Holiday company Pontins said it will investigate its work practices after an investigation by the Equality and Human Rights Commission (EHRC) found that it had discriminated against Irish travellers.
Whistle-blowers said Pontins blacklisted guests with certain Irish surnames in what amounted to blatant race discrimination.
Surnames such as Ward, McDonagh and O'Donnell were flagged in a document on the company’s intranet titled “Undesirable Guests”.
Handlers at Pontins' call centres were told guests with these names were "unwelcome" at its holiday resorts and barred from booking rooms.
In addition, Pontins used its commercial vehicles policy to exclude Gypsies and Travellers from its holiday parks.
The Britannia Hotel Group, which owns Pontins, has agreed to work with the EHRC to address its work practices. Under the agreement, Britannia Jinky Jersey Ltd. will investigate the blacklist and will introduce annual equality and diversity training for staff.
The EHRC said it has the power to launch a full investigation if these conditions were not met.
Gypsies and Irish Travellers are considered a distinct racial group under the 2010 Equality Act which covers England, Scotland and Wales. Pontins was "directly discriminating on the basis of race" by failing to provide services to Traveller groups, the EHRC said.
Alastair Pringle, the EHRC's executive director, said: "It is hard not to draw comparisons with an 'undesirable guest list' and the signs displayed in hotel windows 50 years ago, explicitly barring Irish people and black people.
"Banning people from services based on their race is discrimination and is unlawful. To say that such policies are outdated is an understatement.
"It is right to challenge such practices and any business that believes this is acceptable should think again before they find themselves facing legal action.
"We will continue to work with Pontins and Britannia Jinky Jersey to ensure that our agreement is adhered to and its practices improve."
A spokesperson from Britannia Jinky Jersey said: "Britannia Jinky Jersey Limited has agreed to work together with the Equality and Human Rights Commission to further enhance its staff training and procedures in order to further promote equality throughout its business.”