Brighton's best-known hotel has been caught dumping confidential guest records in a public skip.
The breach by De Vere's Grand hotel sparked identity fraud fears as the information binned included credit card numbers, guest signatures, addresses and passport numbers.
Bob Cotton, the British Hospitality Association's (BHA) chief executive, warned: "All businesses have to take confidential records but it's vital that they're shredded and disposed of properly."
The Information Commissioner's Office (ICO) will now investigate the blunder.
A De Vere spokesman said the hotel normally used a secure waste company to dispose of confidential material, but admitted that "on this occasion this policy was not strictly adhered to".
He added that all records had now been recovered and destroyed securely.
The ICO advises hotels to keep only fairly and lawfully processed information, up-to-date and accurate records, and to dispose of material safely and securely.
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