Marriott threatens M Waikiki with a lawsuit

2 min reading time

Published on 05/09/11 - Updated on 17/03/22

On Thursday Marriott International Inc. reacted to the disputed Waikiki Edition property owner’s bankruptcy declaration by promising a lawsuit seeking tens of millions in damages.

The hotel’s owner, M Waikiki LLC, a subsidiary of the San Diego real estate fund eRealty Fund, filed for Chapter 11 bankruptcy on Wednesday, which it says will allow it to ignore a judge’s order to return management of the hotel to Marriott International Inc.“Occupancy rates at the Waikiki Edition were 67% in July and were running in excess of 80% in August prior to the illegal raid and seizure of the hotel by the owner and its partner overnight last Sunday,” Marriott said in a press release.Marriott acknowledged that it would respect the law and not seek to reinstate its management on the property, now called The Modern Honolulu and managed by Modern Management Services, an affiliate of Aqua Hotels & Resorts. However, Marriott promised a lawsuit.“We will vigorously pursue tens of millions of dollars of claims for damages to the brand and our company in bankruptcy court over time,” said Ed Ryan, executive vice president and general counsel at Marriott. “We of course respect the law and the fact that a bankruptcy filing freezes any other legal orders for the time being. It is clear that this was a desperate step by the owner and legal advisors to circumvent the New York court’s order returning the hotel to our rightful management and control. They will obviously stop at nothing in the effort to escape from the contractual obligations they made to us when they signed the management agreement.”On Wednesday a New York state judge ordered M Waikiki to return the property’s management to Marriott. However, 30 minutes after the deadline for handing back the reins had passed, M Waikiki filed for bankruptcy.The hotel has continued to operate with guests throughout the dispute. It opened in 2010 as the first of Marriott’s new lifestyle hotel brand Edition, conceived with the help of Ian Schrager.M Waikiki said the property has lost a total of US$8.4 million since opening. However, Marriott accused M Waikiki of releasing false information about the hotel’s occupancy.“Occupancy rates at the Waikiki Edition were 67% in July and were running in excess of 80% in August prior to the illegal raid and seizure of the hotel by the owner and its partner overnight last Sunday,” Marriott said in a press release.

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Marriott International

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