For many hotel guests, there’s nothing better than kicking back at the bar, martini in hand. Or maybe it’s cracking open a cold beer in the lounge. Or sipping a mai tai by the pool on a hot summer day.
Whatever the drink of choice, these moments can be highlights of a guest’s stay. But for hotel operators, they come with significant legal responsibilities.
Hotels are required to comply with strict legal obligations when it comes to serving alcohol. These are set out in the Liquor License and Control Act, 2019 and its regulations, and enforced by the Alcohol and Gaming Commission of Ontario (AGCO). Violating these rules can lead to serious consequences, including fines, license suspensions, and reputational damage.
In this blog, we’ll cover five of the most common liquor law violations committed by Ontario hotels. For each one, we’ll explain the legal implications, provide a real-world example, and share practical tips to help hotel operators address the issue effectively.
1. Serving Alcohol Without Smart Serve Certification
In Ontario, anyone who sells or serves alcohol must be certified by Smart Serve Ontario, the province’s mandatory training program. Hotels must therefore ensure that all staff who serve alcohol—whether full-time, part-time, or temporary—are certified.
If someone files a complaint or the AGCO conducts an investigation and finds that an uncertified staff member served alcohol, the hotel may face fines, license suspension, or other disciplinary action.
Example: A hotel hired additional staff for a large wedding reception. One server hadn’t yet completed their Smart Serve training. During the event, a guest was overserved and later involved in a car accident. The AGCO investigated, and the hotel was disciplined both for overservice and for allowing an uncertified staff member to serve alcohol.
Tip: Make Smart Serve certification a non-negotiable condition of employment for any staff involved in alcohol service. Retain copies of each server’s updated certificate on file.
2. Serving Alcohol in Unlicensed Areas
Having a liquor license does not permit a hotel to serve alcohol anywhere on its property. Alcohol may only be served in pre-approved areas that are included in the hotel’s liquor license. Serving alcohol in unlicensed areas is considered unlawful distribution and can result in disciplinary action from the AGCO.
Example: A hotel hosted a corporate wine tasting event in its outdoor garden. However, the garden was not part of the hotel’s licensed service areas. During a routine inspection, the AGCO discovered alcohol was being served in the unlicensed space. The hotel was issued a compliance order and forced to stop service until the garden was added to their liquor license.
Tip: To stay compliant, hotels should regularly review their licensed floor plan and ensure that alcohol is only served in approved areas. And if a hotel is considering opening a new service area, it should apply to have its liquor license amended or obtain a Special Occasion Permit (SOP) for temporary events.
3. Not Updating Liquor Licence After Renovations
It’s not uncommon for hotels (or parts of hotels) to undergo renovations. But even minor changes to the layout of a bar, restaurant, or lounge can impact your liquor license. If the renovated area differs from the approved licensed floor plan, you may be in violation of AGCO regulations.
Example: A hotel reconfigured its lounge to expand the space and add seating. This upgrade inadvertently extended alcohol service into an unlicensed area of the hotel. The AGCO identified the issue and ordered the lounge to temporarily shut down until the license was properly updated.
Tip: If your hotel is being renovated, notify the AGCO about any changes to its physical layout or capacity.
4. Allowing Outside Alcohol Without SOP
Alcohol is not allowed on hotel premises unless it’s covered by a Special Occasion Permit (SOP) issued by the AGCO. This often comes up during weddings or private events where guests want to supply their own beverages. Violating this rule can create significant insurance and liability risks for hotels.
Example: A bride and groom brought several cases of wine for their hotel wedding reception. The hotel manager allowed it, unaware that an SOP would be needed. After an underage guest was mistakenly served alcohol, the incident was reported, and both the hotel and the couple were fined.
Tip: Require that all external alcohol be covered by an SOP. Additionally, educate event sales and catering teams about SOP requirements, and clearly outline policies around outside alcohol in your event contracts.
5. Ignoring Signs of Intoxication
Overserving guests is one of the most serious liquor-related risks for hotels. Under Ontario’s liquor liability laws, if an intoxicated guest causes harm to themselves or others, the hotel may be held legally responsible.
Example: A guest was repeatedly served whiskeys at a hotel bar, despite showing clear signs of intoxication. After he left, he drove off and was involved in a car accident. The victim sued both the driver and the hotel, alleging that the hotel was negligent in continuing to serve an impaired patron. Although the case settled out of court, the hotel’s insurer raised its premiums significantly.
Tip: Train staff to recognize signs of intoxication. These include slurred speech, poor coordination, and aggressive behaviour. Staff should also know to to cut off service when necessary. Additionally, all incidents involving impaired guests should be documented, and staff should be debriefed afterward to reinforce protocols.
Invest in Your Success By Proactively Addressing Liquor Licence Issues
While alcohol service is frequently associated with hotel stays—and is, indeed, a core part of hotel operations—it comes with legal responsibilities. Whether you’re purchasing or franchising a hotel, employing staff, planning renovations, or hosting private events, it’s essential that you stay up to date on Ontario’s liquor laws and ensure your team is doing the same.
By proactively addressing the five common pitfalls outlined in this blog, you’ll protect your liquor licence, reduce liability, and maintain a safe, compliant environment for guests and staff alike.
Contact the Corporate Lawyers at Baker & Company for Trusted Legal Advice on Hotel Law in Toronto and Across Ontario
At Baker & Company, our experienced team of hotel lawyers works closely with clients and understands their unique needs, goals, and challenges. If you’re dealing with the fallout from a liquor law violation or facing any other legal issue, we provide proactive, strategic advice to help resolve disputes and protect your business. Whether you’re a seasoned hotelier or are just starting out, contact us at 416-777-0100 or reach out to us online to schedule a consultation and learn how we can assist you.
