Red Cross admits lax oversight of hotel rooms

updated 1:26 p.m. ET March 1, 2008

SAN DIEGO - The American Red Cross acknowledged that it lacks safeguards against paying for unused hotel rooms during natural disasters, a gap that may have cost it tens of thousands of dollars during Southern California's wildfires last year.

The acknowledgment Friday came a day after the charity disclosed that blocks of rooms booked to accommodate volunteers in San Diego County went empty.

"Our job was to be reviewing who we had in hotels every night and making sure the reservations matched who was coming and who was going," said Joe Becker, who oversees disaster services. "We had instances where we did not do that."

The charity declined to say how much it spent on empty hotel rooms intended for out-of-town volunteers, but Becker estimated it would be tens of thousands of dollars.

A Red Cross spokeswoman, Laura Howe, said the charity would release the exact total after trying to negotiate refunds with some hotels.

"We are going to commit to doing a full accounting of all dollar amounts and room numbers after we finish the process with the hotels," she said. "We will make a full accounting to the community."

On Thursday, Howe said terms of the contract with a hotel booking agency prevented her from saying how much was spent on rooms. The Red Cross came under pressure Friday to disclose the cost.

"The lack of transparency over a major expense is hard to understand," said Sen. Charles Grassley, R-Iowa, who led hearings on the Red Cross' response to Hurricane Katrina. "I don't know why Red Cross officials would enter into a contract that ties their hands on disclosure. Their donors expect to be able to track expenses."

The company that handled the hotel bookings, Corporate Lodging Consultants, Inc. of Wichita, Kan., referred questions to the Red Cross. The company has held the Red Cross contract since 1998.

Agency under scrutiny
The overpayment is the latest blow to the Red Cross, which was criticized for its handling of donations contributed after the Sept. 11 attacks and for an inconsistent response to Katrina in 2005. The wildfires came just six months after President Bush signed a bill overhauling the governance of the organization, which operates under congressional charter.

The Red Cross spent about $140 per day on room, transportation and food stipends for each of the 2,490 people who flew to San Diego from around the country. Each volunteer stayed for about two weeks, Howe said.

Some volunteers were booked at the storied Hotel del Coronado and the swanky La Costa Resort and Spa, as well as several Hiltons. They offered discounts to Red Cross workers.

The unused beds included rooms in high-end hotels, Becker said. Those rooms may have been left vacant because of an effort to redirect volunteers to cheaper hotels after criticism of the luxury digs, he said.

Policies overlooked
Hotel managers said it was unlikely that evacuees were denied hotel rooms because of the Red Cross bookings. Many out-of-town volunteers arrived after most neighborhoods reopened.

"By the time the Red Cross came out here it was a relief effort, and things were back to normal, so there was not a real room crush," said Robert Rauch, who runs a Homewood Suites hotel in suburban Del Mar.

A volunteer who was responsible for coordinating hotel reservations failed to follow written policies for canceling unneeded bookings, Becker said.

In the future, the Red Cross will review hotel invoices weekly during disasters and have an employee from the hotel vendor help volunteers coordinate reservations, Howe said. Training and written manuals for volunteers overseeing accommodation will also be reviewed.

Nearly 2,200 homes were destroyed in the fires, which scorched about 800 square miles. Ten people were killed by the flames. The agency spent about $16 million providing disaster relief, Howe said.

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