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More than two years later, the drama at The Setai in Miami Beach has ended. And in favor of the hotel operator, GHM, who was kicked out, literally, in the middle of the night, by the hotel's owners, Lehman Brothers.
Last week, the ICC International Court of Arbitration ruled "that all previous allegations of mismanagement were baseless and have awarded damages to GHM for improper termination of GHM’s hotel management agreement." It seemed that the hotel's impressive RevPAR rate of 76 percent was a key factor in the decision against Lehman. Lehman Brothers now have 30 days to make the compensation to GHM. The Miami Herald reports the damages exceed $10 million. There are also more tort claims against Lehman that are still pending in state and federal court.
However, GHM will not return to the property as manager. Trevi Luxury Hospitality Group., which has managed the hotel since the shakedown, still remains in place. Room rates for this weekend for a studio suite (the starting room category) start at $530 a night but there's a AAA discounted rate and a Florida resident rate available for $488.
[Photo: The Setai]
Sigh. It's been a week since we last checked in on the Setai in South Beach which underwent major management shakedown just before Easter. And it looks like the drama shows no sign of going away anytime soon.
We just got a new statement from the ousted management company, GHM. Here's what they have to say:
General Hotel Management (GHM), innovative leaders in the luxury hotel space, has provided detailed financial statistics that refute the misleading claims that the Setai in Miami was mismanaged. “There is no evidence that any of the Lehman Brothers’ accusations are legitimate,” said Hans R. Jenni, president and director of GHM. “The Setai’s hotel management team is the best in the business. Our work at the Setai ensured the hotel was consistently ranked among the best hotels in North America.”
More info continues to come in from ex-employees at the Setai Hotel in South Beach which was the scene of a management shakedown last Saturday. And it looks like things were not very happy at The Setai for quite some time.
This Sun Post Weekly article from July 2011 details the rough working conditions inside the hotel's F&B operations. Namely, that GHM was importing young employees from other countries through their GHM Exchange program and had them working in excess of 40 hours a week.
According to the Sun Post, many of these exchange workers were threatened if they refused to work that many hours. Additionally, the report said the restaurant's service charges (aka automatic gratuities) often went to the hotel to pay for their expenses and not to the restaurants or their workers. One former employee emailed us to say that the GM of the hotel had told her they had to turn around every dollaras the owners were very tough on them.
Another day, another report from inside the luxury hotel in South Beach, The Setai.
Not so surprisingly, staffers are not happy with new management company, Trevi Luxury Hospitality Group, which was installed in the dead of night after kicking out the old management crew, GHM.
Yesterday we heard from an owner of one of the Setai condo units who said staff morale and service was at the lowest levels they have ever seen.
Today we learn that over 40 employees have already peaced out of the hotel, even though they are being offered $500 to stay. Additionally, there is no food service down on the beach. All of this comes at a bad time for the hotel as it's Easter Weekend this weekend and the property is sold-out.
We're guessing the hotel won't be organizing any Easter egg hunts on Sunday then....
Got any other scoop on the Setai Shakedown? Even better, do you work for either the Setai or GHM and want to share your story on the DL? HotelChatter is here for you! (Anonymity assured!)
The Setai Shakedown continues.
Just to get you up to speed: The management company at the luxury hotel in South Beach, GHM, was kicked out early Saturday morning and replaced with a new firm, Trevi Luxury Hospitality Group. We heard reports yesterday that Setai staff, including upper management, was heading to court to try and obtain an injunction to stop the takeover.
Meanwhile, GHM released their own statement saying the owners of the Setai, Setai Owners LLC which is actually a division of Lehman Brothers, "ignored a valid contract, stormed the hotel and have taken the law into their own hands."
We've been trying to get some reaction from staffers inside the hotel but people are reluctant to speak out. However, we did get an observation on life at the hotel post-shakedown from a Setai condo owner. Remember, the Setai also has about 163 residences on property. Most of them are owned by Lehman Brothers but several are not. Here's what this Setai owner had to say:
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Singapore-based General Hotel Management, aka the people who were running The Setai in South Beach until they were forcibly removed from the property by the Setai's owners, Lehman Brothers, have just put out a statement with their side of the story.
Hans R. Jenni, President and Director of GHM, said:
"Representatives from Lehman Brothers arrived at the hotel with armed guards and off duty sheriff officers in uniform in the early morning hours on March 31st. They informed us that they were taking over the property and that General Hotel Management (GHM) was no longer welcome on the property. These actions took us by surprise, as we had no prior indication they were intending to do this, nor were we under the impression that they were unhappy with our performance. We had just achieved the second best financial performance year since the inception of the hotel, not an easy accomplishment in the current economic environment."
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UPDATE: GHM speaks out on the shakedown!
It was a wild Saturday in Miami last weekend which really isn't nothing new for the party town but things got crazy--like police involved crazy at The Setai for a different reason--a hostile middle-of-the-night takeover.
USA Today reports the owners of The Setai, Setai Owners LLC, kicked out their current management company, General Hotel Management and GHM (South Beach) LLC, and replaced them with Dallas-based Trevi Luxury Hospitality Group.
The ousting happened because the Setai owners (which is actually a unit of Lehman Brothers) claims the hotel should be more profitable. Here's a little bit on what the hotel was spending their money on (this comes from Lehman's request for arbitration to essentially end GHM's management contract):