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Tampa's 1800Hotels.com Bankruptcy Draws Ire of Travelers Worldwide

Prepaid Reservations Cancelled by Suppliers with No Notification to Travelers Leaves Sour Taste

By Steve Huettel, St. Petersburg Times, Fla.McClatchy-Tribune Regional News

Aug. 06, 2010--Juan Torres strode up to the front desk of the Hilton in Durban, South Africa, his latest stop in a tour of World Cup games last month.

The front desk staff was apologetic. Two rooms he bought on the Web a month earlier were gone. A company called Tourico Holidays canceled his reservations.

The reason: 1800Hotels.com, the online travel agency in Tampa that Torres paid, hadn't paid Tourico, a room wholesaler.

The same thing has happened hundreds, maybe thousands of times in the last month.

To a grandmother as she tried to check into a Candlewood Suites in Birmingham, Ala. To a couple from Winter Park at a Doubletree in Chicago. To a retired university professor staying at an Upper West Side hotel in New York City.

Unhappy customers are trashing 1800Hotels.com on travel websites such as TripAdvisor. They complain that neither the company nor suppliers like Tourico alerted them about canceled reservations. Most found out when they called their hotels before leaving or while checking in.

"What gripes me most is no one felt obligated to tell anyone anything," says Richard Prepost, the retired University of Wisconsin physics professor "It's disgraceful."

Word started leaking out that 1800Hotels.com and its Irish parent, Happy Duck Ltd., filed for bankruptcy reorganization under Chapter 11 in Tampa on July 13.

Two suppliers, Tourico and Gullivers Travel Associates, had canceled more than 3,600 reservations. Bankruptcy was the only way to stop them from ruining the business, the company said.

Their contracts worked like this: Customers paid 1800Hotels.com. Then suppliers had to pay hotels for rooms when customers checked in -- whether or not the company paid them.

1800Hotels.com and its Irish cousin, 1800Hotels.ie, owed $4 million since July 1, said Gullivers, and it would lose $30,000 to $50,000 a day if the judge blocked more cancellations. Bankruptcy Judge Caryl Delano gave suppliers the green light to continue.

The Irish website shut down last month. It still carries a statement that the company filed for bankruptcy to protect customer reservations. But 1800Hotels.com went back into business last week, said Steven Berman, the company's Tampa attorney.

It has a large, new hotel wholesaler and a different way of handling finances, he said. Money from customers goes directly to the supplier, says Berman, so there won't be payment disputes or room cancellations. He wouldn't identify the company.

"The first day, we had a higher volume of sales than we expected," said Berman. It's too early to know if the business will suffer "reputational damage" from the cancellations, he said.

Customers stuck without reservations say no one at 1800Hotels.com, located at 215 N Howard Ave., answered the phone or returned calls. Some like Dianne Osburn of Attleboro, Mass., wound up getting rooms at their hotels, but at a higher rate.

Her four-night stay in Birmingham last week cost $270. Osburn is still out the $205.92 she paid 1800Hotels.com. The company sent her a claim form to file with the U.S. Bankruptcy Court in Tampa. "They took my money and gave me a bogus (hotel) confirmation number," she says.

At the Hilton in South Africa, managers found Torres two spare rooms for himself, his two brothers and nephews. He didn't mind paying the hotel $30 a night above the 1800Hotels.com rate. But he's through with the online hotel site.

"I'm not doing business with them again," said Torres, a casino operator in Honduras. "They knew what they were doing. It's like writing checks without funds."

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

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