A recent ruling by the Hawai‘i Supreme Court has clarified the legal requirements for hotels and restaurants regarding service charges, impacting the hospitality industry both locally and internationally.

Court decision mandates clear disclosure of service charge allocations

In a significant legal development, the Hawai‘i Supreme Court ruled that hotels and restaurants must provide explicit information about how service charges are distributed.

The case, Rodriguez v. Mauna Kea Resort LLC, involved a class-action lawsuit filed by over 100 hotel workers who alleged that their employers failed to adequately disclose the allocation of service charges.

The court determined that vague statements, such as “a portion” of the service charge going to employees, do not meet the legal standard set by Hawai‘i Revised Statutes § 481B-14.

The statute requires businesses to either distribute service charges directly to employees as tips or clearly disclose to customers if the charges are used for other expenses.

Implications for global hotel operations

This ruling has broader implications for hotel operations worldwide. International hotel chains operating in Hawai‘i must now ensure that their service charge policies comply with the state’s legal requirements.

Failure to provide clear disclosures could lead to legal challenges and potential financial liabilities. Hotels are advised to review and update their service charge practices to align with the court’s interpretation of the law.

Industry response and future considerations

The hospitality industry is closely monitoring the impact of this decision. Industry associations and legal experts are expected to provide guidance to help businesses navigate the new requirements.

Hotels may need to adjust their billing practices, staff training, and customer communication strategies to ensure compliance and maintain transparency with guests.

As legal standards evolve, staying informed and adaptable will be crucial for the continued success and reputation of hotel establishments.

This case underscores the importance of clear communication and adherence to legal standards in the hospitality industry. Hotels worldwide should take proactive steps to review their service charge policies and ensure they meet legal requirements to avoid potential legal disputes and maintain customer trust.

MUMBAI, AUGUST 28, 2025:Indian Hotels Company (IHCL), India’s largest hospitality company today announced the signing of aGingerhotel inSatara, Maharashtra. This is a greenfield project.

Ms. Suma Venkatesh, Executive Vice President – Real Estate & Development, IHCL, said, “Satara’s convergence of education, healthcare and business attracts a steady stream of demand, making it an ideal fit for Ginger’s expansion. This signing is in line with IHCL’s approach to expanding its brandscape into such high-potential markets. We are delighted to partner withMs. Vedantika Raje Bhonslefor this project.”

Strategically located in the Satara MIDC area, the125-key Ginger Satarawill embody the brand’s lean luxe ethos combining stylish design with seamless service. The hotel will featureQmin, Ginger’s signature all-day diner, a conference hall, and a well-equipped gym, catering to both business and leisure travellers.

Ms. Vedantika Raje Bhonslesaid, “We are pleased to partner with IHCL to bring Ginger to Satara. This development significantly contributes to the city’s growing infrastructure and hospitality landscape.”

The industrial district of Satara, renowned for its scenic and cultural attractions, is home to the well -established Maharashtra Industrial Development Corporation (MIDC) and companies across sectors like paper, paints and consumer goods.

With the addition of this hotel, IHCL will have43hotels inMaharashtra, including16under development.

About the owner

Ms. Vedantika Raje Bhonsle is actively engaged in real estate development in Satara, overseeing residential projects that contribute to the region’s infrastructure.

About The Indian Hotels Company Limited

The Indian Hotels Company Limited (IHCL) and its subsidiaries bring together a group of brands and businesses that offer a fusion of warm Indian hospitality and world-class service. These include Taj – the iconic brand for the most discerning travellers and ranked as World’s Strongest Hotel Brand 2025 and India’s Strongest Brand 2025 as per Brand Finance; Claridges Collection, a curated set of boutique luxury hotels merging elegance with historical charm; SeleQtions, a named collection of hotels; Tree of Life, private escapes in tranquil settings; Vivanta, sophisticated upscale hotels; Gateway, full-service hotels designed to be your gateway to exceptional destinations and Ginger, which is revolutionising the lean luxe segment.

Incorporated by the founder of the Tata Group, Jamsetji Tata, the Company opened its first hotel – The Taj Mahal Palace, in Bombay in 1903. IHCL has a portfolio of over 550 hotels including 215 under development globally across 4 continents, 14 countries and in over 150+ locations. The Indian Hotels Company Limited (IHCL) is India’s largest hospitality company by market capitalization. It is listed on the BSE and NSE.

SAMHI Hotels Limited, a leading branded hotel ownership and asset management platform in India, has announced the signing of an Agreement to Lease (ATL) through its wholly owned subsidiary, Barque Hotels Private Limited. The agreement is with Mrs P Pramoda, Mrs P Harika, and Aurean Eskar (collectively referred to as the “Lessors”) for a new mid-scale hotel comprising approximately 260 rooms to be developed within a mixed-use project in Hyderabad’s Financial District.

The building will be constructed by Aurean Eskar and handed over to SAMHI for fitouts and branding. The estimated development cost for SAMHI’s scope of work is expected to be between Rs 1.25 billion and Rs 1.43 billion.

This transaction has been structured as a long-term variable lease, strategically linking land value realisation to the hotel’s operating performance. This alignment allows SAMHI to benefit from market upside while maintaining a capital-efficient expansion model.

Aurean Eskar recently completed One Golden Mile, a 500,000 sq ft premium commercial tower in Hyderabad’s Kokapet Business District, which is now fully leased and houses a mix of boutique offices and high-street retail.

The new mid-scale hotel will become SAMHI’s third property in the Financial District, complementing its existing presence with the Sheraton (326 rooms, including 42 under development) in the Upscale+ segment and the Fairfield by Marriott (232 rooms) in the Upper Mid-Scale segment. With this addition, SAMHI will offer a comprehensive range of pricing options, targeting diverse customer segments within this rapidly developing micro-market.

This move reinforces SAMHI’s strategy of building scale and density in high-growth micro-markets by offering multiple branded hotel formats. The approach is designed to optimise portfolio returns and create long-term value.

The agreement remains subject to customary post-signing conditions, including the receipt of necessary building sanctions, following which the final lease deed will be executed.

Commenting on the agreement, Mr Ashish Jakhanwala, Chairman and Managing Director of SAMHI Hotels Ltd, stated:

“With this agreement, we are deepening our presence in Hyderabad’s Financial District by adding a mid-scale offering alongside our existing upscale and upper mid-scale hotels. This strengthens our ability to serve a wider customer base and demonstrates our disciplined, capital-efficient approach to growth. The long-term variable lease structure aligns performance and capital prudence, ensuring value-accretive expansion.”