Class Action Alleges Extended Stay America Denies Refunds to Prepaid Guests, Cancels Reservations

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A proposed class action lawsuit claims Extended Stay America (ESA) has denied refunds to hotel guests after cancelling their prepaid reservations and refusing to accommodate them.

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According to the 27-page complaint, the hotel giant and its co-defendants have run afoul of a North Carolina consumer protection law by accepting payment for prepaid reservations without informing guests that, should they not check in by midnight of the first day, they will be deemed “no-shows” and have their bookings cancelled. Guests who find themselves in this situation are denied accommodation without refund as prepaid reservations are designated as nonrefundable by Extended Stay America, the suit says.

The case stresses that guests facing this situation are typically people “without the means to obtain alternative lodging when they are denied accommodation” and who can “least afford to be denied a refund.”

The filing claims that the policies of Extended Stay America are “unfair and unconscionable.”

The lawsuit blames the hotel’s allegedly deceptive conduct on defendants ESA Management LLC, a subsidiary of Extended Stay America; TWC Norcross LLC, an operator of an ESA hotel; hospitality investment company Three Wall Capital LLC; and Aimbridge Hospitality LLC, which provides hotel management services to roughly 800 hotels under the Extended Stay America brand.

According to the case, guests can make a reservation in two ways, one of which is to make a “guaranteed reservation” by filing a credit card. Per hotel policy, if guests do not check in by 6 pm, the system automatically labels them “no-shows” and charges the credit card for one night’s stay, the complaint says.

Alternatively, guests can prepay for an entire stay at the hotel, the lawsuit relays. The case contends that if guests with a prepaid reservation do not check in by midnight, the system similarly deems them “no-shows” and cancels the booking without refund.

This policy also applies to current hotel guests who wish to extend their booking by prepaying for another reservation, the complaint says. Per the filing, guests may be considered “no-shows” and have their subsequent bookings cancelled without refund “even though the guest is present at the hotel.”

The plaintiff, a Georgia resident, claims to have faced this situation at an Extended Stay America location in her home state, the case alleges. The complaint claims that after her first month-long stay at the hotel, the plaintiff prepaid $1,777.50 for a second booking of a similar length.  According to the lawsuit, she was deemed a “no-show” by the system, refused a refund, and instructed to leave her hotel room.

The suit says that long-term guests staying more than 30 nights constitute the largest revenue stream for the hotel brand—in 2019, 41.6 percent of revenue came from such long-term stays, according to the case.

As the lawsuit tells it, “[i]t is an ‘open secret’ that many ESA guests live permanently in ESA hotel rooms.” The case relays that “[e]xtended-stay hotels are the last housing option for low-income Americans to whom landlords will not rent, often due to prior evictions and the inability to pay the amount necessary up-front to lease housing, e.g. a security deposit and first and last months’ rent.”

Guests staying in hotels like Extended Stay America often come from the country’s “most vulnerable populations,” the suit claims, and are therefore least able to cope with the “deceptive acts” of the defendants.

The lawsuit looks to represent anyone who prepaid for a hotel reservation at any U.S. Extended Stay America location, were refused accommodation during the term of the booking, and were not refunded.

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