HotelChatter

The owners' basis for the lawsuit has to do with how the hotel has fared, or rather not fared, since opening back in September 2010. They claim that the hotel's occupancy rate in the first quarter of 2011 is a woefully low 29.5 percent and that the hotel is bleeding money, about $2.2. million since January alone.

The owners place the blame solely on Marriott and Schrager, saying that Marriott has failed to successfully operate the hotel and establish the Edition brand and that Ian has pretty much checked-out of the partnership.

In the background summarized in the filing, the owners, M Waikiki LLC, took digs at Marriott for being slow to capitalize on the boutique market, naming competitors such as W Hotels, Hotel Indigo and even Andaz for doing a better job in than Marriott.

Jealous of the success of its competitors' brands, given its typical dominance in other market segments, Marriott was desperate to create a lifestyle product to appeal to a younger, affluent demographic. Marriott's path to that objective ran to Ian Schrager.

The filing then goes on to give the lowdown on Ian's history, including his boutique hotel success, Studio 54, tax evasion and even the notorious $600,000 stuffed in garbage bags found by the IRS in the club's ceiling rafters.

But Ian being the godfather of the lifestyle boutique hotel was the main attraction for M Waikiki to allow the Edition brand into their hotel. In fact, M Waikiki seemed to have stars in their eyes when it came to Schrager (perhaps they were one of the rejected club-goers outside Studio 54 back in the early 80s?) His designs, influence, opinion and overall boutique hotel fairy dust were pertinent to the management agreement.

Schrager promised owner that his personal involvement, including his attendance at key design meetings, would ensure that the hotel had all the elements of style necessary for the success of the hotel and for which Schrager had become known. Schrager's personal involvement was critical to Owner and absent his commitment regarding his personal involvement, Owner would not have agreed to brand the Hotel as an Edition.

But later when M Waikiki saw some of the designs and thought it lacked the Ian "edge" one of the owner's execs offered to "get on a plane tonight" and meet Ian in person to go over the plans. The exec's call went unanswered. Probably because even Ian himself has no idea what the heck the Ian Edge is. Or maybe he does know and is saving it for Public Hotels?

Anyways, once the appalling, gut-wrenching numbers for the hotel's operations came in-- including an opening party that cost $472,000, far more than the agreed upon $150,000; "out of control" labor costs, $8.7 million in pre-opening costs and dismal bookings--M Waikiki had decided enough was enough. They are now asking Marriott and Schrager to not only terminate the Edition management contract but pay them back money owed, court costs, attorney fees and any fees, profits, monies and payments that Marriott and Schrager "wrongly" took.

M Waikiki also hinted several times throughout the lawsuit that Schrager is totally over the partnership with Marriott on Edition. Ian told the WSJ last week that he is still very active with the brand but we think M Waikiki has a point--Edition has nothing that is identifiably Schrager in it. And Schrager hasn't really done that much press on Edition. You rarely hear him talking about Edition anymore.

Another point M Waikiki makes is that Marriott hasn't done much to grow the Edition brand. Yes, we know this does take some time but it also takes some consistency and coherency. The Waikiki Edition is totally different from the Waikiki Istanbul. One is a massive resort hotel on an island, the other is a small 77-room property in major city. And there's nothing Edition-y about either one of them. Edition needs a better hook, if you will.

Now you could argue that M Waikiki is being a bit premature in terminating the Edition management contract--after all it's been less than a year--but the fact that they are so eager to be rid of Edition tells us that Marriott must not have anything reassuring in the pipeline. It didn't help that two top execs have jumped ship to Morgans Hotel Group and yeah, Ian's Public Hotels is not exactly restoring their confidence.

The lawsuit will no doubt play out for some time as M Waikiki is already pretty fired up, but we don't mind. We needed something else to keep us busy now that the Starwood-Hilton lawsuit over Denizen Hotels has ended.

Since people are putting out press releases about their dissatisfaction with Edition Hotels, here's what we have to say:
· Waikiki should not have been the first place to open Edition. Edition is, from what we gathered, more of an urban boutique brand. It would have done well if it opened in Miami, Los Angeles, New York or San Francisco. In Waikiki, all you really need from a hotel is a comfy bed, beach access and a luau at night.
· Edition should precede the city name, i.e. Edition Waikiki, Edition Istanbul. They reversed it which kinda de-emphasizes the brand.
· Next time an Edition Hotel opens, it might be good to get some actual photos of the rooms and public spaces up on the website. That irked us to no end about Waikiki Edition.
· The brand definitely needs more Schrager, whatever he's got left to give.

Hotel Lawsuit Lovers--what are your thoughts on the Waikiki Edition lawsuit? Tell us in comments below!