Capella Hotels & Resorts said on Friday that a New York Supreme Court judge ordered that Capella be reinstated as operator of a luxury hotel in Cabo San Lucas, but the hotel’s ownership group is forging ahead with a lawsuit against Capella.
A co-owner of the Capella Pedregal seized management of the 96-room luxury resort on Nov. 3, a move that Capella declared illegal.
“We are very pleased with this decision, and look forward to managing the Capella Pedregal on a long-term basis,” Capella CEO Horst Schulze said in a statement.
Meanwhile, the ownership group, Hoteles del Cabo, alleged in a statement on Friday that Capella misappropriated funds, conducted improper accounting and diverted money earmarked to help hotel employees impacted by Hurricane Odile.
The owner also said it presented Capella with a notice of default on Aug. 14, one month before Hurricane Odile hit.
"Beyond its mismanagement of the property itself, Capella has held funds donated by generous patrons to help the neediest team members recover from the devastating effects of Hurricane Odile," the owner said, adding that it had distributed $125,000 to company employees.
"Capella is holding tens of thousands of dollars intended specifically to help hotel associates get their lives back in order following the horrific storms that have plagued Cabo recently. For reasons beyond our knowledge, they have opted not to distribute those funds.”
Commenting on the lawsuit, Capella said ownership "has persisted in making baseless allegations ... with the intention of damaging the company’s reputation and its standing in the hospitality industry." Capella called the allegation that it withheld relief funds for employees a "particularly egregious and false claim."
Ownership on Monday evening ousted Capella, though it would only say at the time that the property was renamed the Resort at Pedregal. It declined to state the reason for the ouster.
In a statement on Friday, Schulze said, "We are very disappointed with CarVal’s actions, especially after the ruling handed down by the Supreme Court of the State of New York. We refute all their claims as inflammatory and intentionally misleading." CarVal is an adviser to one of the hotel's owners.
"Capella has acted with the utmost integrity in this matter and with the best interests of its employees and guests in mind. Our top priority has always been to create a world-class resort and we believe that when all the facts are known, it will be evident that we have fulfilled every aspect of the management agreement with property ownership," continued Schulze.
The resort is currently closed to repair hurricane damage and is slated to open on a limited basis for existing reservations in January and to fully reopen in March.
Capella earlier this week said the Los Cabos hotel had achieved “record-breaking occupancy rates and revenues in the last two years.”
John Volponi, who had been the hotel’s general manager from May 2012 until the management’s ouster, said on his LinkedIn page that the property achieved “a 43% increase in revenue and a 60% increase in gross operating profit” on his watch.
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This report was updated Friday evening at 6 p.m. with Capella's response to the resort owners' lawsuit.
CORRECTION: CarVal Investors is an adviser to one of the hotel owners but doesn’t have a stake in Capella Pedregal.