Hawaii hotel forecloses, taking guest’s $2,541 deposit with it


The foreclosure crisis isn’t just affecting homeowners. It’s also hitting hotel guests.

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Take Steven Gibson, for example. He prepaid $2,541 for five weeks at the Hawaiiana Hotel — a retirement gift for himself and his wife. Then the hotel’s bank foreclosed, the property shut down, and the Hawaiiana took all of the Gibson’s money with it.

Now what?

Well, you ask nicely for a refund, and if they don’t give it to you, dispute the charges on your credit card. As a last resort, you can become a claimant in bankruptcy court.

Which Gibson tried, more or less.

When the Hawaiiana Hotel went belly up last month and we received a letter from them saying, in part, that they “can no longer provide … hotel accommodations and
any and all monies paid for your future accommodations can not be paid back or refunded to you.”

The letter added,

With this said in great sadness, for what it is worth, we thank you all for your loyal patronage and will take our memories of you with us where ever we may go.

With all our love & aloha,

Hawaiiana Hotel Staff

Gibson thought the letter was a joke, so he called the hotel. It wasn’t.

At that point, I contacted US Bank REI Visa, both by phone and by letter, explained the situation and requested a refund, since I had paid with the US Bank Visa card for services which were not delivered.

The bank’s response: Sorry, you are out of luck. No refund.

The bank’s letter to us, dated 11/12/09, said, in part, “In order to preserve your rights under federal regulations, you were to notify us no later than 60 days after the first statement on which the disputed item appeared. As the charge (04/27/09) appeared on your statement date 05/19/2009 and your inquiry was made on 11/11/2009, this exceeds all time limitations as specified. The disputed item will remain on your account, along with any applicable charges or fees.”

Actually, the Fair Credit Billing Act provides that your credit card,

promptly credit or refund overpayments and other amounts owed to your account. This applies to instances where your account is owed more than one dollar. Your account must be credited promptly with the amount owed. If you prefer a refund, it must be sent within seven business days after the creditor receives your written request. The creditor must also make a good faith effort to refund a credit balance that has remained on your account for more than six months.

Maybe the credit card let the Gibsons down.

I decided to do some sleuthing of my own. The Hawaiiana’s Web page led me to the White Sands Hotel. A supervisor at the property insisted that the White Sands had nothing to do with the Hawaiiana — except that all of the staff and managers had been hired at the White Sands after Hawaiiana’s foreclosure.

A supervisor told me the White Sands wouldn’t honor any Hawaiiana reservations, but was offering a “special” rate for former Hawaiiana guests of $40 a night.

I contacted Gibson with this update, and he decided to appeal his credit card dispute. He sent me an update late yesterday:

I just got off the phone with a representative of US Bank Visa and again explained what happened. She found my file (with the letter from the Hawaiiana) and seemed sympathetic. She said she was passing it on to someone else (presumably a manager) for review and said they would get back to me no later than Friday.

I think US Bank can, and should, refund the $2,541. But if it doesn’t, Gibson may become a claimant in bankruptcy court, where he’s likely to recover only pennies on the dollar.

Update (1 p.m.): Problem solved!

Here’s the latest from Gibson:

Received phone call this morning from a representative of US Bank saying we’ll be getting the full amount credited to our account: $469.27 (don’t know how they came up with that amount) from the Hawaiiana’s owners and the balance, $2,072.04, from US Bank REI Visa.

The guy who called was gracious and said the first refund request should never have been rejected. Apparently some sort of mixup. Said he had the file now and the credits should be reflected on our next statement.

I love a happy ending.

(Photo: Simonds/Flickr Creative Commons)