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The hotel that launched a thousand
ships pages of court filings
According to Bloomberg News, investor Ron Burkle threatened to "crater" some of the hotel group's other deals (like in Moscow and Las Vegas) if the Morgans board members did not approve the Delano South Beach buyout bid from his Yucaipa companies as well as his proposed recapitalization plan.
One of Morgan's largest shareholders, OTK Associates, has already filed a lawsuit against other Morgans board members to stop this arrangement. OTK also wants to overhaul the board and in effect, the company. Meanwhile, Bloomberg News reports that Morgans with its 13 hotels has lost money in every quarter since 2007.
If this sounds terribly confusing, it is. Essentially two board members are fighting each other over direction of the company and who gets most of its assets. Like we said last month, this may not immediately affect your experience at a Morgans Hotel right now, but it certainly could in the future.
More importantly, if the hotel group hasn't turned a profit since 2007, we're not so sure how many of their new hotel projects will actually come to life. To be continued....
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Last week we were stunned to hear that Morgans Hotel Group was selling off its prized possesion, The Delano South Beach. But once we waded through the legal mumbo-jumbo and found that the Delano would remain the Delano and that Morgans would still be running the shop, we were cool with all of it. But we shoulda known better. These hotel sales are never easy.
OTK Associates LLC, the largest stockholder of Morgans Hotel Group Co., has now filed a lawsuit to stop Morgans from re-arranging The Yucaipa Companies interest in the company. (Currently, Yucaipa holds Morgans stock, stock warrants and convertible notes. Morgans' directors want Yucaipa to take ownership of the Delano and the Light Group instead.) OTK Associates believes that the switcheroo would favor the Yucaipa company over other stockholders (like OTK) and is also, you know, like totally illegal according to Delaware law.
OTK also has issues with the looking to stop the postponement of the company's annual meeting which is usually held in May but which is now set for July because OTK believes that stockholders will be denied the right to review the transaction.
As of this afternoon, OTK actually secured a right of postponement on the "recapitalization plan" and released this statement:
OTK is pleased that the Morgans Hotel Group agreed to delay the rights offering, as OTK had requested in its motion for a temporary restraining order. All shareholders should be deeply troubled by the current board of directors’ continued waste of corporate assets to advocate for a coercive and dilutive transaction that OTK believes is invalid. Further, the use of company funds to change shareholder voting rules and diminish voting rights calls into question this board’s fiduciary duties and responsibilities.
Again, we don't think this is going to affect your next Morgans Hotel stay but you never know what might happen in a few months. Lawsuit and other problems at the top always trickle down, even down into your hotel room.
It's been about a year since trouble first started brewing down at Miami's famed Eden Roc Hotel. The property, which has been around since the 1950s, is managed by Marriott, but the relationship between Marriott and the hotel's owners was bad. So bad, in fact, that the hotel tried to boot Marriott from the premises during an after-dark siege. Serious drama, right?.
A judge (who happened to be a self-professed Eden Roc "fan"") declared back in November that Marriott has the legal right to remain as manager of the hotel.
Or should we say, 'had.'
Yesterday, the hotel's attorney announced that Eden Roc has won in a New York Appellate court the right to oust Marriott as manager of the property. The attorney called it "a vindication," and believes the outcome of this bitter lawsuit will help settle future disputes between hotel owners and management:
"A hotel manager is barred from commandeering a property against the owner’s wishes. Any doubts in that regard have been laid to rest."
Here's one kid who's going to have serious bragging rights when they grow up: being born at the Standard Hotel. Talk about starting early!
Tara Kimkee Tan, a former hotel manager at the Standard, was on duty one Saturday night in April 2011, when she suddenly went into labor, and was forced to give birth in a guest room. Which is bad enough, but Yahoo! reports that Tan is now suing Standard for $10 million, claiming that the hotel carelessly shooed her out the side door after the delivery, neglected to offer her maternity leave, and then fired her four months later for 'stealing hotel property.'
Luxury hotels have a tendency to attract some scandale; if it isn’t the celebrity kind (hi Lindsay!), a good lawsuit will do. Even the Maybourne Hotel Group, a small collection of fa-fa-fancy London hotels including Claridge’s, the Connaught, and the Berkeley, isn’t immune.
The Guardian reports that the wealthy Barclays brothers are about to take control over the debt-laden group, amidst a flurry of legal battles, disputes, and general animosity. So what happened here?
Hotel News / Hotel Shakedowns / Marriott Hotels / Miami Hotel Mambo / Hotel Lawsuits / Renaissance Hotels / → All Tags
About a month ago, we reported that Marriott was suing the pants off Eden Roc for attempting to kick Marriott out during an "egregious raid in the pre-dawn hours"—something that sounds good on paper, or maybe in a Nicholas Cage movie, but isn't actually that practical in real life.
Well, now, after Marriott took the Eden Roc owners to court, a judge has decreed that Marriott is still the legal manager of the hotel, and cannot be removed by any underhanded sneak tactics. Well, those weren't the judge's words per se, but you get the gist.
Interestingly, the judge, New York State Supreme Court Justice Melvin L. Schweitzer—we'll just call him Melve—made it known that he actually took a personal interest in the case, having spent some time at the Eden Roc himself. In an aside, Melve mentioned he was "a fan of Eden Roc from years back when I passed over Fontainebleau and went next door." But both Marriott and Eden Roc were too busy making nana-poo-poo faces at each other to acknowledge the compliment.
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There's tons of New York hotel news flying around this week and we don't have time to give each and every story the love and attention it may deserve, so you will have to settle for some news briefs.
· CitizenM Times Square Is On Track For Summer 2013: European-based budget hotel chain CitizenM have been circling for a while now on a yet-to-open CitizenM Times Square property on 50th and Broadway. At the beginning of 2011, we were told the brand was shooting for a 2012 opening in Times Square (which obviously never happened). Now, CitizenM executive Michael Levie tells USA Today that construction is well underway, and that the 24-story, 240-room tower is set to open by next summer. What else? The company is also planning a second NYC location in Soho, set to open the following year.
BusinessWeek reports that some shady business went down in Miami Beach the other week. Well, in addition to whatever other shady business goes down there regularly. But, in this case, the perpetrator was Eden Roc, who attempted to pull off a Waikiki-style shakedown, launching an "egregious raid in the pre-dawn hours" on October 14.
Though the shakedown wasn't successful, it got the message across to Marriott, who's now seeking help from the court to prevent Eden Roc from trying again.
Hotel Lawsuits / Miami Hotel Mambo / Renaissance Hotels / Marriott Hotels / Hotel Owners / → All Tags
Ruh-roh. There's even more trouble in Miami Beach.
Just after we learned about the Setai Shakedown, we saw that the owners of another Miami hotel that made our sexiest bathrooms list, The Eden Roc Renassiance Hotel, are now suing Marriott Hotels and their Renaissance brand for grossly mismanaging the hotel after an extensive renovation. Business Week has this choice bit from the hotel owners' lawsuit:
“In the face of Renaissance’s failures, Eden Roc has quite literally shoveled money into the project to make up for Renaissance’s incompetence,” Eden Roc said in the complaint. “And while Eden Roc loses its shirt, Renaissance and its parent company and guarantor, Marriott International, have lined their pockets with management fees.”
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Hotel Kamp in Helsinki is owned by Starwood
The New York Daily News is reporting on a lawsuit between Wall Street banker Alison Fournier and Starwood Hotels, who gave an unknown man the key to Fournier's Helsinki hotel room, after he explained to the Front Desk that he was her husband. Creepy! And kinda unbelievable.
The surveillance video depicts an American man showing up at the Hotel Kamp's Front Desk, drunkenly explaining he had been locked out from his wife's room, and walking away with the key. Minutes later, he entered Fournier's room, took his clothes off and got into bed with her. Creepy again! Though half-asleep, and alone, Fournier immediately realized what was going on and ran straight out of the room. Starwood has called the event "very unfortunate" and is looking into the facts before taking any further action.
Like, um, an apology?
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The WSJ is reporting that an auditor for Amsterdam Hospitality Group has greedily helped himself to the credit card information of 237 guests, drawing from three of the group's eight Manhattan hotels. Luckily, NYC's Fashion Week mainstay, the Empire Hotel, which the company owns, wasn't affected.
Phew! Though we dote happily on the Empire's ritzy Lincoln Center location and rooftop drinking accommodations, we'd rather not take our chances when handing over our credit cards for a $450-a-night stay. We have enough "mystery charges" showing up on our monthly statements (as we mentioned earlier this morning, our love of hotels is exceeded only by our love of shopping) as it is, and have no need for disappearing funds.
Edition Waikiki Lawsuit / Edition Hotels / Aqua Hotels Hawaii / Hotel Lawsuits / Hotel Employees / Hotel Takeovers / → All Tags
Some late-breaking news yesterday--a New York judge has ordered M Waikiki LLC, the owners of the The Waikiki Edition who dumped the brand in favor of The Modern Honolulu, to reinstall the Edition team which is owned by Marriott Hotels.
The Wall Street Journal reports:
On Wednesday, a New York state judge issued a temporary restraining order and preliminary injunction that stated that Marriott should be allowed to return to its management role at the hotel by 2:30 p.m. local time, replacing Aqua Hotels & Resorts, the management company installed by the owners on Sunday, according to a copy of the judge's order.
But despite the ruling, the WSJ said that by late Wednesday Aqua was still in place and that a bunch of Marriott executives had arrived but then later left the hotel.
Still Marriott says they are accepting reservations for the hotel through Marriott.com and over the phone as well as through "numerous online and other travel providers." (Also of note; anyone who booked a spa deal through PlayHawaii.com are welcome back as well.) But will it still be a Marriott/Edition hotel when you get there? That remains to be seen.