One difficult situation in which hotel operators and owners can find themselves occurs when law enforcement demands access to private hotel guest records without a warrant.

On June 22, 2015, the U.S. Supreme Court issued an important decision addressing this very dilemma, siding with hotel owners. In City of Los Angeles v. Patel, the Court struck down a Los Angeles municipal provision that required hotels to make guest records available for inspection by any L.A. Police Department officer without the need for a search warrant. Prior to the Court's ruling, any officer could obtain, without a warrant, sensitive records, including a hotel guest's name, address, and vehicle details; the number of members in the guest's party; the method of payment; arrival and departure date; and room number. A hotel owner who refused to turn over such information could be arrested on the spot and be subject to a misdemeanor charge punishable by up to six months in jail and a $1,000 fine.

In its 5-4 decision, the Court held that the provision is unconstitutional because it violates the Fourth Amendment's protection against unreasonable searches and seizures. Because the municipal provision failed to afford hotel owners any pre-compliance opportunity to challenge the requested search, the Court held the provision to be facially unconstitutional. In so holding, the Court noted that "business owners cannot reasonably be put to this kind of choice" – that is, either handing over their guests' private information or facing arrest and criminal prosecution.

Writing for the Court, Justice Sonia Sotomayor noted that the Fourth Amendment may be satisfied as long as a hotel owner is afforded an opportunity to have a neutral decisionmaker review an officer's demand to search the hotel guest records before he or she faces penalties for failing to comply. This can be accomplished, for example, through an administrative subpoena by which the hotel owner may challenge law enforcement's request before a judge. This outcome, according to the Court, "reduces the risk that officers will use these administrative searches as a pretext to harass business owners."