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Day of Reckoning Has Come: Hilton Settles with Starwood Over Dumb Denizen Idea

December 23, 2010 at 9:59 AM | by | ()

Merry Christmas to all! Your present from Santy Claus is never hearing about the Hilton-Starwood Lawsuit ever again!

That's because today Hilton has agreed to settle with Starwood over the failed Denizen brand plans which were, as Starwood alleges, "infected" with Starwood trade secrets. Hilton had hired several key employees from Starwood, including W Hotels' Ross Klein, who took with them proprietary Starwood information with which to create Denizen.

The total cost for Hilton to settle? $75 million which is reportedly the monetary payment they are now going to make to Starwood. Not only is Hilton $75 mil poorer but now Denizen is totally dead and never going to see the light of day (we say, Good! That hotel brand was dizzyingly confusing.)

Additionally, Hilton has agreed to "certain business restrictions" for two years. We take that to mean Hilton is not going to be rolling out any new boutique hotel brands until 2013.

Hilton is also not allowed to buy or franchise any Starwood Lifestyle Brand hotel that Starwood operates and Hilton is not allowed to hire anyone from Starwood for two years. There will be an independent monitor set up to make sure that Hilton is abiding by these settlement terms and to make sure that none of Starwood's trade secrets are used.

While Hilton has settled a huge chunk of this fiasco, the NY Times says there are still criminal charges pending against both Hilton and the individual employees who took Starwood proprietary info with them over to Hilton. However, as part of today's settlement, Ross Klein and his fellow Starwood executive who also went to work for Hilton, Amar Lalvani, were forbidden from working at certain hotel companies for the next two years.

Boy, we're just glad this whole mess is over for now. And in the end, we all win because the hotel-on-drugs concept of Denizen won't ever be happening! Somewhere above, a little angel just got its wings!

Archived Comments:

Guilty as Charged

Perhaps Mr. Klein can next develop a boutique, federal correctional concept, offering Harry & David amenities upon arrival.