According to media reports, the hotel chain claims that honouring the cheaper rate would result in losses of $2 million, but says that it will offer 40% discounts on the full rate to compensate customers.
It is the latest e-commerce pricing error to become public, similar to high-profile mistakes on the web sites of Kodak.com, Dabs.com and Argos.co.uk.
In December 2002, the Starwood on-line booking site displayed the unintended bargain rate for luxurious bungalows at a resort on the French Polynesian island of Bora Bora. By the time the mistake was discovered, 136 people had booked 2,631 rooms, some making multiple reservations.
It's not the first error of its kind for Starwood – last year, it fulfilled on-line orders from customers who booked rooms at its W Times Square hotel for $25 per night, the correct rate being $250.
Struan Robertson, editor of OUT-LAW.COM, said:
"The key in a case of this kind is the order process and the wording of the web site's terms and conditions. Together these will determine whether Starwood has entered into a contract from which it cannot easily escape. However, the risk of losing goodwill will be a significant factor in deciding how to react."
In 2002, Kodak was threatened with legal action after refusing to honour the orders placed on its site for cameras that were offered to UK customers at an incorrect price. An unknown number of cameras were ordered for £100 each, instead of £300, before the error was identified. The company eventually agreed to fulfil the orders.
In a similar incident, also in 2002, UK retailer Dabs agreed to fulfil on-line orders for the Microsoft Xbox, despite the incorrect price quoted on its site.
For more information on how to avoid web site pricing errors, see OUT-LAW's article:
The UK's E-commerce Regulations
