Tourism Management 32 (2011) 277287

Contents lists available at ScienceDirect

Tourism Management
journal homepage: www.elsevier.com/locate/tourman

Quality of hotel service and consumer protection: A European contract

law approach
Josep Maria Bech Serrat*
Tourism School, University of Girona, Campus de Montilivi, 17071 Girona, Catalonia, Spain

a r t i c l e i n f o a b s t r a c t

Article history: A lack of transparency in the hotel ranking system presents a serious problem for the industry. This
Received 4 March 2009 is especially the case when it comes to providing information to the consumer and converting quality
Accepted 7 February 2010 standards into binding standards. Since quality management is not merely a strategy for commer-
cialisation, the aim of the rst part of this research paper is to offer companies recommendations
Keywords: from a contract law perspective. This area of law reveals that a reduction in price can be very useful
Quality
for facing quality failures. For this reason, the second part of this paper examines the requirements of
Hospitality
such a remedy for non-performance and promotes the application of scales for calculating a price
Contract law
Information reduction.
Price reduction 2010 Elsevier Ltd. All rights reserved.

1. Introduction
Quality is considered the ability to meet the stated and implied
requirements of customers (Lin & Su, 2003). A vast majority of the
literature provides methods to evaluate hotel service quality by
means of questionnaires and conventional scales, on which
expected and perceived quality is measured (Albacete, Fuentes-
Fuentes, & Llorens-Montes, 2007; Bentez, Martn, & Roman,
2007; Briggs, Sutherland, & Drummond, 2007; Candido, 2005; Erto
& Vanacore, 2002; Hsieh, Lin, & Lin, 2008).
Very few research papers approach hotel quality from a legal
perspective (Bhat, 2006; Federow, 1993) and none of them relate
this area to contract law.
In fact, hotel quality is basically regulated by technical rules, so
there is a lack of tradition in managing quality proceeding from
the contract. As public bodies cannot regulate the numerous
technical standards governing professional activities, there is
a strong commitment of EU institutions to encourage the devel-
opment of voluntary European standards.1 Efforts by the European
* Tel.: 34 972 419719; fax: 34 972 239561.
E-mail address: josepm.bech@udg.edu
1
Art. 26 (5) of the Directive 2006/123/EEC of the European Parliament and of the
Council of 12 December 2006 on services in the internal market (commonly
referred to as the Bolkestein Directive) (OJ L376/36) states that [M]ember States,
in cooperation with the Commission, shall encourage the development of voluntary
European standards with the aim of facilitating compatibility between services
supplied by providers in different Member States, information to the recipient
and the quality of service provision.
Parliament to promote the adoption of these rules have also been
directed towards hotel services.2 Following this trend, a large
number of companies have decided to implement quality
management systems, opting for either certication under ISO
9000 norms or for a model of excellence (Boullon, 2003). Within
this context, quality becomes a part of promoting services and
a strategy for commercialising (Puig-Duran Fresco, 2006). Hotels
use their certications to indicate that they possess the high
standards the customers seek, often without considering the legal
consequences (McDonald, 1998).
However, important limitations arise when quality manage-
ment is based only on technical norms. These are often private
norms, a type of self-regulation agreed upon by a certication
organisation; and, unlike technical regulations, the fullment of
technical norms is voluntary.3 As a result, they neither create legal
duties for hotels to consumers (Fuentes i Gasso, Hidalgo i Moya, &
2
In this sense, the Resolution of 29 November 2007 on a renewed EU Tourism
Policy: Towards a stronger Partnership for European Tourism (2006/2129(INI)),
calls on the Commission, in cooperation with European hotel and catering orga-
nizations, such as HOTREC (Hotels, Restaurants and Cafes in Europe), and with the
European consumer protection organizations, to establish a methodology for
creating such minimum standards on the quality of accommodation services
(point 27).
3
Private grading is carried out on application by the hotel and is, therefore,
based on the hotels consent. Even where there is no prot-making, where
grading is carried out by private sector bodies, the main legal context within
which it is conducted is the contract between the grader and the hotel. Private
grading will depend on fees and can rarely, if ever, be comprehensive
(McDonald, 1998).

0261-5177/$ see front matter 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2010.02.003
278 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
Moles i Plaza, 2001; Yzquierdo Carrasco, 2000)4 nor determine
which standards become enforceable from the guests perspective.
At this point, European contract law can be a very useful tool for
these kinds of quality problems in the hospitality industry.
The nal outline edition of the Common Frame of Reference
(hereafter DCFR) mainly considers the quality of services as an issue
that must be determined by the contracting parties (Art. II.-9:108).5
Hence, the hotel industry should decide whether to give binding
character to quality standards by means of a contract, taking the
legal relationship with the consumer into consideration.6
Even so, it will be difcult to put such an issue into practice.
The current hotel ranking systems in the Member States are not
adequate for informing the consumer of the quality of service
(concerning UK hotels, Briggs et al., 2007; in Spain, Arcarons,
Casanovas, Hernandez, & Martnez, 2008), a common standard of
quality across the sector is needed (Briggs et al., 2007; with regard
to rural accommodation, Albacete et al., 2007)7 and there is a lack
of quality dimensions. Many current rankings use criteria exclu-
sively related to the physical dimension of quality services (in
Ireland, McDonald, 1998; with regard to Anglo-American systems,
Cordato, 2008).8 Since the lack of transparency presents a serious
problem for hospitality, the aim of the rst part of this research
paper is to make recommendations to the industry for giving
binding character to quality standards by means of examining
contract rules (point 2).
Contract law is also systematically ignored by hotels when
facing service quality defects. Many companies apply discounts,
offer gifts or compensating services or adopt other common others). Even so, descriptions of specic services to be supplied
sense measures, quite often according to the customer prole and
type of service (e.g., a bottle of champagne and sliced fruit in the
bedroom, accommodation for a weekend, additional dinner). Here
an approach that is only in accordance with the standards of
technical norms (e.g., ISO 10002:2004: Guide for dealing with
4
Technical norms should be distinguished from technical regulations concerning
elaboration and verication procedures (homologation); these became compulsory
for companies because of an administrative regulation. Only technical regulations
entail the publication of the corresponding norm in an ofcial bulletin containing
the standards of products to be commercialized; it regulates the ofcial control
of products, that is, the obligatory certication by which the public administration
fulls its obligation to test the safety of the products that are put into circulation.
5
European contract law has been rapidly developed over the last few years. This
has culminated in the DCFR of the Study Group on a European Civil Code and the
Research Group on EC Private Law (Acquis Group), which was published in February
2009 (Von Bar et al., 2009). This text is rst and foremost focused on principles,
common denitions and model rules.
6
Quality is also related to the conformity of goods (Arts. IV.A.-2:301(a), IV.B.-3:
102(2)(a), IV.B.-3:104(1)(a), IV.C.-3:104(1), IV.C.-5:105(3), IV.C.-7:105(1), IV.H.-3:
102(1) and (3) DCFR), and other issues (Arts. II.-3:101, II.-5:105 (7), IV.C.-5:104(6),
IV.C.-8:103(1) and IX.-5:207(2) DCFR).
7
To this end, the European Parliament Resolution of 29 November 2007 on
a renewed EU Tourism Policy: Towards a stronger Partnership for European
Tourism, advocates the introduction of an EC grading system for accommodation
that would encompass pan-European common criteria. This would assure
consumers of the minimum level of quality to be expected, regardless of which
Member State they visit. It would also encourage the industry to determine the
meaning of stars and to regularly inform the EU institutions of the progress
made (point 23). Even so, setting up a common ranking system will be not easy
to achieve because of the variety of hotel types and tourist accommodations; the
local requirements, cultures and sensitivities; and the very different structures of
current classication plans (point 25). See points 19 and 21. Hotel grading is carried
out both publicly and privately, and historically there has been no policy for many
EU state tourism authorities to require hotels to externally display their ofcial
grades (in Ireland, McDonald, 1998).
8
Architectural criteria prevail in hotel classication systems in some European
Member States which have historically used the term classication rather than
grade to underline the fact that the system is a guide to the presence of facilities,
rather than a ranking of their quality (e.g., the Spanish Ordinance of 19 July 1968 on
classication of hotels).
customer claims in organizations) becomes problematic because of
its predominant preventive character; i.e., unlike contract law, self-
regulation mostly does become applicable until a quality failure
occurs, and it does not provide remedies for non-performance.9
For this reason, the current measures taken by hotels should be
adjusted, where appropriate, to remedies for non-performance in
accordance with the progress made in European contract law. The
second part of this paper focuses on price reduction (point 3).
When there is a breach of contract (e.g., a room with no balcony),
problems arise in calculating the amount of price reduction because
of a lack of legal criteria; hence some parameters are explained and
scales for a price reduction are promoted as a management tool.
This is basically a conceptual approach and a multidisciplinary
study should specify such scales more precisely in the future.
2. Quality, binding standards, and information to be provided
Many difculties arise in converting quality improvements into
binding standards within the framework of a hotel contract. Special
requirements can be made by the consumer and accepted by the
hotel or intermediary (e.g., a room with a Jacuzzi), but the majority
of hotel contracts are not in writing and only a check-in document
is provided, so identifying agreed standards can be problematic. In
fact, a wide range of quality standards is contained in technical
norms and is unlikely to be expressly included in a contract (e.g.,
welcoming products in rooms and baths, such as soap, shampoo, or
(e.g., in printed brochures and check-in documents, or on websites)
and statements made in advertising will be of paramount impor-
tance in giving binding character to standards.10
Traditionally, most European legal systems have been rather
reluctant to deal with advertising within the law of contract
(Mgelvang-Hansen, 2007). Quality issues are not considered
a concern of contract law but a matter that should be dealt with
solely or primarily by the special acts concerning marketing and
fair trading.11 The approach in most Member States seems to be that
a declaration addressed to the public (e.g., advertisements in
printed media), that would otherwise be considered an offer, is an
invitation to make an offer. So, the advertiser is simply entitled to
refuse to sell on the terms advertised when a purchase of goods
appears more advantageous to the customer than intended by the
advertiser, either due to an error in the advertisement or to attract
customers, as in a case of misleading advertising.
However, a new approach in consumer contract law results from
a revision of the aequis communautaire, in which rules can be seen
as specic manifestations of a general principle to protect the
reasonable expectations of individual consumers based upon public
9
Moreover, an infringement of a large number of technical rules does not lead
consumers to exercise a remedy for non-performance of the contract, since the
majority of defects are very minor (e.g., lack of towels in the bathroom of a hotel
room). Moreover, technical norms include some cases of non-performance from
a contractual approach which are dubiously related to quality failures (e.g., Spanish
norm 3.9.1 UNE 182001:2005: Hotels and Tourist Apartments refers to the arrival
of a customer with conrmed reservation with no possibility of staying at the
establishment).
10
Publicity may be used to make notice of the quality details of the service or to
reduce expectations of the consumer (e.g., a brochure which refers to a hotel room
without views or a tourism guide stating that Hotel APA of Rio de Janeiro, Brazil, is
a somewhat old fashioned establishment).
11
Point 2 of the Annex of the Directive 2005/29/EC of the European Parliament
and of the Council of 11 May 2005 concerning unfair business-to-consumer
commercial practices in the internal market and amending Council Directive 84/
450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament
and of the Council and Regulation (EC) No 2006/2004 of the European Parliament
and of the Council (hereafter Unfair Commercial Practices Directive) (OJ L149/22).
 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
statements (Mgelvang-Hansen, 2007). In that sense, Art. II.-9:102
(2) DCFR provides:
[I]f one of the parties to a contract is a business and before the
contract is concluded makes a statement, either to the other
party or publicly, about the specic characteristics of what is to
be supplied by that business under the contract, the statement is
regarded as a term of the contract unless: a) the other party was
aware when the contract was concluded, or could reasonably be
expected to have been so aware, that the statement was incor-
rect or could not otherwise be relied on as such a term; or b) the
other partys decision to conclude the contract was not inu-
enced by the statement.12
Consequently, quality standards will be legally binding if an
offer, promotion or advertisement by the hotel makes reference to
such standards, and the information provided at the time of con-
tracting forms an integral part of the contract. If information given
in the statement is incorrect or if an undertaking given in the
statement is broken, the other party may resort to the normal
remedies for non-performance of a contractual obligation. This
would prevent parties from creating obligations out of mere
advertising puff, or obviously outdated statements, or very vague
and general statements, or statements qualied by a warning that
special terms might apply (Von Bar & Clive, 2009).13
On the contrary, a consumer is not entitled to require a quality
standard (e.g., to check the consumer in a four-star Spanish hotel
within the maximum of 5 min) simply because compliance to
a technical norm (e.g., norm 4.6.1 UNE 182001:2005: Hotels and
Tourist Apartments) was taken into consideration by a private orga-
nisation in granting the respective certicate.14 The company shall
express to the consumer its contractual will to provide some quality
standard to clarify that it is not to be considered a voluntary standard.
At this point, difculties arise concerning how the information
must be provided to the consumer. No criterion has been estab-
lished by the DCFR, even though this draft is bound to represent
a great step forward in providing a much more consistent and
coherent contract law as a soft law toolbox for future legislation
(Von Bar, Clive, & Schulte-Nolke, 2009; for the same approach
concerning the Principles of European Contract Law (hereafter,
PECL), Lando & Beale, 2000).15
Nevertheless, if a hotel publicises its large rooms, consumers
will be able to require them according to the contract. Even
a contractual will of fullment of the standards inherent to quality
norms could take place when a label, certicate or quality mark is
printed by the hotel on the information provided to the consumer
(e.g., promotional website or contractual document). This is
because a contract obliges a party not only to what has been
expressly mentioned, but that the quality required will result from
other applicable rules of law or from usages or practicesdor, as
a last resort, the quality which the consumer could reasonably
12
See also Art. II.-9:102 (3) DCFR. In a similar way, Art. 5 (3) of the proposal for
a Directive of the European Parliament and the Council on consumer rights of 8
October 2008 states that [t]he information referred to in paragraph 1 [the main
characteristics of the product, amongst other information] shall form an integral
part of the sales or service contract (COM (2008) 614).
13
The effect of this Article could be displaced by a merger clause stating that the
terms of a contract were exclusively in the contract document (Von Bar & Clive,
2009).
14
Some technical norms establish quality standards for the services depending on
the ofcial category of the hotel. For instance, according to the Spanish norm UNE
182001:2005: Hotels and Tourist Apartments, ve-star hotels must offer their
clients room service 24 hours a day.
15
The authors have not taken the characteristics and features of quality in the
hospitality industry into consideration, nor the problems resulting from a lack of
transparency.
279
expect in the circumstances (Art. II.-9:108 DCFR) (e.g., if a hotel
brochure promotes four-star accommodation, the consumer could
reasonably expect large rooms). In addition, once public or private
quality standards are displayed by the hotel, Art. IV.C.-2:105 (2)
DCFR should be applied, which states that [i]f the service provider
professes a higher standard of care and skill the provider must
exercise that care and skill.16 So, for instance, when a hotel is
advertised as a four-star hotel, the business should exercise
a higher standard of care and skill than a three-star advertised hotel
based on the same ranking system (Von Bar & Clive, 2009).
But the absence of transparency in hotel quality services will
make it difcult to determine the binding standards of information
provided to the consumer. Therefore, recommendations will be
needed.
2.1. Avoiding general descriptions
Companies should avoid general descriptions of a hotel or
resort, such as set in a beautiful location, a perfect hideaway or
a luxury hotel. Including the word luxury in descriptive material
creates the impression that the consumer will nd the resort or
hotel somewhat special. If it is a luxury hotel, it could be expected
to be luxurious overall, not just have luxurious rooms. This would
include attentive service of the highest standard, sumptuous
facilities, rst-rate meals and drinks, and an overall ambience of
extravagance (Cordato, 2008). In fact, luxury is often used synon-
ymously with expressions like rst class and highest standard,
and different courts have considered that the word luxury can be
actionable when embellished by description or by reference to
a rating system. Hotels, then, should be selective when using these
terms.
In addressing this problem, the English High Court, in the
Keepel-Palmer v. Exus Travel Ltd and Royal Westmoreland Villas Ltd
case,17 examined the expression offers the guests the ultimate in
luxury style and comfort contained in a brochures description of
the Frangipani Custom Home in Barbados. The expression was
followed by a detailed description of the architectural fabric of the
villa, with its furnishings and environs. After different defects had
arisen (e.g., the absence of plunge rooms, television sets, kettles,
glasses and cups, poor lighting, amongst others), the Court treated
the claim as a breach of contract. Stating that [t]he villa was not
rst class accommodation of a very high standard, the Court
awarded 22,000d25% of the contract pricedfor diminution in
the value of the holiday and 3,000 for loss of enjoyment.18
Similarly, in the recent German case AG Hannover 15.1.2009
(414C 3852/08),19 the court examined a brochure concerning
a hotel room of the Grand Luxe category located in Venice, Italy.
The room was booked by the plaintiffs for an overnight stay from
24.9.2007 to 28.9.2007 for a total amount of V1,382.32. It was
described as a luxury and roomy room (approx. 40 square metres)
which was equipped with furniture from Venice [.] bath,
16
The DCFR includes Chapter 2 of Part C of Book IV on rules applying to service
contracts in general.
17
[2003] All E.R. (D) 183.
18
In Direct Holidays plc v. Wirral Metropolitan Borough Council ([1998] EWHC
Admin 456; Divisional Court, April 28, 1998), the tour operator Direct Holidays
had described in their brochure the ofcial category of a villa in Tenerife (Spain)
as being Three keys when it was in fact only One key. The defence rather
weakly endeavoured to argue that the ofcial Spanish key ratings were of little
or no value and therefore immaterial. No reference to Art. 5 of the Package Travel,
Package Holidays and Package Tours Regulations 1992 (1992 No. 3228; amend-
ments inserted by SI 1995/1648 and SI 1998/1208) was made in the case, but this
norm should be of relevance in the Trade Descriptions Act 1998 prosecutions
such as this (Grant & Mason, 2007).
19
RRa 2/2009, 8083.
280 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
bathrobe, satellite TV [.], including canal view (approx. 40 m)
[.]. In reality, however, the hotel room was simple, of a median
category, and equipped with normal beds, plain night tables and
a non-style wing chair from Venice. After reviewing photographs
taken by the plaintiffs, AG Hannover determined a price reduction
of V287.10, taking other defects into account as well according to
German regulations (x651 d Abs. 1 S.2, 638 Abs. 4, 346 Abs. 1 BGB).
The court declared that the plaintiffs booked a hotel of six-stars
category, so that they could expect a luxury room [.]. More-
over, although the organiser warned the plaintiffs that the photo-
graphed rooms in the brochure were only examples of the furniture
to be provided, AG Hannover believed that the room should have
been at least comparable to the descriptions.20
General descriptions, then, should be avoided. The industry
should consider this when providing a minimum of information
about the specic characteristics of a service to be supplied.
2.2. Providing a minimum of information: separate hotel services
and package holidays
There is no EU regulation on accommodation as a separate
service establishing minimum information requirements on
quality.21 From a general perspective, Art. 5 (1) of the proposal for
a Directive on consumer rights of 8 October 2008 states that:
[P]rior to the conclusion of any sales or service contract, the
trader shall provide the consumer with the following informa-
tion, if not already apparent from the context: a) the main
characteristics of the product, to an extent appropriate to the
medium and the product [.].
Although this is an insufcient provision, and it is unclear
whether this proposaldbased on a fully targeted harmonisation
(Art. 4)dwill come into force,22 a minimum information on the quality
of accommodation should be reasonably provided by the hotel.
In that sense, the German case AG Duisburg 25.11.2008 (51C
3840/08)23 declared that the traveller (the plaintiff) should not be
able to expect to use an smoking room or zone in a Spanish hotel if
he was warned in the brochure that bans on smoking were possible,
although smoking in hotels is not forbidden by the Spanish Anti-
Tobacco Act. Such an environmental quality standard is a main
feature of a product that should be conveyed to the consumer.
On the other hand, the Package Travel Directive24 sets out rules for
general information requirements and advertising, such that partic-
ularities arise when an accommodation service forms an integral part
of a package holiday. The rst indent of Art. 3 (2) states that:
[W]hen a brochure is made available to the consumer, it shall
indicate in a legible, comprehensible and accurate manner both
the price and adequate information concerning [.] (b) the type
of accommodation, its location, category or degree of comfort
20
The Italian Giudice Conciliatore di Roma, 17.6.1987, Temi Romani, 1988, II, 191, also
held an organiser liable for providing accommodations of a lower category that that
agreed upon by the contracting parties. The court ruled that damages to the cor-
responding extent of the price difference for the accommodation period had to be
recovered, as well as damages resulting from a lack of the promised comfort. As for
non-EU cases, see the Australian case Stephenson v. Flight Centre Ltd & Club Mediter-
ranee Pty Ltd [2008] NSWCTTT 844.
21
Although the EC Treaty mentions tourism as an area in which the Community
can take measures (Art. 3 point u), subsidiarity remains the rule, and only a few
norms on hotel accommodation have been enacted (e.g., Council Recommendation
86/666/EEC of 22 December 1986 on re safety in existing hotels, OJ L384/60).
22
Some Member States could be forced to reduce the current consumer
protection.
23
RRa 2/2009, 8586.
24
Council Directive 90/314/EEC of 13 June 1990 on package travel, package holi-
days and package tours (OJ L158/59).
and its main features, its approval and tourist classication
under the rules of the host Member State concerned.25
Additionally, Art. 4 (2) establishes that the contract shall be set out
in writing or such other form as is comprehensible and accessible to
the consumer.26 This must be communicated to the consumer
before the conclusion of the contract. The consumer will be given
a copy of the contract terms of the package, and the contract must
contain minimum information. This includes its location, its tourist
category or degree of comfort, its main features, its compliance with
the rules of the host Member State and its meal plan (Annex).
Identication of the hosting Member State will be of particular
interest in all intra-Community package holidays. This will concern
technical or ofcial regulations, not voluntary technical norms,
especially regarding standardisation and the hotel ranking system.
Thus, for instance, if an organiser makes a statement about a host
Member States compliance with the rules regarding a ve-star
hotel located in Barcelona (Spain) included in a package holiday
sold in Germany, the Catalan Ordinance of 6 October 1987 on
technical requirements of hotels will be applicable. Annex I of this
norm states that the minimum usable area of a double room for
a ve-star ranked hotel must be 16 square metres.
The advertisement will form part of the content of the contract,
and there will be a breach of contract if the services delivered under
the contract do not conform to the advertisement.
Moreover, the second indent of Art. 3 (2) of the Package Travel
Directive states a pre-contractual public statement rule:
[T]he particulars contained in the brochure are binding on the
organiser or retailer, unless:
- changes in such particulars have been clearly communicated to
the consumer before conclusion of the contract, in which case
the brochure shall expressly state so,
- changes are made later following an agreement between the
parties to the contract.
This rule deals with a rather specic situation, and it is the result
of special legislative efforts made to protect package tour travellers.
In such a case, it is a reasonable expectation of the other contract
party that the terms should be in accordance with the pre-
contractual statement made by a party to the contract. This is
also the case when it is given in an advertisement, brochure or
other descriptive material (Mgelvang-Hansen, 2007).
Consequently, when accommodation is included in a package,
technical standards will more frequently acquire a binding char-
acter for the organiser and the retailer by means of information
duties, even though the Package Travel Directive does not refer to
all quality components.27 On the contrary, if accommodation is
a separate service and does not form part of a package, information
requirements will be regulated, where appropriate, by each
25
See also Art. 3 (2). On the contrary, accommodation is not mentioned within the
general information requirements to be provided to the consumer before
concluding the contract (Art. 4 (1) of the Package Travel Directive).
26
Concerning the meaning of this sentence, Art. I.-1:106 (1) DCFR.
27
The Package Travel Directive is one of eight directives subject to the review of
the consumer aequis communautaire. Although quality does not constitute one of
the issues brought forward in the consultation replies (working document of the
Commission Responses to the consultation on the Council Directive 90/314/EEC
of 13 June 1990 on package travel, package holidays and package tours: Summary
of responses; http://ec.europa.eu/consumers/rights/summary_responses_
publication_nal_30012007.pdf; consultation date: 28 January 2010), an exten-
sion of quality service aspects within the current information requirements could
be suggested in a proposal on a revised directive presented by the European
Commission in 2010. Concerning the revision process, see the parliamentary
question of 25 November 2008 by Karin Riis-Jrgensen (ALDE) on the revision
of the Package Travel Directive and the answer given by Ms. Kuneva on behalf
of the European Commission of 8 January 2009: E-6327/08EN.
 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
Member State in less detail. Thus, information given concerning the
quality offered and the number of binding standards will be
reduced, without affecting any possible public liability for
misleading advertising.28
In any case, the minimum information required by norms is too
general, and hotels should adapt it to the specic product.
2.3. Adapting the information provided regarding the product
The hospitality and travel industries should not literally repro-
duce the minimum information required by norms without
adapting it to their own products.
A detailed examination of all quality dimensions should be con-
ducted before providing the information to the consumer (Table 1).
At this point, the current criteria applied to the hotel ranking systems
of the EU are mainly objective and focused on tangible aspects, such
as bedrooms (e.g., dimension, equipment, furniture), services
(e.g., reception, laundry, room service), and premises (e.g., general
cleaning, comfort, hygiene).29 However, quality also includes
a human dimension resulting from the staff who deals directly with
the consumer.30 Concerning this, the German AG Duisburg 1.10.2008
(27C 1039/08)31 ruled that the personnel of a Greek hotel were not
obliged to speak German or any international language in a trip
where the organiser made no mention of language. Moreover, quality
also includes environmental attributes resulting from the interaction
of consumers with the place (Boullon, 2003). What guests consider
a pleasant atmosphere is linked to their age, education, profession,
socioeconomic status, and beliefs and afnities, along with dress,
gestures, language, or hobbies. For example, an environmental
quality defect can arise if a couple goes to Paris for their honeymoon
and the hotels information does not explain that the resorts target is
exclusively elderly guests. To this end, hoteliers, organisers, and
retailers should look for certain homogeneity in the consumers and,
where appropriate, establish a code of appearance, except when the
guest gives different instructions.32
Companies can use quality management systems or excellence
models for improving their internal procedures only. Consider, for
instance, a hotel that has a quality certication contingent on
technical norms that establish a maximum waiting time for
checkout. If guests are not informed of this, they will have no non-
performance remedy in case of a delay, as standards are not guar-
anteed by the contract.
A quality management system based on the fullment of tech-
nical norms will acquire a similar meaning as the ofcial hotel
grade. A certicate or a distinctive mark will be an element under
consideration by the consumer when choosing a service, but the
assumed quality will not necessarily be required by the contract. In
28
See, for example, the STSJ Community of Madrid 5.12.2001, JUR 2002\94084.
29
The star-grading scheme and associated standards are largely producer-driven,
and many hotels offer poor service but have a high rating because they full the
criteria in terms of physical aspects (in Scotland, Briggs et al., 2007).
30
The inclusion of human aspects in internal procedure codes will make it
possible to expose unfounded claims (Fletcher, 2008). Thus, in the case Gutstadt
and Another v. Air Canada and Others [2007] QJ No. 10717, the judge decided that
an airline company staffs conduct was in accordance with the ight procedure
manual when they refused to readmit the plaintiff after a stopover. This was due
to his bad behaviour and an egregious argument with a crew member concerning
the attention of the personnel.
31
RRa 2/2009, 146147.
32
See also the above-mentioned case AG Duisburg 25.11.2008 (51C 3840/08). The
human and environmental dimensions of tourist quality services have been
progressively incorporated into technical norms. For instance, the Spanish norm
182001:2005: Hotels and Tourist Apartments mentions some environmental
aspects, such as smoking areas in restaurants (6.2.3), a relaxed atmosphere in
the bar (6.8), a dining hall for company meetings with a distinct area for each
group of assistants (10.3), and a soundproofed banquet area (10.4).
281
Table 1
Quality dimensions in hotel services.a
Physical dimension
External appearance of building or premises
Hotel location
Longer distance from the beach
Hotel facilities and equipment
Not enough furniture
Lack of facilities
Cleanliness
Poor cleaning services
Lizards and cockroaches in an aparthotel room
Maintenance
Decoration
Human dimension
Flexibility and versatility
Courtesy
Positive attitude
Uniformity of behaviour
Quickly response
Decient customer service
Environmental dimension
Homogeneity of customer/shared behaviour
Atmosphere
Noises due to construction work in progress
Codes of appearance
a
Table 1 starts from a list of Spanish sentences on package holidays (Bech
Serrat, 2001).
this sense, Art. IV.C.-2:105 (3) DCFR seems to be a confusing norm
when stating that:
[I]f the service provider is, or purports to be, a member of
a group of professional service providers for which standards
have been set by a relevant authority or by that group itself, the
service provider must exercise the care and skill expressed in
those standards.
Such standards will usually have been set by a relevant authority
usually a national authority which can either be a private
authority or a public authority. The obligation which this Article
imposes on the service provider all relate to the particular result to
be achieved through the service process. That result can be thought
of as the accomplishment of the clients explicit and implicit wishes
and needs and this might cause the client to invoke the non-
performance of an obligation of the service provider under this
paragraph (Von Bar & Clive, 2009).
However, a hotel may be interested in complying with technical
norms but, at the same time, not be ready to assume a contractual
duty to make all the standards contained in such norms effective.
Non-binding technical norms can quite often be used as a test or
middle step prior to the fullment of a contract, leaving the
consumer without entitlement to remedies for non-performance
(e.g., enforced performance) (Art. III.-3 DCFR). There is no
compulsory external display law for private grades, and a hotels
membership in professional service providers identied by quality
labels will be not enough if the hotel is not willing to assign
a binding character to them and if the consumer is not informed in
some way of the standards.
The Spanish case SAP Gipuzkoa 11.11.2008 [JUR 2009\91487]33
refers to problems in adapting the information provided to the
product. Here the consumers were informed by a travel organiser
that the agreed-upon hotel in London was going to be replaced by
another one. The organiser informed them that the new hotel
33
BOE 161 of 7 July 1995. This Act has been replaced with Arts. 150165 of the
Spanish Royal Legislative Decree 1/2007 of 16 November on consumer protection
(BOE 287 of 30 September 2007).
282 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
would be of Victorian style, located 5 min walk to Paddington
Station and with all its rooms comfortably decorative, full bath-
room with bath tub or shower, satellite TV, telephone, hairdryer,
iron and heating, reception service, breakfast room and parking.
The consumers accepted this change of hotel. In reality, the hotel
rooms were tiny, included wardrobes lacking drawers and sheets
full of holes and they were located on the third and fourth oors in
a building without a lift. A lack of comfort was evident. The Audi-
encia Provincial held the organiser and retailer jointly liable for non-
performance in accordance with Art. 11 of the Spanish Package
Travel Act of 6 July 1995.33
2.4. Avoiding misleading actions and omissions: the Unfair
Commercial Practices Directive
When a hotel does not advertise accurately, the business will
not only be contractually bound to the information given, but it
could also incur public liability for misleading advertising.
The implementation of the Unfair Commercial Practices Directive
in the European Member States legal systems will exert inuence
over the descriptive materials provided by the hospitality industry.
Commercial practices such as displaying a trust mark, quality mark
or equivalent without having obtained the necessary authorisation
are regarded as unfair (art. 5 (5) and Annex I point 2). Although the
common advertising practice of making exaggerated statements, or
statements which are not meant to be taken literally, will be
accepted (Art. 5 para. 3), a commercial practice shall be unfair if:
a) It is contrary to the requirements of professional diligence; and
b) It materially distorts or is likely to materially distort economic
behaviour with regard to the product of the average consumer
whom it reaches or to whom it is addressed, or of the average
member of the group when a commercial practice is directed
towards a particular group of consumers (art. 5 para. 2).
Misleading actions (Art. 6),34 misleading omissions (Art. 7)35 and
aggressive commercial practices (Arts. 8 and 9) shall be prohibited
(Art. 5 paras.1 and 4) when providing descriptive materials as part of
a commercial transaction in relation to a product (Art. 3 para. 1).
The defendant organiser Pullmantur, for example, provided
a brochure claiming that the Hotel Olympic, Prague (The Czech
Republic) was rst superior when, in fact, it was gra-
deddaccording to the report by the Prague Ofce of Tourismdas
three-star in the STSJ Community of Madrid 16.6.2001.36 Accord-
ing to the court, the fact that the defendant in these events does not
use an ofcial ranking is only attributable to the organiser itself.
Moreover, the sentence added, if there is no ofcial classication, it
should be stated, so that there is absolute clarity and no information
misleading to travellers, and when this does exist, as was the case
here, it must be used. Consequently, the court conrmed a sanction
of V1,382.32 (230,000 pesetas) awarded for the claim by the Tourism
Ofce (Direccio n General de Turismo) of the Community of Madrid,
34
Product specications and attributes of traders and their agents, such as their
qualications or awards and distinctions, will be considered in relation to
misleading actions (Art. 6 (1) sub. (b) and (f)), as well as commercial practice
involving non-compliance by the trader with commitments contained in codes of
conduct by which the trader has undertaken to be bound. In addition, other
misleading commercial practices will be claiming to be a signatory to a code of
conduct when the trader is not (Annex I, point 1) or claiming that a code of
conduct has an endorsement from a public or other body which it does not
have (point 3).
35
According to Art. 7 (4) sub. (a), in the case of an invitation to purchase, informa-
tion on the main characteristics of the product, to an extent appropriate to the
medium and the product, shall be regarded as material, if not already apparent
from the context.
36
STSJ Community of Madrid 16.6.2001, JUR 2001\324797.
after considering further that in any case, even abiding by the
arguments of the claim we would consider that three-star would be
equivalent to one and not to rst superior.
In another case, the STSJ Community of Madrid 4.4.200137
sanctioned Circuitos a Fondo, S.A. for V1,442.42 (240,000 pesetas).
This was for stating in the brochure that the Royal National Hotel of
London was classied as three-star. In fact, following a report of the
English Tourism Council, the hotel had not been awarded any of-
cial category or classication, and hotels in Great Britain were not
classied by stars as they were in Spain. According to the court, so
as not to have misleading advertising, the plaintiff should have said
in its advertising that the Hotel was not classied with stars, but
that it was similar to those who were, in such a way that together
with the former, which is already enough to understand what the
reason for which it was sanctioned was, the complaint (against
which there is not a single proof to the contrary), makes it clear that
there were a series of defects improper to a three-star hotel (small,
dirty rooms, unchanged sheets, a total lack of hygiene, a single
towel per person, no shampoo or shower gel, one single, used tablet
of soap with hairs stuck to it, a chaotic breakfast, etc).
In this section, we have focused on the quality of hotel service
from a preventive approach. We will now discuss the same issue
regarding how quality failures have to be faced without abandon-
ing a contract law perspective.
3. Price reduction as a remedy for quality defects in hotel
services
3.1. Price reduction as a remedy for non-performance
If a hotel does not full the quality standards agreed upon by
both parties (e.g., a hotel room without a sea view), a breach of
contract will occur. The term breach of contract is exible, and in
most legal systems, perfectly covers the standard case in which the
debtor is responsible for the non-performance (Zweigert & Kotz,
1987). Under the system adopted by the PECL, there is non-
performance whenever a party does not perform any obligation
under the contract (Art. 8:101 (1)). In addition, a quality defect also
specically refers to a lack of conformity, which is a broad, unitary,
and agglutinative concept of non-performance rst used in sales
(Art. 35 (2) CISG)38 and later applied to other contracts.
At the heart of contract law there is a very basic rule, which is
captured by the Latin principle pacta sunt servanda (agreements
must be observed). This means that a debtor is held to a contract,
so that in the event of a breach, the creditor can seek legal remedy
(Schafer & Ott, 2004). More specically, a failure in hotel quality
may give the consumer the right to a) claim for cure, if it can be
completed within the time allowed for performance; b) claim
specic performance; c) terminate the contract; d) price reduction;
and e) claim damages (Art. 8:101 PECL: Remedies available; Art.
III.-3 DCFR: Remedies for non-performance).
Despite the fact that there are no quantitative data about how
often these remedies are used in Europe to address hotel quality
defects, claiming performance is presumably the preferred one (e.g.,
the consumer asks for a quiet hotel room). Even though legal rules
can provide incentives for a party to avoid breach of contract, strict
enforcement of contracts may also lead to inefciency. In that sense,
37
STSJ Community of Madrid 4.4.2001, JUR 2001\222350.
38
The United Nations Convention on Contracts for the International Sale of Goods,
signed in Vienna on 11 April 1980 (hereafter, CISG). A lack of conformity covers
s, and even aliud pro alio cases (Lopez Lopez, 1997;
quality failures, vices cache
Muller-Chen, 2005). Art. IV.A.-2:301 DCFR states that [t]he goods do not conform
with the contract unless they (a) are of the quantity, quality and description
required by the contract.
 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
the cost of the debtor adhering to the contract may exceed the
benet to the creditor due to circumstances that emerge after the
contract (Schafer & Ott, 2004). In many cases, specic performance is
not possible or it is uneconomical to induce completion of perfor-
mance of a contract after it has been broken (Posner, 2007). Consider
the situation in which the costs for the hotel rise to such an extent
that they exceed the total joint surplus of the contract (e.g., to install
the lift promised to the consumer). Alternatively, consider the
situation in which the performance of contractual obligations
becomes inefcient because the hotel obtains some utility from
addressing an obligation to another party that is greater than the
joint surplus of the original contract (e.g., a room with a sea view is
contracted by a famous actress for ve times the price to be paid by
the original consumer and there are no available rooms with same
features). In such cases, it is efcient not to perform the contract.
Then the rules provide incentives to, on the one hand, breach
contracts when it is efcient to do so, but on the other, prevent
breach of opportunistic reasons (Schafer & Ott, 2004).39
At this point, a reduction in price can be a very useful remedy if
a breach of contract remains, i.e., for facing a hotel quality failure,
although most litigations brought to court by consumers are to
claim compensation for damages.40 Price reduction has been
considered as a remedy for non-performance by important inter-
national and European norms, such as Art. 50 CISG, Art. 9:401 PECL,
and Art. 3 (5) of Directive 1999/44/EC of the European Parliament
and of the Council of 25 May 1999 on certain aspects of the sale of
consumer goods and associated guarantees,41 and academic texts
(i.e., Art. III.-3:601 DCFR). EU institutions have even passed different
norms establishing a right to price reduction to protect the
consumer in tourism activities.42 Requirements for exercising this
remedy thus should be known by the hotel industry.
The right to reduce price seeks a balance between the estimated
price and the received value and does not affect the contract. Any
quality failure will be enough of a breach of contract to allow the
right to exercise price reduction (Von Bar & Clive, 2009).43 The
required breach can be less severe than in contract withdrawal; i.e.,
the majority of European Member State legal systems provide
a price reduction remedy when non-performance is too slight to
justify contract termination (Badenrecht et al., 2007).
39
Most breaches of contract, however, are not opportunistic. Many are involun-
tary because performance is impossible at a reasonable cost and maybe at any
cost, while other breaches are voluntary but efcient (Posner, 2007).
40
For example, the Spanish SJMER Asturias, Oviedo, 6.11.2007, JUR 2008\56954
condemned the tour operator to pay the amount of V 900 in compensation for
damage for advertising the Hotel Mandarin on the Maya Riviera in Mexico as
ve-star in a brochure, when the same hotel was published at its reception
desk and on its website as a four-star hotel. In such cases, the court tends to
accept the causal relationship between the hotels lack of category and the damage
suffered by the consumer. In this sense, SAP Madrid 31.5, 2004, JUR 2004\245613
obliged the tour operator to compensate the claimant for the amount of V 6,000
after considering that undoubtedly the lower category of the hotel (a three-
star hotel and not a four-star hotel) must, necessarily, affect the services
rendered [.].
41
OJ L171/12.
42
Art. 10 (2) of the Regulation (EC) No 261/2004 of the European Parliament and
of the Council of 11 February 2004 establishing common rules on compensation
and assistance to passengers in the event of denied boarding and of cancellation
or long delay of ights (OJ L46/1) states that: [I]f an operating air carrier places
a passenger in a class lower than that for which the ticket was purchased, it shall,
within seven days, by the means provided for in Article 7(3), reimburse: (a) 30 % of
the price of the ticket for all ights of 1500 km or less [.].
43
Yet, it is not clear that this remedy will also be applicable in cases where
a different service is supplied (aliud pro alio), such as accommodation in a hotel
of another ranking. Despite the inclusion of an aliud delivery within the scope of
Art. 50 CISG by some legal scholars (Vazquez Lepinette, 2001), certain regulations
of the civil law systems are mainly based on sales of goods that are unique, as in
Roman law.
283
The remedies available for non-performance depend on
whether it is not excused or excused due to an event that was not
the fault or responsibility of the hotel or due to the behaviour of the
consumer (Art. 8:101 and Art. 8:108 PECL). Even so, non-
performance attributable to the hotel is not required for price
reduction, unlike compensation for damages.44
Obviously, the consumers acceptance of non-performance is
required (Art. III.-3:601 (1) DCFR). Therefore, price reduction is not
a useful remedy without minimum satisfaction of the consumer
taking some advantage of a defective service (Vazquez Lepinette,
2001). However, the consumer will not have to make any sepa-
rate declarations on price reduction before the price is actually
reduced (Shin, 2005). Notice must only be given to the hotel
specifying the nature of the lack of conformity within a reasonable
time after the consumer has or ought to have discovered it (Art. 39
(1) CISG and Art. III.-3:107 DCFR). Acceptance by the hotel is not
a general requirement, either (Art. III.-3:601 DCFR).
A consumer who is entitled to price reduction and who has
already paid a sum exceeding the reduced price, as in a required
advance payment upon booking, will be able to recover the excess
from the hotel (Art. III.-3:601 (2) DCFR).
Compatible remedies are cumulative. Thus, remedies as price
reduction and specic performance or contract termination cannot
be exercised at the same time. If non-conforming tender of which
value is less than that of conforming tender is accepted, price
reduction corresponding to the decrease in value can be accumu-
lated to compensation for pecuniary damages or special damages
(e.g., phone-call expenses) or non-pecuniary damages (e.g., loss of
holidays); whereas damages for that same decrease in value (id
quod interest) cannot be compensated and the aggrieved party is
obliged to choose between price reduction or compensation (con-
cerning Art. 8:102 PECL, Lando & Beale, 2000; as for Art. III.-3:601
DCFR, Von Bar & Clive, 2009).45
These are the main requirements for exercising a reduction in
price. Nevertheless, hotels will face many difculties in calculating
the reduction46 and some criteria will have to be examined.
3.2. Calculating price reduction in hotel services
3.2.1. Parameters for calculating price reduction
Despite price reduction being a consumers right, in practice it
must be established by an agreement between contracting parties
or, in defect of this, by an arbitrator or a sentence. Where appro-
priate, price reduction may also be determined by an expert report
evaluating the difference between the value of the services due and
the value of the services provided.47
Since an agreement between the contracting parties is the more
common way of determining the amount of reduction, some
parameters to calculate this reduction should be considered by
hoteliers. Here an important asymmetry in bargaining power
44
Non-performance that is excused due to an impediment that is not attributable
to the hotel does not give the consumer the right to claim specic performance or
compensation for damages (see Art. 8:108 PECL). However, the right to terminate
the contract and to price reduction may be available to the aggrieved party
(Lando & Beale, 2000).
45
Moreover, a hotel will be not entitled to offer compensation for damages to
exempt themselves from price reduction after a separate declaration of price reduc-
tion. This is because the aim of such a remedy is to adjust the price of the service to
be in line with market prices.
46
Compare with Art. 10 of the Regulation (EC) No 261/2004 of the European
Parliament and of the Council of 11 February 2004 establishing common rules on
compensation and assistance to passengers in the event of denied boarding and
of cancellation or long delay of ights.
47
Calculation of the price reduction is not exclusive to experts, so a judge can
make an evaluation from other evidence (in Austria, Kietaibl, 2007).
284 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
between the hotel and the consumer will arise, whether in an out-
of-court settlement or a lawsuit.
From an economic point of view, rules on price reduction in hotel
services should aim to provide the hotel with an incentive to full its
promise unless the result would be an inefcient use of resources.
This may usually be achieved by giving the consumer his expected
prot on a transaction. If there is a quality failure, the hotel should
return the consumer to the position that he would have been in if the
contractual obligations had been fullled. Efcient breaches of
contract should not be eliminated since an important function of
contracts is to assign risks to the party who is able to avoid them with
the minimum cost (the cheapest cost avoider) (concerning compen-
satory damages for breach, Posner, 2007; Schafer & Ott, 2004).
The price of a service should be the starting point in calculating
a reduction. It should be reducible to zero (Fuhrich, 2007, with
regard to package holidays in German law) according to some
circumstances to be considered discretionary, such as the kind,
length and intensity of the service failure, as well as the remaining
usefulness of the hotel services provided and the consumer
purposes in receiving them (e.g., for a honeymoon).
There are different calculation criteria through European
Member States legal systems. But the price reduction should be, in
any case, proportionate to the decrease in value of the performance
at the time this was tendered, as compared to the value which
a conforming tender would have held at that time (Art. 9:401 (1)
PECL; also, Art. III.-3:601 (1) DCFR; Von Bar & Clive, 2009; con-
cerning the sale, Art. 50 CISG). In other words, the amount of the
price reduction should be proportional to the reduction in the value
of the promised performance (Lando & Beale, 2000).
Even so, it is extremely difcult to estimate such factors. For
example, what is the value difference between hotel services with
appropriate attention from the personnel and services without
defects? Consequently, the use of scales seems to be necessary as an
internal procedural tool for making the price reduction assessment
easier.
3.2.2. Using scales for price reduction
Since the calculation method is complicated, scales for price
reduction can be a very useful management tool in the hotel
industry. However, their use is uncommon and rather foreign to
European contract law.
One signicant exception is the Frankfurt Scale for Assessing
Price Reduction in Package Holidays (Frankfurter Tabelle zur Reise-
preisminderung). These scale was created by one chamber of the
Court of Appeal (Landgericht) in Frankfurt/Main, Germany.48
The court deals exclusively with travel law cases and is regarded
as the most experienced court on the subject.49 The scale may be
used as a starting point to calculate an appropriate price reduction,
48
The Frankfurt Scale was rst published in (1985) Neue Juristische Wochenschrift,
3, 111117.
49
This is largely because several leading travel companies have their headquarters
in the Frankfurt area (Fahrenhorst, 1999). The Court of Appeal in Frankfurt/Main
developed a scale of reductions to deal with the most common shortcomings of
package holidays to give travellers an indication of how much reduction they can
expect, thus enhancing legal certainty (Tempel, 1985). Some German courts, such
as OLG Hamburg, and legal scholars refuse to apply the Frankfurt Scale, arguing
that every individual case has to be dealt with individually, on the basis of its partic-
ular facts (Schwerdtner, 1991). Even the Court of Appeal in Frankfurt/Main some-
times prefers to determine price reduction according to all circumstances in later
years (Urbach, 2009). In any case, the Frankfurt Scale is often mentioned in publi-
cations advising travellers advice on how to handle complaints against a travel
company and there is widespread knowledge of it among the public
(Fahrenhorst, 1999). The scale has been broadly applied, including by the main Aus-
trian sentences (Kietaibl, 2007, who also discusses the existence of Vienna Scale for
a Reduction of Price of Package Holidays, commonly referred to as the Wiener Liste).
similar to the ADAC Scale for a Price Reduction or the Scale for
Defects in Package Travel of Kempten (Urbach, 2009). Despite being
untraditional, we believe that similar scales could be used as
a management tool for calculating price reduction in the hospitality
industry. Such scales should have the following features:
3.2.2.1. The price as a guide. Following the same criteria as the
Frankfurt Scale, the level of reduction provided should be applied to
any accommodation service affected by a failure starting from the
price of the service as a whole and according to the intensity or
seriousness of the defect. In addition, the original price should limit
the amount of price reduction, whereas the amount of compensa-
tion for damages can be higher than the price of service due to the
recovery of pecuniary or non-pecuniary damages.
3.2.2.2. Consider the ve dimensions of service quality. Most litera-
ture makes reference to the ve dimensions of service quality
(tangibility, reliability, responsiveness, assurance, and empathy)
used in the multiple-item SERVQUAL scale (Parasuraman,
Zeithaml, & Berry, 1988a, 1988b). These are referenced when
providing methods for measuring hotel service quality (Albacete
et al., 2007; Hsieh et al., 2008; Erto & Vanacore, 2002); ana-
lysing management issues (Luk & Layton, 2004); or examining the
implementation of a model of excellence in the hospitality
industry (Sauders & Graham, 1992). Since the dimensions can be
obtained only after the service is delivered (Sauders & Graham,
1992), as components of a perceived service quality, they may
be appropriate for assessing a price reduction. It would also be
convenient for all dimensions used to calculate scales start from
quality issues managed in recent years in the hospitality industry.
The Frankfurt Scale make reference to physical attributes almost
exclusively; but there are other factors valued by consumers when
choosing hotel lodging and these should be included in scales and
percentages. These factors will be differently valued by consumers
depending on the type of accommodation, such as tangible
elements like decorations in keeping with rural surroundings
(Hsieh et al., 2008).50
3.2.2.3. Assign averages to some typical defects. Scales could assign
price reduction averages to some typical defects in hotel services
(e.g., 1020% for insufcient cleaning), as is done by the Frankfurt
Scale. Such percentages should be determined discretionally by the
hospitality industry. A certain amount of inconvenience should be
tolerated without any reduction, and insignicant failures should
not be considered (in German, Fuhrich, 2007; Niehuus, 1997;
Tempel, 1997, concerning package holidays). In the case of
multiple defects (e.g., a dirty beach, construction work in progress,
etc.), the percentages of reduction should be able to up to 100% of
the price of the service, without prejudice to an additional
compensation for damages.51
3.2.2.4. Take an objective look at the failure. As a rule, the amount of
money reduced should be calculated in an objective manner,
50
The conservation of premises, cleanliness and dimensions closely linked to the
personnel in touch with the consumer will be important factors when evaluating
quality in rural accommodation; whereas a warm welcome, cleanliness, attractive-
ness, punctual service and choice food are the main requirements in restaurant
service (Erto & Vanacore, 2002; concerning room service, Luk & Layton, 2004).
51
In the same sense, German law has a rule allowing compensation on the basis
of the fault of the organiser, and the traveller may be able to recover compensation
under x651 f Section 1 of the Civil Code. Here, the amount of money recoverable can
be higher than the money to which he would be entitled if the system of reduction
under the Frankfurt Scales was applied.
 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
Table 2
Scale for calculating price reduction in quality failures of hotel services (PRedHServ).a
Reliability % Tangibles
1. Location (*) 525 1. Exterior appearance
2. Type of accommodation/room (*) 530 2. Hotel facilities (*)
3. Homogeneity of customer/shared behaviour 1525 3. Cleanliness (*)
4. Suitability of provision (*) 530 4. Maintenance (*)
5. Atmosphere (*) 540 5. Hotel security
6. Decoration
7. Food/beverage
a
Percentages of the Frankfurt Scale are marked with (*). For more details, see Annex I. However, a complicated formula has been developed by the Frankfurter Scale to
prevent the remedy from reaching an amount of more than 100% of the price. In the case of very serious defects justifying a reduction of more than 50%, a traveller is not only
entitled to such a reduction. In addition, the traveller is allowed to withdraw from the contract.
without taking into consideration the subjective characteristics of
the customer (e.g., age, sex, sensitivity, amongst others).52
All of these criteria should be considered by each of the hotels
when elaborating scales for a price reduction (Table 2). This is
because they are in accordance with the legal framework of the
remedy, economic benets attached to their use and the recent
progress made in quality.
The method of use such scales for a price reduction would be
easy. They should be employed by multiplying the percentages on
the list by the result of dividing the total price and the length of
service, an amount that should be multiplied by the length of time of
the defect.53 The price reduction would be calculated as following:
service price
% assigned to a typical service defect   number of days defect
number of services days
Thus similar parameters can be applied and aspects not strictly
related to the service are irrelevant (e.g., the consumer prole or the
hotels business volume).
No compulsory norm is applicable to the proposed criteria, so
other features could also be acceptable. Scales for price reduction
will constitute default (opt-out) rules of contract law. This implies an
allocation of some risks associated with the execution of the contract
that the parties have not explicitly agreed upon, i.e., an allocation of
all risks is but a thought experiment. The nearer these rules are to the
hypothetical will of the contracting parties, the less the necessity of
the parties engaging in special agreements, thereby reducing
transaction costs, such as the cost of resolving contract disputes.
Although the consumers acceptance of the scales and the calcula-
tion formula will be voluntary, its application may offer important
help to the hospitality industry in calculating price reduction.
The scale should be guidelines, with no obligation for hotels to
provide the consumer with the details, unlike general information
52
Subjective characteristics of the consumer should not be taken into consider-
ation, even if the consumer calls attention to special personal conditions or weak-
nesses when booking the servicedat a travel agent or directly at the hoteld
without prejudice to a claim for compensation for damages. On the contrary, aver-
ages of the Frankfurt Scales can be increased by up to 50% when either special
personal conditions or weaknesses are known by the organiser, and a special
considerable detriment to the customer occurs. If a package holiday becomes defec-
tive in all the services as a result of a breach of an obligation attributable to the
organiser (based on fault), which harms the package holiday in a considerable
way, and the defect is at least considered to be 50%, the consumer can claim
compensation for ruined holidays according to x651 f Section 2 of the German Civil
Code, in addition to a price reduction from the scale. Even so, in our opinion, scales
should have nothing to do with compensation.
53
This calculation formula is employed by the Frankfurt Scale. Accordingly, when
a detriment is only temporary, the price reduction will be proportionate to the time
corresponding to the length of the period of detriment, whether defects are attrib-
utable to the service provider (with fault) or not.
285
% Responsiveness % Empathy %
1020 1. Flexibility/versatility 1020 1. Courtesy 1525
050 2. Positive attitude 525 2. Personal appearance 1020
520 3. Quickly response 525 3. Warm welcome 510
520
1025
515
1020
requirements concerning the price of a service contract (Art. 5 (1)
sub. (a) of the proposal for a Directive on consumer rights of 8
October 2008). The scale also need not be provided at a customers
request, as it is only a means of exercising a remedy for non-
performance. In this way, scales for price reduction should not
affect the price that a party is willing to demand/pay for providing/
receiving accommodation. Additionally, the consumers perception
of the quality of services provided by the company using the scales
should improve without increasing false claims.
Thus the remedy of price reduction may be more extensively
applied, not only in common law European countries with no such
tradition (e.g., England), but also in those of the civil law family in
which claiming compensation for damages prevails historically
(e.g., Italy, France, Spain). Rules of contract law on price reduction,
which normally have to be considered as default (opt-out) rules, do
not regulate how the amount of reduction must be calculated (e.g.,
Art. 50 CISG, Art. 9:401 PECL). For this reason, formal scales for price
reduction could promote the use of this remedy. The application of
scales will only depend on those that the parties have explicitly
agreed upon. Therefore, if the hotel and consumer accept an
amount of price reduction, this will be enforceable regardless of the
European country where the agreement took place.
4. Conclusions
Quality of hotel services is an important issue that is not dis-
cussed enough from a legal perspective. Technical norms are nor-
mally only considered in a framework of commercialising service
and quality management in the hospitality industry. However, the
hotel industry should also focus on how contract rules affect the
binding character of standards. At this point, the information
provided to the consumer becomes a key element in converting
a quality of service into an enforceable one. From European contract
law, the quality forms part of the contents of contracts and must be
determined by the contracting parties (Art. II.-9:108 DCFR).
Therefore, companies should carefully select the appropriate
standards to be achieved, which should include descriptions of
what is to be supplied under the contract when offering, promoting
or advertising services (statements on brochures, a website, etc.).
Within the legal relationship with the consumer, hotels are allowed
to give binding character to those standards however they like. But
once such standards are chosen, information should be provided
accurately and in a proper manner. In this sense, it will be difcult
to keep the consumer properly informed because the current hotel
ranking systems in the Member States are not adequate. Even so,
286 J.M. Bech Serrat / Tourism Management 32 (2011) 277287
from a legal analysis, companies should avoid general descriptions,
provide a minimum of information, adapt the information provided
to the product and avoid misleading actions and omissions.
On the other hand, there is a signicant ignorance of contract
law by the hotel industry concerning defective service. Thus,
companies too often do not take the remedies for non-performance
into consideration (Art. III.-3 DCFR).
In this context, a reduction in price can be a very useful
remedy for facing any quality failure and the requirements for its
exercise should be known by the industry. Moreover, calculating
a price reduction in hotel services can be difcult and, for this
reason, the use of scales is highly recommended. The application
of such a management tool only constitutes a way of carrying out
a reduction in pricedgoverned by voluntary norms and not
compulsory onesdand no specic norms are applicable. Conse-
quently, each hotel is allowed to elaborate and apply its own
scales. Even so, all quality dimensions should be considered. The
use of scales characterised by features of the remedy and the
recent progress made in quality, particularly the multiple-item
SERVQUAL scale, combined with an easy calculation formula for
applying the scales, is preferable. This way, the resultant indi-
cators will be broad enough to include a wide range of quality
defects and will be more in accordance with major advances in
the eld of quality.
Annex
Frankfurt scale for assessing price reduction in package holidays and quality
failures in accommodation.
Defect
1. Location A different location
2.Type of A different type of accommodation
accommodation/ A different type of room
room
3. Hotel facilities No mini-golf
No shopping
No sauna, no radio/TV
Too small room, no balcony, no view to
the sea, no tennis-court, no sailing,
surng, diving-school, no riding, no
baby-sitting, no sun-beds or parasols
No (private) shower
Not enough furniture, no entertainment
(disco, nightclub, cinema or other
organized entertainment)
No restaurant or supermarket
No air-conditioning
No indoor swimming pool, impossible to
bathe in the sea, no beach reserved for
nude bathing
No (private) bath/toilet
No representation available
No health facilities or services
(e.g. thermal spring, massages)
Damage (cracks, humidity, etc.) or vermin
4. Cleanliness Laundry not changed frequently enough
(bed-linen, towels), dirty tables
Dirty plates/dishes/cutlery
Poor cleaning services,
dirty swimming pool, dirty beach
5.Restaurant Monotonous series of meals
self-service instead of
waiter service
Cold meals (not heated)
meals in different sittings
Slow service
Inedible meals (spoiled)
(continued )
Defect Percentage
reduction
6. Atmosphere Smells 515%
Noises during the day 525%
Noises at night 1040%
7. Maintenance/ No lift 510%
Breakdown of No water 10%
appliances or Toilet, bath/water heater 15%
utilities No electricity or gas, 1020%
swimming pool not available,
no air conditioned
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