Hotel Owners Sue Marriott

Marriott International recently was named in lawsuits brought by four owners of hotels it manages who charge the company with engaging in deceptive business practices.

The two most recent suits were filed in August by the Flatley Co., owner of the Marriott Hotel in Quincy, Mass., and Strategic Hotel Capital, which owns eight Marriott-branded properties, including a Ritz-Carlton and a Renaissance. Both lawsuits accuse Marriott of accounting irregularities and mismanagement, among other charges, and seek monetary damages. Both suits contend Marriott levied unauthorized fees related to Avendra, the procurement company that Marriott established in 2001 with Hyatt Hotels Corp., Six Continents Hotels and Fairmont Hotels & Resorts.

Marriott is not the only major hotel company facing disgruntled owners in court. Starwood Hotels & Resorts Worldwide, for example, has faced the same kind of action. Historically, hotel companies were owners and managers of their individual properties. Yet, as the business increasingly has moved toward a manager-only model in the past decade, hotel companies have became more vulnerable to these disputes.

Of interest to travel buyers concerned about data privacy is the charge that the company sold guest lists from its hotels to unnamed third parties. Of further concern, the lawsuits may affect hotel companies as they enter into negotiations for 2003 rates. Weakened by declining occupancy rates and room revenues, particularly in gateway cities, the U.S. lodging industry is having one of its worst years in recent memory.

For the hotel companies involved, the lawsuits—and the potential for expensive judgments if the courts rule against them—certainly are additional distractions and could result in a greater willingness to negotiate.

Marriott labeled the claims unfounded and without merit. "We intend to fight them vigorously and expect to prevail in a court of law," spokesperson Roger Conner said last week. "There are business issues that have been converted into lengthy claims made in a lawsuit. We respect everyone's opinion, but think these are the kinds of matters that could be resolved outside of a filing," he said. Conner said the lawsuits represent four out of more than 500 Marriott owners and that the suits involve no more than 30 out of the 2,500 hotels in the Marriott portfolio.