Hotel owners that spent significant amounts of money prior to the economic downturn in 2008 aren't seeing the numbers that they hoped they would and they're pointing a finger at management teams for not making their revenue dreams come true.
Marriott International is suing the owner of the Eden Roc hotel after a dramatic but unsuccessful early-morning effort by ownership to remove the company’s Renaissance brand from management.
Renaissance, which is also a plaintiff in the suit filed Monday in New York, is contracted to manage the 631-room hotel at 4525 Collins Ave. through 2030. A judge granted a temporary restraining order barring the hotel’s owner from trying to replace or interfere with Renaissance and set a hearing for mid-November.
Sunday’s attempted ouster, which happened before 2 a.m., “included storming the hotel with uniformed security guards while there were guests present, threatening to fire hotel employees if they did not cooperate with the hostile takeover, and changing the locks on hotel offices,” Marriott’s complaint says.
Employees called police, who warned the owners not to take action without a court order.
Marriott and the Eden Roc’s ownership, described in court documents as Eden Roc, LLLP, have been battling in court since the spring, when the owner sued the hotel company for breach of contract for failing to maximize profits at the historic and recently renovated hotel.
Miami-based real estate investment and development company Key International, whose properties include the Eden Roc as well as the Marriott South Beach and several hotels in Spain, says it spent $240 million on an expansion and renovation of the property that wrapped up in 2008.
In an apparently premature news release that went out Sunday, the owner of the hotel said that a new management team was in place and a new website and reservations number had been launched. The website was not working Tuesday.
According to that statement, the management agreement with Marriott International and Renaissance Hotels & Resorts had been terminated on March 30 “following years of mismanagement of the property and a failure to maximize the Eden Roc brand.”
“Our exhaustive efforts to encourage Marriott to correct its numerous management defaults, and to preserve our partnership, proved fruitless, leaving us with no option but regain control and to put this property on the path to success,” said Diego Ardid, a vice president at Key International, in the statement released Sunday.
Ardid, attorneys representing the owners and media contacts from Kekst and Company, the New York public relations firm listed on the statement, could not be reached Tuesday despite multiple efforts.
While still relatively uncommon, such early-morning takeovers have been making news lately. Last August, the owners of the Waikiki Edition — a new Marriott brand — pushed Marriott out in a surprise move. That hotel is now operating as the Modern Honolulu and both sides have settled.
On the same day, the owners of the former Fairmont Turnberry Isle in Aventura kicked out Fairmont in what was described in court records as “a bold, surprise takeover.”
Earlier this year, the owner of the luxury Setai in Miami Beach forced out Singapore-based General Hotel Management in a similar early-morning move and installed a new operator.
Ed Ryan, Marriott’s General Counsel, said in an interview Tuesday that he believes what happened Sunday at the Eden Roc was wrong.
“It’s dangerous,” he said. “The risk of physical confrontation is really, really high. There’s a lot of employee intimidation that occurs in this situation.”
(c)2012 The Miami Herald. Distributed by MCT Information Services.