Hotel’s Clientele Caught In Row With Issuer

Paul Steinmetz, Luxembourg’s ambassador to India, was at dinner early this year at Brix, the Italian restaurant at the Grand Hotel in the Capital.

When it was time to pay, Steinmetz said he was informed by restaurant staff that his loyalty card for the hotel, the Grand Connoisseur card, was no longer being honoured by the hotel, despite it being valid through October.

The card, which cost Steinmetz Rs4,950, prior to taxes for a year, offers steep discounts on food and beverage, beauty salon and rooms at the hotel such as 50% off when out to dinner with another person and 45% discounts in some categories of room.

Steinmetz said he only renewed the card in September 2006 after his office received calls from both the Grand hotel and ICS Club Marketing (India) Pvt. Ltd, which sold the card.

“It’s a bit strange for the hospitality industry not to be hospitable,” said Steinmetz. “I’m not putting anyone up at the Grand (any more) because of this…It’s a breach of trust and I’m quite angry.”

The ambassador said Grand blamed ICS for issuing cards after it ended a deal with the firm, while ICS said the card shouldn’t have been cancelled by the hotel.

Steinmetz’s situation illustrates what is now an ugly fight between the hotel and ICS, with at least 1,000 cardholders by ICS estimates, caught in the middle.

The fight also illustrates how customers can get caught in commercial disputes between companies and their outsourced service providers with no real recourse other than to go to courts, as well as how easy it is for loyal shoppers to turn into angry customers in the services industry.

“On average, the card (had) some 2,000 members,” said Dirk Bakker, CEO of ICS. He added that the Grand and ICS shared revenue from card sales that would be deposited in an account controlled by ICS. The Grand’s general manager Ray Mc Shane, who joined the hotel earlier this year, declined to comment on specifics of the financial arrangement between ICS and the hotel.

The crux of the dispute is a disagreement over when the contract between the hotel and ICS ended.

The Grand contracted out sales of the card to ICS in March 2003 on a three-year contract, according to Mc Shane. As a result, the hotel believes that cards issued since March 2006 such as Steinmetz’s card are invalid and that it is not legally obligated to honour them.

Bakker, meanwhile, claimed that the initial contract was for two years with automatic annual renewal, subject to a 90-day notification period by either company. He said the contract wasn’t terminated until April 2007, so all the cards sold through March were valid. It isn’t possible to independently verify the competing claims.

Mc Shane said that the hotel has prominently displayed signs since February indicating that the card will not be honoured in every area where the Connoisseur club can be used.

It also placed advertisements in several newspapers in May 2007 to alert consumers of its stand.

ICS said that it has dedicated extra staff to take customer calls from people who believe they hold valid Connoisseur cards. Bakker said the company is particularly focused on about 30 customers that are especially irate. It is unclear what ICS intends to do for these customers.