U.S. Wins Record Hotel Bias Settlement

The Justice Department won the biggest hotel discrimination settlement in U.S. history Tuesday, securing $8 million in penalties from a St. Louis-based chain that allegedly discouraged black tourists from staying at its upscale hotels.

The Adam’s Mark chain agreed to pay damages to potentially hundreds of black guests who may have been harassed and discriminated against at its Daytona Beach hotel during a black college reunion last year, and it pledged $1.5 million to four historically black colleges in Florida.

The company also agreed to institute new training and marketing programs to attract minority guests around the country in exchange for the dismissal of pending discrimination lawsuits by the federal government and the state of Florida, among others.

Fred Kummer, Adam’s Mark president, said that, while the hotel chain “has never intentionally done anything wrong, we apologize for any actions that may have made any of our guests feel uncomfortable or unwelcome.”

Adam’s Mark runs 21 full-service hotels in 14 states, concentrated primarily in the South and Midwest. None are in California. The company specializes in hosting conferences for business clientele, billing itself as “the place for remarkable meetings.”

Atty. Gen. Janet Reno said that the settlement should serve as a wake-up call to other members of the hospitality industry, prompting them to redouble their anti-bias efforts and “ensure that no discriminatory practices exist at their hotels.”

At a time when the notion of “racial profiling” has provoked bitter controversy in the law enforcement community, the case has spotlighted the less-discussed issue of racial tensions in the hospitality industry.

The Adam’s Mark case was triggered by complaints from five young black professionals who attended a black college reunion in Florida last year and said that they were harassed by Adam’s Mark employees in Daytona Beach because of their race. The five said that they were given undesirable rooms, charged unusually high rates, made to wear security wrist bands and subjected to other treatment different from that accorded white guests.

John P. Relman, a lawyer for the plaintiffs, said that research in the case and past litigation against Adam’s Mark exposed a broad pattern of discrimination by the hotel in failing to hire black managers, putting black guests in less-desirable rooms and refusing to book back-to-back black conferences for fear of attracting too many minorities.

“The environment was extremely hostile,” he said in an interview after the settlement announcement. “The hotel chain really did not want to have black groups booked.”

Efforts to resolve complaints against the hotel reached an impasse late last year, prompting the U.S. Justice Department, the state of Florida and several private groups to file what developed into a class-action claim against Adam’s Mark. It was the first time that the federal government had taken such a step against a hotel, and the litigation served to revive negotiations with the chain, leading to Tuesday’s settlement.

Kummer, who had pledged last year that the chain would be exonerated, said after the settlement that Adam’s Mark “is looking forward to moving ahead and making a good company better, now that this lawsuit is behind us.”

Under terms of the agreement, Adam’s Mark will pay a total of $4.4 million to black guests and visitors who can show that they were discriminated against at the Daytona Beach hotel during the black college reunion in April 1999. That group is thought to number at least 1,200. Each of the original five plaintiffs will receive $25,000.

Four historically black colleges in Florida--Florida A&M;, Bethune-Cookman College, Edward Water College and Florida Memorial College--will share $1.5 million from Adam’s Mark for scholarships and other assistance in hotel management.

The settlement also includes $1.75 million in attorney fees.

Relman, the attorney for the plaintiffs, said that the case has exposed racial prejudice in the hotel industry in the same way that litigation against Denny’s in the early 1990s did in the restaurant industry. “It takes Denny’s one step further,” he said.

The industry’s leading trade group, the American Hotel & Motel Assn., said it is taking steps to make the industry more sensitive to racial issues, creating a task force to look at diversity among management and related issues.

Asked whether discrimination against guests is a problem in the industry, association spokeswoman Tia Gordon said: “I wouldn’t consider it a problem. I would consider it an issue we’re dealing with head-on.”

Industry leaders created the diversity task force because they “realized there were a lot of issues even before the Adam’s Mark case happened--losing employees, discrimination in the workplace, not having a diverse enough work group out there,” she said.

The hotel association estimates that whites made up 75.8% of hotel managers in the United States as of 1998, compared with 72.5% of the population at large. Blacks made up 8.6% of hotel management (versus 12.1% of the population); Asian and Pacific Islander represented 5% (versus 3.6%); and Latinos represented 7% (versus 11.1%).