upon, staff members of one of the world’s most recognized and trusted hotel brands.

Inquiry revealed that the nanny provided through the secondary subsidiary concierge desk was not licensed as a childcare provider. Whether or not the hotel management realized the woman was unvetted and uncertified is irrelevant: the agent subsidiary that allowed her to solicit clients within the hotel should have known this. Had she attended to her charges more closely, she might have prevented a tragic result.

Plaintiffs further contended that the kiosk should have been directed to issue two wristbands, one to indicate non-swimmers; also, that the hotel should have provided reliable monitoring of the slide’s deep receiving pool to ensure that all users emerged safely. After the incident, the hotel began requiring that its kiosk agent issue two distinct wristbands, one for capable swimmers and readily identifiable as such to the safety/security officer on slide platform duty. While remedial actions are rarely admissible at trial, this was a prudent protocol implemented by defendant hotel.

Plaintiff brought several charges against the hotel company and its guest service agents that were summarized in Plaintiff’s expert’s report:

The Defendants, collectively or severally, failed in their duty to take reasonable, prudent measures in the circumstances to ensure safe premises for guests, breaching their duty of care in three principal ways:

(1) Defendants allowed a hazard, an inherently dangerous recreational structure, to exist on their premises, subjecting Defendants to potential liability;

(2) Defendants negligently operated the inherently dangerous recreational structure; and

(3) Defendants negligently failed to properly direct, instruct, monitor, and supervise their agents, actual and apparent, in the implementation of reasonable and prudent protocols, practices, and safeguards to ensure safe premises for hotel guests.

Plaintiffs argued a persuasive case that the totality of these negligent acts and omissions comprised a systemic failure on the part of the affiliated Defendants in their duty of reasonable care, and that this breach of duty was the proximate cause of the drowning death.


Hotels cannot operate except through agents—principally, their employees. When the scope of operations is extensive, it’s fine to retain outside entities as agents, so long as hotel management provides effective operational protocols and consistent oversight of their implementation. The principal will always incur liability for negligence of agents working within their scope of employment.

While based on actual cases, the illustrative cases in this article are just that, with changes by the author to disguise the identity of parties involved while sharpening the instructional intent.

Peter T. Tomaras, CHA, FMP
Peter T. Tomaras, CHA, FMP
Peter T. Tomaras is not an attorney. He managed hotels for 27 years and taught hospitality management (including hospitality law) for 10 years. He recently retired from 15 years of providing expert witness testimony to litigators in hospitality cases. He may be reached at