Owner of EDITION HOTEL files lawsuit against Marriott, owner of the brand and concept
In 2007, Marriott International announced a partnership with boutique hotel pioneer Ian Schrager to develop a new boutique hotel brand called Edition. Four years later, there are just two of them: the first in Hawaii (the Waikiki Edition Hotel), followed by a much smaller property in Istanbul that opened only last month.
That’s enough to make the owner of the first Edition upset — so upset, in fact, that M Waikiki LLC has filed a lawsuit seeking tens of millions of dollars in damages and the right to terminate the agreement with Marriott, the operator of the 353-room Waikiki Edition Hotel.
The May 26 lawsuit alleges that, "What Defendants [Marriott and Ian Schrager] represented would be a fully supported new lifestyle hotel brand in the Marriott family of brands has turned out to be a nonexistent hotel chain."
According to law firm Bickel & Brewer, which represents M Waikiki LLC, Marriott said in 2007 that it had agreements in place to open nine Edition hotels in major cities worldwide within a year, with up to 100 more coming soon thereafter. The defendants’ failure to perform their obligations have "resulted in outrageously low occupancy levels and average daily room rates for the [Waikiki Edition] Hotel," says the lawsuit. "Since its opening in September 2010, not only has Marriott all but given up on generating sufficient business and revenues for the Hotel, it has refused to manage operating costs in such a way as to ensure any profit to Owner."
The lawsuit claims that — despite a celeb-studded opening and press for the luxury resort — the Waikiki Edition Hotel’s occupancy levels are below 38%, while competing properties’ occupancy rates are 74%. Moreover, says the complaint, "Schrager abandoned Edition (and Owner) to create his own lifestyle hotel brands, one or more of which is expected to complete directly with Edition Hotels."
The lawsuit, in part, refers to Schrager’s recent announcement that he is launching a new hotel brand, called Public, this year, with the first hotel to open in September in Chicago.The Edition Hotels website, meanwhile, lists as "coming soon" properties in Barcelona, Mexico City, Bangkok, Miami’s South Beach and London. Now it’s unlikely those hotels will ever open, unless Schrager and Marriott can come to terms.
Marriott’s official response to the lawsuit is encapsulated in this statement: "We are surprised and perplexed by this action and will defend it vigorously. Across the spectrum, Edition has been one of the most positively received new Lifestyle hotel brands of the 21st century. Innumerable stories in major global media and customer reviews speak for themselves. Edition and specifically the Waikiki Edition have generated tremendous excitement, and both we and Ian Schrager are confident of the hotel’s and Edition’s success."
Obviously, part of the problem associated with Edition is the simple fact that it launched right before a global economic meltdown. Along with other travel businesses, hotels have been battered in the past few years. Some chains have continued to introduce new brands and employed other techniques, such as swapping hotels, in an effort to revitalize their flagging business.
Clearly, the Waikiki Edition Hotel’s owner and its law firm believe Marriott and Ian Schrager could have done more to support the Edition brand.