John Owens is the owner and general manager of the Beach View Hotel. This con- temporary 300-
room hotel was built in the late 1980s and overlooks a white sandy beach. In recent years, the hotel
has built an excellent reputation with its guests. The Beach View Hotel enjoys 80 percent occupancy
year-round. The best time for business is during summer when occupancy reaches 100 percent.
For the last few years, Mr. Owens has been considering a major renovation to the property, but he has
continually postponed the project for different reasons. Last week, while he was in a meeting with his
executive team discussing final preparations for the summer season, the housekeeping director, Mrs.
Smithson, told him that a number of rooms on the fifth floor were flooded because of a roof leak. Mrs.
Smithson reminded Mr. Owens that during previous meetings she had told him of the stifling smell in
some of the rooms on the fifth floor and that guest also had complained several times.
The director of engineering, Mr. Landsman, spoke up immediately. He stated that according to previous
roof inspections, the recommendation was that the hotel needed a new roof.
Mr. Owens acknowledged that he had been told about the roof in earlier meetings, but he wanted to
wait until after the busy summer season so as not to disturb his guests. He further stated that replacing
the roof would not be an easy task, and that the workers and equipment in the hotel would definitely
create a disturbance.
However, shortly after the meeting, Mr. Owens started calling a number of roofing companies to get
estimates. The prices varied greatly, but each company agreed that it would take approximately six to
eight weeks to get the job done.
The hotel’s advertisements all stated, “a peaceful, quiet location on the beach.” Mr. Owens thought
about the summer season and the many guests that would be visiting the Beach View Hotel: “What
will I tell the guests when they arrive? Should I inform the guests who have existing reservations?
When new guests call for reservations, should I mention the construction? Maybe I should just cancel
the summer season?”
Mr. Owens thought about his dilemma for a few days. Finally, he decided not to mention anything to
either the already existing reservations or to potential guests when they called to book for summer. He
would give each guest a note upon arrival, stating that the hotel was undergoing emergency repairs
and that he was very sorry for the inconvenience.
He would also offer $100 dining credit in the hotel’s restaurant.
Case Questions

1. Is Mr. Owens acting in an ethical manner? Explain your answer.
2. How would you handle the situation that Mr. Owens is facing? Explain your answer.