The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis has moved to settle a US class action lawsuit that alleged it failed to properly disclose to guests how a “mandatory housekeeping gratuity and utility serve fee” charge was used, with Kerzner International agreeing to remove the word ‘housekeeping’ from all marketing and promotional material.

The lawsuit, which was filed in the US district court for south Florida last year, is due to come up for final settlement approval on August 6, 2012, with Kerzner International and Atlantis “vigorously” denying any wrongdoing or liability in respect to the claims against them.

The settlement agreement, signed on February 14-15, 2012, by attorneys for both Jennifer Costa and others who brought the class action suit, and Kerzner International’s counsel, states that the Atlantis operator decided to settle to “avoid the time, risk, burden, expense and distraction” associated with defending the litigation.

Apart from removing the word ‘housekeeping’ from all marketing material referring to ‘mandatory gratuities’, the only other requirement of the settlement is for Kerzner International to pay the class’s legal fees provided these do not exceed $450,000.

Setting out the background to the settlement, court documents obtained by Tribune Business state: “The gravamen of the amended compliant is that [Atlantis] imposed a ‘mandatory housekeeping gratuity and utility service fee’ to customers who stayed at the Atlantis resort without adequately disclosing how those fees were used.

“Defendants [Kerzner and Atlantis] assert, in defence, that all mandatory housekeeping gratuities and utility service fees were adequately disclosed, were not misleading and were passed through to hotel staff or to pay utility costs.”

The Costa class, which potentially includes thousands of US travellers who stayed at Atlantis over a four-year period - from March 28, 2007, to September 14, 2011 - had alleged that these fees, which were added to the guest bill, breached Florida law on ‘deceptive and unfair trade practices’ by not using them “entirely” to pay housekeeping staff or utility costs.

Kerzner International, though, denied that it had breached Florida law or any contract, and insisted that the housekeeping gratuity funds were “passed through to hotel staff”.

Adding that Kerzner International and Atlantis believed the lawsuit had “no merit”, the settlement agreement added: “Defendants vigorously deny any wrongdoing or liability with respect to any of the facts claimed or alleged, or that could have been alleged.”

To settle the action, the agreement said: “The parties hereby agree that changes to the term ‘Mandatory Housekeeping Gratuity’ on the website www.atlantis.com that were implemented during the pendency of, and in response to, the litigation, as well as the injunction prohibiting future use of the term ‘Mandatory Housekeeping Gratuity’, are the primary benefits to the settlement class under this agreement.

“Defendants [Kerzner and Atlantis] agree that advertisements created or commissioned by defendants shall continue to use the term ‘Mandatory Gratuity’ instead of ‘Mandatory Housekeeping Gratuity’, and defendants agree that disclosures on the website www.atlantis.com shall continue to use the term ‘Mandatory Gratuity’ instead of ‘Mandatory Housekeeping Gratuity’.”

Not every member of the Costa class is pleased with the settlement agreement, especially as it does not require Kerzner/Atlantis to pay compensation to any US guests over that four-year period.

An objection filed by Roger Cowie, who allegedly stayed at Atlantis between August 8-13, 2011, said the deal only benefited the class’s attorneys and the Kerzner side.

He claimed: “Class members such as myself, who have already stayed at Atlantis and paid our fees, receive absolutely nothing.

“Yet we are being required to release our claims, including our claims for monetary compensation, and getting nothing in return. That is not fair, reasonable or adequate.”

And Cowie added: “Although I applaud the owners of Atlantis for agreeing to change their disclosure about housekeeping gratuities in the future, that does not provide any benefit to class members like me who have already stayed at Atlantis in the past and suffered whatever harm we suffered. It certainly does not justify our giving up any claims for monetary compensation.”

The lawsuit, and settlement agreement, are interesting in the context that many observers believe the automatic 15 per cent gratuity earned by ‘tipped’ workers in the hotel industry has contributed to a decline in productivity and service standards, since it does not have to be earned.

Indeed, this was blamed by a blogger, Matthew Swyers, for service problems he experienced during a recent stay at Atlantis - his posting being widely-read in the Bahamas.

Mr Swyers wrote: “At Atlantis a 15 per cent gratuity is automatically included on every food bill. Every one. Not just for fine dining or groups more than six. From when you buy ice cream at their Ben & Jerry’s to every Pi�a Colada purchased, an extra 15 per cent is added for the staff. Why?

“The theory behind gratuities is to encourage and reward good service. However, in this instance the incentives for quality service is diminished when the staff already knows they are going to pocket 15 per cent no matter what.”

In response, George Markantonis, Kerzner International (Bahamas) president and managing director, said that while Atlantis “wasn’t perfect”, it always tried to compensate and make up for bad experiences suffered by a few guests.

He pointed out, though, that independent surveys of customer/guest satisfaction conducted by JD Powers ranked Atlantis and the One & Only Ocean Club “among the highest in the industry, and they continue to climb forward”.