
M Waikiki LLC agreed to pay an undisclosed sum to Marriott International to settle a dispute over management of The Modern Honolulu, the former Waikiki Edition property.
M Waikiki LLC, a subsidiary of the San Diego real estate fund eRealty Fund, filed for Chapter 11 bankruptcy in September, allowing it to ignore a judge’s order to return management of the hotel to Marriott International. The Bethesda, Maryland-based Marriott International reacted to the bankruptcy by promising a lawsuit seeking tens of millions of dollars in damages. Under the agreement Marriott will drop the lawsuit and drop its opposition to M Waikiki LLC’s bankruptcy reorganization plan. While the amount of the payment by M Waikiki to Marriott is not being disclosed, the court ruled last month that US$20.7 million was the amount Marriott should reasonably recoup to cover lost management fees.Waikiki Edition 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 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,” Marriott said in a press release last year.